ACA U
PDATE
: E
XPERIENCES
AND
E
XPECTATIONS
Allen Steinberg November 3, 2014
Agenda
– Overview: Framing the discussion – Experiences: Pfeiffer University and University of Sioux Falls – Some Key Challenges – Future ExpectationsExperiences and Expectations
• What have been most significant lessons in build‐up to 2015 regarding: – Health plan design – HR practices • What are your key challenges going into 2015 • What are your expectations regarding – The future of employer‐sponsored health insurance – The challenges posed by trying to teach employees "health care literacy" to allow them to make purchasing decisionsExperiences:
Pfeiffer University and University of Sioux Falls
• Background on your university • Employee population – Benefits eligible – Other (adjunct, variable hour, students) • Background on your health care plans (pre‐ACA compliance changes) • Process for addressing administrative challenges posed by ACA • The biggest challenges posed for your institution by ACA. • Your solution for addressing administrative and employment challenges posed by ACA – New rules limiting hours for certain classifications of employees – New rules on how employee hours are tracked – Changes to the dependent/spouse premium structure • Costs of complying with ACA – Administrative costs – Health care coverage • Impact of ACA looking forward – Overall employment structure (e.g., fewer part time, more outsourcing) – Health care strategy (e.g., more use of HDHPs, new premium strategy)Pfeiffer University
•
1885 Beginnings
•
United Methodist
Connections
•
Small Comprehensive
•
3 Campuses
•
85+ Full Time Faculty
•
56 Adjunct Faculty
•
Approx. 200+
Employee Focused
Employee
Focused
Low cost to Employee Prevention Incentives Limited cost to families Self InsuredKey Challenges as We Move Into 2015
• Reacting to employer mandate—what is your strategy? • Measuring and tracking service and documenting practices to support employer mandate strategy • Driving down health care costs—for now and for the future (i.e, 2018) • Religious institutions: contraception coverageKey Challenges Moving into 2015: Pay or Play
“Minimum essential coverage” offered to less than 95% of
full-time employees
$2,000 Per Year per full-time employee (minus 30 employees)
“Minimum essential coverage” offered to
95% of full-time employees, but does
not satisfy affordability requirement
Affordability
Employee premium for self-only coverage does not exceed 9.5%
of employee’s income
$3,000 Per Year
per full-time employee who purchases insurance through an exchange and
receives a premium tax credit or subsidy Minimum Value
(indirect requirement)
Plan Covers At Least 60% of Plan Costs
Key Challenges: Understanding Your Options
• Excise tax for failure of employer mandate has two prongs:
– Not offering minimum essential coverage to at least 95%* of full‐time
employees and their dependents (4980H(a) penalty):
$2,000 per full‐time employee (minus first 30* employees)
– Not offering affordable coverage that is minimum essential coverage to any full‐time employee (4980H(b) penalty):
$3,000 per full‐time employee who receives a tax credit on public exchange
• Penalty triggered only if any employee receives tax credit through
public exchange
• Minimum essential coverage defined to include a wide range of
employer‐sponsored plans (and does not contain a minimum value standard)
Pay or Play—It’s Complicated
4980H(a) requires employer offer “minimum essential coverage” to 95% of employees; 4980H(b) requires coverage be affordable ‐Can include any product on large group market within a state ‐Can include any self‐insured plan ‐No minimum value standard Employee cannot receive tax credit if eligible for an employer‐ sponsored plan if such plan is: ‐Affordable (premium <9.5% of income), and ‐Meets minimum value (60%) Employer Mandate Employee Tax Credit Minimum value (60%) standard relevant in calculating employer tax ($3,000/employee who receives tax credit)Pay or Play: Some Twists and Turns
• Affordable coverage: employee‐only coverage costs no more than 9.5% of employee’s total household pay – No required subsidy/cap on cost for spouse or dependent coverage – “Safe harbor” methods for calculating employee pay: • Employee’s W‐2 pay • Employee’s hourly rate of pay X 130 hours/month • Federal poverty level for single individual ($11,670) • Minimum value: plan covers, on an actuarial basis, 60% of costs (for general population) – Very modest plans can meet this requirement—especially managed care (HMO or narrow network plans) – Using federal calculator, some “skinny” plans also seem to pass this test—some of these skinny plans are actually anorexicPay or Plan: Some Considerations
• For an employer that already provides healthcare, key goal is to avoid the 4980H(a) penalty ($2,000/employee) • 4980H(b) penalty is less troubling: – Only imposed per employee who receives tax credit – Excludes employees with spousal or other coverage • In structuring response to pay‐or‐play rules: – Providing a “minimum value” plan (60% coverage) is likely to cost approximately $3,500/year – Using permitted safe harbor (9.5% of Federal poverty level), can charge $1,100/year; other safe harbors allow you to charge morePay or Play: Full‐time Employees
• Mandates only apply for “full time employees”—those working (on average) 30 hours/week – Law requires monthly measurement and assessment – IRS has created system of “measurement” and “stability” periods— employee’s status (as calculated during measurement period) remains in effect for duration of stability period (if still employed) – Different rules for different classes of employees: • Employees with variable, part‐time or seasonal schedules—coverage under mandate not yet know and entry into plan can be deferred pending completion of measurement cycle • Regular, full‐time (>30hours/week)—no measurement cycle applied; subject only to 90 day waiting periodPay‐or‐Play: Measuring Service
• Service measured under detailed rules: – Hourly employees: counting actual hours – Salaried: hours worked or “equivalencies” (e,g., 8 hours per day for any day that employee worked) • These rules a special challenge for higher ed; some relief granted: – Adjunct: sum of 2.25 hours/hour of classroom time PLUS 1.0 hours for each additional hour of service required – Work study employment does not count – “Good faith” for everything else • Other challenges (graduate students, concurrent appointments) abound Does ACA change your actual employment practices?Pay or Play: How Do You React to ACA?
