HEALTHCARE REFORM & CITIES

1. HEALTHCARE REFORM & CITIES PRESENTED BY DON ZIMMERMAN EXECUTIVE DIRECTOR WEDNESDAY, JANUARY 29, 2014 Arkansas Municipal League-2014 Winter Conference

2. The Patient Protection and Affordable Care Act (ACA) • i.e. PPACA, Affordable Care Act, ACA or Obamacare became law in 2010 • Implementation since then has been somewhat difficult since the law is complicated • Rules have been made by several federal agencies, primarily HHS & IRS, along with states • Non-compliance carries penalties so we must endeavor to get implementation right

3. The goal is to ensure all Americans, regardless of: • Age, • Gender, • State of residence, or • Health status Have access to affordable health coverage that meets certain minimum standards

4. Plans must provide “essential health benefits” In 10 categories, those being: • Ambulatory, • Emergency services, • Hospitalization, • Lab services, • Maturity/Newborn, • Mental/Addictions, • Rehab, • Pediatric, • Prescriptions, • Preventative/Wellness/Chronic Diseases

5. Waiting periods for coverage can not be more than 90 days from date of hire • Annual out of pocket costs (deductible plus co-insurance) is limited to: • $ 6,350 individual; and • $ 12,700 family • Exchanges through states are classified as: • Bronze plan (60-40) • Silver plan (70-30) • Gold plan (80-20) • Platinum plan (90-10) The Law targets 4 groups. Let’s discuss these 4 groups.

6. 1. The Poor • States were given the option to expand Medicaid coverage to residents whose incomes are up to 138 % of the federal poverty level • Arkansas was allowed to use those federal dollars to allow these individuals to purchase coverage over the exchange i.e. “the private option”

7. 2. The Uninsured or Underinsured • To make coverage affordable premium subsidies are available to some individuals with family incomes up to 400 % of the federal poverty level • The “individual mandate” assesses a penalty on those not having coverage

8. 3. Small Employers • Those with less than 50 employees are eligible to purchase through the exchange Small cities – under 50 (49ers) • Not required to offer coverage • If in MHBF you’re in good shape

9. Small Cities – under 50 (49ers) • Premium subsidies for up to 400% of federal poverty level • $ 45,960 for individual; and • $ 94,200 for family of four in 2013 • Most people at 300% or less of poverty level • $ 34,470 for individual; and • $ 70,500 four person family will qualify for a subsidy IF they do not have an offer of “affordable” coverage from their employer • This group could lose eligibility if too many went to exchange and group drops below 75%

10. Small cities…continued • An easy way to gauge the impact is to see if the cost for employee only coverage in your plan is less than $90.96 per month • This figure represents 9.5% of individual’s income at 100% of federal poverty level • If employee cost is less than that amount, it is likely that no one will qualify for a subsidy

11. 4. Large Employers (50 or more) • The so-called “Play or Pay” requirements have been delayed until January 1, 2015 • Those rules will require large employers to provide comprehensive affordable coverage to employees who work an average of 30 hours per week • Those plans will have to be offered to at least 95% of their full time employees, and • Will have to be affordable with minimum essential benefits that meet minimum value standards • “Affordable” means the premium cost to the employee is no more than 9.5 percent of the employee’s W-2 income

12. 4. Large Employers…continued • “Minimum Essential Health Benefits” are the ten categories, and • “Minimum Value Standards” means the plan pays at least 60 % of in network costs, i.e. “bronze plan” • The MHBF is 80 % or in the “gold plan” category • Penalties are triggered for the large employers if just one of the city’s employees go to the exchange and qualifies for a subsidy which can happen IF they are not offered “affordable” coverage by their employer

13. “Play or Pay” territory2 types of Penalties • Action - Employers don’t offer coverage to at least 95 % of FTE’s • Penalty – $2,000 per FTE (minus 30) if at least 1 FTE receives a subsidy • Action – Plan doesn’t offer minimum value or is not affordable • Penalty – Lesser of $3,000 per FTE receiving a subsidy or $2,000 per FTE (minus 30)

14. Large Cities • Effective 1/1/2015 Large Employers are mandated to offer at least 95% of your fulltime employees affordable health coverage with minimum essential benefits in a plan that meets minimum value standards • Affordable – no more than 9.5 % of employees W-2 income • Minimum required value – has essential benefits and pays at least 60 % of expected in-network costs

15. SBC – Summary of Benefits & Coverage • Adult Age Dependents – up to age 26 covered under parents policy unless in an employer group • Maximums – No Dollar Caps

16. H.R. 1076 • Sponsored by Representative Ralph Hall, et al – R-TX • H.R.1076- To amend the Patient Protection and Affordable Care Act to provide for savings to the Federal Government by permitting pass-through funding for State authorized public entity health benefits pools

17. H.R. 1076 – Official Summary • Amends the Patient Protection and Affordable Care Act (PPACA) to allow a state-authorized public entity benefits pool to apply to the Secretary of Health and Human Services (HHS) for pass-through funding with respect to health care benefits provided through the pool for coverage years beginning on or after January 1, 2014. Requires the Secretary to approve such a pool if the health care benefits provided through it will: • (1) provide at least the essential health benefits • (2) provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable as the health insurance requirements of PPACA would provide, and

18. H.R. 1076 - Summary…continued • (3) result in cost savings to the federal government because the cost of coverage through the pool is less than the cost of coverage through an exchange. Treats an individual covered under such a plan as having minimum essential coverage for purposes of the Internal Revenue Code. Requires the Secretary to provide for an alternative means by which an aggregate amount shall be paid to the pool annually based on the premium tax credits, cost-sharing reductions, and small business credits that would have been provided to an exchange plan. Gives the Secretary 180 days to make a determination on an application under this Act.

19. NLC (National League of Cities) Actions on Reinsurance Tax of $ 63.00 person

20. House Bill 1001-Special Session • Sponsored by Representative Jim Nickels (D) • TO ESTABLISH A UNIFIED HEALTH CARE BENEFIT PROGRAM FOR ALL PUBLICLY FUNDED EMPLOYEES AND RETIRED EMPLOYEES