1. ESB-1681-0512

2. This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance. From Health Care Reform

3. ESB-1681-0512 Provide a road map for Health Care Reform Gain an understanding of the key obligations affecting employers in a state sponsored plan Introduce an employer’s long-term options

4. ESB-1681-0512 1,000 pages of legislation drafted and enacted very quickly Rules are still being developed –Federal agency guidance –Role of states

5. ESB-1681-0512 Plan design mandates Health FSA/HRA/HSA provisions Administrative requirements Plan sponsorship provisions

6. ESB-1681-0512 2010 & 2014 PLAN DESIGN MANDATES Some provisions apply to all plans, some only to non-grandfathered plans Implications of grandfathering Apply to major medical ESB-1681-0512

7. KEY MANDATES INFLUENCING PLAN DESIGN Annual and lifetime limits prohibited Waiting periods limited to 90 days Deductibles limited to $2,000/$4,000 for individual/family coverage Required out-of-pocket maximums ESB-1681-0512

8. Employee Health FSA contributions will be capped at $2,500 effective 1/1/2013 Employee contributions are subject to the new limit

9. ESB-1681-0512 W-2 reporting of value of health coverage Summary of Benefits & Coverage (SBC) Automatic enrollment Coverage and workforce reporting to IRS and employees Nondiscrimination testing

10. ESB-1681-0512 Cornerstone year of Health Care Reform –State Exchanges –Individual mandate –Federal premium tax credit to purchase Exchange coverage –“Employer responsibility”

11. ESB-1681-0512 Penalty may apply if: –No coverage offered to full-time employees and dependents –Coverage is “unaffordable” or “inadequate” –Employee receives federal premium tax credit for Exchange coverage

12. ESB-1681-0512 Definitions: –Large employer –Full-time employee –Inadequate –Unaffordable

13. ESB-1681-0512 Monthly penalty for no coverage: –1/12 th x $2,000 per month/per employee (after 1 st 30 employees) Penalty for unaffordable/inadequate coverage: –1/12 th x $3,000 per month/per employee with federal premium tax credit

14. ESB-1681-0512 Effective 2018: 40% non-deductible excise tax Imposed on aggregate value of health coverage that exceeds threshold amounts

15. ESB-1681-0512 General thresholds: –$10,200 individual coverage –$27,500 family coverage Indexed for inflation Applies for specified health coverage

16. ESB-1681-0512

17. Plan design mandates Health FSA/HRA/HSA provisions Administrative requirements Plan sponsorship issues

18. ESB-1681-0512 WHAT DO YOU DO NOW? 1.Understand your responsibilities 2.Assess whether costs are sustainable 3.Understand your choices 4.Design an implementation strategy 5.Implement your plan

19. ESB-1681-0512

20. No one-size-fits-all solution Can offer more than one Two-part strategy Transition period

21. ESB-1681-0512 ACTION PLAN - RECAP 1.Understand your responsibilities 2.Assess whether costs are sustainable 3.Understand your choices 4.Design an implementation strategy 5.Implement your plan

22. ESB-1681-0512 Thank you! This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance. Copyright 2012 American Fidelity Assurance Company