Affordable Care Act Update for Churches and Nonprofits

Affordable Care Act Update May 2014 Donna Lively Director of Insurance Plans GuideStone Financial Resources

Agenda • Individual Mandate • Employer Mandate • Reporting and Taxes

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Background • Core of law is an attempt to reduce number of • • • •

uninsured Requires most in U.S. to have health insurance Creates state-based Exchanges (federal as well) Large employers required to offer coverage or pay penalties Expands Medicaid to 138% of the federal poverty level ◦ 26 states have expanded Medicaid

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Happening Now • • • • •

23 delays to the law 50 regulations in process of being written right now Recent changes to HRA/EPP/FSA Recent changes to Employer Mandate Congress in a deadlock

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Individual Shared Responsibility — Individual Mandate

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2014 Impact: Individuals and Families • Individual Shared Responsibility provision began January 1, 2014 • Everyone with income above the poverty level must have “minimum essential coverage” • Some exemptions to individual mandate do apply ◦ Hardship ◦ Indian Tribe ◦ Religious Objection ◦ Incarcerated/Not in U.S. legally ◦ Coverage under health care sharing ministry — such as Medi-Share or Samaritan’s Trust – considered MEC

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2014 Impact: Individuals and Families • Penalty is $95 or 1% of Household income in 2014 ◦ There are penalty maximums • 2014 penalty collected with 2015 tax refund ◦ If you aren’t owed a refund, you don’t pay the penalty  Penalty never goes away  If you ever have a refund the penalty will be deducted • Penalty increases year over year ◦ $325 or 2% in 2015 ◦ $695 or 3% in 2016 7

2014 Impact: Exchanges/Marketplaces • Exchanges opened as an alternative for people with: ◦ No other available coverage ◦ Lower to moderate income ◦ Pre-existing medical conditions • Open enrollment period: ◦ Annual time to enroll for coverage ◦ October 01, 2013 – March 31, 2014 (extended for 2014) ◦ HIPAA Qualifying Event for off-annual-enrollment ◦ Non-HIPPA QE for short term coverage would include medical underwriting 8

2014 Impact: Exchanges/Marketplaces Who will be offering coverage in the exchanges? • Fully insured, state-regulated insurance companies • Participating carriers (varies by state) • No church plans or unions are allowed to offer benefits in the Exchanges and their participants are not eligible for a subsidy What networks and benefits will be available? • Majority are more narrow provider networks • High-tech, sub-specialty providers probably not available through the exchanges • Variety of benefit options 9

2014 Impact: Exchanges/Marketplaces Would the exchanges save me money? • Premium tax credit (subsidy) ◦ Tax credit offered to Americans who earn less than 400% of poverty level. ◦ Note: Clergy housing allowance is not included in household income calculation. • Cost-sharing reductions (subsidy) ◦ Lower deductible and higher co-insurance level for persons earning less than 300% of poverty level. ◦ Claims paid at the “higher” level regardless of chosen plan. 10

Eligibility for Premium Tax Credit

FPL* 2014

Individual

Family of four

100%

$11,850

$24,450

400%

$47,400

$97,800

*Federal Poverty Level (FPL) The premium tax credit is not available to employees of employers that adopt the Small Business Health Options Program (SHOP).

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2014 Impact: Exchanges/Marketplaces and SMALL GROUP Rating rules? • Guaranteed issue and renewability • Restrictions on rate flexibility — rates can vary by: ◦ Community rating ◦ Age — 1:3 slope from younger to older ◦ Family size  Larger the family the higher the rate ◦ Geography ◦ Smoking habits — 1:1.5 upcharge

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2014 Impact: Exchanges/Marketplaces and SMALL GROUP What will the plans look like? • Creation of standard metallic benefit plans • Essential health benefits required ◦ No coverage dollar limit for the 10 identified categories of services • Maximum out-of-pocket spending (MOOP) limits: ◦ No more co-insurance maximums ◦ MOOP are an aggregate of all eligible, in-network medical and RX including co-pays, deductibles, coinsurance,  $6,350 — Individual (2014)  $12,700 — Family (2014) 13

Premium Tax Credit is NOT available if you are… • Offered an employer sponsored health plan that is

• • • •

affordable and of minimum value Enrolled in an employer plan Are covered by Medicare or Medicaid Are covered by another government coverage Have income above 400% of poverty level

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Small Group Insurance • 96% of all organizations are less than 50 FTE • Small group has no mandate to offer coverage • Small group defined as: ◦