Healthcare Reform : Where are we NOW? Presented by: Joey Janssen, Employee Benefit Specialist August 23, 2013 “We Make Benefits Work”

“Incredible change happens in your life when you decide to take control of what you do have power over instead of craving control over what you don't.” - Steve Maraboli Change “We Make Benefits Work”

Quote of the Day – August 22 “ Failure to hit the bulls-eye is never the fault of the target” “We Make Benefits Work”

Current Headlines Employer Mandate Delayed until 2015 – Individual Mandate still on track Out of Pocket Maximum Limits Revised for 2014 – Not delayed Exchanges – Still on track?? National Employers & Universities Slash Benefits – Stating healthcare law (Spouse Coverage) – University of Virginia & UPS “We Make Benefits Work”

Current Headlines Navigator Grants – 67 Million Recent study from Employee Benefit Advisor state Navigators are the LEAST likely sources for consultation on the new healthcare law Aetna backs out of State-Based Exchanges The 40 Hour is Full Time Bill – Bipartisan attempt

Today’s Agenda PPACA Highlights Small Employer Defined Small Group Deductible Ceiling Group Rating Factors – Rate Limitations Pricing Changes & Adjusted Community Rating Notification of Exchanges “We Make Benefits Work”

Agenda Continued What is a Large Employer? Full Time Equivalents Common Ownership Measurement Periods– PLAN NOW Pay or Play Mentality--DELAYED Employer Mandate– DELAYED Waiting Period Limitations “We Make Benefits Work”

Individual Mandate Who? – All citizens of the United States of America What? – Must purchase health insurance When? – Beginning Jan Why? – The Patient Protection and Affordable Care Act How? What if I don’t comply? – Additional taxes – $95 or 1% of your household income over the filing threshold – $325 per uninsured or 2 % of your household income over the filing threshold – 2016 & beyond- $695 per uninsured person or 2.5% of household income over the filing threshold – WHICHEVER IS GREATER “We Make Benefits Work”

New Benefit & Coverage Rules Employer ImpactsDescriptionIndividualSmall Group Fully Insured Large Group Fully Insured Self-Funded 1 Essential Health Benefits (EHB) Health Plans must provide Essential Health Benefits for individual and small group Yes No 2 OOP Max OOP limits must comply with OOP limits for HSA plans All cost sharing (including copays) for EHB services must count toward OOPM Yes 3 Deductible Limits Beginning 2014 plan design deductibles may not exceed a $2,000 (self-only) or $4,000 (other than self-only) annual limitation NoYesNo 4 Metallic Levels Four tiers of coverage for EHB packages: Bronze, Silver, Gold, and Platinum and catastrophic coverage (under 30-year-olds only) Requirement to meet actuarial value of one of four plans Requirement in and out of Exchange Yes No 5 Pre-existing Condition Exclusion (All Ages) Beginning in 2014, pre-existing condition exclusions must be removed for all members, not just those under age 19 Yes “We Make Benefits Work”

Essential Health Benefits 10 essential health benefits Pediatric services, including oral and vision care Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services Prescription drugs Rehabilitative and rehabilitative services and devices Laboratory services Preventive / wellness and chronic disease management “We Make Benefits Work”

Premium Impacts and Pricing 11 Individual Market Premium Increase * Small Group Market Premium Increase ** Avg Rate Increase 10% Employer Movement 2-3%*** Product % Pre-ReformPost-Reform 10% -5% to +50% Avg Rate Increase 10% Taxes/Fees 3.8% Pre-ReformPost-Reform 10% 25% to 200% Reform Compliance drives significant price increases. Community Rating causes significant disruption for many groups. Many consumers and employers will face substantial price increases Product 3 to 5% Pre-ReformPost-Reform 10% 15% to 20% Avg Rate Increase 10% Avg Rate Increase 10% Avg Rate Increase 10% Avg Rate Increase: 10% Large Group Premium Increase Incremental Increase to rates beginning in 2013 to cover taxes, fees and benefits. 11 Product % Guaranteed Issue and Rating Rules % Community Rating -25% to 25% Taxes/Fees 3.8% Taxes/Fees 3.8% “We Make Benefits Work”

