EDITORIAL

9. The information contained in this presentation has been collected from multiple documents and presentations. It is not intended to contain any legal advice. Please consult with your legal advisors for specific information that may apply to you and your company.

10. AN EDITORIAL MOMENT

11. Insurance Companies Who’s to Blame? Doctors Lawyers Consumers Agents

14. The Law The President signed the health care legislation into law on March 23, 2010. The regulations defining the law are being written by HHS, DOL and IRS. IRS & OSHA have monitoring responsibility. CMS has responsibility for most of the implementation, including that of the Marketplace.

15. You Can Keep Your Insurance Grandfathered Plans

16. Grandfathered PlanBenefits of Retaining Status Exemption from rating restrictions based on age variation. Ability to continue coverage based on class. Exemption from implementing Essential Health Benefits (e.g. pediatric dental).

17. A Grandfathered Plan Increase Deductible up to 15%. Increase Copays up to 15%. Increase Coinsurance more than 15%. Decrease employer contributions by more than 5%.

18. Grandfathered Plan Most plans have lost “Grandfather” status. Those who have retained status must provide a statement to participant that it believes it is a “Grandfathered” plan. Do you have your documents?

19. Dependents Coverage

20. Age 26 Coverage for children must be available until the child reaches age 26. Do you have proof of the notice to employees? (Penalty up to $100 per day).

21. Minimum Loss Ratio MLR (2011) The MLR is 85% for large group plans and 80% for individual and small group plans (50 and below). Carriers will have to issue a premium rebate to individuals for plans that fail to meet the minimum MLR requirements.   

22. Large Groups 51 or More Full-Time Employees

23. Play or Pay

24. Employer Responsibility Effective starting January 1, 2015. Employer must count all full-time employees and part-time employees on a full-time equivalent basis in determining if they have 50 or more employees.

25. Does the employer have at least 50 full-time employees? NO PENALTY APPLIES START NO Play or Pay Penalties Beginning in 2014 Does the employer offer coverage to all full-time employees? Did at least one full-time employee receive a premium tax credit or cost-sharing subsidy through an Exchange? PENALTY APPLIES $2,000 x number of full-time employees minus 30 NO YES NO YES YES AFFORDABILITY TEST Is the employee’s required premium contribution for single coverage for the employer’s lowest-cost plan 9.5% or less of the employee’s household income? EXCHANGE SUBSIDY Do any employees purchase coverage in an exchange and receive a premium tax credit or cost-sharing subsidy? PENALTY APPLIES Lesser of $3,000 x number of employees receiving premium tax credits, or $2,000 x number of employees minus 30 NO YES NO YES NO MINIMUM VALUE TEST Does the employer-sponsored plan provide minimum value? YES NO PENALTY APPLIES

26. Calculating Full-Time Equivalent Employees Total number of full-time employees = 30. Part-time employees = 40. Total hours worked by each part-time employee in a calendar month = 20 hrs / week x 40 = 3,200 hrs. 3,200 / 120 = 27 Full-time-equivalent employees. Total full-time and full-time-equivalent employees = 57. Play or Pay penalties apply.

27. Affordable Coverage Example Employee hourly wage $9.50 per hour $9.50 x 40 hours = $380.00 $380 x 9.5% = $36.10 per week Employee cost of health insurance $156.43

28. Tracking Time Start tracking part-time hours now. Start tracking full-time hours now. Learn about the safe harbor for seasonal employees.

29. Miscellaneous Requirements If employee is covered by spouse’s plan there is no penalty to employer unless 50+ and employer does not provide coverage or provides unaffordable coverage. Employers are not required to cover spouses. Definition of a dependent does not include the spouse.

30. Small Groups 1 to 50 Full-Time Employees

31. PPACA “Metal” Plans

32. Minimum Value Standards Minimum value - actuarial value threshold of 60%. Small group plans in the bronze level of coverage meet minimum value requirements. Beginning in 2014, summaries of benefits and coverage must indicate whether the plan meets applicable minimum value requirements.

