ACA imposes a 40 percent excise tax on the cost of coverage exceeding $10,200 for single coverage and $27,500 for family coverage.

(1)

In Focus: Provisions Impacting Employer-Sponsored Health

Coverage Through 2020

While many employers are wondering if self-funding is the right solution for their business, a number of factors must be weighed in making this decision. The Affordable Care Act introduced a number of new requirements for employer-sponsored health benefits, which are provided in the chart below. The chart also highlights the differences in how fully insured and self-funded health plans are impacted by these provisions.

Provision Effective Date Description

Applicable to Fully Insured Plans? Applicable to Self-Funded Plans? 2020 Cadillac tax Delayed until 2020

ACA imposes a 40 percent excise tax on the cost of coverage exceeding $10,200 for single coverage and $27,500 for family coverage.

Yes Yes

2017 Cost sharing

2017 plan year In-network OOP maximum cannot exceed $7,150 for self-only coverage and $14,300

for family coverage. Yes Yes

Health Insurance

Provider Fee _{year moratorium}There is a one in 2017 on this

annual fee.

Fee collected from health insurers. Estimated to increase premiums in the insured market on average by 1.9% to 2.3% in 2014 and, by 2023, to increase premiums 2.8% to 3.7% 1_.

Yes assessed against self-funded No. This fee will not be plans.

2016

Cost sharing*, **

2016 Plan Year In-network OOP maximum may not exceed $6,850 for self-only coverage and $13,700 for

family coverage. Yes Yes

Employer mandate* 2016 Applies to employers with 50 or more full-time employees (FTEs) and equivalents.

An employer with 50 or more full-time equivalent employees may be subject to a financial penalty2_{if it either does not provide}

minimum essential coverage to its employees, or if that coverage is unaffordable3_{or does}

not provide minimum value. Plans will meet minimum value if they cover 60 percent of allowed costs in 2016 and both inpatient hospital and physician services.

Yes Yes

Essential Health Benefits Package*

2016

Insured coverage in the individual and small group markets (on and off the exchanges) must:

• Provide essential health benefits

• Cost-share no longer tied to qualified high

deductible plan. Yes

Self-funded employers are not required to provide essential health benefits or meet certain

(2)

Habilitative Services

2016

HHS adopted a uniform definition of habilitative services (an Essential Health Benefit) for when the state-selected benchmark plan does not include these services and the state has not enacted its own definition. “Healthcare services that help a person keep, learn or improve skills and functioning for daily living. Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities in a variety of inpatient and/or outpatient settings.”

Yes

Self-funded employers are not required to provide essential health benefits or meet certain actuarial value requirements but are subject

to out-of-pocket limits. If self-funded plans include essential health benefits, including habilitative services,

then no annual or lifetime dollar maximums may be

applied.

Reinsurance Assessment Fee*

2016

Funds a three-year reinsurance program for carriers in the individual health insurance market.

$27.00 average covered life annually Amount subject to change thereafter.

Yes Yes

Reporting requirements*

2016 for the 2015 coverage period

Regulations implementing minimum essential coverage reporting for Section 6055 and 6056 of the Internal Revenue Code require certain employers to provide detailed information about their health plan coverage and enrollees.

Yes Yes

Patient Centered Outcomes Research Institute Fee*

Report on IRS form 720 by July 31 of the calendar year immediately following the last day of the plan

year.

• $2.17 per average number of covered lives for plan years ending between October 1, 2015 and December 31, 2015. Filing date: July 31, 2016

• $2.17 per average number of covered lives for plan years between January 1, 2016, and September 30, 2016. Filing date: July 31, 2017

The fee is based on increases in the projected per capita amount of the National Health Expenditures. The fee will not apply to policy or plan years that begin after Sept. 30, 2019.

Yes, the insurance company pays the fee.

(3)

2015

Cost sharing*, **

Plan years on or after Jan. 1, 2015.

In-network OOP maximum for essential health benefits may not exceed $6,600 for self-only

coverage and $13,200 for family coverage. Yes Yes

Employer mandate* ₂₀₁₅ Applies to employers with 100 or more FTEs and equivalents. Those groups with 50 FTEs and

equivalents are exempt in 2015 provided they meet

certain criteria.

An employer with 50 or more full-time equivalent employees may be subject to a financial penalty2_{if it either does not provide}

minimum essential coverage to its employees, or if that coverage is unaffordable3_{or does}

not provide minimum value. Plans will meet minimum value if they cover 60 percent of allowed costs in 2015 and both inpatient hospital and physician services.

Yes Yes

2014

• Provide essential health benefits • Deductibles were eliminated

• Cost-share no longer tied to qualified high deductible plan.

• Meet certain actuarial value5_{requirements.}

Yes

to out-of-pocket limits.

Health Plan

Identifier (HPID)* As of Oct. 31, 2014, enforcement

of the HPID regulations is delayed until further notice. Small health plans,

those with annual receipts of $5 million or less, must

obtain a HPID by Nov. 5, 2015.

