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Spring 2013 Health Reform Update For Health Agents

Spring 2013 Health Reform Update For Health Agents. Presented by Clay Peek, PEEK PERFORMANCE INC. Our Featured Guest Speaker Keith Prettyman , Partner, Woods/Aitken Law Firm Mike Benke , BMC (864)228-2635 PPI office www.peekperformanceinsurance.com. Thanks for Attending.

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Spring 2013 Health Reform Update For Health Agents

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  1. Spring 2013Health Reform UpdateFor Health Agents Presented by Clay Peek, PEEK PERFORMANCE INC. Our Featured Guest Speaker Keith Prettyman, Partner, Woods/Aitken Law Firm Mike Benke, BMC (864)228-2635 PPI office www.peekperformanceinsurance.com

  2. Thanks for Attending Some of you are attending this important session at the invitation of one our valued marketing partner/agencies. Please learn all you can from this session, then return to them for your product contracting. We’re here to help you – and them – succeed! If you’re not affiliated with the TSS/Wilhelm, NMG/CLA/Hagy, Hopkins, HPA/Hilgers, Tey Warnock and other teams – please contact us directly for all product needs you may have. Clay Peek, Peek Performance Inc

  3. Opportunities Abound!Major Medical The individual Major Medical plans are still selling – but there is great uncertainty about the pricing of those plans after Jan. 1, 2014 Agents should anticipate the real possibility of MM commissions going down 1/1/14. However, a reduction in commissions could be more than made up in the increase in volume due to a shrinking Group market. Subsidies will be available for lower income buyers and may enable many to purchase “qualified” MM plans. Many people will still not be able to afford a MM plan, even with the subsidies. PPI agents will be able to sell subsidized MM plans.

  4. Opportunities AboundLimited Medical Plans Limited Medical plans are still a good idea for “gap filling” on a high deductible MM plan. Limited Medical plans are an affordable “Primary coverage” alternative to those who can’t afford or medically qualify for a MM plan. Some excellent Limited Medical plans will persist after Jan. 2014 Limited Medical plans are not ACA qualified plans Citizens who don’t purchase a “qualified plan” may be subject to ACA tax/penalties, depending on health plan cost and their income.

  5. How American’s Get Health Insurance Now Group Employer – 145 million (incl. dependents) 2. Personal Policies – 40 million (up from 12 million in 2002) 3. Medicare– 47 million (incl. 12 million in MA) 4. Medicaid– 45 million (incl. 8 million over 65 or disabled) 5. Uninsured– 40 million (PC #, closer to 10 million)

  6. How American’s Will Get Health Insurance 2015 Group Employer – May drop to 20 million (incl. dependents) Lose 125M here 2. Personal Policies – May increase to 185 million (more with GOP plans) 3. Medicare– 47 million (incl. 12 million in MA) 4. Medicaid– 45 million (less with GOP plans) 5. Uninsured –20 million Lose 20m

  7. How American’s Will Get Health Insurance 2015 Group Employer – 20 million (incl. dependents) From 28 million1 to 125 million2 consumers will change how and where they get their insurance in 2014 2. Personal Policies – 185 million (more with GOP plans) 3. Medicare– 47 million (incl. 12 million in MA) 4. Medicaid– 45 million (less with GOP plans) 5. Uninsured –20 million Sources: 1Congressional Budget Office, 2McKinsey Consulting

  8. ACA’s Impact on Individuals

  9. Example: Family of 4 making $55k a year premium of $14,556. Single premium $5400

  10. The “Private Insurance Exchange” Opportunity 2012 2015 CHANGE Rising CostsReformExchanges TraditionalGroup Benefits New/OtherBenefitModels Disruptive SolutionsDynamic Marketplace OPPORTUNITY What Models? 72% - Planning on Exchanges AON Hewitt survey of 562 U.S. Employers, Nov 2011 86% - Reduce costs 45% - Improve access to quality plans 43% - Enhance wellness programs 43% - Increase healthcare choices Why?

  11. About the Penalty/Tax Very severe for Employer Groups 50+ In 2014, $2000 per ee (less 30) who don’t provide qualified coverage $3000 per ee (less 30) if ER offers coverage, but the cost to ee is above 9.5% of income. Fewer individuals/families than you might think (who don’t purchase an ACA qualified MM plan) will end up paying the tax because of the “8%” guideline on policy cost.

