Health Care Reform Implementation Update

1. Health Care Reform Implementation Update Steve Peebles Staff Vice President Account Management

2. Implementation • Responding to guidance Guidance issued How do we put this into place with the least disruption for customers and members? How might the rules affect customers and members? Implement and communicate Submit comments • Guidance – Proposed rules, final rules, clarifications, etc., issued by HHS and other federal agencies • HHS – Department of Health and Human Services Key terms

3. Summary of Benefits & Coverage • Final Rule (issued on 2/9/12): • Compliance Date = Required for open enrollments beginning on or after September 23, 2012 • Format = Issuers must use template developed by NAIC • Delivery = Electronic is acceptable and can be used for “pre-enrollees” • Premium field = Requirement has been omitted • Coverage examples = Reduced from 3 to 2

4. Summary of Benefits & Coverage – Format • 75 data elements • Automatically generated • Systematically running process

5. Merrill Solution – Creates Electronic Workflow

6. Notice of material modification • At least 60 days’ notice of material modifications to the plan: • Does not apply to renewals of coverage • Can be satisfied with an updated SBC if the change is reflected on the SBC • If self-insured, provide a notice or updated SBC at least 60 days before making off-cycle changes. Employer to-do list

7. Women’s Preventive Guidelines • New guidelines take effect for policies (non-grandfathered) with plan years beginning on or after August 1, 2012 • 100% covered in-network per ACA Preventive requirement • There are 4 types of preventive care services (out of the total of 8) required by HHS, including new coverage: • Screening for Gestational Diabetes (new coverage – 3 codes) • HPV Testing (new coverage – 3 codes) • Contraceptives and Counseling females only (new medical and Rx coverage) • Breastfeeding Support, Supplies, Counseling (new equipment coverage)

8. Spending account changes • Make sure your employee benefit materials reflect the new spending account rules. Health care flexible spending account (FSA) Health reimbursement arrangement (HRA) Health savings account (HSA) Prescription required for OTC reimbursement (2011) Higher penalty for nonqualified distributions (2011) Cap on contributions (2013) Employer to-do list

9. W-2 reporting • Required dates • Employers who issue 250 or more W-2s: • 2012 tax year (forms issued January 2013) • Make sure your payroll department or vendor is prepared for W-2 reporting. Employer to-do list

10. Comparative effectiveness research plan fees • To be paid by plan sponsor (for self-insured) or plan issuer • (for fully insured) Plan/policy year ending during … Fee Fiscal year 2013  $1 multiplied by the average number of covered lives $2 multiplied by the average number of covered lives Fiscal year 2014 $2 (adjusted for inflation) multiplied by the average number of covered lives Fiscal year 2015 – 2019 • If self-insured, pay these fees starting with your first renewal after October 1, 2012. Employer to-do list

11. Employer to-do list All employers: Make sure your employee benefit materials reflect the new spending account rules, if you offer such plans (FSA, HRA, HSA) All employers with 100% preventive benefits: Coverage for additional women’s health services should be added at your first renewal on or after August 1, 2012. Self-insured groups: Provide a material modification notice or updated SBC at least 60 days before making off-cycle changes. All employers: Make sure your payroll department or vendor is prepared for W-2 reporting. Self-insured groups: Pay comparative effective research (PCORI) fees starting with your first renewal after October 1, 2012. Now 2012 2012 or 2013