ACA|Readiness A Guide for Nevada Employers Broker Name Agency Contact Information

ACA | Readiness The Patient Protection and Affordable Care Act (ACA) was signed into law on March 23, 2010, with the aim to improve the quality of health care in America and increase access to care for individuals and businesses.

ACA | Readiness – Budget Considerations Beginning in 2014, the ACA only allows for rate variance by four factors: age, family composition, geographic location, and tobacco use. Nevada will employ 4 Rating Regions Member Level Rating Each individual will be rated (cap of 3 on children under 21) 3:1 ratio will limit rates charged to 64 year-old to 3x those charged to 21 year-olds Risk Adjustment Factors (RAF) are no longer used Single-year age bands: no rate increases on birthday months, only policy anniversaries New 2014 Small Group Insurance Rating Structure

ACA | Readiness – Budget Considerations Beginning in 2010, ACA provides tax credits to eligible small businesses with no more than 25 employees and average annual wages of less than $50,000, offsetting the employer cost of providing health insurance to employees to 2013: A tax credit up to 35% of employer costs to 2016: A tax credit up to 50% of employer costs for those businesses that qualify and purchase coverage from the Covered Nevada Health Link’s Small Business Health Options Program (SHOP). Small Employer Health Care Tax Credit

ACA | Readiness – Budget Considerations With uncertainty in how 2014 Member Level Rating will affect group premium, carriers have begun offering the ability to “ Early Renew ” an existing policy, so application of the new structure will not take effect until December Early Renewal Options CarrierBasic GuidelinesDeadline St. Mary’s Health PlansSubmit Early Renewal Rate Request Form.11/1/2013 Note: Only programs still open for submission at the time this document was created have been included.

ACA | Readiness – Budget Considerations The following fees, mandated by the ACA, will be assessed on health insurance carriers. These are being integrated into the rates charged for coverage in PCORI – Patient Centered Outcomes Research Institute Goal: Explore the effectiveness of medical treatment Reinsurance Tax Goal: To help reinsure the individual market insurers who cover people with expensive claims Health Insurer Tax Goal: To help fund premium tax credits and cost-sharing subsidies for lower income individuals and families Taxes & Fees

ACA | Readiness – Budget Considerations The ACA requires small employer health plans to spend 80% of premium on health care. Carrier Rebates: Carriers that exceed the allowed 20% margin for business costs must rebate the difference to their employer- customers. Employer Rebates: Employers receiving a rebate must distribute to their employees their portion of the rebated premium within 3 months. – These rebated amounts should be proportionate to the employee’s contribution. Medical Loss Ratio (MLR) Rebates

ACA | Readiness – Plan Administration The ACA mandates a maximum 90-day waiting period for new-hires to be enrolled in a group medical plan. Common Waiting Periods: 1 st of the month following the date of hire 1 st of the month following 30 days after the date of hire 1 st of the month following 60 days after the date of hire 1 st of the month following 90 days is not acceptable. 90-day Waiting Period Maximum

ACA | Readiness – Plan Administration Groups of two married individuals may be excluded from Small Group insurance beginning in Beware: Carriers may begin to automatically transition these 2- person groups into individual coverage, and many carriers will only be offering limited networks on IFP products. Spouse-Only (2-person) groups

ACA | Readiness – Plan Administration In 2014, FSA contributions will be limited to $2,500. FSA documents must reflect this change. If a group is Early Renewed, the FSA must reflect the plan-year change. Flexible Spending Account (FSA) Limits

ACA | Readiness – Plan Administration Carriers are finalizing Underwriting requirements, including participation guidelines. IFP policies purchased through Nevada HealthLink (or elsewhere) will continue to be counted against participation; they are not eligible waivers. Annual Open Enrollment (11/15 to 12/15 each year) will allow an employer that cannot qualify due to participation or contribution to enroll without meeting these requirements. Whether the Open Enrollment begins with 2013 or 2014 is still being debated. Participation Requirements

ACA | Readiness – Plan Administration Small Group: ACA defines Full-Time status Federally as employees who work an average of 30 hours per week (130 hours per month) Large Group: ACA defines Full-Time status Federally as employees who work an average of 30 hours per week (130 hours per month) Full-Time Employee Definition

ACA | Readiness – Plan Administration Though delayed, the Large Employer Mandate will require employers to determine group size to ensure coverage is offered as mandated, and in 2014 to prepare for compliance with the mandate effective in Large Employer = 50+ Full-Time Equivalent Employees (FTE) In 2015 Large Employers must offer “ affordable ” coverage or face penalties. The Standard Measurement Period will begin in 2014; employers should begin tracking employee hours and group size now. The Standard Measurement Period used will determine the Stability Period and review cycle needed to maintain compliance. Small Employers = no penalty and no mandate Group Size Determination - The Large Employer Mandate (it’s still coming!)

