1. Healthcare Reform Bryan Lagg Blue Cross Blue Shield of Mississippi

2. Major Timelines Related to Healthcare Reform 2010 - 2011: Market Reform 2012 - 2013: Financing Alignment 2014 - Ongoing: The Exchange / Individual Mandates

3. March 23, 2010 January 1, 2010 2010 Provisions Rate Review Consumer Information Grants to States Grandfathered Plan Status in Effect Small Business Tax Credits

4. Key Provisions: Employer Responsibility (Tax)

5. 2010- 2013 Estimated Annual Premiums Funding Percentag e Total Tax Credit Available Potential Tax Credit Reduction Phase-Out (# of Employees) Reduction Phase-Out (Average Salary) Total Tax Credit $70,00050%35%$12,25000 Number of Employees: 10 Assumed Premiums: $70,000/year Funding Percentage: 50% Average Annual Wages: $25,000 Potential Tax Credit: 35% Main Street Mechanic Auto Repair Shop

6. 2010- 2013 Estimated Annual Premiums Funding Percentag e Total Tax Credit Available Potential Tax Credit Reduction Phase-Out (# of Employees) Reduction Phase-Out (Average Salary) Total Tax Credit $240,00050%35%$42,000-$28,0000$14,000 Number of Employees: 40 Part-Time Employees (equivalent of 20 FTEs) Assumed Premiums: $240,000/year Funding Percentage: 50% Average Annual Wages: $25,000 Potential Tax Credit: 35% Downtown Diner

7. 2010- 2013 Estimated Annual Premiums Funding Percentag e Total Tax Credit Available Potential Tax Credit Reduction Phase-Out (# of Employees) Reduction Phase-Out (Average Salary) Total Tax Credit $72,00050%25%$9,00000 Number of Employees: 9 Assumed Premiums: $72,000/year Funding Percentage: 50% Average Annual Wages: $22,000 Potential Tax Credit: 25% 1st Street Family Services (Non-profit Foster Care)

8. 2010- 2013 Estimated Annual Premiums Funding Percentag e Total Tax Credit Available Potential Tax Credit Reduction Phase-Out (# of Employees) Reduction Phase-Out (Average Salary) Total Tax Credit $90,00050%35%$15,750-$2,100-$6,300$7,350 Number of Employees: 12 Assumed Premiums: $90,000/year Funding Percentage: 50% Average Annual Wages: $35,000 Potential Tax Credit: 35% Acme Air Conditioning, LLC (Manufacturer)

9. March 23, 2010 January 1, 2010June/July, 2010September 2010 2010 Provisions Rate Review Consumer Information Grants to States Grandfathered Plan Status in Effect Small Business Tax Credits Part D “Donut Hole” Decreased Sec. 833 Changes Limits deductibility of insurer executive compensation (90 days out) National high risk pool Early retiree reinsurance grants July 1 HHS Internet portal Part D discounts in “donut hole” (180 days out) HHS regulations on state Exchange waivers HIT standards Plan Years 6 Months Out Dependent Coverage to Age 26 No pre-ex exclusion period < age 19 Preventive services with no cost-sharing

10. Preventive Measures Healthy You! Compared to USPSTF Services / Frequency Birth-24 Months 2-11 Years 12-17 Years 18-34 Years 35-39 Years 40-49 Years 50+ Years Preventive medicine evaluation or re-evaluation / 1 visit per calendar year 8  Hemoglobin, hematocrit or CBC / Once per calendar year  Urinalysis / Once per calendar year  Immunizations  Blood pressure / Once per calendar year  Breast exam / Once per calendar year  Pap smear and pelvic exam / Once per calendar year 

11. Preventive Measures Healthy You! Compared to USPSTF Services / Frequency Birth-24 Months 2-11 Years 12-17 Years 18-34 Years 35-39 Years 40-49 Years 50+ Years Glucose  Lipid profile / Once per calendar year  Mammogram / Once per calendar year  PSA / Once per calendar year  Stool for occult blood / Once per calendar year  Flexible sigmoidoscopy / Once every five years or Colonoscopy / Once every 10 years  Bone density / Once per lifetime 

12. March 23, 2010 January 1, 2010June/July, 2010September 2010 2010 Provisions Rate Review Consumer Information Grants to States Grandfathered Plan Status in Effect Small Business Tax Credits Part D “Donut Hole” Decreased Sec. 833 Changes Limits deductibility of insurer executive compensation (90 days out) National high risk pool Early retiree reinsurance grants July 1 HHS Internet portal Part D discounts in “donut hole” (180 days out) HHS regulations on state Exchange waivers HIT standards Plan Years 6 Months Out Dependent Coverage to Age 26 No pre-ex exclusion period < age 19 Preventive services with no cost-sharing Restrictions on Rescissions No lifetime limits; restricted annual limits MLR reporting January 1, 2011 MLR rebates HSA/FSA changes

13. 2013 Contribution limits on HSAs Itemized deductions for unreimbursed medical expenses Medicare taxes 2014 Long-Term Provisions $8B insurer fee

