Caring For Those Who Serve HealthFlex: Health Care Reform Discussion AUMCPBO Meeting October 27, 2010

2010 Programs Early Retiree Reinsurance ProgramEarly Retiree Reinsurance Program Small Business Tax CreditSmall Business Tax Credit Pre-Existing Condition Insurance PlanPre-Existing Condition Insurance Plan ■ Federal/State Plans

2011 Changes Age 26 Dependent CoverageAge 26 Dependent Coverage Grandfathered Plan RulesGrandfathered Plan Rules No RescissionsNo Rescissions No Pre-Existing Conditions Under Age 19No Pre-Existing Conditions Under Age 19 Over-the-Counter Drugs: ineligible for flexible spending account (FSA) and health reimbursement arrangement (HRA)Over-the-Counter Drugs: ineligible for flexible spending account (FSA) and health reimbursement arrangement (HRA)

2011 Changes No Lifetime LimitsNo Lifetime Limits ■ Annual limits restricted Patient ProtectionsPatient Protections ■ Provider choice ■ No cost-share for emergencies Preventive CarePreventive Care New Claims and Appeals ProceduresNew Claims and Appeals Procedures

HealthFlex Concerns Church Plan Eligibility for the Small Business Tax CreditChurch Plan Eligibility for the Small Business Tax Credit Controlled Group RulesControlled Group Rules ■ Example—Who is the employer: local church, annual conference or denomination? Nondiscrimination Rules for Health PlansNondiscrimination Rules for Health Plans

2012 to 2014 Changes W-2 Reporting Value (Cost) of Health Coverage (2012)W-2 Reporting Value (Cost) of Health Coverage (2012) Medical FSA limited to $2,500 (2013)Medical FSA limited to $2,500 (2013) Uniform Summary of Benefits (2013)Uniform Summary of Benefits (2013) Automatic Enrollment (large employers, 2013)Automatic Enrollment (large employers, 2013) New Taxes on High Earners (2013)New Taxes on High Earners (2013)

Changes to Medicare Medicare Advantage payments reduced in 2012Medicare Advantage payments reduced in 2012 Part D donut hole begins to be filledPart D donut hole begins to be filled ■ 2011  50% discount through donut hole in brand-name Rx (discount increases each year to 2020)  7% discount on generic Rx (discount increases each year to 2020)

2014 and Beyond Exchanges for individuals and small employersExchanges for individuals and small employers ■ Exchange plan premiums subsidized for families earning less than 400% of federal poverty level (FPL) ■ Employer participation in exchanges  Small employers eligible to offer in 2014  Large employers by 2017 Employer “pay or play” beginsEmployer “pay or play” begins Individual mandate applies (tax penalty)Individual mandate applies (tax penalty)

Exchanges State-based (regional pacts allowed)State-based (regional pacts allowed) Single risk poolSingle risk pool Only insurance carriers may offer coverageOnly insurance carriers may offer coverage Rating system based on quality, price and enrollee satisfactionRating system based on quality, price and enrollee satisfaction Premium rate variation limits: age (3:1), tobacco use (1.5:1), family structure and geographic areaPremium rate variation limits: age (3:1), tobacco use (1.5:1), family structure and geographic area Platinum, Gold, Silver and Bronze plansPlatinum, Gold, Silver and Bronze plans

Applied Examples UMC minister making median compensation:UMC minister making median compensation: ■ Median pay 2010: $56,795 ■ Housing allowance: $12,695 ■ MAGI*: $44,100 ■ MAGI*: $44,100 UMC minister in lower-paid annual conference:UMC minister in lower-paid annual conference: ■ Lower pay 2010: $49,888 ■ Housing allowance: $11,151 ■ MAGI: $38,737 * Modified adjusted gross income (MAGI)

Applied Examples Lower-paid minister (MAGI $38,737) with spouseLower-paid minister (MAGI $38,737) with spouse Exchange PlanUMC Plan Premium$3,118$13,000 Cost Share13%20% Out-of-Pocket Maximum$5,950$6,000 Exchange PlanUMC Plan Premium$3,300$19,000 Cost Share13%20%+ Out-of-Pocket Maximum$5,950$6,000 Median-paid minister (MAGI $44,100) with spouse and child Median-paid minister (MAGI $44,100) with spouse and child

Applied Examples Lower-paid minister with part-time working spouse and child (MAGI $51,987 )Lower-paid minister with part-time working spouse and child (MAGI $51,987 ) Exchange PlanUMC Plan Premium$4,420$13,000 Cost Share27%20% Out-of-Pocket Maximum$5,950$6,000 Exchange PlanUMC Plan Premium$6,700$19,000 Cost Share30%20%+ Out-of-Pocket Maximum$7,973$6,000 Median-paid minister w/ full-time working spouse and child (MAGI $70,600)Median-paid minister w/ full-time working spouse and child (MAGI $70,600)

Mandates and Penalties Employer penalty:Employer penalty: ■ coverage offered: ■ No coverage offered:  Total number of FTEs x $2,000 ■ Coverage offered, but one FTE receives an exchange subsidy—lesser of:  Total number of FTEs receiving a subsidy x $3,000, or  Total number of FTEs x $2,000 (i.e., the “no coverage” penalty) Individual mandate tax penalty:Individual mandate tax penalty: ■ 2014:greater of $95 or 1% of income ■ 2015:greater of $325 or 2% of income ■ 2016:greater of $695 or 2.5% of income (indexed)

HealthFlex Concerns Church Plan Access to Exchanges (subsidies)Church Plan Access to Exchanges (subsidies) Controlled Group Rules (penalties)Controlled Group Rules (penalties) “Minimum Essential Coverage” definition to avoid penalties“Minimum Essential Coverage” definition to avoid penalties Unsettled Future: elections in 2010, 2012 and court challenges to the lawUnsettled Future: elections in 2010, 2012 and court challenges to the law

Retiree Coverage Strategy Medicare-Eligible RetireesMedicare-Eligible Retirees ■ Part D “donut hole” being filled ■ Retiree Drug Subsidy (RDS) remains ■ Eventual shift to medical-only supplemental coverage coupled with Part D Early RetireesEarly Retirees ■ After exchanges—fixed dollar retiree health benefits

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