Affordable Care Act (ACA) Updates
By: Cindy Brenke, Risk Advisor – Employee Benefits
June 1, 2014 – As the 2014 implementation of the Affordable Care Act is upon us in full force, how familiar are you with some of the recent changes to the legislation?
Our goal at IBTX is not only to keep our employers and employees informed of these changes but also to educate. Below are some of the recent changes for the Affordable Care Act (ACA).
The Federal Insurance Marketplace
The Insurance marketplace is currently closed for 2014 and the next open enrollment will begin in the fall – November 15, 2014 – February 15, 2015, outside the normal open enrollment period one can enroll in private health insurance plan through the marketplace only if you have a qualifying life event.
Implementation of taxes and fees on group health plans as of January 2014
This legislation impacts both fully insured and self-funded. Below is an outline of the fees and what you may experience on your upcoming renewals for the 2014 plan year. The total estimated impact of all taxes and fees is approximately 4.5% for fully insured and $5 increase per member per month for Self-funded.
Some of the major changes on group health plans include the following:
- Patient Centered Outcomes Research Institute (PCORI) Fee – funds research at evaluates and compares health outcomes, clinical effectiveness, risk and benefits of medical treatments and services.
- First year fee was $1 per member per year, second year increased to $2, will be indexed to medical inflation thereafter.
- Transitional Reinsurance Fee – fees are distributed to health insurance issuers in the non-grandfathered individual market that disproportionately attract individuals at risk for higher medical costs with the intent of spreading the financial risk across all issuers.
- Temporary fee collected annually 2014-2016 – Approximately $5 per member per month for 2014 and will change for 2015.
- Insurer Fee ASA Health Insurance Industry Tax – Fully insured only – fee will fund premium tax subsidies for low income individuals and families who purchase insurance through the exchange.
- Annual, permanent fee…..Sources estimate impact of fee first year to be 2.5% of total premium.
- Risk Adjustment Fee – individual and small group markets only – funds the costs of HHS running the Risk Adjustment Program, redistributing premiums from plans with low risk population to plans with high risk population.
- Estimated to be $1 per member per year, rolled out in premiums not called out on invoices. Permanent beginning 2014.
Increasing the Small Business Tax Credit
The 2nd phase of the credit is up to 50% of the employer’s contribution to provide health insurance for employees. There is also up to a 35% credit for small non-profit organizations. To qualify:
- Employers must pay at least ½ single coverage for employees
- Must be NO more than 25 Full time equipment employees not counting owners and family members
- Average annual wages of employees must be less than $50,000.
Delay of Pay or Play
As of February 10, 2014 – businesses that have between 50 to 100 employees will be provided an additional year grace period to phase in mandated health care coverage of employees working in excess of 30 hours a week. Businesses which employee 100 employees or more will continue to be subject to the federal requirement to provide health care coverage. This will go into effect starting January 1, 2015. (Note this mandate was previous delayed by one year this past summer) Businesses with more than 100 employees must offer coverage to 70% of their full-time employees in 2015 and 95% of their employees in 2016.
Transitional Relief Policy
Obama Administration announced the transitional relief policy that allows individual and small group, fully insured, non-grandfathered policyholders to maintain their 2013 medical coverage through 2014; it indicated it would assess the policy and the specified timeframe. On March 6, 2014, the Centers for Medicare and Medicaid Services (CMS) announced it will extend the transitional policy for two years, for policy years beginning on, after or before Oct. 1, 2016, with the possibility of adding a one year extension. The transitional relief also applies to large businesses that currently purchase insurance in the large group market if, as of January 1, 2016, they will be redefined by the Affordable Care Act (ACA) as small businesses purchasing insurance in the small group market.
Repeal of Small Group Deductible Limits
On Tuesday, April 1, President Barack Obama signed into law a bill to delay for a repeal of the small group deductible limits established in the Affordable Care Act (ACA). Originally the ACA established limits on the deductible amounts of non-grandfathered health plans in the small group market for 2014 of $2,000 (self-only) or $4,000 (other than self-only) annually. The repeal of the limits means that all plan deductibles must stay under the out-of-pocket maximum limitations of $6,350 for individuals and $12,700 families for all subscriber cost-sharing created by the ACA.
HUMAN RIGHTS BILL 4118 – SUSPENDING THE INDIVIDUAL MANDATE PENALTY LAW EQUALS FAIRNESS ACT.
The purpose of this bill is to amend the Internal Revenue Code of 1986 to delay the implementation of the penalty for failure to comply with the individual health insurance mandate Introduced by Lynn Jenkins Republican out of Kansas on February 27, 2014, passed by the House of Representatives on March 5, 2014. This bill will need to be voted on by the Senate and signed off by the President before implementation.