HomeMy WebLinkAbout11/05/2013 12 2012 Health Care Plan ReportBUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
For Meeting of: 11/5/2013
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ITEM TITLE:
SUBMITTED BY:
SUMMARY EXPLANATION:
2012 Health Care Plan Report
Cheryl Ann Mattia, Human Resources Manager
Randy Tabert, Chair of Employee Welfare Benefit Program
Board
Attached is the 2012 Year -End Report for the City of Yakima's Self -Insured Health Care Plan. In
reviewing this report, it is important to note that Employee Benefit Management Services, Inc.
utilizes a paid claims system of reporting expenditures. This differs from Generally Accepted
Accounting Principles (GAAP), used by the City of Yakima for its records. The City recognizes
expenditures on a claims incurred basis. Further, the report does not include any revenues or
expenditures for City personnel and administrative costs, which are reflected in the City's Health
Benefit Reserve Fund.
Since the last Report to Council in 2012, the City's Health Plan (the Plan) has become
significantly healthier:
We finished 2012 with a 1% decline in per capita Plan costs. Through the first 9 months
of 2013, we are down 5% compared to last year.
City Finance reports a year to date increase in Plan reserves of $1,040,000, putting the
fund reserves at a record $3.5 million or 35% of current plan expenditures.
Despite a million dollar stop -loss reimbursement paid to the City in 2012, the renewal
negotiations resulted in a favorable 7% premium increase on January 1, 2013.
The City -sponsored wellness clinic, miCare, opened in February 2013 and almost
immediately began generating positive employee feedback and financial savings.
We have no stop -loss claims to date in 2013 (claims over $250,000) and preliminary stop -loss
renewal numbers show a worst case scenario of fixing our 2014 risk at prior year levels.
Resolution: Ordinance:
Other (Specify):
Contract: Contract Term:
Start Date: End Date:
Item Budgeted: Amount:
Funding Source/Fiscal
Impact:
Strategic Priority:
Insurance Required? No
Mail to:
Phone:
APPROVED FOR
SUBMITTAL:
RECOMMENDATION:
Accept report as submitted
ATTACHMENTS:
Description
❑ report
City Manager
Upload Date
10/22/2013
Type
Cover Memo
111
October 15, 2013
City Council Members
CITY OF YAKIMA
129 North 2nd Street
Yakima, WA 98901
Re: Year 2012 Health Care Plan Report
2013 Renewal and Current Status of Plan
Dear Council Members:
Attached are the FinancialSummaries and related reports of the City's Employee Health
Plan (the Plan) for calendar year 2012 and mid -year 2013. The Plan is self-funded (it is
not health insurance) and utilizes a third party administrator and stop -loss insurance to
provide service to the Plan's participants and risk management to the City.. The Plan is
in compliance with current law and regulations and continues to be well monitored and
managed by a cooperative relationship between the City Manager's Office, the Human
Resource and Finance Divisions and a voluntary Board represent ng all employees and
bargaining units.
Executive Summary
Since the last Report to Council in 2012, the City's Health Plan (the Plan) has become
significantly healthier:
• We finished 2012 with a 1% decline in per capita Plan costs Through the first
9 months of 2013, we are down 5% compared to last year.
• City Finance reports a year to date increase in Plan reserves of $1,040,000,
putting the fund at a record $3.5 million.
• Despite a million dollar stop -loss reimbursement paid to the City in 2012, the
renewal negotiations resulted in a favorable 7% premium increase on January 1,
2013.
• A City -sponsored wellness clinic, called miCare, opened in February 2013 and
almost immediately began generating positive employee feedback, financial
results and press.
At the risk of jinxing our fortunes, reports now indicate we have no stop -loss claims to
date in 2013 (claims over $250,000) and preliminary stop -loss renewalnumbers show a
worst case scenario of fixing our 2014 risk at prior year levels.
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Healthcare Plan Report
October 15, 2013
Page 2
Federal health care reform, also referred to as the Affordable Care Act (ACA) or
Obamacare, is on its way to full implementation by January 1, 2014. There are only a
few requirements of the ACA that directly impact the City's Health Plan this and next
year, most of which have already been amended into the Health Plan documents,
vendor contracts and City policies.
