Health Care Reform and the Individual Medical Market

For agent use only. Not for distribution to consumers. Assurant Health is the brand name for products underwritten and issued by Time Insurance Company.J-106139 (New 05/2013) © 2013 Assurant, Inc. All rights reserved.

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Agenda

• Market space– What’s happening– Anticipated shifts

• What does it mean for your customer– Customer classifications– How they buy– What they buy– What it’s going to cost

• How Assurant Health will help you make money

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Assurant Health is your long term partner• Assurant Health has a history of adapting to

change– Expertise in individual and small group medical– Complex administration systems a key

capability– Experienced at dealing with regulatory and

administrative changes throughout the decades

– 120 years in complex and changing industry*

*Assurant Health is the brand name for products underwritten and issued by Time Insurance Company (est. 1892) and John Alden Life Insurance Company (est. 1961).

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Patient Protection and Affordable Care Act (PPACA)• Signed into law on March 23, 2010, with the

goal of decreasing the number of uninsured Americans

• Some tenets of the law have already been enacted with the remainder going into effect on the first plan year on or after January 1, 2014– Policies issued before March 23, 2010, are considered

grandfathered and are exempt from most of the provisions Currently rules that implement the provisions

of PPACA are still being drafted and released. We are still awaiting final rules on many PPACA requirements

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PPACA benefit changes – already implemented• Unlimited lifetime maximum• Dependents covered up to age 26

– Regardless of school enrollment• Women’s health coverage• Preventive services• Medical loss ratio (MLR)

– Insurers must spend at least 80% of premium on claims and improving health care quality and if not they have to return the difference to the employers in the form of a rebate

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PPACA benefit changes coming in 2014• Individual mandate

– All individuals must have minimum essential coverage in order to avoid being subject to a tax penalty (some exceptions)

• Guarantee issue• Elimination of pre-existing condition coverage

restrictions• Maximum waiting periods

– 90 days• Elimination of rating for:

– Health status, gender, size loads & industry• Essential health benefits• Metallic levels

– Bronze, Silver, Gold, Platinum

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Plan classifications• Grandfathered

– Policies issued before March 23, 2010, are considered grandfathered and are exempt from some of the main provisions of HCR

• They are not required to cover preventive services without cost sharing

• They do not have to cover essential health benefits – Plans remain grandfathered so long as they do not make

significant changes in coverage• Non-grandfathered

– Any policy issued post signing of PPACA– Policies issued before March 23, 2010, but the customer

made changes to the plan post PPACA that changed the grandfathered status

– Must conform to all applicable reform requirements

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What does this mean for your customer?What does this meanfor your customer?

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Customer changes

1. Changes in how they buy2. Changes in what they buy3. Changes in what it’s going

to cost them

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Changes in how they buy1. Changes in how they buy

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Purchase options• Individuals have the option of purchasing their plans

– On the public Exchange (HIX)• Run by either state or federal government• Subsidies can only be received by individuals who purchase

coverage on the public Exchange– Through a private Exchange

• Private companies can consolidate offerings from multiple insurance carriers or offer a single carrier Exchange

• Plans sold on a private Exchange must still have the essential health benefits and metal levels

• PPACA subsidies are not available on private Exchanges– Off the Exchange

• How the purchase process happens today• Policies must still have essential health benefits and metal

levels• PPACA subsidies are not available off of the Exchange

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Role of the agent

• Agents have a role in each of these purchase scenarios

• Agents will be particularly effective in helping customers understand the differences and advantages to on/off Exchange products and options

• Agent commissions will be same in all three purchase scenarios

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Individual public Exchange• There are three types of public Exchanges

established by PPACA– Federally facilitated (federally administered)– State partnership (state and federally

administered)– State based (state administered)

• Functions:– To help individual shop for coverage from a

variety of health insurance providers• Navigators provide customer assistance with

subsidy eligibility and qualified health plan enrollment on the public Exchange– Employed by the Exchange

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Qualified health plans

• Qualified health plans (QHPs) are plans that are certified to be sold on the Exchange– Plans must be QHPs to be sold on an Exchange