14. Key Provisions: Financing FSA Limits (2011+) Limited to $2,500 per year Tax on Rx/Devices (2011) $47B in new taxes Increased Medicare Tax (2013+) Increases tax on income and investments for high-income people ‣ Additional.9% HI tax for individuals earning more than $200,000 and joint filers earning more than $250,000 Insurance Tax (2014+) $60B tax on insured products; $8B in 2014 Cadillac Tax (2018+) Tax on high-value plans ($10,200 single/$27,500 family)

15. 2013 Contribution limits on HSAs Itemized deductions for unreimbursed medical expenses Medicare taxes 2014 Long-Term Provisions $8B insurer fee Health insurance Exchanges

16. Key Provisions: Exchanges (2014+) ‣ States must establish Exchanges for individuals and small employers (federal fallback) ‣ Employee choice ‣ Subsidies and small employer credits only available through Exchange ‣ Options limited to 4 “actuarial value” benefit packages ‣ Bronze (60%), Silver (70%), Gold (80%), Platinum (90%) ‣ Insurers must offer Silver and Gold

17. Key Provisions: Exchanges (2014+) ‣ Catastrophic plan offering available to individuals less than 30 or with financial hardship ‣ State mandates required only if state pays added costs ‣ Participating plans must meet extensive requirements ‣ Grants to “navigators” for education and enrollment Outside Exchange ‣ Individual and group coverage can be sold ‣ Must meet “essential benefits” ‣ Follow cost-sharing limits ‣ Apply state benefits mandates

18. Small Business Tax Credits Employees201020112012201320142015 1-25 35% tax credit eligible if: 1) 50% funding level 2) Average Annual Wage (AAW) < $25,000 3) Phase-out based on size & AAW Early retiree reinsurance grants 50% tax credit eligible if: 1) Exchange participation 2) 50% funding level 3) AAW < $25,000 4) Phase-out based on size & AAW Employers required to report value of healthcare benefits on W-2 Part D subsidy deduction elimi- nated Medicare tax increase

19. 2010- 2013 Estimated Annual Premiums Funding Percentag e Total Tax Credit Available Potential Tax Credit Reduction Phase-Out (# of Employees) Reduction Phase-Out (Average Salary) Total Tax Credit $90,00050%35%$15,750-$2,100-$6,300$7,350 Number of Employees: 12 Assumed Premiums: $90,000/year Funding Percentage: 50% Average Annual Wages: $35,000 Potential Tax Credit: 35% Acme Air Conditioning, LLC (Manufacturer) 2014- 2015 Estimated Annual Premiums Funding Percentag e Total Tax Credit Available Tax Credit Reduction Phase-Out (# of Employees) Reduction Phase-Out (Average Salary) Total Tax Credit $90,00050% $22,500-$3,000-$9,000$10,500

20. 2013 Contribution limits on HSAs Itemized deductions for unreimbursed medical expenses Medicare taxes 2014 Long-Term Provisions $8B insurer fee Health insurance Exchanges Individual mandate and subsidies

21. Key Provisions: Individual Mandate and Subsidies Individual Mandate (2014+) All individuals must purchase minimum coverage. Penalty (with exceptions) is lower of: ‣ National average premium, or ‣ Greater of: % income (up to 2.5%), or $95 (2014), $695 (2016) Subsidies (2014+) Sliding scale, up to 400% Federal Poverty Level ($88,000 per year for family of 4) ‣ Only available through Exchanges

22. 2013 Contribution limits on HSAs Itemized deductions for unreimbursed medical expenses Medicare taxes 2014 Long-Term Provisions $8B insurer fee Health insurance Exchanges Individual mandate and subsidies Employer requirements

23. Key Provisions: Employer Requirements Requirement: “Play” (2014+) Employers with more than 50 full-time employees (FTEs) must offer minimum coverage: ‣ Part-time are included on FTE basis in calculating more than 50 FTEs ‣ FTE is 30+ hours per week ‣ No minimum contribution ‣ Must provide “essential coverage” Coverage Penalty: “Pay” (2014+) Employers with more than 50 FTEs: ‣ Not offering coverage and at least one FTE receives tax credit ‣ $2,000 x total number of FTEs (minus first 30 FTEs) ‣ Offering coverage at least one FTE receives tax credit but actuarial value less than 60% or employee cost is more than 9.5% of household income ‣ Lesser of $2,000 x total FTEs or $3,000 x number of employees receiving tax credit

24. 2013 Contribution limits on HSAs Itemized deductions for unreimbursed medical expenses Medicare taxes 2014 Long-Term Provisions $8B insurer fee Health insurance Exchanges Individual mandate and subsidies Employer requirements Medicaid expansion Risk Pool eliminated

25. Final Summary: State of the Union 2014 Government subsidies Medicaid rolls increased Exchange implemented/incentives to enroll Rich benefit designs taxed No real measures addressing cost, only attempts to increase access; rates will increase Coverage mandated/insufficient penalties