Affordable Care Act impact on insurance plans Individual market webinar 40192CAIENABC 8/13

What we’ll cover: ▪Overview of 2014 changes ▪Health Insurance Marketplace ▪Coverage options: customer mapping, transitioning and grandfathering ▪Case examples ▪Tools and resources 2 Today’s topics

Overview of 2014 changes

4 Changes that affect premiums Guaranteed issue No one can be denied coverage Broader benefits and limits 10 types of Essential Health Benefits required, out-of-pocket limits and deductible restrictions Change in rating Rates based on age and address (and tobacco use, in some states), not gender and health status At least 60% actuarial value Plans pay at least 60% of covered services New taxes and fees Apply to certain plans Subsidies/credits Help those with low or moderate incomes pay for coverage Reinsurance program Insurers / TPAs / self- funded plans contribute to fund high claims New Health Insurance Marketplace (Exchanges) Offers plans for individuals

Individuals Small groups Large groups Guaranteed issue Broader benefits 5 How each premium is affected ~ ~ ~ ~ depending on number of required benefits included in plan ~ ~ ~ ~ ~ ~ IncreaseDecreaseLittle change

Individuals Small groups Large groups Change in rating At least 60% actuarial value 6 How each premium is affected ~ ~ for customers with more cost share than allowed ~ ~ ~ ~ IncreaseDecreaseLittle change for healthy for less healthy young men and older women young women and older men young individuals older individuals for healthy for less healthy groups younger than average groups older than average little change for customers with less cost share ~ ~ for customers with more cost share than allowed little change for customers with less cost share ~ ~

Individuals Small groups Large groups New taxes and fees Subsidies/ credits 7 How each premium is affected for those who qualify ~ ~ ~ ~ IncreaseDecreaseLittle change

Individuals Small groups Large groups Reinsurance program New Health Insurance Marketplace (Exchanges) 8 How each premium is affected ~ ~ ~ ~ IncreaseDecreaseLittle change

▪Outpatient services ▪Emergency services ▪Hospitalization ▪Maternity and newborn care ▪Mental health and substance use disorder services (including behavioral health treatment) ▪Prescription drugs ▪Rehabilitative and habilitative services/devices ▪Laboratory services ▪Preventive and wellness and chronic-disease management ▪Pediatric services (including dental and vision) 9 Essential health benefits (EHBs) Nongrandfathered plans for individuals on and off the Marketplace must cover:

▪Annual/lifetime dollar limits cannot apply Affects only nongrandfathered plans Applies for in-network and out-of-network services ▪Visit limits are allowed on EHBs and can replace dollar limits ▪Non-EHB annual/lifetime dollar limits are allowed ▪Rule: Applies to medical, pharmacy and pediatric vision and dental benefits that are under the policy Does not apply to: -Stand-alone benefits, which are “excepted” under HIPAA 10 EHBs and annual/ lifetime dollar limits NOTE: Medical Policy rules still apply to EHBs

2014 OOP limits for all individual nongrandfathered plans: Individual: $6,350 Family: $12,700 ▪The OOP cap applies for medical and specialty EHBs ▪Cap is equal to the amount set for HSA-compatible plans 11 Out-of-pocket (OOP) maximum

Premiums for individuals are not based on gender or health but on: Family size Age – with maximum 3:1 rating bands Where people live 12 Community rating

Center Forward ▪Increases likely in the individual and small group markets ▪Some groups up by 49%, others down by 39% American Action Forum ▪Increase in costs for young, healthy people in the individual and small group markets ▪Costs for older, less healthy would drop about 22% Milliman actuarial firm ▪75% to 95% rise in premiums in the individual market ▪Rates for others would drop Jonathan Gruber of MIT ▪Premiums in individual market may increase as much as 85% ▪Small group market may increase more than 20% 13 Studies on premium impact

Health Insurance Marketplace

15 Overview of state models State-Based Active Purchaser Exchange Partnership Exchange, State-Based Active Purchaser/Facilitator Blend, or Federally-Facilitated with State Plan Management State-Based Facilitator Exchange Federally-Facilitated Exchange

Coverage options for individuals

▪People not already on a government plan have these options: Employer-sponsored coverage Individual coverage through Health Insurance Marketplace (“on exchange”) Individual coverage outside the Health Insurance Marketplace (“off exchange”) No coverage – pay the penalty 17 Options for individuals

▪Mapping ▪Transitioning ▪Grandfathering 18 Options for current members Communications about coverage options are being mailed to members and Brokers. All members will be contacted by the end of October. Please check with your local sales representative for state-specific information.

