PPACA: Insurance

Health Care Reform UpdateHealth Care Reform Update
Presented by:
Andy Impastatoy p
Vice President – Client Compliance

Political OutlookPolitical Outlook
• Status quo federal electionsStatus quo federal elections
• State legislative attacks
– PPACA is here to stayPPACA is here to stay
• Louisiana Exchange
– Federal government’s roleg
• Medicaid expansion
– Will Louisiana expand?p
• Pending litigation
• Future litigation
This publication is provided for educational and informational purposes only and does not contain legal advice. You should not act on any information provided without consulting legal
counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly stated otherwise, any tax advice contained in this communication is not intended to be used and
cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.
Proprietary and Confidential. Not for Distribution
g

Existing RequirementsExisting Requirements
• Plan sponsors must confirm they are inPlan sponsors must confirm they are in
compliance with all applicable requirements that
have become effective since the Act’s passage
• Plan sponsors taking a “wait and see” approach
must get in gear
• DOL has ramped up enforcement regarding
existing requirements

Existing RequirementsExisting Requirements
• Grandfathered Plans (GF)Grandfathered Plans (GF)
– Impermissible changes
• Elimination of benefits
• Any increase in percentage cost-sharing
• Increase in fixed-amount cost-sharing
– 15% above medical inflation is allowed
• Decrease in employer contribution
– Five percentage points
• Certain changes to annual limitsCertain changes to annual limits
– Disclosure requirements
– Recordkeeping requirements

Existing Requirements
• Dependent coverage (GF*)
Dependent coverage (GF )
• Prohibition on lifetime limits
• Restrictions on annual limitsRestrictions on annual limits
• Pre-existing conditions for children
• Patient protections (GF)• Patient protections (GF)
• Preventive care (GF)
• Internal and external claim review (GF)• Internal and external claim review (GF)

• Expanded women’s preventive care (GF)
Expanded women s preventive care (GF)
• Medical Loss Ratio (MLR) Rebates
• Summary of benefits and coverageSummary of benefits and coverage
• W-2 reporting
• Additional Medicare tax for HCEs• Additional Medicare tax for HCEs
• Elimination of Part D subsidy deduction
• Flexible spending account (FSA) caps• Flexible spending account (FSA) caps

Exchange NoticeExchange Notice
• OverviewOverview
– Employer disclosure requirement
• Written notice• Written notice
• Existence of Exchange (now called Marketplace)
• Eligibility of subsidyg y y
• Consequences of dropping employer coverage
• Original deadline March 1, 2013

• OverviewOverview
– DOL extended deadline on January 24, 2013
DOL issued temporary guidance on May 8– DOL issued temporary guidance on May 8,
2013
• Technical Release 2013-12Technical Release 2013 12
• Model Exchange Notices
• Revised COBRA Election Notice

• Applicability (Employer)Applicability (Employer)
• PPACA § 1512 added § 18B of the FLSA
• Applies to employers subject to FLSAApplies to employers subject to FLSA
• Broad definition of employer
– Employs one or more employees
– Engaged in interstate commerce
– $500,000 in annual volume of business*
B d d fi iti f l• Broad definition of employee
• Most employers are subject to the
requirement
requirement

• Applicability (Employee)Applicability (Employee)
• New and existing employees
• Full time and part time employees• Full-time and part-time employees
• Plan enrollment status is immaterial
Separate notice to dependents is not• Separate notice to dependents is not
required

• TimingTiming
– New employee
• Time of hiring beginning October 1 2013• Time of hiring beginning October 1, 2013
• Within 14 days of start date
– Existing employeeExisting employee
• No later than October 1, 2013
– Provided automaticallyProvided automatically
– Free of charge

• DeliveryDelivery
– May be provided first-class mail
May be provided electronically– May be provided electronically
• DOL electronic safe harbor rules
Guidance is unclear on other methods of– Guidance is unclear on other methods of
delivery
• Part of new employee materialsPart of new employee materials
• Hand delivery

• Model NoticesModel Notices
– Model for employers who offer coverage
• All or some employees• All or some employees
– Model for employers who do not offer
coveragecoverage
– Employers can use model notices
– Employers can use modified versionEmployers can use modified version
• Provided meets the content requirements

Fees
• Patient centered outcomes research fee
Fees
Patient centered outcomes research fee
(PCOR)
Plan years ending after September 30 2012– Plan years ending after September 30, 2012
– $1 per covered life for first year
$2 per covered life for plan years ending– $2 per covered life for plan years ending
October 1, 2013
Amount adjusted by Treasury Department for– Amount adjusted by Treasury Department for
plan years ending after September 30, 2014
– Fee will phase out (sunset) in 2019
Fee will phase out (sunset) in 2019

Fees
• Patient centered outcomes research fee
Fees
Patient centered outcomes research fee
(PCOR)
– Insurer has to pay fee for insured plans
– Plan sponsor has to pay fee for self-funded plans
– Prescribed formulas for determining covered lives
Fee will be reported on IRS Form 720 annually– Fee will be reported on IRS Form 720 annually
– Fee will be paid annually (by July 31st of each year)
– Carriers will pass this fee on as a premium increasep p

Fees
• Reinsurance program fee
Fees
Reinsurance program fee
– Effective 2014-2016
– Fully insured = carrier*Fully insured carrier
– Self insured = plan (can use TPA)
– Intended to stabilize premiums in individual market
– Major medical products only
– Prescribed methods for counting covered lives
– Reported and paid to HHS on a calendar year basis
– Proposed amount of $5.85 PMPM or $70 PMPY
• HHS has proposed flat rate of $63
• HHS has proposed flat rate of $63

FeesFees
• Insurance industry feeInsurance industry fee
– Effective 2014 (permanent)
Fully insured = carrier*– Fully insured = carrier
– Does not apply to self-insured plans
Intended to pay for exchange subsidies– Intended to pay for exchange subsidies
– Estimated amount of $9 PMPM or $108
PMPYPMPY

Community RatingCommunity Rating
• Rating limitationsRating limitations
– “Small” (Non-GF) groups only
Premiums can vary only for:– Premiums can vary only for:
• Coverage category
• Rating area (established by States)Rating area (established by States)
• Age (3:1)
• Tobacco use (1.5:1)( )
– Will result in large premium increases

Plan Design ChangesPlan Design Changes
• Prohibition on pre-existing condition exclusionProhibition on pre existing condition exclusion
• Prohibition on annual limits
• Restriction on waiting periods (90 days)Restriction on waiting periods (90 days)
• Essential health benefits (GF) (no large)
• Deductible caps ($2 000 /$4 000) (GF) (no• Deductible caps ($2,000 /$4,000) (GF) (no
large)
• Out of pocket caps ($6 250 / $12 500) (GF)• Out of pocket caps ($6,250 / $12,500) (GF)

Questions & AnswersQuestions & Answers
Proprietary and Confidential. Not for Distribution 20

PPACA: Insurance

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