After the $1,000,000 stop loss reimbursement last year, we spent $9.8 million on this
Plan.. I am projected this year to finish around $9.1 million with the possibility of being
under $9 million in totalPlan cost. This is a level not seen since 2008.
Please note, however, that the single greatest cause of the reduction of Plan costs is
the change made two years ago that moved retired LEOFF 1 participants over the age
of 65 onto Medicare and Medicare supplement insurance. The net cost reductions of
this change are now fully absorbed into the Plan reports and cannot be duplicated again
going forward. Combined with our new miCare clinic and the good fortune of no stop-
loss claims, we have these extraordinary results to celebrate.
As of now, the Plan covers 754 current and retired employees. Of the retirees, 34 are
LEOFF 1 and 37 are non-LEOFF 1 retirees; many of these non-LEOFF 1 retirees may
voluntarily move off the Plan in 2014 as new options for them become available through
the public exchange. Due to the LEOFF 1 carve -out in July 2011, we now have a 3 to 1
ratio of over age 60 employees (139) to under age 30 (46) a significantly more
favorable age mix than the 5 to 1 ratio prior to 2011 -
This news could not be more positive. I feelobligated to add a cautionary statement so
to not forget that the cost of health care is still projected to increase for the
foreseeable future.. National health spending has increased at historically low rates
following the deep recession that supposedly ended in 2009. Whether this slowdown
stems from broader economic factors, structuralchanges in the health system, or some
combination of the two, it is a significant unknown factor in projecting future costs.
With major elements of the Affordable Care Act taking effect in just a few months, we
must remain diligent with our Plan management and protect the newly replenished
reserve account.
miCare and Incentivized Wellness
Key to the City's Health Plan success will be increasing utilization of the miCare Health
& Wellness clinic. Now that the clinic has been open and operational for 9 months, we
are only just beginning to reach optimalcapacity for 26 hours per week. The Benefits
Board, HR Manager and City Manager are designing and implementing new incentives to
bring more employees and covered dependents into the clinic. This clinic model works
as advertised and the build out and startup costs have already been recaptured.. Going
forward, limited benefit enhancements (like modest increases to dental and vision
coverage) and defined pre tax contributions will be used to increase miCare utilization
1
Healthcare Plan Report
October 15, 2013
Page 3
and slowly change the culture of the City to align benefit strategies with a healthier
workforce. This is the single most exciting element of this Plan and may very well be a
cornerstone of attracting and retaining workforce talent in the future.
What to Expect in 2014
Here is my crystal ball for next year:
• The 2014 renewal will be presented to the Benefits Board in November and all
indications are it will be favorable and an easy recommendation to the City
Manager. It may involve a change in stop -loss insurers, but no other material
changes are expected.
• Properly incentivizing wellness will be the key to future Plan success.
• National trends in hospitalconsolidation and narrow provider networks will find
their way into Yakima and force changes to the Plan either in 2014 or early 2015.
• Medicare plus (or relative value) arrangements will slowly replace discounted
network pricing (PPO networks) for hospitalbased claims.. These will be discussed
in 2014 by the Benefits Board but not likely to be implemented next year.
• The incidence of large stop -loss claims will likely return to the norm and,
therefore, I am again projecting a 5% Plan cost increase in 2014.. It would be
unwise to expect a repeat of the decreases in 2013 and, yes, I hope to be proven
wrong.
• Employees will search for less expensive coverage from the Washington
Healthplanfinder (Public Exchange) for their dependents and find they are
ineligible for federalpremium subsidies. Your Human Resources Division will hear
about it from those whose family income qualify them for these subsidies.
• As a result of the Washington Healthplanfinder options, the City may be asked
to introduce options that do not disqualify certain dependents from receiving
federal premium subsidies for Public Exchange -based policies. Strategies to
address these options are being discussed by your Human Resources Division and
the Benefits Board.
• The Benefits Board will be presented with many new alternatives in 2014 - from
Accountable Care Organizations (ACOs) to Private Exchange options. Few, if any,
will gain traction for self-funded employers with well reserved health plans,
though these optii ons must be addressed..
• Disruptive innovations will flood into the local healthcare delivery system
beginning next year. From new retail health clinics and telemedicine solutions
to simple home health monitoring systems, many exciting and challenging
solutions will have to be explored.
