The Impact of Health Care Reform on Business National Association of Health Underwriters September 8, 2010

Small Business Tax Credit Eligible small businesses are eligible for phase one of the small business premium tax credit. – Small employers with fewer than 25 employees will receive a maximum credit, based on number of employees, of up to 50% of premiums by 2014 for up to 2 years if the employer contributes at least 50% of the total premium cost. – Businesses do not have to have a tax liability to be eligible – Non-profits are eligible – Average salary must be $50,000 or less

Keeping Current Coverage Essentially all plans in effect on date of PPACA enactment (March 23, 2010) are grandfathered. Very few changes are permitted if an employer wants to stay with its current plan structure and retain grandfathered status. Employers who want to keep their current plan as is often want to keep their costs as low as possible. Some changes are required whether a plan is grandfathered or not. Insurers may make decisions about their small group business and voluntarily adopt certain PPACA provisions. These changes may add new benefits but also come with increased cost.

New Requirements in 2014 All individuals are required to carry coverage – Tax penalties for non-compliance – Exceptions for hardship and certain other income related circumstances Imposes new annual taxes / fees (non-deductible) on private health insurers based on net premiums – This applies to insured plans only Businesses with more than 50 full-time employees will face potential fines if they do not offer qualifying coverage to full-time employees.

New Requirements in 2014 Coverage must be offered on a guarantee issue basis in all markets and be guarantee renewable Exclusions based on preexisting conditions will be prohibited in all markets Significant restrictions on rates for individuals and small groups. Redefines small group coverage as employees.

Exchanges in 2014 Requires each state to create an Exchange to facilitate the sale of qualified benefit plans to individuals, including new federally administered multi-state plans and non-profit co-operative plans. – In addition the states must create SHOP Exchanges to help small employers purchase such coverage. – The state can either create one exchange to serve both the individual and group market or they can create a separate individual market exchange and group SHOP exchange. – States may choose to allow large groups (over 100) to purchase coverage through the exchanges in 2017.

Essential Benefits Qualified plans offered will cover essential benefits using four coverage tiers Benefits are based on various percentages of the amount of health care used by an average person in a year The Bronze level will be 60% of what an average person uses, Silver will be 70%, Gold 80%, and Platinum 90% Actual benefits in each tier can vary as long as their benefits are actuarially equivalent to the percentage category for the plan tier There will also be a plan designed to appeal to younger people under age 30 with a lower premium and a lower level of benefits. Deductibles will be restricted to $2,000 for individuals and $4,000 for families but this can be increased if the employer contributes to an account that can be used to offset the higher deductible – For example, a plan could have a $3,000 individual deductible if the employer deposits $1,000 into the employees HSA, HRA, or FSA

Tax Credits in 2014 Creates sliding-scale tax credits for non-Medicaid eligible individuals with incomes up to 400% of FPL to buy coverage through the exchange. – The reconciliation provides slight increases to the subsidy amounts for all subsidy-eligible individuals and increases the cost-sharing subsidies for those making 250% FPL or less. – In general these are only available to those without access to employer-sponsored coverage, unless the coverage offered doesnt meet minimum standards or is deemed unaffordable.

PPACA Bill Beyond % excise tax on insurers of employer-sponsored health plans with aggregate values that exceed $10,200 for singles and from $27,500 for families takes effect in – Values of health plans include reimbursements from FSAs, HRAs and employer contributions to HSAs. – Stand-alone vision and dental are excluded from the calculation. – Premium values are indexed to CPI – Allows plans to take into account age, gender and certain other factors that impact premium costs

Discussion and Questions Janet Trautwein NAHU Executive Vice President and CEO