Affordable Care Act Resource Guide

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with fewer than 50 employees

Effective

October 29, 2015

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The information in this

document is a general

o v e r v i e w

of the rules, regulations and consequences of the ACA. It may not address every aspect of the ACA that affects your

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Affordable Care Act Overview ...2

Compliance Status Options ...3

Small Business Tax Credits ...4

Employer Shared Responsibility ...5

IRS Financial Reporting ...6

Group Market Size Definitions ...7

Summary of Coverage Changes ...8

What’s Ahead for ACA Compliance ...10

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Blue Cross of Idaho prepared this resource

guide to help you understand how the

Affordable Care Act will affect your business

and impact the healthcare coverage you offer

your employees.

What does it mean for you?

The Affordable Care Act (ACA) is the final version of healthcare reform legislation passed by Congress and signed into law on March 23, 2010 by President Obama. Some of these regulations took effect immediately, while others are being rolled out in phases over the next few years. Individuals and businesses share responsibility with the government for making insurance more accessible for all. For example, the ACA requires employers

with 50 or more full-time equivalent (FTE) employees to offer minimum essential coverage at an affordable price or pay an IRS tax penalty.

In the back of this guide you will find a timeline of compliance requirements for both large and small businesses, as the ACA affects them differently.

Affordable Care

Act Overview

The information in this document is a general overview of the rules, regulations and consequences of the ACA. It may not address every aspect of the ACA that affects your health insurance and is not intended to be legal or tax advice.

IMPACTS OF THE

AffordableŁ

Care Act

Ensure more people have access to and get health insurance

coverage

Set coverage standards for Ł health insurance

benefits

Lower premium and out-of-pocket

costs throughŁ subsidies

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As different aspects of the ACA are phased

in, or in some cases postponed, businesses

may have a different compliance status

options depending on their group size.

Are you grandfathered?

^GF NG GM

If your plan was effective prior to QHP

March 23, 2010 it may be grandfathered under the ACA. This option allows both large and small groups to keep offering their current coverage and avoid some of the impacts of the healthcare law, but only if no changes are made to the coverage offered.

Are you grandmothered?

GF NG

GM

QHP

Small businesses with non-grandfathered plans received an extension until

October 1, 2016 to offer employees a qualified health plan (QHP) that is ACA- compliant. All non-grandfathered plans were scheduled to end in 2014, but the transitional policy allows for temporary grandmothered status.

Are you a qualified

health plan?

GF NG

GM

QHP

Qualified health plans became available to small businesses in 2014. QHPs are reviewed and certified by the Idaho health insurance exchange, called Your Health Idaho, to be fully ACA-compliant. The insurance carriers offering the plans are in good standing with the Idaho Department of Insurance.

Compliance

Status Options

Qualified health plans can be

purchased directly from

Blue Cross of Idaho, or at

yourhealthidaho.org. The bronze,

silver and gold level health plans

offered to individuals and small

groups provide all essential

health benefits without annual

dollar limits.

Affordable Care

Act Overview

G NG

QHP

_GM

Status Options

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If you are a small employer with up to 25

full-time equivalent employees, you may be

eligible for a tax credit to offset the cost of

providing healthcare coverage for employees.

Are you eligible for tax credits?

The Small Business Health Options Program (SHOP) helps very small employers get a break on the cost of offering health coverage to employees. You may be eligible if the average annual pay of your employees is less than

$50,000 and you pay 50 percent or more of the cost of health insurance.

Your tax credit could be as much as half what your company pays for health benefits today. Qualified health plans must be purchased through the SHOP exchange, part of the Idaho health insurance marketplace at yourhealthidaho.org, in order to be eligible for a small group tax credit. Remember that the ACA does not require businesses with fewer than 50 full-time employees to offer insurance to their employees. However, if you do offer qualified health coverage to your employees, they are not eligible for individual subsidies on the exchange.

Small Business

Tax Credits

The SHOP eligibility

form is required for tax

credits. You can find this at

yourhealthidaho.org (search

for the SHOP employer

application). Remember to

notify Blue Cross of Idaho

if your small business has

applied for a tax credit.

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Employers must calculate the number of

full-time and part-time employees to

determine if they are required to offer

minimum essential coverage as an

applicable large employer (ALE).

Do you know your group size?

The ACA requires that applicable large employers (those with 50 or more full-time equivalent (FTE) employees must offer minimum essential coverage (MEC) to employees and their

dependents. This insurance must be affordable and cover a certain level of healthcare expenses, or employers will pay a tax penalty.