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Healthcare Plan Report
October 15, 2013
Page 4
Conclusion
The slow economic recovery has brought extended financial pressure on the City of
Yakima, its employees and local taxpayers. The Health Plan undoubtedly faces
additionalcost pressures and legislative uncertainty.. Many employers are taking drastic
measures to enable them to offer affordable health coverage to their employees while
a few others may drop their health plans entirely and face penalties in 2015. The City
is in a much better Health Plan position than at any time in the last several years, and
this affords us the advantage to see how some of the new strategies and innovations
play out in the marketplace first.
take great pride in being the advisor to this Plan., and I II ook forward to any questions
or instructions you may have.
Sincerely,
Dan sher, CPA, CGMA
Plap Consultant
Attachments
2013 EBMS Executive/FinancialSummary (Jan -Sept.)
Bar Chart
2012 EBMS Executive/Fii nancialSummary
Health Care Reform: Complance Timeline
IF' IR II 11\11G
City of Yakima
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Financial Summary 1/1/2013- 12/31/2013
Admin MiCare Vision Dental Prescription Medical Stop Loss Gross Aggregate Medical Dental AV..,
Fees Fees Pd Claims Pd Claims Pd Claims Pd Claims Reimb. Total Cost Deduc t EE Count EE Count Per Emp
/ I. 1
.445,003 $27,067 $66,156 $10,098 $63,088
$45,252 $27,101 $39,569 $6,537 $59,153
'45,534 $27,870 $44 253 $7,642 $54,111
A5,471 $27,600 $44,171 $8,560 $64,357
$45,375 $27,218 $42,372 $8,855 $51.461
$44,942 $26,999 $35,934 $7,564 $57,365
$45,006 $27,258 $39,728 $7,698 $66, 315
'44,781 $26,915 $10,845 $49,041
$125.423 $379,892 $716,726 $1,028.452 752 715 $869.46
$102,574 $330,828 $611,015 $1,039,100 760 720 $756.23
$148,687 $673,281 $1,001,378 $1,036,803 758 722 $1,266.26
$114,814 $382,372 $687,345 $1,033.358 755 725 $855.41
$140,370 $399,755 $715.406 $1,031.423 754 719 $895.94
$61,611 $556,159 $790,574 $1,024,670 749 715 $1,011.17
$212,969 $341,349 $740,322 $1.019,177 745 711 $944,65
$101.423 $433,255 $666,260 $1Q23,883 749 708 $893.32
#DIV/0!
#DIV/0!
#DIV/0!
Total $406,406 $245,227 $.312,183 $78,096 $539,921 $1,122,695 $4,012,908
$6,717,436 $9,266,356 6,775 6,448 $1,008.67
Current Year Avg PEPM:
Prior Year Avg PEPM:
$59.20 $11.53 $83.73 $165.71 $592.31 Net Total: $6,717,436 , Average Net Cost Per Employee: $1,008.67
$12.35 $75.49 $145.19 $969.86 Prior Year Average Net Cost Per Employee: $1,055.69
Percent changed between current and prior year: -5%
Confidential 10/14/2013
Medical Pd Claims
$4,012,908 --
1
60%
Stop Loss Reimb.
$0
o%
Excess Premium
$406,406
6%
Admin Fees
$245,227
4%
MiCare Fees
$312,183
4%
Vision Pd Claims
$78,096
1%
Dental Pd Claims
$539,921
8%
Prescription Pd Claims
$1,122,695
17%
EMSPRING
Milimpiamasamel
CITY OF YAKIMA
Health Care Plan
Total Average Monthly Cost Per Employee
2013 - 9 Months Data
2012
2011
2010
009
$991.50
$1,054.81
$1,067.50
•
$0 $200 $400 $600
$943.26
$868.00
$839.50
$800
$1,000
$1,200
EMSPRING
City of Yakima
Financial Summary 1/1/2012-12/31/2012
cess Amin islon rental- 'rescnptron ,edica top Loss ross ggrega e 'e•ica ien a ve os..