  12. Net Result? Prices are going up on MM plans. Still, more “Individual” (as opposed to “Group”) plans will be sold. Our “Private Insurance Exchange” may help you capture some of those sales. Yes, even MM plans with subsides. (www.ppihealthexchange.com) ( You don’t need no stinkin’ Navigator ! ) Many people will still not be able to afford / or will simply choose to not to purchase a MM plan … and many of them won’t pay a penalty A Limited Medical plan is much better than no plan at all! Adding Cancer plans, Accidental Injury, Critical Illness, etc., helps provide coverage for some of the exposures, when a MM is not an option.

  13. OVERVIEW OF HEALTHCARE REFORM – Keith Prettyman General Approach of PPACA • Individuals must have mandated coverage or pay an income tax penalty. • No employer mandate per se, but employers with 50+ employees face penalties if employees are not provided mandated coverage • Plans in existence at the time of enactment (3/23/10) are “grandfathered” • Expands Medicaid to 133% of federal poverty level (“FPL”) • Establishes state-based “Exchanges” for individual and small group insurance purchases. Federal subsidies apply to low income individuals who purchase coverage through the exchange. • New federal health insurance regulations and mandates

  14. OVERVIEW OF HEALTHCARE REFORM Grandfathered Plans • “If you like your current coverage, you can keep it.” • Defined: Coverage provided by a health plan in which an individual was enrolled on March 23, 2010 • Grandfathered plans are exempt from some, but not all, of the mandates • Loss of grandfathered status results from elimination of all benefits for a particular condition, increases in deductibles, co-pays or coinsurance amounts, increasing employee contributions by more than 5% or changing dollar limits on benefits

  15. OVERVIEW OF HEALTHCARE REFORM Exchanges (RE: State &/or Federal, not Private) • Effective 2014, states must have an “American Health Benefit Exchange” • 24 states have indicated that they’d construct one – 26 may not. • CO indicates 1.4% excise tax to pay for exchange, Feds – 3.5% • Brings health insurance buyers and sellers together via web-based standardized policies, applications and processes • Pools risks and offers individuals access to “group – type” rates • Allows ONLY “qualified health plans” to be sold • Eliminates underwriting practices • Subsidizes premiums for households with incomes up to 400% FPL • Premium subsidies in the form of tax credits provided on a sliding income scale • Private sector plans only; OPM will develop and offer two multi-state plans

  16. NAVIGATORS • State/Federal Exchanges must establish a Navigator program • Navigators will advise (but not enroll) applicants • Navigators can be professional associations, community nonprofit groups, fishing/ranching/farming organizations, chambers of commerce, unions and licensed agents • Funding may not be from the federal funds used to establish the exchange • Navigators CANNOT be compensated by carriers for their service • Feds have indicated $50.00 per applicant is sufficient

  17. Fees and Costs • Colorado has recently announced a 1.4% excise fee on the cost of health plans • Other states will likely follow a similar pattern • Feds have indicated that they will likely place a 3.5% excise tax on health premiums on plans sold on the Federal Exchange. • Other fees will also apply: Cadillac Coverage fees, Reinsurance fees … and more.

  18. Fees and Costs (Source, “News from the Blues, BCBS of Texas” 4/17/13) HHS has published it’s final rule on regulations for the “Transitional Reinsurance Program Contribution Fee” or “Reinsurance Fee.” “HHS has established a per capita contribution rate of $5.25 per member, per month for the 2014 benefit year. Market segments affected include Fully Insured and Self Insured Group, Cobra and Individual under 65 market … unless exceptions apply.”

  19. COVERAGE CHANGES 2010-2013 • Prohibition on Lifetime and Annual Dollar Limits on Benefits • Prohibition on Pre-Existing Condition Exclusions for Children Under 19 • Coverage of Preventive Health Services • Extension of Coverage for Children up to Age 26 • Mandated Appeals Process • Prohibitions on Certain Rescissions • Patient Protections • W-2 Requirement • Summary of Benefits and Coverage

  20. COVERAGE CHANGES 2010-2013 Prohibition of Lifetime and Annual Dollar Limits on Benefits • Effective for plan years beginning after 9/23/2010 • Applies to grandfathered plans • Absolute prohibition on lifetime limits • Phase-in of annual limits - 9/23/10 – 9/23/11 - $750,000 - 9/23/11 – 9/23/12 - $1,250,000 - 9/23/12 – 12/31/13 - $2,000,000 • Restrictions on annual limits only applies to “essential benefits”

