Health Care Reform: 2012 by aaorose


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									Health Care Reform
Supreme Court Ruling and What’s Next.

                      CPEhr Webinar

                          July 19, 2012

Health Care Reform

Peter Duncan CEBS, CLU, ChFC
Sidles Duncan & Associates

Health Care Reform
June 28, 2012: U.S. Supreme Court upholds
Patient Protection and Affordable Care Act
         Court found Congress did not have the power to
          pass the law under Commerce Clause
     Led to some initial confusion as several news organizations
      mis-reported outcome
         Court noted that Congress lacked the authority to
          regulate “inactivity” (for example, the failure to buy
          a product or service)
     Not the determinative finding
         Court upholds citing Congressional taxing

Health Care Reform
  Patient Protection and Affordable Care Act
 Requires US citizens and legal residents to
  have health insurance,
 Individual and Employer Penalties

 Creates State Based Health Exchanges,

 Premium credits for low income individuals

Health Care Reform
        What has happened to date
 No lifetime or annual limits,
 100% coverage for preventative coverage,
 Dependent coverage for adult children to age 26,
 No pre-existing condition exclusions for children,
 No prior authorization or higher cost sharing for
  emergency services out of network,
 Nondiscrimination in favor of highly compensated
  employees (delayed)

Health Care Reform
          What has happened to date
 No pre-tax reimbursements from “health accounts” for
  non-prescribed, over the counter medications,
 20% tax on nonqualified HSA withdrawals,
 Reporting the value of employer sponsored coverage on
  w-2’s (delayed 2012)
 Automatic enrollment in Long Term Care program,
  employer may opt out (program cancelled),

Health Care Reform

           What has happened to date
 Uniform explanation of coverage (September 23, 2012),
 60 day notice for material modifications, if not provided in
  uniform explanation of coverage (pending)
 Women's health coverage expansions under preventive
  on or after August 1, 2012.
 MLR Rebates payable.

Health Care Reform

A Year by Year Look at Health Care Reform
 FSA contributions limited to $2,500,
 New federal employer tax, $1.00 / $2.00 per covered
 Medicare payroll tax increase from 1.45% to 2.35%,
  employee only,
 Employer notice to employees of exchanges, premium
  subsides, and free choice vouchers by March 2013.

Health Care Reform
         Looking Ahead at Health Care Reform
   Individual mandate and penalties for not purchasing coverage,
   Guaranteed issue,
   Standard benefit plans, (bronze, silver, gold, platinum),
   State health exchanges effective,
   Waiting period not more than 90 days,
   Employer penalties for not offering coverage,
   Health insurance company fees: $8 billion 2014, $14.3 billion 2018,
    2019 prior year amount increased by premium growth rate.
   Cadillac Tax. 40% tax on plans value in excess of $10,200 single,
    $27,500 family.

Health Care Reform
   Individual mandate starts in 2014
   Requires individuals hold health coverage or pay a penalty

   Fines (assessed as “taxes”) for failure to purchase
   $ 95 or 1.0% of adjusted income in 2014

   $325 or 2.0% of adjusted income in 2015

   $695 or 2.5% of adjusted income in 2016

     Individual subject to penalty unless shows evidence of
      coverage for at least nine (9) months of the year

Health Care Reform
 Employers with over 50 employees must offer coverage to full
 time workers and their family members.

      If not offered, employer penalty $2,000 per FTE,
       excluding first 30 EE’s

      If coverage is not “affordable”, penalty lesser of $3,000
       for each employee receiving a tax credit or $2,000 for
       each FTE.
       (Affordable means the plan has an actuarial value at
       least 60% and the employee cost is less than 9.5% of
       household income)

Health Care Reform
 Employers must determine if they have over 50 full-time
 employees or full-time equivalents
  Measured across control group

  Part-time equivalents

  New federal definition that sets that standard at 30 or more hours
   of actual work on average per week in a month
  Actual year of measurement is 2013

  Seasonal less than 120 days during the year excluded.

 FTE Equivalent Example:
 35 FTE, (30+ hours)
 20 PTE (24 hours, 96 hours month)
 These 20 PTE are the equivalent of 16 FTE
 20 x 96 / 120= 16
 FTE 35 + 16= 51

Health Care Reform

 Employers with fewer than 50 full-time worker
 excused from federal mandate
  Smaller employers may be “incented” to
   voluntarily provide health coverage by federal tax
  Employers may still be subject to state and local

Health Care Reform
All Employers: Vouchers

Employers that offer coverage are required to provide a free choice voucher to
employees with incomes less than 400% FPL, whose share of premium
exceeds 8% but less than 9.8% of their income and who chose to enroll in a
plan in the Exchange.

Voucher equal to what employer would have paid to provide coverage under
employer’s plan. Employer providing free choice vouchers is not subject to

Employers with 200 or more employees:

Required to automatically enroll employees into health plans offered by
employer. Employee may opt out.

Health Care Reform
 PPACA may face further legal challenges

     Catholic organizations recently filed lawsuits in a number of states
     challenging the PPACA’s contraception coverage requirement

     State and local governments may challenge the federal government’s
     power to impose penalties on non-federal entities as employers

     Plan sponsors are expected to challenge whether penalties issued in
     states that failed to establish Exchanges are valid under PPACA’s
     statutory language

     November elections will factor strongly
 President Obama would certainly veto any action against the law
 Governor Romney has actively campaigned to “repeal and replace”

Health Care Reform
     Some analysts anticipate “system gaming” as the penalties for not
     purchasing health insurance are artificially low

 Unlikely to deter healthier individuals from staying uninsured until they
 require coverage

 Individual mandate annually satisfied with only nine (9) months
 demonstrable coverage

 Exchanges will feature lengthy grace periods before premium payment

     Significant remainder of current uninsured population still coverage

 Unreimbursed medical costs represents on-going system drain

 Additional pressure on health care costs
Health Care Reform
    Next Steps:

     Continue implementation as required by law,

     Follow guidelines for compliance as they are issued,

     Provide employers with required employee notices,

     Provide employers with guidance on the impact of penalties, if

     Provide employers with administrative support to meet laws

     Communicate new developments and changes to the law.

Thanks for attending.


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