July 8th, 2013 -- Letter from Donna Mills of COBESO (Complete Benefit Solutions) that will help to outline all the changes that are headed our way regarding new laws surrounding health insurance.
The decision to postpone the employer mandate until 2015 means
that businesses that do not offer healthcare benefits to employees will not be
subject to the penalty provisions under the ACA until then. The Obama
Administration also postponed implementation of the employer reporting
requirements until 2015.
The U.S. Department of Treasury decided
to hold off to allow regulators to streamline the rules that businesses would
be required to follow under the landmark legislation. More than 70,000 pages of
rules have already been written to implement the legislation, and Barney &
Barney estimates costs will still double by 2020 in spite of the delayed ACA
mandates.
“Many employers will want to continue
preparing now for 2015 and should consider working with us to assess the
problem and identify a plan that’s right for them.”
For the majority of large employers, the delay will have no
impact. Most large firms currently offer coverage to their employees. Small
businesses with fewer than 50 workers were already exempt from the rules and
will also see no changes.
The Treasury Department’s announcement
pertains only to the employer mandate and the employer reporting requirements
under the ACA. The decision does not delay the individual mandate, which
requires Americans currently without health insurance to obtain coverage
effective January 1, 2014. Individuals will need to purchase insurance
independently, through new marketplaces beginning in October, or with the help
of a licensed insurance broker.
“Businesses across America got a
temporary break from the Obama’s Administration’s smart decision to postpone
implementation of the ACA for a year, As soon as the employer mandate takes
effect, however, healthcare costs will jump significantly. Now is the time for
businesses to expedite their planning to mitigate the impact of the ACA.”
Educating our members on what is to come is
extremely important. To prove that we are a partner in helping you find
solutions for you our members I have provided some tips below and attachments.
As you know, this is a fluid topic with
many items changing in real time. We are still working through much of the
structure details.
This letter is to help you decipher some
information and also share some of the resources I have personally used in
order to get a better understanding of the law.
NY Exchange:
For details on NY Exchange law, please use http://www.healthbenefitexchange.ny.gov/resources
NY State Required Benefits
attached
Overall HealthCare Reform
Require U.S. citizens and
legal residents to have qualifying health coverage. Those without coverage pay
a tax penalty of the greater of $695 per year up to a maximum of three times
that amount ($2,085) per family or 2.5% of household income. The penalty will
be phased-in according to the following schedule: $95 in 2014, $325 in 2015, and
$695 in 2016 for the flat fee or 1.0% of taxable income in 2014, 2.0% of
taxable income in 2015, and 2.5% of taxable income in 2016. Beginning after
2016, the penalty will be increased annually by the cost-of-living adjustment.
Exemptions will be granted for financial hardship, religious objections,
American Indians, those without coverage for less than three months,
undocumented immigrants, incarcerated individuals, those for whom the lowest
cost plan option exceeds 8% of an individual’s income, and those with incomes
below the tax filing threshold (in 2009 the threshold for taxpayers under age
65 was $9,350 for singles and $18,700 for couples).
For plans
that are effective or renew on or after January 1, 2014, regulations have
finalized the approach for defining the 10 broad categories of essential health
benefits (EHBs):
Ambulatory
patient services
Emergency
services
Hospitalization
Maternity and
newborn care
Mental health and
substance abuse services
Prescription
drugs
Rehabilitative
and habilitative services and devices
Laboratory
services
Preventive and
wellness services and chronic disease management
Pediatric
services (including oral and vision care)
A state
benchmark approach was adopted; however, large group plans are permitted to use
any available benchmark option. Supplemented as needed to ensure coverage of
the 10 EHB categories. This is to comply with the annual and lifetime dollar
limit requirements.
That means we will remove any
annual dollar limits that may apply to Durable Medical Equipment (DME),
chiropractic services and pediatric vision hardware. Limits may remain on
bariatric surgery, adult vision hardware, hearing aids, nutritional support,
infertility services including AI/ART, TMJ and voluntary abortion.
The prohibition of annual and
lifetime dollar limits for essential health benefits applies to both
nongrandfathered and grandfathered fully funded and self-insured plans.
Small business tax credits
- Provide small employers with no more than 25 employees and average annual wages of less than$50,000 that purchase health insurance for employees with a tax credit.
– Phase I:
For tax years 2010 through 2013, provide a tax credit of up to 35% of the
employer’s contribution toward the employee’s health insurance premium if the
employer contributes at least 50% of the total premium cost or 50% of a
benchmark premium. The full credit will be available to employers with 10 or
fewer employees and average annual wages of less than $25,000. The credit phases-out
as firm size and average wage increases. Tax-exempt small businesses meeting
these requirements are eligible for tax credits of up to 25% of the employer’s
contribution toward the employee’s health insurance premium.