• Do you provide minimum affordable coverage with little/no spouse/dependent subsidy? – Avoids penalty under employer mandate – Prevents employee—or family—from accessing tax subsidies through federal exchange • Do you offer a “skinny” plan that meets 60% threshold test— but preclude employees from obtaining tax credit and leave employees with risk of financial exposure or limited coverage • Do you restrict hours for employees near 30/hour per week threshold to reduce cost of employer mandate—but distort employment practices • Do you offer different tiers of health coverage/subsidies (while meeting nondiscrimination rules) to reduce overall cost of health care“Cadillac” Tax
• Effective in 2018 a 40% excise tax imposed on “high‐cost” health coverage (the "Cadillac Tax“) • The initial annual threshold amounts for the tax are: – $10,200 for self‐only coverage – $27,500 for coverage other than self‐only • Threshold applied to COBRA rate—not affected by increasing employee contributions • Includes employer contributions to a HSA or FSA and employee (pretax) contributions to HSA or FSA • Limited exclusions (such as separate insured vision and dental programs) and adjustments (for retirees)“Cadillac” Tax
• The threshold amounts are subject to adjustments that are expected to be low medical trend—so tax will ultimately impact a broad range of plans • The tax is imposed on the insurer (if insured) or on the administrator (if self‐funded); ultimately, the plan sponsor will bear the cost (unless passed along to employees) • Tax likely to accelerate impetus toward higher deductible plans or other lower‐cost options (e.g., HMOs or “narrow networks”) • No regulatory guidance issued yet; next few years will see a scramble by employers to avoid tax—and by IRS to close “loopholes”Expectations: Issues for Consideration
• The future of employer‐sponsored health insurance – What are employee perspectives on health care? – What is employer role in providing health insurance in the future? • Key questions: – Is there a high deductible plan in your future? – Is there a private health care exchange in your future? • The challenges posed by trying to teach employees "health care literacy" to allow them to make purchasing decisions • How does ACA impact your plan design—and your broader HR policies and programs?Employee Perspectives: Extremely/ Very
Satisfied With Overall Health Care Plan
61% 31%* 41%* 67% 37%* 37%* 64%^ 35%* 47%*^ 63% 40%*^ 49%* 66%^ 40%* 52%* 60%^ 35%*^ 43%*^ 57%^ 37%* 46%* 62%^ 38%* 48%* 58%^ 40%* 47%* 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Traditional HDHP CDHP 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: EBRI/Commonwealth Fund Consumerism in Health Care Survey, 2005‐2007; EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey, 2008‐2013. a Traditional = health plan w/ no deductible or <$1,000 (individual), <$2,000 (family); b HDHP = High‐deductible health plan w/ deductible $1,000+ (individual), $2,000+ (family), no account; c CDHP = Consumer‐driven health plan w/ deductible $1,000+ (individual), $2,000+ (family), w/ account. a b cEmployee Perspectives: Extremely/ Very
Dissatisfied With Health Plan By Type of Plan
8% 30%* 26%* 7% 26%* 21%* 8% 24%* 15%*^ 8% 20%*^ 17%* 7% 22%* 14%* 8% 27%*^ 21%*^ 10%^ 24%*^ 17%*^ 8%^ 23%* 17%* 11%^ 22%* 19%* 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Traditional HDHP CDHP 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: EBRI/Commonwealth Fund Consumerism in Health Care Survey, 2005‐2007; EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey, 2008‐2013. a Traditional = health plan w/ no deductible or <$1,000 (individual), <$2,000 (family); b HDHP = High‐deductible health plan w/ deductible $1,000+ (individual), $2,000+ (family), no account; c CDHP = Consumer‐driven health plan w/ deductible $1,000+ (individual), $2,000+ (family), w/ account. * Difference between HDHP/CDHP and Traditional is statistically significant at p ≤ 0.05 or better. a b cEmployee Perspectives: Extremely or Very
Satisfied With Out‐of‐Pocket Costs, Type of Plan
45% 13%* 18%* 46% 18%* 20%* 46% 16%* 24%*^ 45% 17%* 23%* 52%^ 20%* 29%*^ 44% 16%*^ 22%*^ 41% 16%* 24%* 44% 18%* 27%*^ 44% 20%* 31%*^ 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Traditional HDHP CDHP 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: EBRI/Commonwealth Fund Consumerism in Health Care Survey, 2005‐2007; EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey, 2008‐2013. Note: survey question changed in 2009 from asking about "Out‐of‐pocket health care costs for my health care" to "Out‐of‐pocket health care costs for my other health care" because of the introduction of a question specifically asking about out‐of‐pocket costs for drugs. a Traditional = health plan w/ no deductible or <$1,000 (individual), <$2,000 (family); b HDHP = High‐deductible health plan w/ deductible $1,000+ (individual), $2,000+ (family), no account; a b cEmployee Perspectives: Extremely or Very