Small Employer In Florida, a small group will continue to be defined as under 50 employees for 2014 and 2015 In 2016 small groups will be defined as employers with employees “We Make Benefits Work”

Deductible Ceiling $2,000 Single / $4,000 Family What does this mean? Is this attainable? Will there be any exceptions? – Bronze level plans, 60% actuarial value You could see plans with $5,000 deductibles “We Make Benefits Work”

Adjusted Community Rating Adjusted Community Rating will apply to individual and fully insured small group health insurance Pricing Restrictions will begin on or after January 1, 2014 “We Make Benefits Work”

Rating Factors & Premium Restrictions Geographic Area Age (3:1 limit) Tobacco Use (1.5:1 limit) Group Rate Factors are limited to Gender Health Status Claims History Medical Underwriting Group Size Industry Rates may not vary by “We Make Benefits Work”

Pricing Today and Beginning 2014 Additional Rating Factors Being Eliminated or Changed Size Factors (eliminated) Gender differentiation (eliminated) Typically 10-1 Age slope (changed/reduced) 16 Healthiest or Newest groups and Lowest Rate Less Healthy or Longest Duration groups and Highest Rate Current State High MRRF Future State MRRF 1.0 Current State Low MRRF “We Make Benefits Work”

Notification of Exchanges What is it? Deadline to comply – October 1, 2013 Who gets them? – Full-time, part time, variable Should I send them now or wait? Where do I find them? “We Make Benefits Work”

2014 Exchange Options Public Exchange for Individuals Public Exchange for Small Groups Private Exchanges “We Make Benefits Work”

Public Exchange for Individuals (Marketplace) Subsidies available for Individuals: – Under 65 – Not Eligible for Employer Coverage Or is it not affordable – Not Eligible for Medicaid or Medicare – The high premiums are still there – who pays? *Subsidies available for those at 100% - 400% of Poverty Level “We Make Benefits Work”

Public Exchange for Small Groups (SHOP) Available in 2014 – 2 Plans per metallic level- no competition Purchased through an agent 50% Tax Credit Available for Employers: – <25 Employees – Average Annual Wage <50K – Contribution at least 50% of EE Premium “We Make Benefits Work”

Private Exchanges Similar to public exchanges, except: – NO Subsidies or Tax Credits Available! – NOT operated by the government, but Insurance Carriers and Agencies! “We Make Benefits Work”

New Waiting Period Guidelines Waiting periods for Full Time employees cannot exceed 90 days – 90 Days first of month no longer a compliant option. “We Make Benefits Work”

Adapting to the New World of Healthcare How do you think insurance companies will respond? – Innovation? – New Concepts? Special Enrollment Periods Self Insured Returne of Premium – Creativity? Plan Designs Plan Functionality “We Make Benefits Work”

Creativity & Change United Healthcare – Renewal Dates – Plan Designs – “Private” Exchanges – Return of Premium Aetna – New Business – Existing Business – Private Exchanges “We Make Benefits Work”

Small Business Options Today Offer Employer Sponsored Health Insurance Don’t Offer Employer Sponsored Insurance ( No Penalty) January 1, 2014 Offer Employer Sponsored Health Insurance Don’t Offer Employer Sponsored Insurance ( No Penalty) Offering Employer sponsored benefits may look different than it does today but will still be a viable way to provide value to your employees “We Make Benefits Work”

Small Group – What To Consider Doing Now ? Consider renewing 12/01 – WHY?? Consider return of premium programs

Large Group Discussion What is a Large Employer? Full Time Equivalents Common Ownership Measurement Periods– Plan NOW Pay or Play Mentality-- Delayed Employer Mandate-- Delayed Waiting Period Limitations “We Make Benefits Work”