Determining your group size starting in 2015 may not be obvious. Full-time and part-time employees will factor into your calculation. Full-time is defined as working more than 30 hours a week and part-time hours are combined to calculate FTEs. The federal “FTE counting method” applies to the employer shared

responsibility mandate and the penalties for noncompliance, as well as for small business tax credits.

Employer Shared

Responsibility

January February March April May June

July August September October November December

TOTAL

Total full-time employees

Calculate the number of full-time employees for each calendar month in the previous year.

Divide the total by 12 and round down TOTAL Equivalent Employees TOTAL

Employees

÷ 12 =

Step 1

Total part-time employees

Calculate the number of hours your part-time employees worked each month. (not to exceed 120 hours per month per employee)

January February March April May June

July August September October November December

TOTAL (total monthly hours) ÷ 120 = (full time equivalent)

Step 2

TOTAL Add total full-time employees

to the full-time equivalent result in step 2

Step 3

Step 4

Federal FTE Counting Method

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The Affordable Care Act includes two

sections in Internal Revenue Service (IRS)

code requiring insurers and applicable

large employers (ALEs) to report on health

insurance provided to employees.

Which reporting requirements

apply?

The purpose of Section 6055 is enforcement of the individual mandate. For small, fully insured groups,

Blue Cross of Idaho will submit Form 1094-B (summary information on the employer) and Form 1095-B (information about each employee) to the IRS. We’ll also send a copy of Form 1095-B to the employee.

The purpose of Section 6056 reporting is enforcement of the employer mandate. Since small employers (those with fewer than 50 employees) are not considered applicable large employers, they are not subject to the employer mandate. Self- insured small groups must file their own forms with the IRS.

Reporting under both sections is voluntary for the 2014 plan year. The first mandated reporting will be for the 2015 plan year, due to the IRS by Feb. 29, 2016 for paper filing or March 31, 2016 for electronic filing. Since Form 1095-B also determines employee eligibility for premium tax credits, it requires employee and

dependent social security numbers, which are being collected in 2015.

Blue Cross of Idaho Action Alerts on financial reporting requirements for both large and small groups, whether fully insured or self-funded, can be found at reform.bcidaho.com.

IRS Financial

Reporting

Some small companies are treated as ALEs if they are part of a related or commonly owned company that collectively meets the large group definition. These small individual employers in large multi-employer groups should consult with their tax advisors for clarification.

What’s a PCORI?

The Patient-Centered Outcomes Research Institute established

by the ACA imposes a fee on health plans to evaluate and compare outcomes and clinical

effectiveness of treatments, services, procedures

and drugs.

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IRS Financial

Reporting

While the IRS identifies groups with 50 or

more full-time equivalent (FTE) employees as

applicable large employers for tax reporting

purposes, other ACA provisions use a

different counting methodology to determine

group size.

What does it mean to you?

In Idaho, the small group definition is defined as 50 or fewer eligible employees. A large group is 51 or more employees, and the counting method also differs from the federal FTE employee calculation used to enforce the employer mandate.

The Idaho Department of Insurance uses the “eligible employee” method of counting employees to determine whether a group is considered a small employer or a large one in terms of the insurance products available to them. In this state counting method (allowed by the federal government), part-time employees are not counted.

Small group market provisions include guaranteed issue, modified community rating and essential health benefits, as well as other benefits and coverage (see pages 8 and 9 for a full list). Grandmothered small groups can retain their status until November 1, 2016 when transitional policies end.

Recent legislation called the PACE Act (HR 1624) was signed by the President on Oct. 7, 2015 to allow states to keep the current small group definition at 1-50 employees instead of changing it to 1-100.

State Eligible Employee

Counting Method

Group Market

Size Definitions

TOTAL ALL Employees

Option 1

Employees working 30 or more hours per week on average TOTAL

Employees

Option 2

Employees

(for groups with at least three (3) active enrollees and by agreement between Blue Cross of Idaho and the Group)

City or County Employees Only

Public officers and public emplyees regardless of the number of hours worked

Option 1

Employees

Option 2

Employees

(for groups with at least three (3) active enrollees and by agreement between Blue Cross of Idaho and the Group)

City or County Employees Only

Public officers and public emplyees regardless of the number of hours worked

City or County Employees Only

Public officers and public employees regardless of the number of hours worked.

