“Healthcare Reform Summer of 2012:The Supreme Court Decision, Rules Update, and Exchanges”

1. “Healthcare Reform Summer of 2012:The Supreme Court Decision, Rules Update, and Exchanges” ADP Client Seminar --Botanical Center Jesse A PattonLUTCF, HIA, MHP, FAHM, HIPAAA, EHBA, PHIAS

2. Economy, Budget Deficit, Medicare Top Election Issue Priority List Thinking ahead to the November election, please tell me how important each of the following will be to your vote for President. The economy Extremely important Very important Somewhat important Less important than that The federal budget deficit Medicare Medicaid Spending on the military The 2010 health care law Taxes International affairs Immigration issues Social issues such as abortion and gay marriage Note: Some items asked of separate half samples. Don’t know/Refused answers not shown. Source: Kaiser Family Foundation Health Tracking Poll (conducted September 13-19, 2012)

3. Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings, 1999-2012 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2012; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2012 (April to April).

4. Average Annual Premiums for Single and Family Coverage, 1999-2012 $15,745* * Estimate is statistically different from estimate for the previous year shown (p<.05). Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012.

5. U. S. House Committees The Exchange will revolutionize health care choices and will help reduce the growth in health care spending by encouraging competition on price and quality, not benefit manipulation or efforts to exclude needy patients

6. ABILITY TO COMPARISON SHOP • Give people the ability to choose from a variety of plans • Provide standardized benefit packages so that people will be able to comparison shop and make informed choices based on cost and quality • Plans compete locally—so small plans and national plans have an equal opportunity to offer coverage

7. Health Insurance Exchange • A health insurance exchange is an organized marketplace for the purchase of health insurance • Exchanges do not bear risk themselves – they are not insurers • They would contract with private insurers to cover specified populations

8. PPACA Exchanges • State-based health insurance exchanges not optional, if a state doesn’t create one, federal government will • Law requires the creation of and American Health Benefit Exchange (AHBE) (for individuals) and Small Business Health Options Program (SHOP) Exchange for small employers up to 100 lives • States can combine their individual and small employer exchanges • Regional sub-exchanges optional • States can choose to expand their exchanges to serve employer groups of 100+ in 2017

9. Flexible Exchange Options for States

10. Exchanges – Inside and Outside Markets • Congress specifically provided that individual and group health insurance markets are to exist outside of the exchanges • The law specifies that “grandfathered” plans will continue to exist outside the exchange • Other plans are also permitted to exist outside of the exchange, and from experience in Massachusetts and Utah, some individuals and businesses will continue to purchase coverage there • Subsidies only currently available through the exchanges. • In 2014, the Small Employer Tax Credit will also only be available in the Exchange.

11. Premium Tax Credits and Cost-Sharing ProtectionsUnder the Affordable Care Act Catastrophic policy with essential benefits package available to young adults and people who cannot find plan premium <8% of income Notes: FPL refers to federal poverty level; levels are for 2011. Actuarial values are the average percent of medical costs covered by a health plan. Premium and cost-sharing credits are for the Silver plan. Source: Commonwealth Fund Health Reform Resource Center: What’s in the Affordable Care Act? (PL 111-148 and 111-152), http://www.commonwealthfund.org/Health-Reform/Health-Reform-Resource.aspx.

12. Health Insurance CO-OPs • Federal government now pledged $3.8 billion in grants and loans to assist in the establishment of non-profit member-run health CO-OPs. Originally PPACA established $6 billion • Candidates to create a CO-OP Accountable Care Organization Integrated Delivery Systems Chambers of Commerce Associations • Grants assist CO-OPs with State Solvency/Reserves must be repaid in 15 years. Loans that assist in start-up cost repaid in 5 years

13. Employer Responsibilities

14. No Coverage • If an employer fails to provide its full-time employees (and their dependents) the opportunity to enroll in “minimum essential coverage,” and • One or more full-time employees enrolls for coverage in an exchange and qualifies for a premium tax credit or cost-sharing reduction, then • Employer penalty = $2,000 for each of its full-time employees in the workforce

15. Penalties assessed on a monthly basis. No penalties assessed on first 30 full-time employees. No penalties apply to part-time employees. No penalties for waiting periods (if any), not exceeding 90 days. Total “affordability” penalty is capped. May not exceed penalty for “no coverage.” Employer does not determine if employee is eligible for premium tax credit based on household income, but is notified by the exchange if full-time employee qualifies. Additional Details

16. Unaffordable Coverage • If employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage, and • One or more full-time employees enrolls for coverage in an exchange and qualifies for a premium tax credit or cost sharing reduction because • The employee’s share of the premium exceed 9.5% of income, or • The actuarial value of the coverage was less than 60%, then • Employer penalty = $3,000 for each full-time employee who receives a tax credit or cost-sharing reduction

17. Safe Harbor for Affordability Penalty

18. Questions