  21. COVERAGE CHANGES 2010-2013 Prohibition on Pre-Existing Exclusions for Children under 19 Coverage of Preventive Care • Does not apply to grandfathered plans • Definition of “preventive” is extensive - Evidence based services having an “A” or “B” rating from U.S. Preventive Services Task Force - Immunizations recommended by Advisory Committee on Immunization Practices - Screenings for infants, children and women recommended by the Health Resources and Services Administration • Must be provided without any cost-sharing (100%)

  22. COVERAGE CHANGES 2010-2013 Extension of Coverage for Children up to Age 26 • “Children” are natural children, adopted children and stepchildren • Dependency is NOT required • For grandfathered plans, until 2014, extension is not required if the adult child has employer-based coverage available • Does NOT extend coverage to adult child’s spouse or children • Does not mandate that dependent coverage must be provided (until 2014), but if it is provided these rules apply

  23. COVERAGE CHANGES 2010-2013 Mandated Appeals Process - Delayed • Does not apply to grandfathered plans • Internal process as required by ERISA • External process at a level of the NAIC External Review Act Prohibition on Certain Rescissions • Applies to grandfathered plans • Rescission is a retroactive termination • Rescissions can only be made for fraud, material misrepresentation or nonpayment of premium

  24. COVERAGE CHANGES 2010-2013 Patient Protections • Does not apply to grandfathered plans • Pediatricians and OB-GYN’s as primary physicians • Coverage of emergency services without preauthorization (no differential in PPO/HMO for out of network emergency costs) • ER’s must provide W-2 re value/cost of insurance if more than 250 EE’s • ER’s must provide adequate Uniform Summary of Benefits documents to EE’s,

  25. INDIVIDUAL MANDATE • “Cornerstone” of national health care reform • All “applicable individuals” are required to have “minimum essential coverage” or pay a tax penalty - “applicable individuals” are American citizens other than those who qualify for an exemption - “minimum essential coverage” - Government sponsored programs (Medicare, Medicaid, Tricare) - Qualifying employer coverage - Grandfathered coverage - Qualifying individual coverage

  26. INDIVIDUAL MANDATE Penalty • Unless “exempt” an individual who does not have minimum essential coverage will pay an annual penalty as part of their tax return which is the greater of: YearDollar Amount or % of Income 2014 $95 1% 2015 $325 2% 2016 $695 (indexed) 2.5% • Exempt - Those whose lowest premium would exceed 8% of household income - Those who do not file a 1040 due to income - Members of Indian Tribes - Those with religious exemptions - Incarcerated individuals - Undocumented aliens

  27. EMPLOYER PAY-OR-PLAY MANDATE • Applies to “large employers” – those with more than 50 FTEs • Waiver for 30 FT EE’s • Full time is defined as 30 or more hours per week • Part time hours are combined for any month and divided by 120 to determine FTE • Must include part time to determine if employer is subject to mandate, but the penalty only applies to full time

  28. EMPLOYER PAY-OR-PLAY MANDATE - Illustration: • 1. Currently 100 employees – If ER reduces hours to save FT # (keep below 50) • - 49 are now Full Time • Calculate hours of the 51 PT ee’s – • Pay penalty based 49 FT – (30 ee’s exemption) • 2. 60 ee’s - 30 waiver = 30 FT EE’s = No penalty

  29. EMPLOYER PAY-OR-PLAY MANDATE • Two types of penalties • $2,000 per year ($166.67/month) for each FT employee (over the first 30) who is not provided minimum essential coverage AND at least one FT employee gets subsidized coverage through an exchange. Applies to employers who DO NOT provide qualifying coverage. • 3,000 per year ($250/month) for each employee who acquires coverage through an exchange if the employee’s required contribution for the employer’s coverage would exceed 9.5% of W-2 income or the employer pays less than 60% of the premium. Applies to employers who DO provide qualifying coverage. • (Clay – the “No good deed goes unpunished” rule) • What about exposure to the ER who offers qualified & affordable coverage that the EE chooses not to use? No penalty to ER. EE can’t go to the exchange.