mium Fees Pd. Claims Pd Claims Pd Claims Pd Claims Reimb. Total Cost Deduct EE Count EE Count Per Em
2588 $60,649
$11.273 $59,345
$12.689 $67,626
$10,888 $60,345
$6,222 $66,885
$7.214 $52,258
$7,890 $50.705
$7.714 $62.323
$6.963 $41,883
$6,376 $54,272
$8,530 $67,236
$7.901 $52,616
$115,248 $696,142
$12.35 $75.49
$11.62 $76.54
78,465
$38.384
$38.554
$37,194
$37,623
$49,510
$39, 508
$39.400
$37.972
$38, 390
$38,551
$39,319
Total $47:1,868
$27,151
$27.180
$27.248
$26,532
$26.727
$26,315
$26.611
$28.609
$25.389
$25.586
$25,951
$26.392
$319,692
Current Year Avg PEPM:
Prior Year Avg PEPM:
$62,421
$179,172
$123,967
$107.203
$124.385
$106,804
$97,938
$116,364
$111.982
$98,556
$111.404
$114,675
$1.354,871
$145.19
$176.18
$801,767
$573.473
$506.602
$748,000
$838,336
$830,045
$654,320
$593.303
$843,281
$578.737
$472.121
$527.675
$7,967,659
$969.86
$719.78
$0
$0
$0
($92.906)
($85.448)
($64.703)
($485,596)
($141.378)
($131.094)
($44.781)
f$15,973) $723.792
($21.158) $768,578
$1,012,041
$888,827
$776,686
$990,162
$1.100.178
$1.072.145
$876,971
$847,713
$1,067.469
$801,917
$1,030,405
$1.035.204
$1.019,987
$1.01 1.315
$1.011.042
$1.000,345
$1 .001272
$992,873
$990.473
$983,274
$983.456
$976,274
796
800
788
781
781
778
779
772
770
764
764
759
828
828
819
816
813
735
732
732
732
732
734
721
$1,268.46
$1.108.53
$982.39
$1,383.4`
$1.514.72
$1.465.17
$1.753.30
$1.285.62
$1,559.40
$1.111.35
$971.88
$1.044.15
($1.083,037) $10,926.479 $12.035,922 9,332 9.222 $1,287.81
Net Total: $9,843,442 Average Net Cost Per Employee: $1,055.69
Prior Year Average Net Cost Per Employee: $1,067 50
Percent changed between current and prior year: -1%
Medical Pd Claims
$7,967,659
66%
Confidential 10/14/2013
Stop Loss Reinb.
($1,083,037)
-9%
Excess Premium
$472,868
4%
Admin Fees
$319,692
3%
Vision Pd CI a i ms
$115,248
1%
Dental Pd Claims
$696,142
6%
Prescription Pd Claims
$1,354,871
11%
EMSPRING
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On March 23, 2010. President Obama signed the health care reform bill, or Affordable Care Ac(ACA). into Ilaww. ACA
makes sweeping changes to the U.S. health care ayatmm.ACA'oheaUh care reforms, which are primarily focused on
reducing the uninsured population and decreasing health care costs, wlU be implemented over the next several years.
This Legislative Brief provides effective dates for key ACA reforms that affect employers and individuals. Please read
below for more information.
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March 30, 2010
Plan years beginning on
or after Sept. 23, 2010
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Small Business Health Care Tax Credit
1331
Eligible small employers can receive a credit for contributions to purchase health
insurance for employees. The credit is up to 35 percent of the employer's contribution
to provide health insurance for employees. There is also up to a 25 percent cedlt for
small tax-exempt organizations When the Exchanges are operational,the tax credits
will increase, up to 50 percent of premiums.
Tax-free Coverage to Children Under Age 27
Employer-provided accident or health plan coverage for an e|igib|e adult chi|d can
generally be excluded from taxable income.
Prohibition on Lifetime and Annual Dollar Limits
Group health plans and health insurance issuers offering group or individual health
insurance coverage may not impose lifetime limits or unreasonable annual limits on the
dollar value of essential health benefits. This requirement applies to all p|ans, although
plans were allowed to request a waver of the annual limit requirenmemtthrnugh HHS
untilSept. 22, 2011. All annual limits wlIlIl also be prohibited beginning ln 2014.
ppeals Process and External Review Requirements
Enhanced internal claims and appeals requirements and external review procedures
apply for group health plans and health insurance ioouero, and insurers offering
individual coverage (except for grandfathered health plans).