OR

ELIGIBLE vs. ENROLLED Blue Cross of Idaho uses the state “eligible employee” counting method to determine group market size. In addition, we use the number of employees enrolled to rate groups. For example, 51 to 99 enrolled, eligible employees is a mid- sized, community-rated group according to Blue Cross policies. Groups with 100 or more enrolled employees would be experience- rated as a large group based on their actual claims. This distinction between eligible and enrolled employees does not apply to the small group market. Please see our Action Alert on this topic for specific examples.

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Summary of

Coverage Changes

Here’s a summary of coverage and plan changes for small groups resulting from the ACA. This general information provides an overview of how Blue Cross of Idaho is responding to new regulations. Effective dates refer to plan years on or after the date listed.

GF NG

GM

QHP

Grandfathered plans

GF NG

GM

QHP

Grandmothered plans

GF NG

GM

QHP Qualified health plans

GF NG

GM

QHP

DEPENDENT AGE AGE (SEPT. 2010)

We extended coverage for dependent adult children up to age 26, regardless of marital status, income, financial status, educational status or place of residence.

GF NG

GM

QHP

PRE-EXISTING WAITING PERIODS (JAN. 2014).

We stopped requiring waiting periods for pre-existing conditions for all members, regardless of age.

GF NG

GM

QHP

PREVENTIVE HEALTH SERVICES (JAN. 2010).

We cover preventive care services at 100 percent, not subject to deductible or coinsurance, when provided by an in-network provider.

GF NG

GM

QHP

PREVENTIVE HEALTH SERVICES/WOMEN’S HEALTH (SEPT. 2010).

We cover preventive care services at 100 percent, not subject to deductible or coinsurance, when provided by an in-network provider. We also expanded covered preventive services to include additional women’s health services.

GF NG

GM

QHP

LIFETIME DOLLAR LIMITS (SEPT. 2010).

We removed all lifetime dollar maximum limits on essential health benefits (EHBs).

GF NG

GM

QHP

ANNUAL DOLLAR LIMIT ON EHBs (JAN. 2014)

We removed annual dollar maximums from essential health benefits, including prescription drug services.

Interested in a complete list of ACA-compliant Preventive Health Services? You can find them on the Blue Cross of Idaho website at https://members.bcidaho. com/health-and-wellness/ health-and-wellness- preventive-care-services. page.

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It’s important to us that you receive timely information about your health insurance and understand your rights as a Blue Cross of Idaho member. Blue Cross of Idaho will:

• Respond to urgent care requests for prior authorization within 72 hours of receipt.

• Provide members with a description of the diagnosis and treatment codes and their corresponding meanings on request.

• Provide unique, identifiable denial codes/reasons on all adverse benefit determinations and add a general definition of investigational and medical necessity to the explanation of benefit statements.

• Provide an external review process. Provide translation of some forms into Spanish, Tagalog, Chinese and Navajo Indian (Dine) on request.

GF NG

GM

QHP

Blue Cross of Idaho provides individual members, employer groups and potential members access to a uniform overview of their health insurance coverage. These materials contain a short, easy-to-understand summary of benefits and coverage (SBC) and a list of definitions (called the uniform glossary) that explains terms commonly used in health insurance coverage such as “deductible” and “copayment.”

GF NG

GM

QHP

WELLNESS PROGRAM INCENTIVES (JAN. 2014)

The ACA allows employers who offer wellness programs to increase the maximum reward under a health-contingent wellness program from 20 to 30 percent of the cost of health coverage. Employers can further increase the reward to as much as 50 percent for programs designed to prevent or reduce tobacco use.

GF NG

GM

QHP

EMPLOYEE WAITING PERIOD (JAN. 2014)

Probationary periods for new employees can’t exceed 90 days, beyond an official orientation period of 30 days, to meet your enrollment timeline. Beginning in 2014, Blue Cross of Idaho set a standard of the first of the month following 60 days and all groups were moved to this standard with the option to inform us of other group-specific timelines.

GF NG

GM

QHP

OUT-OF-POCKET MAXIMUMS (JAN. 2014)

The ACA sets a maximum amount you have to pay out of your own pocket for services. For 2015, the limits for non-grandfathered groups increase to $6,600 for individuals and $13,200 for families, including medical and pharmacy services. The ACA allows for separate OOP maximums for medical and pharmacy, and Blue Cross of Idaho’s standard is to have separate maximums for most groups. Our maximum out-of-pockets are set at $5,500 medical and $1,000 pharmacy. For 2016 the limits will be $6,850 for individuals and

$13,700 for families.

GF NG

GM

QHP

ESSENTIAL HEALTH BENEFITS (JAN. 2014)

All non-grandfathered plans include coverage for essential health benefits in the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including vision care.

