Patient Protection and Affordable Care Act (PPACA)

1. Patient Protection and AffordableCare Act (PPACA)

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

4. Editorial Moment

5. Who is at fault?

8. 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 The Law

9. You can keep your insurance Grandfathered Plans

10. 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)

11. A Grandfathered Plan Increase Deductible up to 15% Increase Co pays up to 15% Increase Co insurance more than 15% Decrease employer contributions by more than 5%

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

13. Dependents Coverage

14. 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) Age 26

15. Minimum Loss RatioMLR

16. 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.    Minimum Loss Ratio MLR (2011)

17. Large Groups 51 or More Full Time Employees

18. Play or Pay

19. Play or Pay 2015

20. 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 Employer Responsibility

21. 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, then • Employer penalty = $2,000 for each of its full-time employees in the workforce • This penalty is non-deductible • Penalty does not offset the cost of employee coverage No Coverage

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

23. 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 Affordable Coverage

24. 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 • If the employer has many employees in this category, the alternative penalty reverts to $2,000 per FT employee Affordable Coverage

25. 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 Affordable Coverage Example

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

27. If employee is covered by spouses 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 Miscellaneous Requirements

28. Small Groups 1 to 50 Full Time Employees

29. PPACA “Metal” Plans

30. 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 Minimum Value Standards

31. 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) Minimum Essential Coverage

32. Minimum Value Calculator

33. 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 Essential Health Benefits

34. 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 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) $167.23 • Joey Smith (22) $253.97 • Susie Smith (24) $260.09 • Bobby Jones $598.98 Employee/Spouse • Anna Jones (wife) $555.23 Age Rated Plan Small Group

35. Health Insurance Marketplace(The Exchange)

36. 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 Community Rating

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

38. Health Insurance Market Place The 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

39. Federal Subsidies

40. 2013 Federal Poverty Level

41. 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 Individual Mandate Penalties

42. 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 $5,000 deductible plan $423.93 • 2014 $2500 deductible plan $965.51 Community Rating

43. 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. Small Business Marketplace (SHOP)

44. Planning is Essential

45. Increasing Premiums 3% to 4%

46. PCORI Tax-$2.00 per covered individual-Self Admin HRA, per employee (belly button tax) • Re insurance Tax-$63.00 per year (belly button tax) Funds large claims in the individual marker • HIT Tax- $8 B divided by premiums collected in prior year 2014. $15 B 2015, $18 B 2016- Paid by insurers to help fund health care reform • All are pass through taxes Taxes

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

48. Miscellaneous Requirements

49. DOL ran a contest for the best software to inform employee about their labor laws. • Award winner on November 4 • $14 M effort to educate employees Government Initiative

50. Many employers have said the will move employees to 1099 status. • The IRS is on to this and will be conducting audits. • An employee can contact IRS and ask about their status and you could receive an audit notice. • Engage an independent contractor for a year or more. • Be very careful with this!!!!!!! 1099 Independent Contractors