Published on February 25, 2014
Employers and the ACA John J. Sarno, Esq. Employers Association of New Jersey www.eanj.org 1
Points to Cover: Personal Mandate Insurance Reforms Health Exchange “Play or Pay” Market Dynamics Employer Options 2
Patient Protection and Affordable Care Act March 23, 2010 A New Era for America 3
U.S. Supreme court heard oral argument on the constitutionality of the Affordable Care Act on March 26-28, 2012 4
Minimum Essential Coverage Requirement (the Personal Mandate 2014) A federal requirement that individuals purchase health care insurance or pay penalty up to 2.5% of income is unprecedented. 5
All five congressional committees reported out a bill containing the Individual Mandate 6
6 lobbyists for every member of Congress Insurance Industry - $100 million Pharma - $110 million Providers - $80 million Hospitals - $90 million Medical Device - $30 million 7
The pharmaceutical industry alone spent over $600,000 per day in lobbying (2.3 lobbyists per member of Congress) 8
The Health Insurance Exchange Uninsured individuals not eligible for Medicare or Medicaid will be permitted to purchase insurance through state Exchanges (purchasing pools). Individuals will be eligible for subsidies. Employers with fewer than 100 employees will be permitted to enroll. Employer eligibility may be expanded in 2017. 9
Insurance Reform High-risk pool created (2010) Dependent coverage to age 26 (2010) Children with pre-existing conditions cannot be denied coverage (2010) No denial for pre-existing conditions eliminated (2014) No Charge for annual wellness visit (2014) Guaranteed issue policy (2014) Modified community ratio (2014) 80 – 85% medical loss ratio (2014) Long-term insurance program (2014) No pre-existing condition exclusions (2014) 10
All Plans Must Provide Essential Health Benefits “Essential Health Benefits” requires minimum set of benefits, with no lifetime of annual coverage limits Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance abuse coverage Prescription drugs Rehab services and medical devices Preventative and wellness/chronic disease management 11
“Free” Preventive Care No Co-Pays No Out-Of-Pockets No Deductibles 12
Hospitals, physicians, insurance companies and others agree that without the Individual Mandate the consumer protection and benefits reforms would ruin the health care market 13
Exchange Enrollment October – December, 2013 2.2 Million Americans 23% - 18 – 34 15% - 35 – 44 22% - 45 – 54 33% - 55 – 64 15
Who is Insured? Most people are insured through an employer-sponsored plan (177 million Americans, 62% of people are under age 65) 99% of employers with 200 or more employees offer health insurance 78% - 10 to 24 employees 49% - 3 to 9 employees 16
Who is Insured (continued) About 70 million Americans are insured under a “public plan” Medicare Medicaid Government spends about 42% of every dollar spent on health care 17
The Uninsured Estimated 46 million Americans lack health care insurance (15% of U.S. population) 18
Who Are The Uninsured? 27 million have personal income over $50,000 66% of uninsured have family incomes of $45 $85,000 14 million are eligible for Medicaid on the Children‟s Health Insurance Program 10 million „illegal‟ aliens 1/3 are between 18 to 29 years of age 19
About 500,000 New Jerseyans are eligible to purchase a healthcare plan on the Health Insurance Marketplace Most work full-or part-time for a small employer About 80% will be eligible for a subsidy 525,000 undocumented workers in N.J. not eligible 20
Employer-Plan Crisis Premiums have grown 4-times faster than wages since 1999. Average employee contribution has gone up 200% since 2000. Out-of-pocket and co-payments have gone up 115% since 2000. 21
Affordability Full-time employee cannot pay more than 9.5% of household income for his/her share of premium for single coverage. Lowest cost plan. Safeharbor: Employer may use W-2 income for employee. (Box 1) Rate of Pay Safeharbor – Hourly rate multiplied by 130 hrs/month. Determine affordability using monthly premium based on monthly wage. For salaried employee, monthly wage can be used. Does not apply where wages were reduced during the year. 22
The Marketplace, Prices and Subsidies- N.J. 29 plans within 4 categories Platinum Gold Silver – benchmark plan (70% of healthcare costs) Bronze October – December, 2013 4 of 5 enrollments eligible for subsidy 54% - women 46% - men 23
Delayed until January 1, 2015 24
“Large” Employer Penalty Employers with 50 or more “full-time” employees will be penalized for not offering coverage or coverage that does not meet standards. All employees counted in a calendar month (parttime, temporary, seasonal). “Full-time” employee is someone who is employed to perform services on average of 30-hrs per week or 120 hrs/month. Part-time employees are grouped together to create “full-time” equivalents. Aggregate number of hours worked by part-time workers in any month and divide by 120 to determine number of full-time equivalents. 25
Penalty for not offering insurance or to less than 95% of full-time employees and at least one FTE receives a subsidy to pay for insurance on the Exchange Penalty for not offering insurance or to less than 95% of full-time employees and at least one FTE receives a subsidy to pay for insurance on the Exchange 26
Auditing and Enforcement U.S. Department of Treasury (IRS) U.S. Department of HHS U.S. Department of Labor Combined databases – Form W-2, Form 5500, Social Security Administration database. 27
New Jersey Health Reform (1992) Individual and Small Group Pools Guaranteed – Issue No-Preexisting Condition Exclusion Modified Community Rating Medical Loss Ratio (80%) Standardized Plans/Coverages 75% Coverage (25 or more hours) 28
Health Care Inflation Employer-Sponsored Plans (per employee) 2010 $7,300 2000 $15,000 (family) $3,500 $6,200 (family) 29
A Looming Challenge Health Care Inflation 1. Premiums have grown 4-times faster than wages since 1999. In NJ, 5 times faster. 2. Average employee contribution has gone up 200% since 2000. 3. Out-of-pocket and co-payments have gone up 115% since 2000. 4. NJ Public Interest Group estimates premiums for New Jersey employers will double to $24,000 per year by 2016. 5. Premiums in N.J. are third highest in U.S. 30
Tax Credits for Small Business Sliding scale tax credit to employers with fewer than 25 employees. 10 or fewer workers with average annual wages of less than $25,000, up to 35% through 2013 Eligibility based on employer contributing at least 50% of total premium. 2014 tax credit, up to 50% if insurance is purchased through the Exchange. 31
Affiliated Physicians & Employers Health Plan 32
Questions? Thank You 33
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