NOTE: The medical policies we currently offer do not include coverage for pediatric dental care, which is considered an EHB under the ACA. Blue Cross of Idaho offers dental products as a stand-alone plan.

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What’s Ahead for

ACA Compliance

Through December 2015, small employer groups “SG” are those with 50 or fewer eligible employees. Through December 2015, large employer groups “LG” are those with 51 or more eligible employees.

May 2015

^SG ^LG

Blue Cross of Idaho reached out to groups for future financial reporting. Highlights include:

• Will need to capture enrollee social security numbers

• Contact account manager for process to request data

• Request a strategic impact report on effects of ACA

January 2016

^SG ^LG

Non-grandfathered, mid-sized groups with 51 to 100

employees were scheduled to be reclassified as part of small group market and subject to ACA requirements. But:

• President Obama signed PACE Act in Oct. 2015 to retain small group market as 1-50 employees

• Blue Cross of Idaho uses state “eligible employee” counting method to determine group size

• In addition, we use number of enrolled employees to rate groups (ie, 51 to 99 enrolled eligible employees is a mid- sized, community-rated group according to Blue Cross policies)

January 2016

^SG ^LG

HSA plans required to have aggregate (embedded) out-of- pocket maximum:

• Maximum OOP costs can’t exceed self-only federal limit

• This includes individuals enrolled in family policies

• Blue Cross will apply this to deductibles as well as OOP max

• No more HSA policies with umbrella OOP option

January 2016

^SG ^LG

Employer shared responsibility reporting requirements:

• Blue Cross to supply data to groups by mail

• Group size 50 or more FTEs

o We report under 6055 for fully insured groups o Self-funded groups responsible for own reporting o Tax forms 1094/1095 vary by group size and funding o All employers must provide 1095-C to FTEs

SG LG

JAN 2016 JAN 2016 JAN 2016 FEB 2016

HSA plans must have aggregate

(not umbrella) out-of-pocket max

Groups with 51-100 employees remain defined as large group

market

ALEs must provide 1095-C to

FT employees by 1/31/2016

Employers must file 1094-C and 1095-C to IRS by

2/29/2016

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February-March 2016

^LG

Applicable large employers must file 1094-C and 1095-C with IRS:

• If filing by paper, due 2/29/16

• If filing electronically, due 3/31/16

November 2016

^SG

Grandmothered status ends:

• Transitional policies must move to QHPs on renewal

• Beginning with plan years effective 11/1/16

December 2016

^SG ^LG

New SBC formats issued for January 2017 renewals:

• 30 days prior to renewal OR

• For open enrollment period of plan

January 2017

^LG

Large groups may be eligible to purchase on Exchange:

• Groups with 101 or more FTEs

• Plans must include essential health benefits

• If available in their state

January 2018

^SG ^LG

Cadillac Tax due at group renewal date:

• Excise tax on employers with rich benefit plans

• Tax is 40% of cost above prescribed amounts

• Coverage amounts $10,200 individual/$27,500 family

PLEASE NOTE: Any change in plan will require reassessment of group size using the state “eligible employee” counting method. Blue Cross of Idaho will issue renewals for 2016 based on the plan in which the group is enrolled.

NOV 2016 DEC 2016 JAN 2017 JAN 2018

GM status ends - must move to QHP on renewal, beginning 11/1/2016

New SBC formats issued 30 days prior to renewal

or for open enrollment

Large groups with 101 or more employees

can buy on exchange

Federal excise tax of 40% imposed on employers with

rich benefit plans affects your employees and

your bottom line, now and in the future. Contact your service representative or account

manager to order your employee and business-specific report.

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NOTES

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intended to be legal or tax advice.

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Lewiston 866-841-2583 208-746-0531

Pocatello

275 S. 5th Ave., Suite 150 Pocatello, ID 83201

208-232-6206

Twin Falls 1503 Blue Lakes Blvd. N.

Twin Falls, ID 83301 208-733-7258 STREET ADDRESS

3000 E. Pine Avenue Meridian, ID 83642-5995

MAILING ADDRESS P.O. Box 7408 Boise, ID 83707

208-387-6683 Meridian

CLAIMS INQUIRIES 208-331-7347 800-627-1188

Idaho Falls 1910 Channing Way Idaho Falls, ID 83404

208-522-8813 Coeur d’Alene

1450 NW Blvd., Suite 106 Coeur d’Alene, ID 83814

208-666-1495