As of Oct. 31, 2014, enforcement of the HPID regulations is delayed until further notice. Health plans, including small health plans, must obtain a HPID for use in HIPAA standard transactions if the health plan is identified in the HIPAA standard transaction, effective

Nov. 7, 2016. _{(Applies to}Yes

Insurers)

Yes

Reinsurance Assessment Fee*

2014

Funds a three-year reinsurance program for carriers in the individual health insurance market.

$44.00 per year for 2015

Amount subject to change thereafter.

Yes Yes

Patient Centered Outcomes Research

Institute Fee* Report on IRS form 720 by July 31

$2.08 per average number of covered lives for plan years ending between Jan. 1, 2015

(4)

90-Day Waiting

Period Limit 2014 Plans may not impose a waiting period of more than 90 days. Yes Yes Cost-Share Subsidy

2014

Sliding-scale financial assistance made available for certain individuals who make less than 251% of the federal poverty level and who purchase coverage on an exchange and meet certain other qualifications.

Yes Exchange coverage

only

No.

Note: 250% of the FPL for a single-person household in

2014 was $29,175. Cost sharing**

Plan years on or after Jan. 1, 2014.

In-network out-of-pocket maximums may not exceed the limits of $6,350 for self-only coverage and $12,700 for family for 2014. In addition, all member in-network

cost-sharing, such as copayments, coinsurance and deductibles, must apply to the out-of-pocket maximum.

Special rules apply for the 2014 plan year if the plan uses more than one service provider to administer benefits (such as pharmacy benefits manager for pharmacy benefits and a TPA for other medical benefits).

Yes Yes

Coverage Sold

Through Exchanges 2014

Open enrollment for individual and small group coverage on the exchanges

begins on Oct. 1, 2013.

Carriers may offer qualified health plans in the individual and small group markets through exchanges.

Exchanges may be operated by the federal government, by a state or in a state-federal-government partnership.

Yes No

Employer Mandate*

Penalties delayed until 2015

An employer with 50 or more full-time equivalent employees may be subject to a financial penalty2_{if it either does not}

provide minimal essential coverage to its employees, or if that coverage it does provide is unaffordable3_{or does not provide minimum}

value4_.

Yes Yes

2014

• Provide essential health benefits

• Cost-sharing limits apply to qualified high-deductible health plans (except small group plans may not have deductibles greater than $2,000 for individuals or $4,000 for family coverage); and

• Meet certain actuarial value5_{requirements.}

Yes

(5)

2014 Continued Health Plan

Identifier (HPID)* As of Oct. 31, 2014, enforcement of the HPID regulations is delayed until further notice. Health plans, excluding small health plans, must

obtain a HPID by Nov. 5, 2014.

As of Oct. 31, 2014, enforcement of the HPID regulations is delayed until further notice. Health plans, including small health plans, must obtain a HPID for use in HIPAA standard transactions if the health plan is identified in the HIPAA standard transaction, effective Nov. 7, 2016. Yes (Applies to Insurers) Yes Health Insurance Provider Fee6,* 2014

Fee collected from health insurers. Estimated to increase premiums in the insured market on average by 1.9% to 2.3% in 2014 and, by 2023, to increase premiums 2.8% to 3.7%1_.

Yes This fee will not be assessed No. against self-funded plans. Individual Mandate

2014 Individuals who do not meet certain hardship exceptions will be required to have minimum

essential coverage or pay a penalty 7_. Yes Yes

Individual Premium Tax Credit

2014

Sliding-scale financial assistance made available for certain individuals who make less than 401% of the federal poverty level (FPL), who purchase coverage on an exchange and meet certain other qualifications.

Yes Exchange coverage

only

No.

Note: 400% of the FPL for a single-person household in

2014 was $46,680. Modified

Community Rating

2014

Individual and small group health insurance carriers may no longer consider health status,

industry or gender when setting premium rates. _Yes

No. Self-funded plans may consider health information

to help determine cost expectations. No Pre-Existing

Exclusions for

Adults 2014

Health plans may no longer impose

pre-existing condition exclusions. Yes Yes

Report on IRS form 720 by July 31 of the calendar year immediately following the last day of the plan

year.

An annual fee of:

• $2 per average number of covered lives for plan years ending between Jan. 1, 2014, and Sept. 30, 2014. Filing date: July 31, 2013 • $2.08 per average number of covered lives

for plan years ending between

October 1, 2014 and December 31, 2014. Filing date: July 31, 2014.

The fee is based on increases in the projected per capita amount of the National Health Expenditures. The fee will not apply to policy or plan years that begin after Sept. 30, 2019.

Yes, the insurance company pays the

fee.

Yes, the plan sponsor pays the fee.

(6)

Exchange Notice

Oct. 1, 2013 Employer to provide all employees notice about exchanges: Model notices available on

the U.S. Dept. of Labor website. Yes Yes

Health Flexible Spending Account (FSA) limits 2013 Plan years beginning on or after Jan. 1, 2013

Limits annual employee salary reduction contributions to an FSA to $2,500.