33. Minimum Essential Coverage • The type of coverage an individual needs to have to meet the individual responsibility requirement. • Individual market policies • Job-based coverage • Medicare, Medicaid, CHIP, TRICARE • The law does not specify the details of what this coverage has to be, other than it has to cover preventive care with no cost-sharing and can’t be dental-only or vision-only (limited benefit).

34. Minimum Value Calculator

35. Essential Health Benefits • The 10 categories of benefits individual and small employer plans have to provide: • Outpatient care • Emergency room • Treatment in the hospital • Maternity • Mental health and substance use disorder services • Prescription drugs • Rehabilitative and habilitative services. • Lab tests • Preventive services • Pediatric dental and vision

36. Age Rated Small Group Censuses must provide every dependent’s date of birth and the quotes will be lined out with a rate for each belly button.  So a quote (and the eventual billing) might look like this on a 3-person group: John Brown $328.95 Employee Joe Smith$358.23 Employee/Spouse/Children Jane Smith (wife) $429.29 Danny Smith (12) $158.77 Jennifer Smith (14) $158.77 Joey Smith (22) $253.97 Susie Smith (24) $260.09 Bobby Jones $598.98 Employee/Spouse Anna Jones (wife) $555.23

37. Health Insurance Marketplace (The Exchange)

38. Community Rating • Primary component of the law affected by • Age band limitations (7:1 goes to 3:1). • No health underwriting. • Cost-sharing limits (e.g. $2,000 ded). • Essential health benefits. • No pre-existing conditions.

39. Health Insurance MarketplaceThe Exchange Smaller provider networks. Smaller hospital network. No out of network benefits on some plans. Gatekeeper plans (no open access).

40. Health Insurance MarketplaceThe Exchange • Federal subsidies (only available through the Exchange) are based on: • The premium cost of the second-lowest silver Exchange plan. • The household income of the applicant. • The number of people in the tax household

41. Federal Subsidies

42. 2013 Federal Poverty Level

43. Individual Mandate Penalties • For individuals (whichever is greater) • 2014: $95 or 1% of income above tax filing threshold ($9,500 in 2011). • 2015: $325 or 2% of income above tax filing threshold. • 2016: $695 or 2.5% of income above tax filing threshold. • Note: Penalty for dependents under age 18 is one half of the individual amount. • For families (whichever is greater) • 2014: $285 or 1% of income above tax filing threshold. • 2015: $975 or 2% of income above tax filing threshold. • 2016: $2085 or 2.5% of income above tax filing threshold.

44. Community Rating • Real Life Examples • Family of three – 63 male, 59 female, 18 son • Current $2500 deductible plan $819.32 • 2014 $2500 deductible plan $1,397.29 • Family of four – 49 male, 50 female, 14 son, 12 daughter • Current $5000 deductible plan $423.93 • 2014 $2500 deductible plan $965.51

45. Small Business Marketplace(SHOP) • For a small business to qualify to purchase coverage on a SHOP they must: • Be in a SHOP service area. • Have at least one common-law employee (not owners). • Have 50 or fewer total FTE employees. • Pay a consistent percentage or amount toward the premium (at least 50%). • Receive tax credit. • An employer can use a defined contribution to pay for an employee to purchase individual coverage only if that coverage is purchased through a SHOP plan.

46. Planning is Essential

47. Increasing Premiums 3% to 4%

48. Taxes PCORI Tax-$2.00 per covered individual-Self Admin HRA, per each employee and each dependent. Reinsurance Tax-$63.00 per year per each employee and each dependent. Funds large claims in the individual market. HIT Tax- $8B divided by premiums collected in prior year 2014. $15B 2015, $18B 2016- Paid by insurers to help fund health care reform. All are pass through taxes.

49. January 1, 2013 Medicare Tax increase for high income earners an additional 0.9 to employees earning over $200,000 ($250,000 joint filers).

50. Miscellaneous Requirements