We’re mapping our nongrandfathered members to new ACA-compliant plans ▪As a participant in California’s Individual Health Insurance Marketplace, we are required to discontinue non-ACA compliant nongrandfathered individual plans as of 1/1/14. ▪Therefore we will map all of our nongrandfathered members to off- Exchange ACA complaint plans effective 1/1/14. ▪An easier way to transition from an old plan to a new plan ▪Guide shows plan options for members who are mapped ▪We will apply the current Agent of Record 19 Mapping

An option to keep a plan that was in effect before March 23, A grandfathered plan doesn’t have to meet ACA requirements. Benefits of a grandfathered plan: ▪Could help control premium costs ▪May offer more choices of providers and prescription benefits ▪Won’t be affected by ACA changes that could increase out-of-pocket costs Grandfathering

Case examples

Mark’s employer has decided not to offer coverage. Mark needs coverage for his family and himself, so he’s going to shop in the Health Insurance Marketplace. His reasons: ▪He can compare plans side by side from different insurers to find coverage that meets his needs. ▪He can work with his producer to find out if he qualifies for a subsidy or tax credit when he buys a plan in the Marketplace (“on exchange”). ▪He may also choose to work with his producer to buy Individual coverage outside the Marketplace (“off exchange”). 22 Case example Shop in the Marketplace

Mandy is 27 and recently aged off her parent’s plan. She has opted not to buy coverage. Her reasons: ▪She thinks the cost is too high for regular or even catastrophic insurance. ▪She can always go to the ER if she needs to. Mandy may save money on premiums, but she’ll pay a penalty for not having insurance. The penalty goes up each year. 23 Case example No coverage Penalty is $95 or 1% of taxable earnings, whichever is larger 2014: Mandy should work with her producer to see if she qualifies for a subsidy or a tax credit before deciding to go without insurance.

Tools and resources

To help you keep and grow your business, use these tools from anthem.com/ca:  Producer Toolbox – new producer website with single sign-on and online account management  Marketing materials – gives you the tools you need to help your clients buy the individual and family plans that fit their needs; available on the MerrillConnect order supply site  Plan map/transition guide – shows you how we will map nongrandfathered plans to Anthem ACA-compliant plans; makes it easier for you to help clients who can’t renew their current plans because of new ACA requirements Tools to help your business

Also available at anthem.com/ca for you and your clients: ▪Subsidy estimator – shows whether your client might qualify for a subsidy and gives an estimate; final determination comes from the Marketplace ▪Online shopper site – clients can get a quote, learn about insurance basics, compare plans, check if they can get a tax credit or subsidy and apply for a plan; available in Spanish and English ▪(Coming soon) ChangeMyCoverage tool – web- based, self-service tool helps clients if they move to an Anthem ACA-compliant plan that’s different from what we’ve recommended; offers a personalized message and shows new options compared to their current plan Decision-making tools

Use our Producer Toolbox to quote our Marketplace products 27

Redesigned site for producers: makinghealthcarereformwork.com For members: healthcarereform4you.com 28 HCR websites

Key dates ▪January 1, 2014: Anthem members with plans that are not grandfathered and not ACA-compliant move to our compliant plans (off-exchange) ▪January 1, 2014: Conversion and Guarantee Issue Plans end ▪March 31, 2014: Open Enrollment ends ▪April 1 – September 30, 2014: Special Enrollment for qualifying events only

Thank you! Q & A Anthem Blue Cross is the trade name of Blue Cross of California. Anthem Blue Cross and Anthem Blue Cross Life and Health Insurance Company are independent licensees of the Blue Cross Association. ®ANTHEM is a registered trademark of Anthem Insurance Companies, Inc. The Blue Cross name and symbol are registered marks of the Blue Cross Association.