– Phase II:
For tax years 2014 and later, for eligible small businesses that purchase
coverage through the state Exchange, provide a tax credit of up to 50% of the
employer’s contribution toward the employee’s health insurance premium if the
employer contributes at least 50% of the total premium cost. The credit will be
available for two years. The full credit will be available to employers with 10
or fewer
employees and average annual wages of less than $25,000. The credit phases-out
as firm size and average wage increases. Tax-exempt small businesses meeting
these requirements are eligible for tax credits of up to 35% of the employer’s
contribution toward the employee’s health insurance premium.
Reinsurance program
- Create a temporary reinsurance program for employers providing health insurance coverage to retirees over age 55 who are not eligible for Medicare. Program will reimburse employers or insurers for 80% of retiree claims between $15,000 and $90,000. Payments from the reinsurance program will be used to lower the costs for enrollees in the employer plan. Appropriate $5 billion to finance the program. (Effective 90 days following enactment through January 1, 2014).
Tax
Changes Related to Health Insurance or Financing Health Reform Tax changes
related to health insurance.
- Impose a tax on individuals without qualifying
coverage of the greater of $695 per year up to a maximum of three times that
amount or 2.5% of household income to be phased-in beginning in 2014.
- Exclude the costs for over-the-counter drugs not
prescribed by a doctor from being reimbursed through an HRA or health FSA and
from being reimbursed on a tax-free basis through an HSA or Archer Medical
Savings Account. (Effective January 1, 2011).
- Increase the tax on distributions from a health
savings account or an Archer MSA that are not used for qualified medical
expenses to 20% (from 10% for HSAs and from 15% for Archer MSAs) of the
disbursed amount. (Effective January 1, 2011).
- Limit the amount of contributions to a flexible
spending account for medical expenses to $2,500 per year increased annually by
the cost of living adjustment. (Effective January 1, 2013).
- Increase the threshold for the itemized
deduction for unreimbursed medical expenses from 7.5% of adjusted gross income
to 10% of adjusted gross income for regular tax purposes; waive the increase
for individuals age 65 and older for tax years 2013 through 2016. (Effective
January 1, 2013).
- Increase the Medicare Part A (hospital
insurance) tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over
$200,000 for individual taxpayers and $250,000 for married couples filing
jointly and impose a 3.8% tax on unearned income for higher-income taxpayers
(thresholds are not indexed). (Effective January 1, 2013).
- Impose an excise tax on insurers of
employer-sponsored health plans with aggregate values that exceed $10,200 for
individual coverage and $27,500 for family coverage (these threshold values
will be indexed to the consumer price index for urban consumers (CPI-U) for
years beginning in 2020). The threshold amounts will be increased for retired
individuals age 55 and older who are not eligible for Medicare and for
employees engaged in high-risk professions by $1,650 for individual coverage
and $3,450 for family coverage. The threshold amounts may be adjusted upwards
if health care costs rise more than expected prior to implementation of the tax
in 2018. The threshold amounts will be increased for firms that may have higher
health care costs because of the age or gender of their workers. The tax is
equal to 40% of the value of the plan that exceeds the threshold amounts and is
imposed on the issuer of the health insurance policy, which in the case of a
self-insured plan is the plan administrator or, in some cases, the employer.
The aggregate value of the health insurance plan includes reimbursements under
a flexible spending account for medical expenses (health FSA) or health
reimbursement arrangement (HRA), employer contributions to a health savings
account (HSA), and coverage for supplementary health insurance coverage,
excluding dental and vision coverage. (Effective January 1, 2018).
- Eliminate the tax deduction for employers who receive Medicare Part D retiree drug subsidy payments
Benefit tiers
- Create four benefit categories of plans plus a separate catastrophic plan to be offered through the Exchange, and in the individual and small group markets:
– Bronze plan
represents minimum creditable coverage and provides the essential health benefits, cover 60% of the benefit costs of the plan, with an out-of-pocket limit equal to the
Health Savings Account (HSA) current law limit ($5,950 for individuals and $11,900 for families in
2010);
– Silver plan
provides the essential health benefits, covers 70% of the benefit costs of the
plan, with the HSA out-of-pocket limits;
– Gold plan
provides the essential health benefits, covers 80% of the benefit costs of the
plan, with the HSA out-of-pocket limits;
– Platinum
plan provides the essential health benefits, covers 90% of the benefit costs of
the plan, with the HSA out-of-pocket limits;
– Catastrophic
plan available to those up to age 30 or to those who are exempt from the
mandate to purchase coverage and provides catastrophic coverage only with the coverage
level set at the HSA current law levels except that prevention benefits and coverage for three
primary care visits would be exempt from the deductible. This plan is only available in the individual
market.
- Reduce the out-of-pocket limits for those with incomes up to 400% FPL to the following levels:
– 100-200%
FPL: one-third of the HSA limits ($1,983/individual and $3,967/family);
– 200-300%
FPL: one-half of the HSA limits ($2,975/individual and $5,950/family);
– 300-400%
FPL: two-thirds of the HSA limits ($3,987/individual and $7,973/family).