What is a Large Employer? A large employer is defined as a company that has greater than 50 full time equivalents. “We Make Benefits Work”

Full-Time Equivalents Why are FTE’s important? – This is used to determine whether or not an employer is qualified as a large employer. – Full Time Employees: 30 hours or more How do you calculate FTE’s? – Add together the total # of FTE’s for the month, plus a number that is equal to the total number hours worked in a month by part time employees, divided by 120 “We Make Benefits Work”

Full Time Equivalent Example Large or Small Employer? 46 Full Time Employees 20 Part Time Employees # Hours Worked Per PT Employee: 30 Total Number of Hours Worked by PT EE: 600 How many full time employees will this company have? 51 “We Make Benefits Work”

Common Ownership -Used to determine if you are a large employer -0-20% ownership -Rarely found to have common ownership % ownership -Assumed to have no common ownership but the burden to report and show that it does exist lies with the employer % ownership -Common ownership assumed and the employer must show that it doesn’t exist % ownership -Common ownership assumed “We Make Benefits Work”

Why is Common Ownership Important? Business 1: 20 Employees Business 2: 40 Employees Business 3: 5 Employees Total Number of Employees: 65 “We Make Benefits Work”

Measurement Periods We have more than 50 full-time employees so we are subject to the employer mandate penalties. How do we know which of our employees is considered “full-time” requiring us to pay a penalty if they qualify for premium tax credits at an exchange (if the employee has a variable work schedule or is seasonal)? Through the end of 2014, for purposes of the employer mandate penalties, the guidance permits you to use a “look-back measurement period/stability period” safe harbor to determine which of your employees are considered full-time employees. You may use a standard measurement/stability period for ongoing employees, while using a different “We Make Benefits Work”

Measurement Periods Variable Hour Employees – “Reasonably Determine ” Look back period – 2013 Deadline – July 1 Standard Measurement Periods – Ongoing Employees Initial Measurement Periods – 3, 6, 9 or 12 months Stability Periods – Equals the IMP Administrative Periods “We Make Benefits Work”

Large Group Participation & Contribution Current: 75% Participation amount eligible employees; 50% of total population Current: Minimum 50% contribution Out of State Employees? Multiple Carriers? 2014 and beyond? “We Make Benefits Work”

Or Mentality Will I be Subject to Penalties? Do I have > 50 Full Time (FTE) Employees? Is my health plan deemed affordable? (9.5% threshold) Does my health plan meet the minimum 60% actuarial value? – This is related to self insured plans more than fully insured How will Penalties be Assessed? Do I offer coverage? (Play) – $3,000 penalty per employee receiving government subsidy. Do I cancel all health benefits? (Pay) – $2,000 penalty per employee (minus 30) “We Make Benefits Work”

Tax Penalties Continued $2,000 Penalty $2,000 will be assessed if employer sponsor coverage is not offered How is this penalty assessed if an employee only works 9 months? $3,000 Penalty What is the trigger? Coverage is deemed unaffordable – over 9.5% gross Employee goes to exchange “We Make Benefits Work”

W2 Safe Harbor Under the Form W-2 safe harbor, an employer could determine affordability by referring to an employee’s wages from that employer. Wages for this purpose would be the amount required to be reported in box 1 of Form W-2 This rule can help an employer determine their contribution strategy amount. “We Make Benefits Work”

Contribution Strategy Idea 75 Employees Require employees to pay $250 per month towards premium or $3,000 annually ER would only pay penalty on those employees making under $31,250 AND receiving a subsidy What about those under $31,250? “We Make Benefits Work”

New Options for Large Group Flexibility & Control United Healthcare – ASO- Partially Self Funded – Return of Premium – 51+ Cigna – Proshare (partially self funded) – Share in the savings “We Make Benefits Work”

What Should You Do Now? Create a plan Evaluate ALL of your options Make a decision that is best for YOUR business “We Make Benefits Work”

Questions?? “We Make Benefits Work”