Navigating the Patient Protection and Affordable Care Act (PPACA)

2. Navigating the Patient Protection and Affordable Care Act (PPACA) Key Provisions Impacting Small Business

3. What is PPACA? • This presentation is focused on companies with less than 50 employees • Became law March 23, 2010; some provisions already in effect • Employer rules vary by company size: • Self Employed • 25 Employees or less • 25-49 Employees • 50 + Employees • 250 + Employees

4. Key Benefit Mandates • Most carriers have/are modifying the plans they offer to conform to these requirements • Guaranteed Issue: waives pre-existing condition exclusions for persons younger than 19 ; on Jan 1, 2014, this benefit applies to ALL ages • Community Rating elements • Removal of annual and lifetime dollar limits • Coverage for dependents to age 26 • 100% coverage for certain preventive services • Additional participant claim and appeal rights • 90-day maximum wait for coverage

5. Three New Terms • Health insurance exchanges – where “pools” of qualified insurance policies became available for purchase beginning on Oct 1, 2013 • Individual mandate – individuals must have health insurance that meets new federal requirements, or pay a penalty • Employer mandate – employers of 50 or more must provide insurance or pay a penalty. (Penalty delayed to Jan 1, 2015 due ostensibly to employer terminations and restructuring to29-hour jobs)

6. Insurance Exchanges • Setup required by 2014, but 32 states have refused to fund, passing baton to the US gov’t • Insurance companies offer coverage “pools” through “portals of access” • Regulatory bodies – regulate carriers and policies • Subsidy administration – IRS • Enrollment portals – online “SHOP” • Information portals – internet-based • Congress mandated continuation of individual and group coverage outside the exchanges

7. Individual Coverage • Required to have Minimum Essential Health Coverage (MEC) starting January 1, 2014 • Exchange will subsidize premiums for individuals earning less than $46,000 • Annual penalty per family member the greater of (max 3 per family): • 2014- $ 95 or 1% of individual’s taxable income • 2015- $ 325 or 2% • 2016- $ 695 or 2.5%, then indexed for inflation • Enforced as tax liability on federal income tax

8. Main Impacts on Employers • Employees can elect the exchange, impacting its 75% participation rate, but if the employer offers a plan, no subsidy is available to the employee • But .. the exchange is operating the first year on “honor-system;” employee can claim no employer coverage – no way to verify • By 1/1/2014 – employer plan must conform to mandated benefits – plan renewal before end of 2013 will buy another year of noncompliance • Employer plans unchanged since Mar. 23, 2010 can be “grandfathered” indefinitely

9. Employer Administrivia • Provide employees with current Benefits and Coverage (SBC) disclosure summary from insurer – at renewal or effective date after 9/23/13 • Notify employees of the existence of the exchange • Medical Loss Ratio (MLR) rebates started 2012; insurer must spend 85% of group premiums on claims • H&HS supposedly approves >10% rate increases • Employee FSA contributions reduced to $2500; OTC meds disallowed for HSAs

10. Taxes and Fees • Employer credit: up to 35% of 2013 premiums • 3.8% tax on investment income in effect for some • 0.9% Medicare payroll tax of income over $200,000 • Four new fees added starting 2014 to insurance premiums: • HIIF – 2.3%+ to offset PPACA cost-generating provisions • REA - $5.25/mo/insured to cover high cost patients • PCORI – funds comparative treatment research • FFEUF – pays for access to federally-facilitated exchanges

11. Where is PPACA taking us? • Insurance premiums will continue to rise. • Coverage choices and flexibility will diminish. • Fewer doctors will take Medicare; Independent Payment Advisory Board will ration services, condemning seniors to 2nd-class medical care. • Other Americans will wait longer for service, especially on exchanges, which docs will avoid. • Privacy will evaporate – in 2014, health records will go to a centralized federal database.

12. Towards a Single-Payer System • 10 million uninsured individuals without employer coverage are being forced to enroll in health insurance • Applicants can receive a “liar’s subsidy” • Delay in business penalties accelerates the transition from employer-based insurance to the Single Payer System; it also transfers $60 billion in expense from business to taxpayers • Community organizers have infested public places to sign up live bodies for the exchanges • By 2015, so many workers will be trapped in the exchanges that there will be no going back to private plans

13. Recommendations • If you want to keep control of a group of 5 or more employees, look into partial self-funding • Take charge of your health • Find an independent physician or hospital • Consider treatment outside the U.S. • Support efforts in Congress to defund PPACA; Democrats and unions are jumping ship

14. For More Information www.familybusinessoffice.net • http://www.sba.gov/healthcare • http://www.dol.gov/ebsa/healthreform • http://healthcare.gov/ • http://www.theihcc.com Family Business Office Wayne Peterson … (800) 659-4570