• QHP certification requires qualification/accreditation by URAC or NCQA

• QHPs can be sold on or off the Exchange– The rate on and off the Exchange for those plans must

be the same

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Why does a customer still need an agent?• Solution selling

– Help the customer make the most informed, cost-effective decision

• Frequent changes– Be an expert on the changes in the law and an advisor

to your client

• Complexity– There are a number of new concepts for your customers:

on/off Exchanges and public and private Exchanges

• Assurant Health MGAs are here to help you work through this new environment

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Agent involvement

• States can allow agents to enroll individuals for IM and/or assist individuals in applying for subsidies

• Agents must register with the Exchange in advance of assisting those eligible for subsidies– Agents must also receive training and comply with

privacy/security standards

• Agents must first ensure completion of eligibility verification and enrollment application before helping an individual enroll in a QHP via the public Exchange

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Assurant Health MGAs

• Assurant Health MGAs - The agent’s partner in the sales process with individuals and families

• Support is available through all stages of the selling process: from the quote, to the close of the sale to renewals

Call Stephens-Matthews Marketing1-800-544-8250

www.stephens-matthews.com

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When they buy: open enrollment

• Individuals can only purchase on the public Exchange during open enrollment– Initial open enrollment October 1, 2013 – March 31, 2014– Subsequent open enrollment periods: October 1 – December 7

• A qualifying life event can trigger a special enrollment period where individuals can purchase on the Exchange outside of open enrollment – The special enrollment period for the

individual market is 60 days from the date of a triggering event

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Changes in what they buy2. Changes in what they buy

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Minimum essential coverage

• Individuals must have minimum essential coverage (MEC) in order to avoid a penalty. Individual major medical plans are minimum essential coverage

• Individual major medical plans must have the essential health benefits package on the first plan year on or after January 1, 2014, in order to be compliant with health care reform

• Plans that cover benefits designated as essential health benefits must cover these benefits with no annual limits or lifetime maximums

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Essential health benefits package• The essential health benefit package consists

of the essential health benefits (EHBs), cost sharing limitations and metal levels

• All plans sold on/off the Exchange after January 1, 2014, will need to have the essential health benefits package

• Essential health benefits cover 10 categories of services – Individual major medical plans must include EHBs

• The EHB benchmark plans reflect what benefits will be considered essential health benefits– EHBs will vary by state

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EHB standard – benchmark plans• Each state must define its essential health

benefit standard by selecting a benchmark plan

• Benchmark plans establish what the essential health benefits are in a state– The benchmark plan can include any state mandated

benefits that were enacted prior to December 31, 2011

• Benchmark plans are selected by each state– The scope and limitations of

the EHBs will differ state by state– The benchmark plans selected

per state apply for 2014 and 2015

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Cost sharing

• Identifies what out-of-pocket costs the individual is responsible for; not including premium

• Cost sharing will vary by metallic levels• Total OOP max for 2014 is set at HSA federal

OOP limits for high deductible health plans. The OOP max applies to individual major medical, small group and self funded

• All copays go toward total OOP max– Office visit and prescription

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Metallic levels

• Plans that customers buy will be identified by one of four metallic levels: bronze, silver, gold or platinum

• Actuarial value is the percentage of claims the plan pays for in-network essential health benefits

• Levels are identified based on actuarial value– Bronze = 60%

Silver = 70%Gold = 80%Platinum = 90%

– Actuarial value is NOT the same as coinsurance

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Changes in what it’s going to cost them3. Changes in what it’s going to cost them

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Product pricing• Products are going to have to be re-filed and re-priced to reflect:

– The additional benefits they are required to cover

– Guarantee issue– Changes in cost-sharing percentages

• Shifting to an adjusted community rating– Ratings for individuals and families– Restricted rating on age and geographic area– Can still rate for tobacco usage– The elimination of rating for health status,

gender and industry

Subsidies • PPACA provides for subsidies for individuals

purchasing individual major medical coverage via the public Exchange.