These out-of-pocket reductions are applied within the actuarial limits of the
plan and will not
increase the actuarial value of the plan.
increase the actuarial value of the plan.
- Require guarantee issue and renewability and allow rating variation based only on age (limited to 3 to 1 ratio), premium rating area, family composition, and tobacco use (limited to 1.5. to 1 ratio) in the individual and the small group market and the Exchange.
- Require risk adjustment in the individual and small group markets and in the Exchange. (Effective January 1, 2014).
Qualifications of
participating health plans
- Require qualified health plans participating in
the Exchange to meet marketing requirements, have adequate provider networks,
contract with essential community providers, contract with navigators to
conduct outreach and enrollment assistance, be accredited with respect to
performance on quality measures, use a uniform enrollment form and standard
format to present plan information.
- Require qualified health plans to report information on claims payment policies, enrollment, disenrollment, number of claims denied, cost-sharing requirements, out-of-network policies, and enrollee rights in plain language.
Requirements of the
exchanges
- Require the Exchanges to maintain a call center
for customer service, and establish procedures for enrolling individuals and
businesses and for determining eligibility for tax credits. Require states to
develop a single form for applying for state health subsidy programs that can
be filed online, in person, by mail or by phone. Permit Exchanges to contract
with state Medicaid agencies to determine eligibility for tax credits in the
Exchanges.
- Require Exchanges to submit financial reports to the Secretary and comply with oversight investigations including a GAO study on the operation and administration of Exchanges.
Basic
health plan
- Permit states the option to create a Basic Health Plan for uninsured individuals with incomes between 133-200% FPL who would otherwise be eligible to receive premium subsidies in the Exchange. States opting to provide this coverage will contract with one or more standard plans to provide at least the essential health benefits and must ensure that eligible individuals do not pay more in premiums than they would have paid in the Exchange and that the cost-sharing requirements do not exceed those of the platinum plan for enrollees with income less than 150% FPL or the gold plan for all other enrollees. States will receive 95% of the funds that would have been paid as federal premium and cost-sharing subsidies for eligible individuals to establish the Basic Health Plan. Individuals with incomes between 133-200% FPL in states creating Basic Health Plans will not be eligible for subsidies in the Exchanges.
Abortion
coverage
- Permit
states to prohibit plans participating in the Exchange from providing coverage
for abortions.
- Require plans that choose to offer coverage for abortions beyond those for which federal funds are permitted (to save the life of the woman and in cases of rape or incest) in states that allow such coverage to create allocation accounts for segregating premium payments for coverage of abortion services from premium payments for coverage for all other services to ensure that no federal premium or cost-sharing subsidies are used to pay for the abortion coverage. Plans must also estimate the actuarial value of covering abortions by taking into account the cost of the abortion benefit
Insurance market
rules
- Prohibit individual and group health plans from placing lifetime limits on the dollar value of coverage and prohibit insurers from rescinding coverage except in cases of fraud. Prohibit pre-existing condition exclusions for children. (Effective six months following enactment) Beginning in January 2014, prohibit individual and group health plans from placing annual limits on the dollar value of coverage. Prior to January 2014, plans may only impose annual limits on coverage as determined by the Secretary.
- Grandfather existing individual and group plans with respect to new benefit standards, but require these grandfathered plans to extend dependent coverage to adult children up to age 26 and prohibit rescissions of coverage. Require grandfathered group plans to eliminate lifetime limits on coverage and beginning in 2014, eliminate annual limits on coverage. Prior to 2014, grandfathered group plans may only impose annual limits as determined by the Secretary. Require grandfathered group plans to eliminate pre-existing condition exclusions for children within six months of enactment and by 2014 for adults, and eliminate waiting periods for coverage of greater than 90 days by 2014. (Effective six months following enactment, except where otherwise specified).
- Impose the same insurance market regulations relating to guarantee issue, premium rating, and prohibitions on pre-existing condition exclusions in the individual market, in the Exchange, and in the small group market. (See new rating and market rules in Creation of insurance pooling mechanism.)
- Require all new policies (except stand-alone dental, vision, and long-term care insurance plans), including those offered through the Exchanges and those offered outside of the Exchanges, to comply with one of the four benefit categories. Existing individual and employer-sponsored plans do not have to meet the new benefit standards. (See description of benefit categories in Creation of insurance pooling mechanism.) (Effective January 1, 2014).
- Limit deductibles for health plans in the small group market to $2,000 for individuals and $4,000 for families unless contributions are offered that offset deductible amounts above these limits. This deductible limit will not affect the actuarial value of any plans. (Effective January 1, 2014).
- Limit any waiting periods for coverage to 90 days. (Effective January 1, 2014).
- Create a temporary reinsurance program to collect payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals.
- Finance the reinsurance program through mandatory contributions by health insurers totaling $25 billion over three years. (Effective January 1, 2014 through December 2016).
- Allow states the option of merging the individual and small group markets. (Effective January 1, 2014).
