State Law Resources Conference

1. Randi Reichel, Esq. Vice President, Regulatory Affairs UnitedHealth Group Affordable Care Act – Implementation Challenges State Law Resources Conference

2. ACA IMPLEMENTATION CHALLENGES -- 2014 • ACA Implementation – Challenges Galore: • Market Rule Changes • Exchange Timelines • Funding • Uncertainty • Implementation and enrollment

3. Market Rule Changes

4. 1 3 2 1 Expanded Benefits • RatingChanges • Taxes & Fees

5. 2012 2013 2014 Health care reform timeline • 60-day advance notice of material modifications • Accountable Care Organization requirements • Appeals provision fully implemented G • First medical loss ratio rebates to be paid by August • New women’s preventive services with no cost sharing G • Patient-centered Outcomes Research Institute (PCORI) fee ($1 per member/year) • Quality bonus begins for Medicare Advantage plans • Summary of Benefits and Coverage (SBC) and the Uniform Glossary • Administrative simplification begins • Annual fee on medical device sales begins • Deduction for expenses allocable to the Part D subsidy for “qualified prescription drug plans” eliminated • Employee notification of access to Exchanges • FSA contributions limited to $2,500 • High earner tax begins • PCORI fee increases to $2 per member/year • W-2 reporting on the value of employer-sponsored health benefits • Coverage for all adult children until age 26 including those that have employer coverage (formerly not covered for grandfathered plans) • Deductible caps cannot exceed $2k for individual and $4k for family G • Essential health benefits required for small employers G • Guaranteed issue and renewability G • Health Benefit Exchanges • ICD-10 code adoption • Individual & employer mandates • Insurer fee – permanent • Mandatory coverage for clinical trials G • No annual dollar limits • No pre-existing condition exclusions • OOP limits must comply with OOP limits for HSA qualified plans G • Quality of Care Reporting Requirements • Rating restrictions / Adjusted community rating G • Tax credits and subsidies for individuals and small employers • Transitional reinsurance fee (2014-2016) • Waiting period limits • Wellness programs G Grandfatherable provision. Note: some provisions apply only to fully insured business (e.g., MLR and guarantee issue)

6. Expanded Benefits Individual and small group plans must provide Essential Health Benefits Package. Four components of package: Essential Health Benefits  Ten required coverage categories 1 Out-of-Pocket Maximum  New accumulation rules and ceiling 2 3 Small group deductible ceiling  $2,000 single/$4,000 family 4 Limited to “Metallic” coverage levels  Bronze, Silver, Gold, Platinum

7. Expanded benefits • These requirements are limited to “Metallic” coverage levels (Bronze, Silver, Gold, Platinum) Metallic Coverage Levels • of the actuarial value of the covered benefits Plan Type % • Bronze 60% • Silver 70% • Gold 80% • Platinum 90%

8. Rating and market rule changes Huge market changes…especially for small groups • Small groups move to adjusted community rating where all policyholders’ premiums only vary by location, small age bands and tobacco use • All plans: • Removal of pre-existing conditions • Guaranteed issue and renewal of coverage • No medical underwriting For individual and small group markets

9. Exchange Timelines

10. EXCHANGE TIMELINES • Three “types” of exchanges – • State exchange • Federal exchange • Partnership exchange • Unique characteristics for each and unique challenges

11. Timeline for Exchanges • In 2014–2016, individuals and small group employers can participate. 2017 2013 2014 2015 2016 Beginning 2017, large group employers may be able to participate. By late summer or fall, employers must provide all employees with information about Exchanges.

12. Market influencers: Movement and more movement • 20 million purchasing through Exchanges • 30 million newly insured • 15 million affected by Medicare increases 80 million potentially switching coverage Estimates above based on public sources including CBO and Lewin Group publications

13. Discussion Draft Yes Check with your Medicaid Office eligibility may change 1/1/2014 You can choose employer plan coverage or Health Insurance Marketplace coverage with a tax credit Is your income ≤ 133% of FPL? You may purchase non-group coverage outside of Health Insurance Marketplace You may be eligible for Medicaid Did state expand Medicaid? Did state expand Medicaid? You can choose employer plan coverage or may be able to buy non-group coverage outside of Health Insurance Marketplace Does the employer or union plan cover at least 60 % of health expenses on average? Is family income between FPL and 4 x FPL? Is family income between FPL and 4 x FPL? Family is guaranteed access to unsubsidized coverage through Health Insurance Marketplace or non-group coverage outside of Health Insurance Marketplace You can choose employer plan or unsubsidized coverage in Health Insurance Marketplace or go to the outside non-group market Are you a citizen or legal resident? Would you pay > 9.5% of family income for single coverage? You are guaranteed access through Health Insurance Marketplace and eligible for tax credit Is your income ≤ 133% FPL? Are you a citizen or legal resident? You maybe eligible for Medicaid Are you in Medicare / Medicaid No No Does caller appear English language proficient? Yes Yes Yes Yes Yes Start Yes Yes Yes No No Yes Yes No Yes Yes No No No No No No No Are you eligible for coverage from an employer or union? Engage appropriate assister No Are you a citizen or legal resident? No Yes 4/1/2013