Patient Protections
ACA imposes three new requirements on group health plans and group or individual
health nsurance coverage that are referred to as patent protections These patient
protections relate to the choice of a health care professona, access to obstetrical and
gynecological care, and coverage .for emergency services.
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or after Sept. 23, 2010
(continued)
Dependent Coverage for Children Under Age 26
!fa group health plan or insurer provides dependent coverage of children, the plan
must make that coverage available until a child turns age 26. A United exception
applies for grandfathered health plans prior to Jan. 1,2014.
Eliminating Pre-existing Condition Exclusions for Children
Group health plans and health insurance issuers may not impose pre-existing condition
exclusions on coverage for children under age 19. This provision applies to all
employer plans and new plans in the individual market.
Coverage of Preventive Care Services
Group health plans and health insurance issuers offering group or individual health
insurance coverage must provide coverage for certain preventive care services without
cost-sharing (for example, deductibies, copayments or coinsurance). Grandfathered
plans are exempt from this requirement.
Rescissions Prohibition
ACA prohibits rescissions,or retroactive cancellations, ofcoverage, except in cases of
fraud or intentional misrepresentation. Also, plans and issuers must provide at least 30
days' advance notice to the enrollee before coverage may be rescinded. This provision
applies to all grandfathered and non -grandfathered plans.
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Increased Tax on Withdrawals from HSAs and Archer MSAs
ACA increased the additional tax on HSA withdrawals prior to age 65 that are not used
for qualified medical expenses from 10 to 20 percent. The additional tax for Archer
MSA withdrawals not used for qualified medical expenses also increased from 15 to 20
percent.
Beginning on Jan. 1,
2011
Medical Loss Ratio (MLR) Requirements
Health insurance issuers offering coverage in the group or individual markets (including
grandfathered health plans) must comply with medical loss ratio standards. Issuers
must annually report on the share of premium dollars spent on health care and provide
consumer rebates for excessive medical loss ratios.
Simple Cafeteria Plans
ACA created a simple cafeteria plan to provide a vehicle through which small
businesses can provide tax-free benefits to their employees. This plan is designed to
ease the small emp|oye6nadministogive burden of sponsoring a cafeteria plan.The
provision also exempts employers who make contributions for employees under a
simple cafeteria plan from certain nondiscrimination requirements applicable to highly
compensated and key employees.
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after Jan. 1,2011
Over -the -Counter (OTC) Drug Restrictions
ACA changed the definition of "qualified medical expenses" for health savings accounts
(HSAs), health flexible spending accounts (FSAs) and health reimbursement
arrangements (HRAs) to the definition used for the itemized tax deduction. This means
that expenses for over-the-counter (OTC) medicines and drugs may not be reimbursed
by these plans unless they are accompanied by a prescription. There is an exception
for insulin. AIso, OTC medical supplies and devices may continue to be reimbursed
without a prescription.
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2012Taxable Year
Reporting Health Coverage Costs on Form W-2
ACA requires employers to disclose the value of the health coverage provided by the
employer to each employee on the employee's annual Form W-2.This requirement was
effective, but optional,for the 2011 tax year and is mandatory for later years for most
employers. This requirement is optional for small employers (those filing fewer than
250 Forms W-2) at least for the 2012 tax year and will remain optional until further
guidance is issued. Employers that file at least 250 Forms W-2 must comply with this
reporting requirement for 2012 (for Forms W-2 that must be issued by the end of
January 2013) and future years.
Aug. 1'2012
Medical Loss Ratio (MLR) Rebates
Sponsors of fully insured plans will receive rebates by Aug 1, 2012, if they qualify fora
rebate from their health insurance issuers due to the MLR rules.
Plan years beginning on
or after Aug. 1, 2012
Coverage of Additional Preventive Care Services for Women
Group health plans and health insurance issuers offering group or individual health
insurance coverage must provide coverage for specific services for mmmon, including
contraceptives and contraceptive counseling, without cost-sharing Grandfathered
plans are exempt from this requirement. Exceptions to the contraceptive coverage
requirement apply to religious employers.
Earlier of the plan's first
open enrollment period
or first plan year
beginning on or after
Sept. 23, 2012
Uniform Summary of Benefits and Coverage
All health plans must provide a uniform summary of the plan's benefits and coverage to
participants. The summary must be written in easily understood language and is limited
to four double -sided pagesAny mid -year changes to the information contained in the
summary must be provided to participants 60 days in advance.
