Published on February 24, 2014
Affordable Care Act: The Basics Erin Hart, Director of Health Benefit Services
History of Social Legislation 1913: Establishment of IRS 1935: Social Security Administration 1948: Health Insurance as an Employee Benefit 1965: Medicare & Medicaid 1973: HMO Act 1974: ERISA 1985: PPOs 1994: Managed Care Initiatives 1996: HIPAA 1996: Community Health Centers 2010: Patient Protection and Affordable Care Act
Cost Containment Health Care Professionals System based on their advice and referrals
Wellness as Cost Containment 83% • Don’t have a good diet 65% • Are over weight or obese 67% • Don’t get enough exercise to get the health benefits ~70% • Of all causes of death are lifestyle related and preventable
Entities Affected by Reform • Employers • Doctors • Individuals • Hospitals • Medicare • Insurance companies • Medicaid • Pharmaceutical companies • Uninsured • Other health care professionals • Foreign nationals • State governments • Federal government
The Good & The Bad WHAT IS GOOD? Shrink costs by 33% Universal Coverage Mandatory Coverage Move more people paying into the pool. WHAT IS BAD? Providers will come under intense pressure Cost is unknown Cost to administer will increase Mandatory coverage
Current Health Care Reform The facts: • • • • • • Majority of doctors like reform Healthcare system needed to be reformed Cost unknown Utility Access to health care system Creation of state-based exchanges for individuals and small businesses
10% excise tax on indoor tanning – 6/30/2010 0.9% Medicare tax on wages – 2013 3.8% Medicare tax on unearned income Single – over $200,000 Couples – over $250,000 Increase from 7.5% to 10% medical deductions floor – 2013 Tax Consequences
40% tax on high-cost health plans - 2018 Individuals - $10,200 Families - $27,500 Medical Device Companies – 2012 2.3% tax Pharmaceutical Companies Annual Fees Insurance Companies Annual Fees Long Term Care Tax Consequences
Health Insurance Exchanges • Aimed at the now uninsured, underinsured and those who buy insurance on their own • Understanding options • Employers • No national government plan • State run or will be run by Feds • Available to all individuals and small businesses of 100 employees or less • More organized and competitive market • Choice of Plan • Establish common rates regarding the offering • Common pricing methods • Way to achieve universal coverage • Could be lowered to 50 employees or less
Health Insurance Exchanges • Only US citizens and legal immigrants • At least 2 multi state insurers in each exchange • At least 1 non profit • 4 benefit tiers – bronze, silver, gold, platinum • Catastrophic – up to age 30 • Require guarantee issue and renewability • Rating variation on age, geography, tobacco use
Although we spend more dollars on health care than any other industrialized nation, we are not the healthiest. • Over 70% of illnesses today are attributable to preventable causes. • Obesity alone is estimated to cost an employer at least $460 per employee per year. • The workplace is the ideal setting to address an employee’s health & well-being. • Wellness programs should aim to reduce health benefits costs through SUSTAINED improvements in workforce health. • It is a long-term strategy that may not produce significant ROI in the short-term. The Business Case for “Wellness”
Up to 30% of total premium discounts can be offered as incentives for employees maintaining a health standard. This can go to 50%. Typical wellness initiatives • Blood testing • Body mass index (BMI) • Strength/flexibility • Education on Lifestyle/habits • Tobacco Cessation • Excessive Alcohol/Drugs • Weight control • Lack of Exercise Wellness and Healthy Lifestyles
What to Expect 10 or less employees If average wage $25K or less, tax credit will be 35% of premium Do not have to provide health insurance benefits
What to Expect 24 or less employees Small Business Health Care Tax Credit is available if average wage $50K or less – up to 35% of wages Do not have to provide health insurance
What to Expect 49 employees or less Do not have to provide health insurance
What to Expect 50 or more employees If health insurance is not covered, will be assessed a fee of $2K per FTE. The first 30 FTE are excluded from assessment. If health care is offered, but someone collects the premium tax credit, the employer is charged a fee of $3K/employee who accesses the credit or $2K for all employees.
What to Expect 201 and more Employees must be automatically enrolled in the plan with an opt out option Employees must be informed of the Health Insurance Exchange
Employer Mandates Free Choice Vouchers – if an employee opts out and their share of the premium is greater than 8%, but less than 9% and they buy through a Health Insurance Exchange Inform employees of Health Insurance Exchange Inform employees if they are eligible for premium assistance tax credits and cost-sharing reductions. Employer pays less than 60% of the cost of coverage. A minimum package of benefits to be designed and defined by Feds. Only four types of plans to be allowed. The Health Care Exchange will only offer those qualified health benefit plans.
Employers • Value of health benefit reportable on W-2’s – 2011 • Elimination of Part D prescription drug deduction – 2013 • Health Savings Accounts – double to 20% penalty for non qualified distributions – 2011 • Unaffordable Coverage – if an employee opts out of plan because premium is greater than 9.5% of family income the employer pays a $3K penalty for each FTE who receives a government subsidy and buys through an exchange
• Actuarial values – at least 60% of base plan • Cadillac plans – in 2018 a 40% excise tax on insurance companies and employers • FSA limits - $2.5K limit with no OTC, w/out a prescription • HSA – 20% penalty on non-medical distributions • W-2 – include value of employer health benefits • Long term care enrollment – optional program • Nursing mothers – must allow time, space and privacy to mothers who are expressing milk. Employers
Small Business Tax Credit – Effective 1/1/2010 • Receive both State and Federal Tax Credits • Non Profits – 25% credit – up to 35% in 2014 • Dental & Vision Coverage eligible for credit • Credit – 35% of premiums – up to 50% in 2014 Example ABC, Inc. 10 FTE w/average wage: $24K ABC’s contribution to health insurance: $100K ($10K/FTE) State Small Business Health Care Tax Credit: $40K Federal Tax Credit: $35K Employers
Strategic Planning Considerations • Senior management should make final decisions • Determine total annual budget for health plan • CFO – involved in analysis & plan selection • 3 Brokers/agents competing for your business • Assess employee’s health care needs • Review claims data annually • Wellness – assessment & incentives
Strategic Planning Considerations Benefit Structure • Determine if existing benefit plan is aligned with prevention and wellness goals & objectives • Identify screens & tests not covered • Evaluate the potential costs and benefits of preventive services Analyze employee attitudes • Interest in participating in specific programs • Barriers to participation in prevention programs Perform a Health Risk Assessment • Health risks and habits of employees and other beneficiaries • Readiness to change unhealthy lifestyle habits
Strategic Planning Considerations Medical claims analysis • Identify “top ten” costliest conditions • Are conditions preventable or related to lifestyle choices? • Understand services being under- and over-used by workforce population Health plan • Understand existing health plans’ current and potential capabilities • Ability to incorporate coverage changes • Ability to track preventive service utilization by employer or by plan • Efforts to educate primary care physicians about appropriate preventive care benefit administration • Ability to support efforts to educate employees about preventive services • Identify possible gaps between prevention program goals and the capabilities of health plans • HIPAA Wellness Incentives
Thank you! Erin Hart American HealthCare Group Phone: (412)563-7807 Cell: (412)657-3028 ehart@American-HealthCare.net
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