National Association of Health Underwriters Health Reform Update January 8, 2010 Russ Childers, President Janet Trautwein, CEO Jesse Patton, Legislative Council Chair Susan Rash, Legislative Council Vice-Chair Jessica Waltman, Sr. Vice President of Government Affairs

Current Status of Reform Efforts Bills have passed in House and Senate Bills have passed in House and Senate Congress will not use formal conference committee to work out differences Congress will not use formal conference committee to work out differences Previous bills of this magnitude have held open formal conference committees Previous bills of this magnitude have held open formal conference committees Negotiations going on behind closed doors Negotiations going on behind closed doors Process being used called “ping-pong” Process being used called “ping-pong” Amends bills in each house to make identical Amends bills in each house to make identical

Current Status of Reform Efforts Democratic leadership will still need 60 votes in the Senate Democratic leadership will still need 60 votes in the Senate Although a vote on the final bill will only require 51 votes, the motion to proceed to a vote on the final bill will require 60 Although a vote on the final bill will only require 51 votes, the motion to proceed to a vote on the final bill will require 60 Goal is passage by State of the Union Address (February 2 nd ) Goal is passage by State of the Union Address (February 2 nd ) This goal will be very difficult to achieve This goal will be very difficult to achieve

What Needs to be Changed Clarifying the Role of the States Minimum Loss Ratio Requirements Minimum Loss Ratio Requirements Structure of the Exchanges Structure of the Exchanges Agent-Broker Language needs to be clarified Agent-Broker Language needs to be clarified Regulatory authority overall Regulatory authority overall

Additional Key Issues Taxes need to be eliminated or delayed until major reforms begin Taxes need to be eliminated or delayed until major reforms begin Effective dates need to be at least 12 months after enactment Effective dates need to be at least 12 months after enactment High risk pool funding needs to focus on existing high risk pool and alternative mechanism structures rather than creating new federal entities. High risk pool funding needs to focus on existing high risk pool and alternative mechanism structures rather than creating new federal entities.

Additional Key Issues Personal responsibility requirements/individual mandate Personal responsibility requirements/individual mandate Age rating Age rating Insurance pooling requirements Insurance pooling requirements Public Option still in House language Public Option still in House language

Issues of Concern for You and Your Clients Employer Mandates and Waiting Periods Employer Mandates and Waiting Periods Senate language likely to prevail Senate language likely to prevail Employers over 50 must provide coverage or pay $750 penalty per FTE if even one employee is eligible for subsidies Employers over 50 must provide coverage or pay $750 penalty per FTE if even one employee is eligible for subsidies Part-time and seasonal employees excluded Part-time and seasonal employees excluded Full time means 30 or more hours per week averaged on a monthly basis Full time means 30 or more hours per week averaged on a monthly basis

Issues of Concern for You and Your Clients Employer Mandates and Waiting Periods Employer Mandates and Waiting Periods Allows maximum 90 day waiting period Allows maximum 90 day waiting period Penalties for waiting periods longer than 60 days of $600 per employee Penalties for waiting periods longer than 60 days of $600 per employee Employees who are not eligible for subsidies can opt out of employer coverage with voucher for full employer contribution if employee share of premiums exceeds 9.8% of household income. Employees who are not eligible for subsidies can opt out of employer coverage with voucher for full employer contribution if employee share of premiums exceeds 9.8% of household income. House language much more onerous. House language much more onerous.

Issues of Concern for You and Your Clients ERISA ERISA Unclear whether Senate language will prevail Unclear whether Senate language will prevail Senate bill retains exclusive federal regulation of self-funded plans Senate bill retains exclusive federal regulation of self-funded plans Many new requirements on ALL plans, including new automatic enrollment procedures for employers with more than 200 employees, new notice requirements, and new reporting requirements Many new requirements on ALL plans, including new automatic enrollment procedures for employers with more than 200 employees, new notice requirements, and new reporting requirements

Implementation Issues What is effective at Enactment? Coverage for reconstructive surgery for children with congenital or developmental deformities (House) Coverage for reconstructive surgery for children with congenital or developmental deformities (House) All plans in all market segments All plans in all market segments Group pre-existing conditions waiting period changes from 6/12 to 1/3. (House) Group pre-existing conditions waiting period changes from 6/12 to 1/3. (House) All plans in all market segments All plans in all market segments Pre-existing conditions limitations due to domestic violence are prohibited (House) Pre-existing conditions limitations due to domestic violence are prohibited (House) All plans in all market segments All plans in all market segments

Implementation Issues What is effective in six months? No lifetime limits (at enactment in House) No lifetime limits (at enactment in House) All new plans (Senate); All plans in House All new plans (Senate); All plans in House Restrictions on annual limits Restrictions on annual limits All plans in all market segments All plans in all market segments Coverage for specific preventive services with no cost-sharing Coverage for specific preventive services with no cost-sharing All plans in all market segments All plans in all market segments Elimination of pre-existing exclusions for children under 19 Elimination of pre-existing exclusions for children under 19 All new plans in all market segments All new plans in all market segments

Implementation Issues What is effective in six months? Extension of dependent coverage to 26 (at enactment in House) Extension of dependent coverage to 26 (at enactment in House) All new plans in Senate; All plans in House All new plans in Senate; All plans in House Restrictions on rescission of policies Restrictions on rescission of policies All new plans in Senate; All plans in House All new plans in Senate; All plans in House New appeals process New appeals process All new plans in all market segments All new plans in all market segments No discrimination in coverage or premium based on salary No discrimination in coverage or premium based on salary All group plans All group plans

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