1. Health Care Reform: Counseling The Corporate Client Eleanor D. Thompson October 19, 2010 HEALTH CARE REFORM FROM THE EMPLOYER’S PERSPECTIVE HEALTH CARE REFORM FROM THE EMPLOYER’S PERSPECTIVE: Counseling The Corporate Client PBI Presentation October 19, 2010 Eleanor D. Thompson

2. INTRODUCTION New Rules Why the health care system needs new rules…  Unsustainable health costs  Poor quality of care  Unaffordable health insurance

3. INTRODUCTION How Employers see it…  Lack of capital available to invest in business  Reduced profits  Reduction in workforce  Increased expenses dominated by health care costs Employers’ Goals:  Stabilize expenses  Save jobs  Salvage solvency in recessionary economy

4. Three Key Options For Employers to Meet Goals Three Key Options For Employers to Meet Goals: 1. Whether to provide health care coverage to employees? 2. Whether to maintain grandfather status? 3. Whether to initiate or enhance cost controls in the form of Plan design, cost-sharing and/or implementing Wellness Programs?

5. Analysis of Employer Options Requires: Legal Analysis: The Patient Protection and Affordable Care Act The Health Care and Reconciliation Act of 2010 Accompanying Regulations Technical Releases from HHS, DOL and Treasury FAQs posted by HHS-DOL- Treasury on Healthcare.gov Other federal statutes Other state statutes Non-Legal Analysis: Financial analysis of impact of choice on corporate assets Corporate analysis of the impact of choice on business management, operations, employee relations and corporate reputation

6. 1. Whether to Provide Health Care Coverage Costs For Providing Coverage Penalties for NOT Providing Coverage vs. A. In short term B. In long term C. Rules, methodologies, calculations

7. vs. 2. Whether to Retain Grandfather Status Keep the Plan you have Change the Plan you have Control costs by eliminating some, but not all, PPACA requirements Control costs by changing plan design or cost-sharing vs.

8. 3. Whether, and how, to Control Costs Using Plan Design Provide less comprehensive health benefits Cover only employee, not spouse or dependents Offer and encourage Consumer Direct Health Plans Using Cost-Sharing Methods Increase employee portion of premium Increase deductible Increase co-payment Increase coinsurance

9. 3. Whether, and how, to Control Costs Prevention and Wellness Redirection From Illness to Health Goal: to encourage healthier lifestyles for employees and lower healthcare costs for employers Prevention Insurers required to cover preventive care with no cost-sharing by consumer §2713 Incentive to consumer to choose healthy lifestyle Cost increasing to Employer currently Screening, laboratory tests and other types of preventive care To be supplemented by the U.S. Preventive Services Task Force

10. 3. Whether, and how, to Control Costs Wellness Programs 4 Wellness Program Provisions PPACA §1001PPACA §1201*PPACA §4303 amended by §10404 § 10408 Reporting requirements to be developed by Secretary of HHS regarding wellness and health promotion activities Non- discrimination rules that affect employer wellness programs CDC will provide employers with technical assistance, consultation, tools and other resources in evaluating employer-based wellness programs Awarding Grants to eligible employers to provide their employees with access to comprehensive wellness programs

11. 3. Whether, and how, to Control Costs Wellness Programs to Save Lives and Save Money PPACA §1201 The wellness provisions of the PPACA essentially codify the wellness regulations that were established by HHS, DOL and Treasury under HIPAA in 1996 PPACA broadens wellness provision applicable to group health plans to include health insurance issuers; and increases incentive limit from 20% to 30%, with option to go to 50%

12. 3. Whether, and how, to Control Costs Wellness Programs Employers may use incentives in Wellness Programs, such as, discounts, rebates, or other rewards for participation without running afoul of non- discrimination rules based on health-status related factors Provided,  The reward does not require the participant to satisfy a certain health standard;  The reward is available to all similarly situated individuals

13. 3. Whether, and how, to Control Costs Wellness Programs  If the reward is based on a certain health standard, it will be permitted, but only if…  The reward is not greater than 30% of total coverage  The program is designed to promote health or prevent disease  Individuals given an opportunity to qualify at least once each year  The reward is available to all similarly situated individuals  The availability of reasonable alternatives is disclosed in plan materials

14. 3. Whether, and how, to Control Costs Wellness Programs Legal Analysis Required for Wellness Plans PPACA – Patient Protection and Affordable Care Act HIPAA – Health Insurance Portability and Accountability Act ADA – Americans with Disabilities Act GINA – Genetic Information Non-discrimination Act ADEA – Age Discrimination in Employment Act Title VII of the Civil Rights Act of 1964 State Laws Federal Tax Laws