14. For use in states that HAVE expanded Medicaid Discussion Draft Yes Check with your Medicaid Office eligibility may change 1/1/2014 You can choose employer plan coverage or Health Insurance Marketplace coverage with a tax credit Is your income ≤ 133% of FPL? You may purchase non-group coverage outside of Health Insurance Marketplace You may be eligible for Medicaid You can choose employer plan coverage or may be able to buy non-group coverage outside of Health Insurance Marketplace Does the employer or union plan cover at least 60 % of health expenses on average? Is family income between FPL and 4 x FPL? Is family income between FPL and 4 x FPL? Family is guaranteed access to unsubsidized coverage through Health Insurance Marketplace or non-group coverage outside of Health Insurance Marketplace You can choose employer plan or unsubsidized coverage in Health Insurance Marketplace or go to the outside non-group market Are you a citizen or legal resident? Would you pay > 9.5% of family income for single coverage? You are guaranteed access through Health Insurance Marketplace and eligible for tax credit Is your income ≤ 133% FPL? Are you a citizen or legal resident? You maybe eligible for Medicaid Are you in Medicare / Medicaid No No Does caller appear English language proficient? Yes Yes Yes Yes Start Yes Yes No No Yes Yes Yes Yes No No No No No No No Are you eligible for coverage from an employer or union? Engage appropriate assister Are you a citizen or legal resident? No Yes 4/1/2013

15. For use in states that have NOT expanded Medicaid Discussion Draft Yes Check with your Medicaid Office eligibility may change 1/1/2014 You can choose employer plan coverage or Health Insurance Marketplace coverage with a tax credit Is your income ≤ 133% of FPL? You may purchase non-group coverage outside of Health Insurance Marketplace You can choose employer plan coverage or may be able to buy non-group coverage outside of Health Insurance Marketplace Does the employer or union plan cover at least 60 % of health expenses on average? Is family income between FPL and 4 x FPL? Is family income between FPL and 4 x FPL? Family is guaranteed access to unsubsidized coverage through Health Insurance Marketplace or non-group coverage outside of Health Insurance Marketplace You can choose employer plan or unsubsidized coverage in Health Insurance Marketplace or go to the outside non-group market Are you a citizen or legal resident? Would you pay > 9.5% of family income for single coverage? You are guaranteed access through Health Insurance Marketplace and eligible for tax credit Is your income ≤ 133% FPL? Are you a citizen or legal resident? Are you in Medicare / Medicaid No No Does caller appear English language proficient? Yes Yes Yes Start Yes No No No Yes Yes Yes Yes No No No No No No Are you eligible for coverage from an employer or union? Engage appropriate assister Are you a citizen or legal resident? No Yes 4/1/2013

16. Discussion Draft • How will DOI refer customers to the Health Insurance Marketplace or to other agency, entity or individuals, such as navigators, agents and brokers to ensure consumer has access to Health Insurance Marketplace products and possible tax advantages? • Refer Medicaid Customers to XXX-YYY-ZZZ* • Refer Medicare Customers to State Health Insurance Assistance Program (SHIP) at AAA-BBB-DDD, or to other Medicare support number as determined by the DOI.* Check with your Medicaid Office eligibility may change 1/1/2014 You may purchase non-group coverage outside of Health Insurance Marketplace You can choose employer plan or unsubsidized coverage in Health Insurance Marketplace or go to the outside non-group market You are guaranteed access through Health Insurance Marketplace and eligible for tax credit You maybe eligible for Medicaid • Refer Medicaid Customers to XXX-YYY-ZZZ* • How will DOI refer customers to the private market outside of the Health Insurance Marketplace? • Refer Medicaid Customers to XXX-YYY-ZZZ* Engage appropriate assister • Refer Customers to appropriate Assister at XXX-YYY-ZZZ* *States will have to determine when, how and to which agency or entity with regard to conducting “soft handoffs” 4/1/2013

17. Taxes and Fees

18. to help fund the Patient-Centered Outcomes Research Institute Taxes & Fees PCORI Fee to fund Health Insurance Exchanges Insurer Fee Transitional Reinsurance Fee to stabilize individual and small group markets on rich benefit coverage Excise Tax

19. Taxes and fees at a glance Transitional Reinsurance Fee Excise Tax Projections based on analysis of study by Oliver Wyman & AHIP 2012

20. Taxes and fees at a glance, continued Transitional Reinsurance Fee Excise Tax Projections based on analysis of study by Oliver Wyman & AHIP 2012

21. Illustrative Many consumers and employers will face substantial price increases Individual Market Premium Increase * Small Group Market Premium Increase ** Large Group Premium Increase Estimated pricing impacts -5% to +50% 25% to 200% 15% to 20% Guaranteed Issue and Rating Rules 0 - 100% Community Rating -25% to 25% Employer Movement 2-3%*** Product 15 - 30% Transitional Reinsurance Fee Product 3 to 5% Product 6 - 10% 10% 10% 10% Taxes/Fees 3.8% Taxes/Fees 3.8% Taxes/Fees 3.8% Avg Rate Increase 10% Avg Rate Increase 10% Avg Rate Increase 10% Avg Rate Increase: 10% Avg Rate Increase 10% Avg Rate Increase 10% Excise Tax Pre-Reform Post-Reform Pre-Reform Post-Reform Pre-Reform Post-Reform Community Rating causes significant disruption for many groups. Incremental Increase to rates beginning in 2013 to cover taxes, fees and benefits. Reform Compliance drives significant price increases. * Before the impact of reinsurance credits and any applicable premium subsidies. Reflects a range for the majority of policies; actual results could be outside this range. ** Reflects the majority of groups in states with moderate underwriting flexibility prior to 2014. Actual results could be outside this range. *** Represents the impact of small employers dropping coverage or changing their renewal date in response to 2014 premium changes.

22. Uncertainty

23. Questions?