Yes Yes

Patient Centered Outcomes Research

Institute Fee* Report on IRS form 720 by July 31 of the calendar year immediately following the last day of the plan year. The first fee was due by July 31,

2013.

An annual fee of:

• $1 per average number of covered lives for plan years ending between Jan. 1, 2013, and Sept. 30, 2013. Filing date: July 31, 2014 • $2 per average number of covered lives for

plan years ending between Oct. 1, 2013, and Dec. 31, 2013. Filing date: July 31, 2014 The fee is based on increases in the projected per capita amount of the National Health Expenditures. The fee will not apply to policy or plan years that begin after Sept. 30, 2019.

fee.

Risk Adjustment

2014

Individual and small group fully-insured plans sold on and off exchanges will be assessed if their actuarial risk is less than, and credited if their actuarial risk is more than, the average actuarial risk for all plans in the state.

Yes not be required to subsidize No. Self-funded plans will one another.

Risk Corridor

2014

A system using revenue from qualified health plans to subsidize one another from 2014-2016 to limit the gains and losses of those plans. Yes – Only carriers selling plans on the exchanges

No. Self-funded plans will not be required to subsidize

one another.

W-2 Reporting ₂₀₁₃

2012 W-2 Forms (usually provided by

Jan. 31, 2013)

Employers filing 250 or more W-2s in the preceding year must report the total cost of each employee’s employer-sponsored

coverage on each employee’s W-2. Yes Yes

2012

Report on IRS form 720 by July 31 of the calendar year immediately following the last day of the plan year. The first fee was due by July 31,

2013.

An annual fee of:

• $1 per average number of covered lives for plan years ending between Oct. 1, 2012, and Dec. 31, 2012. Filing date: July 31, 2013 The fee is based on increases in the projected per capita amount of the National Health Expenditures. The fee will not apply to policy or plan years that begin after Sept. 30, 2019.

fee.

Rate Increase

Review ₂₀₁₁ Rate increases of 10% or more on fully insured health plans must be submitted to the U.S.

(7)

2012 Continued Summary of Benefits and Coverage Document Plan years on or after Sept. 23, 2012

Standardized summary of health plan coverage that insurers and employers must

make available to enrollees. Yes Yes

Women’s preventive

health services*, ** Plan years on or after Aug. 1, 2012

Coverage for contraceptive services for women without cost-sharing. (Exceptions have

been made for some employers.) Yes Yes

2011

Medical Loss Ratio (MLR)

2011

For small and large groups, respectively, health insurers must spend at least 80% or 85% of every premium dollar on claims and quality improvement activities or rebate the difference to customers.

Yes not dictate how plan dollars No. Federal regulations do are spent. 2010 Mandated Benefit Provisions Plan years on or after Sept. 23, 2010

• Removal of annual and lifetime dollar limits

• Coverage for dependents to age 26 • No pre-existing condition exclusions for

person younger than 19

• Increased parity for out-of-network emergency services

• 100% coverage for certain preventive services**

• Additional claim and appeal rights**

(8)

8

PLEASE NOTE: This document is designed to provide a high-level overview of aspects of the Affordable Care Act (ACA), as modified by the Health Care and Education Reconciliation Act and various regulation and regulatory guidelines. It is not comprehensive and does not constitute legal or tax advice for healthcare reform implementation. Please consult a professional benefit adviser or legal counsel regarding how the law may impact your specific benefit plan.

Last Updated: April 6, 2016

For more information on ACA, visit http://trustmarkhcr.wordpress.com, the Trustmark Healthcare Reform blog.

The Trustmark Companies and operating divisions include Trustmark Life Insurance Company, Trustmark Life Insurance Company of New York, Trustmark Insurance Company, CoreSource, HealthFitness, Starmark and Trustmark Voluntary Benefit Solutions.

400 Field Drive Lake Forest, Illinois 60045 847-615-1500 www.trustmarkcompanies.com

2016) per FTE, and the first 30 FTEs (first 80 FTEs for 2015) are discounted for purposes of calculating the penalty.

3_{An employer’s health plan is unaffordable if the employee’s contribution to the cost of employee-only coverage (in the lowest cost plan option) is more than 9.5% (9.56% for 2015 and 9.66% for plan years}

beginning in 2016) of the employee’s household income. An employer also can use safe harbors identified by the IRS to determine if its health plan is affordable.

4 _{An employer’s health plan provides minimum value if the plan’s share of an enrollee’s overall medical expenses is at least 60% and covers inpatient hospital and physician services.} 5_{Actuarial value is a measure of a health plan’s share of an enrollee’s overall medical expenses, expressed as a percentage.}

6_{The Health Insurance Industry Fee is also known as the Health Insurance Tax (HIT).}

7_{Penalties are the greater of a set dollar amount or percentage of taxable income as follows: 2014: $95 or 1%; 2015: $325 or 2%; 2016: $695 or 2.5% and adjusted to the cost}

of living thereafter.