ACA | Readiness – Plan Administration Two or more companies that have a common owner are combined for the purpose of calculating group size. The combined FTE calculation will render mandated responsibility or not on each individual organization regardless of the individual organization ’ s group size. Beginning 1/1/15, employers not offering “ affordable ” coverage with minimum value will be assessed a $2,000 annual fine multiplied by the number of full-time employees (minus the first 30), if at least one employee receives subsidized coverage on a State (or a Federally Facilitated) Exchange. Controlled Group / Common Ownership & Group Size

ACA | Readiness – Plan Administration Under common law rules, anyone who performs services for you is your employee if you control what will be done and how it will be done. Changing an employee ’ s status to 1099 from W-2 will not change the IRS ’ consideration of the employee’s status when this principle is applied. Common Law Employee

ACA | Readiness – Plan Administration All employers subject to the Fair Labor Standards Act (FLSA) should provide notice to current employees and new hires regarding the Health Insurance Marketplace (Nevada Health Link) and its offer of subsidized coverage. Though there is no penalty for non-compliance, delivery of these notices by 10/1/13 and then within 14 days of hire is law. Some small employers may not be subject to FLSA if they are not involved in interstate commerce, but these businesses are a minority. Employee Notices & Documents

ACA | Readiness – Plan Administration ACA requires individual and group health plans to provide a uniform Summary of Benefits & Coverage (SBC) to all applicants and enrollees. The SBC is not the same as the carrier’s Summary of Benefits. The SBC must be provided in threshold languages in areas where a minority group has attained a sufficient percentage of the populace. Carriers offer SBCs in all required languages on their websites. Summary of Benefits & Coverage (SBC)

ACA | Readiness – Plan Administration ACA requires an employer offering group health coverage to provide a notice of plan modification to enrollees at least 60 days prior to the effective date of any modification This requirement does not pertain to carrier-issued renewal modifications. 60-Day Notice of Modification

ACA | Readiness – Plan Design Changes Beginning in 2014, all individual and small group health plans must designate their actuarial value (percent of cost paid by the plan for covered benefits in- network) by Metal Tier. Metal Level Plans (Bronze, Silver, Gold & Platinum) Bronze Plan pays 60%* of the costs for covered benefits in-network Silver Plan pays 70%* of the costs for covered benefits in-network Gold Plan pays 80%* of the costs for covered benefits in-network Platinum Plan pays 90%* of the costs for covered benefits in-network * Values can vary +/- 2%.

ACA | Readiness – Plan Design Changes Individual and small group insurers must offer plans in 2014 and beyond that deliver minimum EHB. There are 10 categories: Ambulatory Services Emergency Services Hospitalization Maternity & Newborn Care Mental Health & Substance Abuse Services Prescription Drugs Rehabilitative and Habilitative Services and Devices Laboratory Services Preventative and Wellness Services Pediatric Dental & Vision Essential Health Benefits (EHB)

ACA | Readiness – Plan Design Changes The ACA limits deductible maximums in 2014 to $2,000 single / $4,000 family. Actual deductibles are likely to be significantly lower because plans must cover at least 60% of health care costs (Bronze). Higher deductible health plans will no longer be available at the Silver, Gold or Platinum metal tiers. Deductible maximums do not apply to middle-market or large- group carrier products. Deductible Maximums

ACA | Readiness – General Compliance The ACA prohibits fully-insured employer groups from offering discriminatory coverage to their employees, officers, and shareholders. Highly-compensated employees cannot be offered coverage options that are not offered to all employees. This mandate does not apply to self-funded employer groups. Although this mandate went into effect on 9/23/2010, federal regulators have suspended enforcement until final guidelines are provided. Non-discrimination