Health Care Reform

1. Health Care Reform Summary of Provisions Under the Patient Protection and Affordable Care Act (PPACA) Presented March 2013 By Allegiance Benefit Advisors Inc. Allegiance Benefit Advisors Inc. 495 Purchase Street, Swansea, MA 02777-5023 Phone/Fax (774) 565-2002 • allegiancebenefitadvisors@gmail.com

2. PPACA Background The Patient Protection and Affordable Care Act (PPACA) is aimed primarily at decreasing the number of uninsured Americans and reducing the overall costs of health care. It provides a number of mechanisms—including mandates, subsidies, and tax credits—to employers and individuals in order to increase the coverage rate. PPACA together with the Health Care and Education Reconciliation Act represents the most significant regulatory overhaul of the U.S. healthcare system since the passage of Medicare and Medicaid in 1965. Allegiance Benefit Advisors Inc.

3. Health Reform Timeline Allegiance Benefit Advisors Inc.

4. Health Reform Timeline Allegiance Benefit Advisors Inc.

5. 2013 The CIP Group * 799 Cambridge St * Cambridge, MA 02141 * (617) 354-0866 Allegiance Benefit Advisors Inc. .

6. 2014 Allegiance Benefit Advisors Inc. The CIP Group * 799 Cambridge St * Cambridge, MA 02141 * (617) 354-0866

7. Individual Mandate in Reform Under health care reform law, all people must have minimum essential coverage beginning January 1, 2014. People have "minimum essential coverage" if they have a: • Government-sponsored plan • Employer-sponsored plan • Individual plan People can choose to buy health insurance on or off state insurance exchanges that will open in 2014. Some people can also get federal premium assistance on an exchange. If a person cannot keep minimum essential coverage, the Internal Revenue Service will collect a tax penalty from him or her. The monthly tax penalty is described as 1/12th of the greater of: • For 2014: $95 per uninsured adult in the household (capped at $285 per household) or one percent of the household income over the filing threshold. • For 2015: $325 per uninsured adult in the household (capped at $975 per household) or two percent of the household income over the filing threshold. • For 2016: $695 per uninsured adult in the household (capped at $2,085 per household) or 2.5 percent of the household income over the filing threshold • The penalty will be half of the amount for people under age 18. There are a few exceptions to the penalty, including: • Religious reasons • Not present in the United States • In prison • Not able to pay for coverage that is more than eight percent of the household income • An income that is below 100 percent of the poverty Level • Having a hardship waiver • Not covered for less than three months during the year Allegiance Benefit Advisors Inc.

8. PPACA subsidies provide to people buying health insurance Eligibility rules enacted under PPACA give states the option of extending coverage in Medicaid to most people with incomes under 138% of poverty. For people with somewhat higher incomes (up to 400% of poverty), PPACA provides tax credits that reduce premium costs. People with incomes up to 250% of poverty also are eligible for reduced cost sharing (e.g., coverage with lower deductibles and copayments) paid for by the federal government. The premium tax credits and cost-sharing assistance will begin in 2014. People eligible for public coverage are not eligible for premium assistance in exchanges. In states without expanded Medicaid coverage, people with incomes less than 100% of poverty will not be eligible for exchange subsidies Allegiance Benefit Advisors Inc.

9. PPACA subsidies: Tax Credit Amounts The amount of the tax credit that a person can receive is based on the premium for the second lowest cost (silver) plan in the exchange area where the person is eligible to purchase coverage. A silver plan is a plan that provides the essential benefits4 and has an actuarial value of 70%. (In PPACA, a 70% actuarial value means that on average the plan pays 70% of the cost of covered benefits for a standard population of enrollees.) The amount of the tax credit varies with income such that the premium a person would have to pay for the second lowest cost silver plan would not exceed a specified percentage of their income (adjusted for family size), as follows: Allegiance Benefit Advisors Inc.

10. Subsidy Amounts Not yet available Allegiance Benefit Advisors Inc.

11. Employer Mandate Businesses with 50 or more full-time employees or full-time equivalents face potential employer mandate penalties. In this context, a full-time employee is one who works 120 hours per month or more. In counting toward 50, each 120 hours per month of part-time labor comprises an FTE. If an owner has several different businesses, the full-timers and FTEs in those separate businesses may be added together aggregated to determine whether the employee count is 50 or more. The decision on whether to combine an owner’s businesses in this way rests with the Internal Revenue Service. Allegiance Benefit Advisors Inc.

12. Exchanges • By October 1, 2013, Exchanges must be operational in each state to begin Open Enrollment for the 2014 plan year. The Exchange will make it easier for small businesses with fewer than 50 employees and individual consumers to compare plan offerings and buy health insurance. • Each state must establish an individual and a small business Exchange. States may choose to establish a single Exchange that serves both markets. • Exchange governing boards must be publicly accountable, transparent and have technically competent leadership among other rules regulated by the Department of Health and Human Services. • Any plan offered on an Exchange must be a Qualified Health Plan (QHP) - an insurance plan certified by the Exchange through which it’s offered. And, all plans must provide essential health benefits. • Plans will be available within a level of cost sharing that best fits the needs of those individuals and small business seeking a plan on the Exchange. The cost share levels are also referred to as the Actuarial Value, and are distinguished by metal levels. Allegiance Benefit Advisors Inc.

13. Premium Assistance Tax Credit Citizens and legal residents in families with incomes between 100% and 400% of poverty level who purchase coverage through a health insurance exchange are eligible for a tax credit to reduce the cost of coverage. People eligible for public coverage are not eligible for premium assistance in exchanges. People offered coverage through an employer are also not eligible for premium tax credits unless the employer plan does not have an actuarial value of at least 60% or unless the person’s share of the premium for employer-sponsored insurance exceeds 9.5% of income. People who meet these thresholds for unaffordable employer-sponsored insurance are eligible to enroll in a health insurance exchange and may receive tax credits to reduce the cost of coverage purchased through the exchange. Allegiance Benefit Advisors Inc.

14. Exchange Timeline Allegiance Benefit Advisors Inc.

15. Small Business Tax CreditAssistance for Those With Fewer Than 25 Employees Beginning in 2010, tax credits were available for small employers providing health insurance to their workers. Eligibility for this assistance is Limited to: • Firms with fewer than 25 employees • Average annual employee compensation does not exceed $50,000 • Available to a “for-profit” business up to 35% of the employer’s cost of health insurance if the employer provides more than 50% of the employees’ premium expenses • Available to small “not-for-profit” business up to 25% of the employer’s cost of insurance and offsets any payroll taxes that employees incur • These subsidies will increase in 2014 to 50% and 35% for the “for-profit” and “not-for-profit” businesses, respectively. Allegiance Benefit Advisors Inc.

16. Decision Making Resources • Is my Firm Subject to the Employer Mandate? • Do I have to Offer Health Insurance? • What is my Financial Exposure? • How Do I Communicate Changes to Employees? • Am I Eligible for Tax Credit Allegiance Benefit Advisors Inc.

17. We Can Help Allegiance Benefit Advisors Inc. 495 Purchase Street, Swansea, MA 02777-5023 Phone/Fax (774) 565-2002 • allegiancebenefitadvisors@gmail.com