Community Webinar PPACA (AKA: Obama Care) Fiduciary Liability Exposures The class will begin at the top of the hour. There is no sound at this time. This class is being recorded. The recording can be found in the Community at Webinars Archive You can ask questions at anytime, type them into the chat box. Check your chat box for links to upcoming classes. This class is not approved for CE credit. Some things you should know: 1

 Presents Monthly Webinars Free to Community Members.  Community webinars are archived on the Community homepage under the right hand tab titled: Webinar Archive 2

 In addition the community has unique business networking opportunities.  Enjoy the Weekly Newsletter on a specific topic with a tip of the week; claim; quiz flash and articles 3

 One Flat Fee per Office includes  Monthly webinars approved for CE many states  Test and Learn  Audio Presentations on insurance topics  Checklists  Power point presentations for client and/or peer training 4

Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state jurisdiction. The instructional materials provided by The Insurance Community Center and its authors is intended as a general guideline and any interpretations provided by The Community do not modify or revise insurance policy language. Information which is copyrighted and proprietary to Insurance Services Office, Inc. (“ISO Material”) is included in this publication. Use of the ISO Material is limited to ISO Participating Insurers and their Authorized Representatives. The Insurance Community Center assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials provided. Insight Insurance Consulting Copyright 2013© 5

Marjorie L. Segale, AFIS, CISC, RPLU, CIC, CRIS, ACSR, CISR Insurance Community Center, LLC Director of Education 6

 What is PPACA?  Fiduciary Liability and increase risk due to PPACA  Coverage concerns 7

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 Patient Protection and Affordable Care Act  Signed into law 3/23/2010  Promoted as a means to increase the quality of health care and control cost of health insurance  The federal agency with enforcement ability is the IRS 9

 Regulations have been, are and will be created to address the various provisions in this voluminous law  With unknown regulations comes risk to the employer  There are a number of mechanisms built into the law, all of which also increase risk to your business clients if they fail on any front to comply with these 10

 FDA authorized to approve generic versions of drugs and grant pharmaceutical manufacturers the right to 12 years exclusivity of the drug until generics can be developed  Non-profit Patient-Centered Outcomes Research Institute established to undertake comparative effectiveness research  The Prevention and Public Health Fund was created to fund programs and research designed to increase chronic disease prevention 11

 A National Prevention, Health Promotion and Public Health Council was created to develop a national strategy on prevention, health promotion and public health  The Indian Health Care Improvement Act was reauthorized and amended  Chain restaurants and food vendors with 20 or more locations are required to display caloric content of their food and additional information, such as fats and sodium content available on request  States allowed to apply for a “State Plan Amendment” to expand family planning eligibility 12

 Adults with existing conditions became eligible to join a temporary high-risk pool to be superseded by the health care exchanges coming in 2014  Pre-existing condition  Uninsured for 6 months  No age requirement  Premiums are set as if for a standard person without increased heath risks 13

 Insurers prohibited from imposing lifetime dollar limits on essential benefits  Dependents permitted to remain on parent’s insurance plan until age 26  Including dependents no longer living in family home, not listed on parent’s tax return, no longer a student or married  Insurers prohibited from excluding pre- existing medical conditions 14

 All new insurance plans must include preventive care and medical screenings  Insurers prohibited from charging co-payments, coinsurance or deductibles for these services  Insurer’s abilities to enforce annual spending caps restricted (will be prohibited completely in 2014)  Insurers prohibited from dropping policyholders when they become ill 15

 Insurers are required to reveal their operating costs  Insurers are required to implement an appeals process for coverage determination and claims on all new plans  Medicare is expanded to small, rural hospitals and facilities 16

 Medicare patients with chronic illnesses must be monitored and evaluated every 3 months for coverage of the medications required  A new website to provide consumers insurance information for individuals and small business in all states 17

 A temporary credit program is established to encourage private investment in new therapies for treatment and prevention  All new insurance plans must cover immunizations and adult vaccinations as recommended by the Advisory Committee on immunization  No co-pays, coinsurance or deductibles are allowed if provided by an in-network provider 18

