LTC 069-2013 Impact of the Patient Protection M I . A MI BEACH
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OFFICE OF THE CITY MANAGER . w �u
NO. LTC # 069 -2013 LETTER TO COMMISSfJO
To: Mayor Matti Herrera Bower and Members of the City Commission 3n:- ' ..
FROM: Kathie G. Brooks, Interim City Manager
DATE: February 28, 2012
SUBJECT: Impact of the Patient Protection and Affordable Care Act to the City of Miami
Beach for the 2013 Plan Year
We have now entered into the third year of the Patient Protection and Affordable Care Act
(PPACA). In order to comply with mandates of the PPACA, the City made the following
changes to its health plans during the previous two years which, resulted in little, if any, cost
impacts the City's medical plans. The following outlines the revised provisions of the
PPACA and the impacts associated with these changes to the City's medical plans.
Revised Provisions Effective in the 2011 Plan Year
• Lifetime dollar limits removed from all plans
This mandate eliminated the City's $2M lifetime limits on its Standard HMO and
Standard PPO plans and eliminated the $5 million lifetime limit on its Premium
HMO, Premium PPO and POS plans.
• Dependent coverage increased from age 25 to age 26
The Administration monitored the enrollment of dependent coverage for those over
age 25 during the 2011 Annual Open Enrollment period. There were no new
enrollments of dependents who were age 25 during the 2011 enrollment period.
There were some previously enrolled dependents who attained age 25 during the
plan year whose coverage was extended to age 26. At this time, no perceptible cost
impact to the plan has been determined.
• Elimination of pre- existing condition limitations for enrollees up to age 19
Previously, employees would have provided a HIPPA Certification indicating that
their dependent had health coverage in the prior 18 months. This certification
removed the pre- existing limitation for the dependent. At this time, no perceptible
cost impact to the plan has been determined.
• No recessions, meaning an employer cannot retro - actively terminate an
employee's coverage, unless there was an error in the employee's enrollment
The City has not experienced a correction in an employee's enrollment that has
created a retroactive termination of benefit coverage. Plan enrollments are
annually to ensure that the employee is enrolled in the plan option elected.
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We ore committed ro providing excellent public service and scfey to all who live, work, and play in our vibrant, tropical, historic community.
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• Coverage for preventative care received by network physicians provided at no
cost sharing by the plan participant
In reviewing claims costs, we have not recognized a significant impact to the cost of
preventative care to the plans.
• New requirements for appeals to the plan for coverage of services not
covered by the plan, including plan response deadlines and final, external
review from an outside, third party were required
The City is contracted with the benefits plan carrier which requires the plan carrier to
act as the Plan Fiduciary, eliminating the responsibility from the City to make
coverage determinations based on a participant's benefit appeal. The expenses for
these required changes were the responsibility of the benefits carrier as Plan
Fiduciary and not the City and thus, were absorbed by the City's current plan carrier,
Humana.
Effective in the 2012 Plan Year
• W -2 Form reporting for the employer cost share of the employees elected
health care coverage
This information is included on the 2012 W -2 Forms received by all employees.
Changes were made internally to the City's computer system providing for the
printing of the information on the employee's W -2. The City did not incur a cost.
• Distribution of a uniform summary of benefits reflecting the scope of
coverage by the plan, provided in a 12 -page document, written in simple
language to be distributed no later than March 2013
Humana is providing the summaries of benefits to the City at no additional cost.
These summaries of benefits will be electronically available to all employees in
March 2013.
Effective in the 2013 Plan Year
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• The plan year limit for Health Care Flexible Spending Accounts reduced to
$2,500 from $5,000
Flexible Spending Accounts are funded solely from employee contributions;
therefore, there is no cost impact to the City.
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• Annual dollar limits on essential health benefits cannot be lower than $2M
The City's plans did not have dollar limits on the benefits provided, (all of the
plans have a limitation on the number of annual visits per year) therefore, there
is no cost impact to the City.
• Comparative Effectiveness Fees for group health plans
PPACA imposes a new fee on group health plans to promote research
comparing effectiveness and risks of medical treatments. The initial fee is due
by July 31, 2013. For the 2013 plan year, the fee is $1.00 multiplied by the
average number of covered lives (based on enrollment for the previous year).
For the 2014 plan year, the fee increases to $2.00 per average covered life. For
later years, the fee will increase in accordance with medical inflation. The fee
will only apply through the 2019 plan year. Currently, the average enrollment for
all active employees in the City's five medicals, including the FOP and IAFF
Health Trusts, is 1,494 lives. For 2013, the City's cost for the Comparative
Effectiveness Fee will be $1,494.
• FICA Tax Increase
Effective January 1, 2013, the Medicare withholding increased from 1.45% to
2.35% for wages over $200k (or $250k for married couples filing jointly).
• Notice of Insurance Exchanges
Employers must provide notice to all employees explaining their right to
purchase healthcare coverage through an exchange, their right to possible
eligibility for potential government subsidies for healthcare coverage purchased
through an exchange, and other features of the exchange. However, as of this
date, no guidance has been provided to employers as to what information to
share with their employees. The Department of Labor (DOL) has postponed
distribution of this notice to employees until the notice can be coordinated with
the Health and Human Services (HHS) educational efforts and the Internal
Revenue Service (IRS) guidance regarding the minimum value that can be
provided. The DOL expects that the timing of distribution of these notices will be
in late summer or fall of 2013, coordinating with the open enrollment period for
the exchanges.
The Administration is currently working closely with its benefit consultants, Gallagher
Benefits Services, to monitor any changes in the current mandates, to comply, implement
and determine the cost impact of future mandates of the PPACA for plan year 2014 through
2018. Information regarding future impacts to the City's medical plan, including the
estimated cost impact to the plans, will be provided to the members of the City Commission
as soon as they are available.
Should you have any questions, or need additional information, please feel free to contact
me.
KGB /CG /sr j
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