Healthcare Reform - Between the Marketplace and the Employer Shared Responsibility

1. Healthcare Reform - Between the Marketplace and the Employer Shared Responsibility Brad Wethington, CLU, ChFC, LUTCF Vice President – TPA Services Friday, May 16, 2014

2. Agenda Update on FFM and SBM 2014 Mid-year Enrollment Individual Mandate Employer Shared Responsibility Q&A

3. 2014 Open Enrollment • 8 million enrollees • 2.2M young adults (28 percent) • 2.7M between 0 and 34 (34 percent) • 85 percent qualified for subsidy • Indiana: 132,423 • Last-minute surge: • 3.8M; 1.2M • 47 percent of total and 52 percent of young adults • Young adult enrollment doubled

5. 2014 Open Enrollment • 98M website visits • 33M calls to call centers • All States but One (Washington, DC) with State Exchange failed to meet Youth goal of 39 percent (considered minimum to keep premiums low) • Wide variation by State, Ethnicity • California highest percentage of people (43 percent) eligible for marketplace enrollment • Top 12 states enrolled at least 30 percent of their eligible populations; bottom 17 states 20 percent or fewer • Only 400,000 Latinos of 10.2 million eligible

6. Results • Total enrollment on Exchange, through brokers & Medicaid expansion = 17.8M • No data on how many were already insured • Percentage of adults without insurance reduced from 18 percent of the adult population (40M uninsured) to 15 percent (33M uninsured) – a reduction of 7.26M • 7.26M new insureds result in Q12014 health spending growth of 9.9 percent – fastest in over thirty years: • Increase in elective surgeries • Increase in costly medications

7. Open Enrollment Still Open • Birth or adoption of a child • Marriage, divorce • Losing eligibility on parent’s health plan upon turning 26 • Moving to a new area • Special Enrollment Period (i.e., through July 1) for COBRA eligible • Individuals whose individual market plans are renewing outside of open enrollment have 60 days from the renewal date to select QHP • 60-day Special Enrollment period beginning 5/1 for those currently in a high-risk pool who have not purchased coverage through marketplace

8. Enrollment Costs & Plans For 2015 • Cost per uninsured enrollee between $5.42 and $25,000 • State exchanges must be financially sustainable by end of 2015 when federal funding ends • FFM States Contemplating SBM: • New Mexico • Idaho • SBM States Contemplating FFM: • Oregon and Maryland – already announced • Minnesota, Nevada, Massachusetts - considering

10. Individual Mandate • 2014 • $95 per adult; $47.50 per child (up to $285 for family) or 1 percent of income, whichever is greater • First $10,000 exempt; $20,000 for family • Penalty pro-rated by the number of months without coverage • No penalty for single gap of less than 3 months • Hardship exemption for purchases made on or off exchange through 5/1 • 2015 • $325 per adult; $162.50 per child (up to $975 for family) or 2 percent of income, whichever is greater • Same rules apply as 2014 except (maybe) the hardship exemption

11. Employer Shared Responsibility Rules AKA Employer Mandate Final Rules Released February 10th Rules Generally Take Effect 1/1/15

12. Important Changes from Rules Issued December, 2012 Phase in employer requirements for smaller employers (i.e., <100 FT equivalent employees) until 1/1/16 <50 FTE equivalent still exempt To be eligible, employer will have to go through a certification process

13. Certification Process During period beginning on 2/9/14, and ending on December 31, 2014, employer certifies they did not reduce the size of their workforce or the overall hours of service of its employees in order to satisfy the workforce size condition Employees of entities that are part of controlled group still aggregated when determining if mandate enforcement applies

14. Employee Count Employer establishes 6 mo period in 2014 to count employees for 2015 If ER uses last few months as measurement period, Er will not have to have compliant plan in place until 4/1/15

15. Employer Shared Responsibility Penalties not assessed if offer coverage to at least 70 percent of FTE (increases to 95 percent in 2016) Employer may still be subject to the “b” penalty of $3,000 per individual employee if an otherwise eligible employee who was not offered coverage does seek and obtain subsidized coverage through exchange Choice to exclude certain classes of workers in order to fall under 70% coverage may be deliberate for 2014, as this transition relief was intended to make the transition to the 30 hours/week standard of offering coverage easier for employers

16. Additional Rules Non-calendar plans not required to comply until first renewal on-or-after 1/1/15 (applies to ERISA plan year defined in SPD) No penalties to ER’s not offering coverage to dependents in ‘15 as long as they’re taking steps to offer in ‘16

17. Exempt Employees • Service hours of certain types of individuals not taken into consideration even if receiving some compensation (e.g., expense reimbursements): • Bona fide volunteer • Students participating in federal work-study program • Individuals who work for religious organizations who have taken vow of poverty • Rule provides detailed guidance on counting hours: • Adjunct faculty • People with on-call duty responsibility (e.g., medical personnel, people with layover hours like airline employees, commissioned sales people)

18. For More Information • NAHU: http://newsmanager.commpartners.com/nahuw/issues/2014-02-11/index.html • IRS: http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act • US Treasury Department: http://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet%20021014.pdf

20. Premium Subsidies

21. Cost-Sharing Subsidy

22. Maximum Liability

23. Questions