 Insurers must spend 80% of premium dollars for individuals and small group policyholders and 85% for large groups on health costs and claims  The Centers for Medicare and Medicaid Services responsible for developing the Center for Medicare and Medicaid Innovation and overseeing the testing of innovative payment and delivery models 19

 All health insurance companies must inform the public when they want to increase health insurance rates for individual or small group policies by an average of 10% or more 20

  Employers issuing more than 250 W-2 forms in each preceding year must disclose the value of the benefits they provided 21

  All new plans must cover certain preventive services without cost sharing (deductibles, etc.) ▪ Mammograms ▪ Colonoscopies  Women’s Preventive Services without cost sharing ▪ Well woman visits ▪ Diabetes screening (while pregnant) ▪ Includes FDA approved contraception methods (Contraception Mandate) 22

 The Centers for Medicare & Medicaid Services to being the Readmissions Reduction Program that requires CMS to reduce payments to hospitals with excess readmissions  Penalties will apply and increase from 1% of Medicare reimbursements to 2% in 2013 and 4% in

 Income from self-employment and wages of single individuals in excess of $200K annually subject to additional tax of.9%  $250,000 married filing jointly  $125,000 for married person filing separately 24

 Limit on pre-tax contributions to healthcare flexible spending accounts capped at $2,500 per year  Medical devices subject to a 2.3% excise tax at time of purchase  This also applies to some items purchased by veterinarians such as gloves and catheters  Insurance companies required to use standardized paperwork 25

 Religious organizations that were exempted from the Contraception Mandate for a year must now comply  As of their plan renewal post

 Individuals may enroll in health insurance plans through state-based health insurance exchanges for coverage effective  Open enrollment for this calendar year ends on  Open enrollment in ensuing years begins on 10-1 and ends on 12-7 annually 27

 Insurers prohibited against charge higher rates for pre-existing conditions or gender  Insurers prohibited from establishing annual spending caps on essential health benefits 28

 Individual and employer mandates have been postponed to 2015  In participating states, Medicaid eligibility expanded  Health insurance exchanges established and subsidies for insurance premiums given to those individuals who buy a plan (income restrictions apply) 29

 Two federally regulated Multi-State Plans (MSP) become available through some state plans  One must be offered by a non-profit insurer  The other cannot cover abortion services  Availability 60% of all states in 2014 / 70% in 2015 / 80% in 2016 / 100% in 2017  Patient eligibility waiting periods in excess of 90 days for group coverage prohibited 30

 Two years of tax credits offered to qualified small businesses 50% premium subsidy  Average payroll no more than $50,000 per employee up to 25 Full Time Equivalent (FTE) employees 31

 $2,000 maximum annual deductible for single individual plan and $4,000 maximum annual deductible for any other plan  Applies to employer-sponsored plans  Spending and coverage cuts to Medicare Advantage and includes reduction of Medicare and Medicaid drug reimbursement rates 32

 New excise tax on pharmaceutical companies and is based upon the market share of the company  Health insurance companies become subject to new excise tax based upon market share for  Thereafter increased annually at the rate of inflation 33

 Qualifying medical deductions threshold increases from 7.5% to 10% of AGI  Consumer Operated and Oriented Plans (member-governed non-profit insurers) entitled to a 5-year federal loan can start offering coverage 34

 Employer mandate goes into effect  Individual mandate goes into effect  Medicare fee schedule now used to provide larger payments to physicians who provide high-quality care compared to cost 35

 States allowed to shift children eligible for care to health insurance exchanges 36

 States permitted to form health care choice compacts and allow insurers to sell policies in any state participating in the compact  Threshold for itemizing medical expenses for seniors increases from 7.5% to 10% of income 37

 All existing health plans must cover approved preventive care and checkups  No cost sharing allowed  40% excise tax on high cost (Cadillac) plans imposed  Insurance premiums in excess of $27,500 for family plans and $10,200 (individual plans) 38

 A state may apply to the SHHS for a “waiver of state innovation” provided the state passes legislation implementing an alternative health care plan that meets certain criterion  This would allow the state to be exempt from some of the requirements imposed under PPACA  Can receive payment from the federal government equal to the aggregate amount of any federal subsidies and tax credits their residents would have been eligible to receive 39