There are two types of federal subsidies:

Cost-sharing reduction• Only available to those at or

below 250% of the Federal Poverty Line (FPL), American Indians and Alaska natives

• Reduction in out-of-pocket expenses

• Must be enrolled in a silver plan

Advanced premium tax credit*

• Reduction in the premium that the individual pays

• Available to individuals between 100% and 400% of the FPL

• Government reimburses the carrier for this credit

*Also known as premium subsidy

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Premium subsidy• People earning between 100% and 400% of

the Federal Poverty Line may qualify for a premium subsidy.– Based on the individual’s or family’s

modified adjusted gross income (MAGI). • The premium subsidy could be used toward any

plan on the public Exchange.• A customer will not receive a premium subsidy for

an amount greater than the annual premium payment for the qualified health plan in which they are enrolled.

Premium subsidy qualification• Step 1: Determine the individual’s required share of

premium– The applicable percentage of MAGI is used in calculating an individual’s

required share of premium.– The applicable percentage corresponds to the individual’s percent of

FPL as set forth in the ACA. The maximum applicable percentage is 9.5%. This is not the premium subsidy amount.

• For example, if you are 300% of FPL, then the applicable percentage of MAGI would be 9.5%.

– The applicable percentage multiplied by the individual’s MAGI equals the individual’s required share of premium.

• Step 2: Determine the annual premium payment– The annual premium payment equals the price of the 2nd lowest cost

silver plan offered on the public Exchange in that individual’s state.• Step 3: Compare the annual premium payment to the

applicable income amount – If the annual premium payment of the second lowest cost silver plan is

greater than the individual’s required share of premium, then the individual may qualify for a premium subsidy.

Premium subsidy | Example• Family of four• Household MAGI of $69,000

– Puts them at 300% of the FPL– The applicable percentage of MAGI is 9.5%

• If the premium is more than 9.5% of the MAGI, then this family may be eligible for a premium subsidy.– 9.5% of their MAGI would be $6,555– $69,000 *.095 = $6,555

• Assume the annual premium payment of the second lowest silver on the public Exchange in this family's state is $10,000.

• This family’s potential premium subsidy would be $3,445.– $10,000-6,555 = $3,445

• This premium subsidy could be used toward any qualified health plan on the Exchange.

For illustration only. Customers should consult their tax advisor or legal counsel with questions on their subsidy eligibility. Assurant Health does not provide tax advice.

Premium subsidy | Example

• Individual• MAGI of $44,000

– Puts him at 400% of the FPL– The applicable percentage of MAGI is 9.5%

• If his annual premium payment is more than 9.5% of his MAGI, then he may be eligible for a premium subsidy. – 9.5% of his MAGI would be $4,180

• Assume the annual premium payment of the second lowest silver plan on the public Exchange is $5,000.

• His potential premium subsidy would be $820.– $5,000-4,180 = $820

• His premium subsidy could be used toward any qualified health plan on the Exchange.

For illustration only. Customers should consult their tax advisor or legal counsel with questions on their subsidy eligibility. Assurant Health does not provide tax advice.

Individual tax penalty• If an individual chooses not to have major medical

insurance, they may be subject to a tax penalty.• Individuals may be exempt from the penalty if:

– The premium of the lowest priced bronze plan on the public Exchange in their state would be more than 8% of the individual’s household income.

– The individual’s household income is below the income threshold for filing taxes.

– The individual qualifies for any other exemption including religious reasons, lack of citizenship, incarceration status or membership in an Indian tribe.

Tax penalty, continued• The penalty amount is the greater of the specified percent of

income or the flat dollar amount.

• The penalty amount required will increase by the cost of living after 2016.

• The flat dollar amount is the lesser of the maximum flat dollar amount per family (noted in the table above) or the sum of the flat dollar amounts applicable to each individual in the family.

Year Tax as %of income

Minimum flat dollar amount

per adult

Minimum flat dollar amount per child

Maximum flat dollar amount

per family

2014 1.0% $95.00 $47.50 $285.00

2015 2.0% $325.00 $162.50 $975.00

2016 2.5% $695.00 $347.50 $2,085.00

Penalty example• If a family of four (two adults, two children) has a household

modified adjusted gross income of $150,000, and does not have major medical insurance and does not otherwise qualify for a penalty exemption, the penalty for this family would be:

20141% of income = $1,500 or ($95*2)+($47.50*2)=$285The penalty for this family in 2014 would be the percent of income in the amount of $1,500, as it is greater than the applicable flat dollar amount of $285.