Plan years ending on or
after Oct. 1, 2012
Patient -centered Outcomes Research Institute (PCORI) Fees
For plan years ending on and after Oct. 1, 2012, and before Oct. 1, 2010.ne|Annured
plans and issuers must pay fees to fund health care research. The initial fee is $1 per
covered life, increasing to $2 per covered life for plan years ending on or after Oct. 1,
2013 (and adjusted annually for later plan years). The first possible payments are due
on July 31, 2013.
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Additional Medicare Tax for High -wage Workers
ACA increases the Medicare hospital insurance tax rate by OQ percentage points for
high-income individuals. Employers must withhold the additional taxes on wages paid
in excess of $200,000
Plan years beginning
after Dec. 31, 2012
Health Flexible SavingsAccount (FSA) Contribution Limits
ACA Iimits the amount of salary reduction contributions to health FSAs to $2,500 per
year, indexed by CP[for subsequent years
Beginning in 2013
Administrative Simplification
Health plans must adopt and implement uniform standards and operating rules for the
electronic exchange of health information to reduce paperwork and administrative
burdens and costsFor example, effective Jan 1, 2013, health plans must comply with
HMS's operating rules for electronic health care transactions regarding eligibility for
health plan coverage and health care claim status.
July 31, 2013
Patient -centered Outcomes Research Institute (PCORI) Fee Payments
The first possible PCORIfeo payments are due
Oct. 1, 2013
Employee Notice of Exchanges
Employers must provide a notice to employees regarding the availability of the health
care reform insurance exchangesACA required employers to provide the Exchange
notice by March 1, 2013, but the DOL delayed this deadline. Employers must provide
the notice to each current employee by Oct. 1, 2013. For new employees, employers
must provide the notice at the time of hiring beginning Oct. 1.2O13 For 2014, the
DOL will allow the notice to be provided within 14 days of an employee's start dato
Dec. 31, 2013
HIP Certification
Employers with group health plans must certify that their plans comply with certain
HIPAA rules on electronic transactions.
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Health Insurance Provider Fee
The health care reform Iaw imposes an annual, non-deductible fee on the health
insurance sector, allocated across the industry according to market share. The fee does
not apply to companies whose net premiums written are $25 million or less.
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Employer Coverage Requirements
See 2015 section below. The employer mandate penalties and related reporting
requirements have been delayed for one year, until 2015.
Jan. 1,2014
Individual Coverage Mandates
ACA requires most individuals to obtain acceptable health insurance coverage or pay a
penalty. Individuals may be eligible for an exemption from the penalty if they cannot
obtain affordable coverage
Individual Health Insurance Subsidies
ACA makes federal subsidies available through the Exohangey, in the form of premium
tax credits and cost-sharing reductions, for low-income individuals who are not eligible
for or offered other acceptable coverage
Health Insurance Exchanges
ACA calls for the creation of state -based competitive marketplaces, known as
Affordable Health Insurance Exchanges (Exchanges), for individuals and small
businesses to purchase private health insurance.
Reinsurance Payments
Health insurance issuers and third -party administrators (TPAs) will be required to make
contributions based on a federal contribution rate established by HHS States may
collect additional contributions on top of the federal contribution rate
Plan years beginning on
orafter Jan. 1,2014
Employer Wellness Programs
Under health care reform, the potential incentive for employer wellness programs
increases to 30 percent of the premium for employee participation in the program or
meeting certain health standards. Employers must offer an alternative standard for
those employees whom it is unreasonably difficult or inadvisable to meet the standard.
Following a governmental study on wellness programs,the incentive may be increased
to as much as 50 percent.
Annual Limits Prohibited
Plans and issuers may not impose annual limits on the coverage of essential health
benefits.
Guaranteed Issue and Renewability
Health insurance issuers offering health insurance coverage in the individual orgroup
market in a state must accept every employer and individual in the state that applies
for coverage and must renew or continue to enforce the coverage at the option of the
plan sponsor or the individual. Grandfathered plans are exempt from this requirement.
Pre-existing Condition Prohibition
Group health plans and health insurance issuers may not impose pre-existing condition
exclusions on coverage for anyone.