 Medicaid extends coverage to former foster care youths in care at least 6 months and under 25 years old 40

 Guaranteed issue  Policies must be issued regardless of any medical condition  Partial community rating requires insurers to offer the same premium to same age group and geographic location without regard to gender  No exclusions for pre-existing medical conditions 41

 Applies to employer with more than 50 employees if there is no health insurance to full-time employees  FTEs are those employed 30 hours weekly (this is calculated on a week basis, not a 5-day work week)  $2,000 per employee penalty for failure to provide health care  Postponed to

 All individuals not covered by an employer sponsored health plan or government sponsored plans, such as Medicare must secure an “approved” private insurance policy or pay a penalty 43

 This was put into place in an attempt to reduce the number of people that might not have coverage, but would wait to contribute to the collective premium pool until they become ill or injured 44

 An exception to this requirement is if the individual is a member of a recognized religious sect exempted by the IRS  This requirement can also be waived in cases of financial hardship 45

 The initial penalty is $95.00 or up to 1% of income over the filing minimum, whichever is greater  In future years, this penalty will increase to a minimum of $695 for individuals and $2,085 for families or 2.5% of income over the filing minimum  This was to take effect on but has been delayed to

 State-based  Regulated and administered by either federal or state government  Private insurers may sell plans to individuals and small businesses  May use subsidies if qualified to pay for the cost of the coverage  Websites will be used to market these plans and will be regulated and comparable plans 47

 Reducing work hours  Changing employees to another sister company (this is already in the regulations – the business is viewed as a whole, not is separate “pieces”  Fire employees to get under the threshold 48

 Change the health plan to minimum essential coverage  Downgrade “Cadillac” plans  Move employees to a PEO  Penalties and fines imposed by federal and state governmental agencies 49

 Discrimination claims may increase  EPLI  Wrongful termination claims may increase  EPLI  Changes in health plans causing employees financial harm  Fiduciary Liability 50

 Moving employees to PEO  Combination  Penalties and fines  Watch out for changes in all Executive Risk policies that may remove existing coverage 51

 If you have only been offering Fiduciary Liability if the insured has a 401k – better change your sales approach  ERISA and now PPACA impose responsibilities upon the employer that can have severe financial consequences to the employer  Employees or the government can be the plaintiff 52

 PPACA has lent new clarity to ERISA  The term "group health plan" has the same meaning given that term by Section 2791(a) of the Public Health Service Act, which provides that:  “The term "group health plan" means an employee welfare benefit plan (as defined in section 3(1) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. §1002(1)]) to the extent that the plan provides medical care (as defined in paragraph (2)) and including items and services paid for as medical care) to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise." 53

 PPACA recognizes that there are ERIDSA welfare benefit plans that provide health benefits and they are now officially classified as “group health plans”  This also brings in self-funded health insurance plans as well 54

Covers business assets of the insured company and personal assets of officers, directors, partners, members, supervisors, managers and any other category of an insured person Responds for financial loss caused by actions or inactions of persons responsible for providing, managing and administration of employee benefit programs 55

A written demand for monetary damages or non-monetary relief A civil proceeding commenced by the service of a complaint or similar pleading A criminal proceeding commenced by a return of an indictment or information 56

A formal civil administrative or civil regulatory proceeding commenced by the filing of a notice of charges or similar document or by the entry of a formal investigative order or similar document A written notice of commencement of a fact-finding investigation by the U.S. Department of Labor, the U.S. Pension Benefit Guaranty Corporation, or any similar governmental authority. 57

 Any breach of the responsibilities, obligations or duties imposed by ERISA upon fiduciaries of the Sponsored Plan in their capacity as such fiduciaries; 58

Responds for legal liability imposed upon an employer for their responsibility in providing a defined plan for their employees Includes imposition of liability under ERISA Can include the EBLI coverage section for liability arising out of negligence in administration of these plans 59

 Community Lecture  October 22 nd Cyber Liability and Personal Lines  University CE  September 12 th Farm Liability  September 17 th Website Review  September 19 th Integrated Disability Management  Insight on Ethics and the Insurance Industry ▪ Our last Ethics class of