  30. OTHER JANUARY 1, 2014 MANDATES • Prohibition of pre-existing condition exclusions for adults • Guaranteed issue and renewal of all qualified insurance • Prohibition on charging higher premiums based on health status of an applicant • Limits on premium differentials - Cannot vary by more than 3 to 1 for age - Cannot vary by more than 1.5 to 1 for tobacco use • No waiting periods in excess of 90 days (There will be pre-set “Open Enrollment Periods”) • 1st year Oct. 1 – March 30, 2014 • Limits on deductibles for group health plans (does not apply to grandfathered plans or “Self Funded” group plans). $2,000 per individual and $4,000 per family. • HSA plans still viable

  31. ESSENTIAL HEALTH BENEFITS • Ambulatory patient services • Emergency services • Hospitalization • Maternity and newborn care • Mental health and substance abuse services • Prescription drugs • Rehabilitative services and devices • Laboratory services • Preventive and wellness services and chronic disease management • Pediatric services, including oral and vision care

  32. 4 “Ferrari” Plan Formats • Bronze - 60/40 Coinsurance • Silver - 70/30 Coinsurance • Gold - 80/20 Coinsurance • Platinum - 90/10 Coinsurance • All plans have the same “out of pocket max” which is $6250 for Individuals, $12,500 family • Perhaps some companies will offer “Non ACA Qualified” plans … ?

  33. THE “PRICE OF OBAMACARE’S BROKEN PROMISES” • Congressional study dated March, 2013 • Increased premiums in the individual market due solely to PPACA will be between 30 – 106% • Even after subsidies Americans earning as little as $25,000 will pay more under PPACA • Premiums for 20-29 year-olds will average individual premium increases of 189% (200% = 3 x the original cost!!) • (Clay – Call from your Stock Broker – “Buy Gillette!! NOW!”) • Increases are due to guarantee issue, community rating, essential health benefits and taxes and fees on plans, drugs and medical devices.

  34. IS “CUL’s FIRST CHOICE” VIABLE AFTER 1/1/14? • FC is an “excepted benefit” – but not an ACA Qualified Plan - Excepted Benefits are NOT subject to PPACA. They are: - Accident or disability income insurance; - Limited scope dental, vision and LTCI If offered separately and are not part of the health plan ; - Coverage for specified disease, hospital indemnity and other fixed indemnity if offered as independent, non-coordinated benefits • FC is guaranteed issue (for those who are employed 27+ hours/week) • FC is guaranteed renewable (once you get it, you can keep it, regardless of work through age 65)

  35. IS “FIRST CHOICE” VIABLE AFTER 1/1/14? • Many will forgo mandated coverage and pay the penalty. Why? Premiums will be very expensive. Overall estimates are the premiums will rise 30% - 106% or more based on mandated coverages, restricted rate differentials, inability to underwrite and other factors • Many (especially the healthy and young) will avoid the high cost. Rather than go without any form of coverage, FC becomes a viable alternative at a much lower cost to cover many high out-of pocket medical costs • Even of those who purchase required coverage, most will buy the least expensive option (60% of “full” benefits or catastrophic coverage for those under 30) and will have a need for a supplement

  36. The PPI Value We’ll keep you abreast of the new “Health Reform” era marketplace. We’ll offer marketing instruction for greater sales The best product offerings to meet market needs Free Lead support for all of our best Limited Benefit (also Senior and Life) plans Management opportunities … with “Turn Key Marketing” programs … and we’re eager to work with small agencies too. All tools and training available 24/7 online! Our “Private Insurance Exchange”

  37. PPI Resources www.peekperformanceinsurance.com Primary Agency site www.ppisales.info/direct “Limited Med” focused site www.ppihealthexchange.com Our “Private Insurance Exchange” www.ppiplans.com/ppi Our duplicate-able Accident & Discount RX/Lab site Rachael Wadsworth – Limited Medical Contracting rachaelw@ppisales.info Gary Peek - Agent Services, garyp@ppisales.info Terri Schlarb – Contracting Manager & Senior Market, terris@ppisales.info Clay Peek – Agency Marketing & Training, clayp@ppisales.info 864-228-2635 Office, 800-539-1021 Fax

  38. Other Important Webinars • Term Life with FREE LEADS – Monday April 22 @ 3 PM est • Our “Private Insurance Exchange” class with Mark and Josh of HPA --- “You Don’t Need No Stinkin’ Navigator” Tuesday April 23 @ 2 PM est • CUL’s Affordable Choice SI Plan! Friday April 26 @ 1 PM est • Sign up for all of them at our primary website: www.peekperformanceinsurance.com

  39. Thanks for Attending Some of you are attending this important session at the invitation of one our valued marketing partner/agencies. Please learn all you can from this session, then return to them for your product contracting. We’re here to help you – and them – succeed! If you’re not affiliated with the TSS/Wilhelm, NMG/CLA/Hagy, Hopkins, HPA/Hilgers, Tey Warnock and other teams – please contact us directly for all product needs you may have. Clay Peek, Peek Performance Inc

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