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Nondiscrimination Based on Health Status
Group health plans and health insurance issuers offering group or individual health
insurance coverage (except grandfathered plans) may not establish rules for eligibility
or continued eligibility based on health status -related factors.
Nondiscrimination in Health Care
Group health plans and health insurance issuers offering group or individual insurance
coverage may not discriminate against any provider operating within their scope of
practice. However, this provision does not require a plan to contract with any willing
provider or prevent tiered networks It also does not apply to grandfathered plans.
Plans and issuers also may not discriminate against individuals based on whetherthey
receive subsidies or cooperate in a Fair Labor Standards Act investigation.
Insurance Premium Restrictions
Health insurance issuers in the individual and small group markets will not be permitted
to charge higher rates due to health status, gender or other factors. Premiums will be
able to vary based only on age, geography, family size and tobacco use. The rating
limitations will not apply to health insurance issuers that offer coverage in the large
group market unless the state elects to offer large group coverage through the state
exchange. Also, these restrictions do not apply to grandfathered coverage.
Excessive Waiting Periods Prohibited
Group health plans and health insurance issuers offering group or individual health
insurance coverage will not be able to require a waiting period of more than 90 days.
Coverage for Clinical Trial Participants
Non -grandfathered group health plans and insurance policies will not be able to
terminate coverage because an individual chooses to participate in a clinical trial for
cancer or other life-threatening diseases or deny coverage for routine care that they
would otherwise provide just because an individual is enrolled in such a clinical trial.
Comprehensive Benefits Coverage
Health insurance issuers that offer health insurance coverage in the individual or small
group market will be required to provide the essential benefits package required of
plans sold in the health insurance exchanges This requirement does not apply to
grandfathered plans
Limits on Cost-sharing
Non -grandfathered group health plans will be subjecto limits on cost-sharing or out-
of-pocket costs.
ut-of-pooketcnyts. ACA's annual deductible limit applies only to insured health plans
offered in the small group market, whereas ACAs out-of-pocketmaximum limit applies
to all non -grandfathered health plans.
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Reporting of Health Insurance Coverage
See 2015 section below. The employer mandate penalties and related reporting
requirements have been delayed for one year, until 2015.
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Small Business Health Care Tax Credit
The second phase of the small business tax credit for qualified small employers be
implemented in 2014� These employers can receive a credit for conthbutons to
purchase health insurance for employees, up to 50 percent of premiums.
Automatic Enrollment
ACA requires ernployers With more than 200 full-time employees that offer health
coverage to autonmatIoaUlyennmUU new employees (and re -enroll current employees in
one of the employers health plans,subject to any permissible waiting period.
Employers will not be requIred to comp|y With the automatic enrollment requIrenmente
until final re0uUstIoneare issued and afrna| effective date Is specified.
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Employer Coverage Requirements
Employers With 50 or more employees Will be subject to penaUes if hey do not
provide health coverage to fuUU-tInme employees, or if the coverage they pnm*Ideis not
affordable or does not provide minimum vallue� A full-time employee is an employee
who was employed on average at least 30 hours of service per week.. The employer
mandate penalties and related reporting requirements have been delayed for one
year, until 2015. Therefore,these payments Will not app|y for 2014 No other
provisions of the ACA are affected by the delay.
-----------------------------------------------------------------------------------------------------
Reporting of Health Insurance Coverage
ACA requires any person who pro*Idee"minInmunn essentia| coverage" to an ImdIvIduaU
during aca|endar year to report mertaImhealth insurance coverage mifnrmafinmto the
IRS. The ifirst mifnrmmafinm returns Will be filled in 2016.
High Cost Plan Excise Tax
A 40 percent excise tax (a|so known as a^CadiUac tax) is to be nmpoeed on the excess
benefit of high-cost employer-sponsored health insurance. The annual UInmIt for
purposes of caWafing the excess benefits is $1 ,2 for individuals and $27,5*for
other than individual coverage. ReoponoIb#ItVfor the tax is on the ^^oo*enageprnvIder,~
which can be the insurer, the employer or a third -party adnmImIptnatnr.
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IPIease contact EmSphng with any queotIonoabout how you can prepare for any of the heakhcae reform
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