Satisfied With Choice of Doctors, 2005‐2013
72% 60%* 68%* 77% 67%* 71%* 74%^ 69%* 76% 73% 72%^ 78%* 75% 72% 80%* 72%^ 70%* 76%^ 75%^ 71%* 78% 76% 72% 79% 71%^ 71% 75%^ 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Traditional HDHP CDHP 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: EBRI/Commonwealth Fund Consumerism in Health Care Survey, 2005‐2007; EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey, 2008‐2013. a Traditional = health plan w/ no deductible or <$1,000 (individual), <$2,000 (family); b HDHP = High‐deductible health plan w/ deductible $1,000+ (individual), $2,000+ (family), no account; c CDHP = Consumer‐driven health plan w/ deductible $1,000+ (individual), $2,000+ (family), w/ account. * Difference between HDHP/CDHP and Traditional is statistically significant at p ≤ 0.05 or better. ^ Estimate is statistically different from the prior year shown at the p ≤ 0.05 or better. a b cEmployee Satisfaction With Current Plans:
Likelihood of Keeping Current Plan
60% 31%* 46%* 63% 30%* 36%* 64% 34%*^ 45%*^ 61%^ 38%*^ 45%* 64% 38%* 49%* 61% 32%*^ 44%*^ 58%*^ 34%* 49%*^ 63%^ 37%*^ 48%* 58%^ 40%* 52%* 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Traditional HDHP CDHP 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: EBRI/Commonwealth Fund Consumerism in Health Care Survey, 2005‐2007; EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey, 2008‐2013. a Traditional = health plan w/ no deductible or <$1,000 (individual), <$2,000 (family); b HDHP = High‐deductible health plan w/ deductible $1,000+ (individual), $2,000+ (family), no account; c CDHP = Consumer‐driven health plan w/ deductible $1,000+ (individual), $2,000+ (family), w/ account. * Difference between HDHP/CDHP and Traditional is statistically significant at p ≤ 0.05 or better. a b cEmployee Perspectives: Confidence in
Employer Choices
How confident are you that (your/your spouse’s) employer or union has selected the best available health insurance for its workers? Among those who have health coverage through their employer or union (2014 n=1,207) •Source: Employee Benefit Research Institute and Greenwald & Associates, 2000 ‐2012 Health Confidence Surveys,2013‐2014 Health and Voluntary Workplace Benefits Surveys. 14% 29% 37% 12% 7% 20% 29% 32% 9% 10% 11% 29% 42% 14% 4% 11% 30% 44% 11% 4%Extremely confident Very confident Somewhat confident Not too confident Not at all confident 2000 2012 2013 2014
Employee Perspectives: Preference for
Employer Role
Some employers are thinking about changing the way they provide health insurance to workers. Which of these three choices would you prefer? (2014 n=1,517) 24% 40% 36% 21% 35% 45% 19% 40% 41% Your employer gives you the money they currently spend on health insurance, and you decide whether to purchase health insurance and how much to spend. Employers continue to choose and pay for health insurance the way they do now. You choose your health insurance. Your employer then pays the same amount they currently spend toward that insurance, and you pay any remaining amount, if there is any. 2014 2013 2012 Source: Employee Benefit Research Institute and Greenwald & Associates, 2013‐2014 Health and Voluntary Workplace Benefits Surveys.The Private Health Exchange Universe
Insurer
Once geared to retirees and the individual market, but also expanding to current employer clients in the group market.
Technology model Provides cloud, software, and data analytics solutions to insurers, states, brokers/
consultants, and also large employers looking for a custom exchange.
Broker/Consultant Growing quickly, typically offers fixed products and integrated consulting services. Funded by commissions, fees, or a combination of both. Pure Play A more mature model, once rooted in small group but now also in the mid-to-large employer market. Known for decision support and technology.
Employee Perspectives: Priorities in Comparing
Plans
When you last compared different plans to choose the health insurance plan that was best for you, to what extent did you consider each of the following factors? Among those offered a choice of plan or purchase coverage on own (2014 n=934) 82% 82% 71% 60% 59% 57% 25% 16% 14% 24% 33% 35% 37% 53% 3% 3% 5% 7% 6% 7% 22%Major consideration Minor consideration Not a consideration
The deductibles and copayments The premiums The annual limit on out‐of‐pocket expenses The list of doctors and hospitals included in the plan Prescription coverage The exclusions (things the plan does not cover) Independent quality measures Source: Employee Benefit Research Institute and Greenwald & Associates, 2014 Health and Voluntary Workplace Benefits Survey.