20152% of income = $3,000 or ($325*2)+($162.50*2)=$975The penalty for this family in 2015 would be the percent of income in the amountof $3,000, as it is greater than the applicable flat dollar amount of $975.

20162.5% of income = $3,750 or ($695*2)+($347.50*2)=$2,085The penalty for this family in 2016 would be the percent of income in the amountof $3,750, as it is greater than the applicable flat dollar amount of $2,085.

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How will Assurant Health help make you money in 2014?

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Assurant Health product offerings• Regardless of whether or not the

individual decides to purchase individual medical insurance, there are other Assurant Health products available that may satisfy the individual’s needs• Individual Major Medical

• Assurant Health Access• Assurant Supplemental products

• A wide array of supplemental products that can be sold on an individual basis

• Dental, Accident, Critical Illness, Cancer/Heart/Stroke

• Fully insured small group• Self-funded health plans

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Commissions

• Agent commission for Assurant Health products will remain competitive

• Agent commission is required to be the same on and off the Exchange

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Appendix Appendix

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Public Exchange• Public Exchanges will perform six basic functions

– Certify health plans to ensure they meet minimum benefit standards

– Provide customer service support via a toll free number and a website with standardized information

– Assist employers and individuals with purchasing and enrolling in certified plans

– Utilize quality assurance measurements using a standardized rating system

– Provide assistance for eligible individuals and small businesses in accessing premium and cost-sharing subsidies

– Streamline access to government subsidized programs such as Medicaid, Medicare and Child Health Plan Plus

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Essential health benefits• The federal government requires EHB to cover the following

ten categories– Ambulatory patient services– Emergency services– Hospitalization– Maternity and newborn care– Mental health and substance use disorder services, including

behavioral health treatment– Prescription drugs– Rehabilitative and habilitative services and devices– Laboratory services– Preventive and wellness services and chronic disease

management– Pediatric services, including dental and vision care

• Plans that cover benefits designated as essential health benefits, including self-funded plans, must cover these benefits with no annual limits or lifetime maximums

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Summary of benefits and coverage

• SBC is a standard document that allows consumers to compare health plans between carriers– The government issued a standard form that

all carriers had to complete with their information

• A SBC will be issued– Upon policy quote– Upon policy issuance– Once a plan year– Upon request

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Life events that trigger special enrollment• Triggering events include:

– Loss of minimum essential coverage– Individual gains a dependent or becomes a dependent through marriage, birth,

adoption or placement for adoption– Individual gains status as a citizen, national or lawfully present individual (who

previously was not)– Individual’s enrollment or non-enrollment was unintentional, inadvertent, or

erroneous and is the result of the error, misrepresentation, or inaction of an officer/employee/agent of the Exchange or HHS

– An enrollee adequately demonstrates to the Exchange that the QHP (s)he enrolled in violated a material provision of its contract in relation to the enrollee

– Individual becomes newly eligible or ineligible for a subsidy, regardless of whether the individual is already enrolled in a QHP

– Individual whose existing coverage through an eligible employer sponsored plan will no longer be affordable or provide minimum value for the upcoming plan year (individual must have special enrollment period prior to end of coverage through employer-sponsored plan)

– Individual gains access to new QHPs as a result of a permanent move– An Indian may enroll in a QHP or change from one QHP to another once per

month– Individual demonstrates that (s)he meets other exceptional circumstances as

provided by the Exchange

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IM vs. Group Exchanges

• IM (HIX)– Individual premium

subsidies and cost-sharing

reductions– Individuals enroll only

during enrollment periods

– Exchange verifies eligibility

– Individuals choose any available plan

– Issuer collects premium

• Group (SHOP)– Employer tax credits– Employers can enroll at

any time during the year

– SHOP manages eligibility and participation

– Employers verify employee eligibility

– Employer selects metal level, then all QHPs in that level are available

– SHOP collects premium and distributes to issuers

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Thank youFor more information about Assurant Health, contact

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1-800-544-8250

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