Caring For Those Who Serve

HealthFlex: HealthFlex: Health Care Health Care Reform Reform DiscussionDiscussionAUMCPBO AUMCPBO MeetingMeetingOctober 27, 2010October 27, 2010

2010 Programs2010 Programs

• Early Retiree Reinsurance Program Early Retiree Reinsurance Program

• Small Business Tax CreditSmall Business Tax Credit

• Pre-Existing Condition Insurance Pre-Existing Condition Insurance PlanPlan■ Federal/State PlansFederal/State Plans

2011 Changes2011 Changes

• Age 26 Dependent CoverageAge 26 Dependent Coverage

• Grandfathered Plan RulesGrandfathered Plan Rules

• No RescissionsNo Rescissions

• No Pre-Existing Conditions Under Age No Pre-Existing Conditions Under Age 1919

• Over-the-Counter Drugs: ineligible for Over-the-Counter Drugs: ineligible for flexible spending account (FSA) and flexible spending account (FSA) and health reimbursement arrangement health reimbursement arrangement (HRA)(HRA)

2011 Changes2011 Changes

• No Lifetime LimitsNo Lifetime Limits■ Annual limits restrictedAnnual limits restricted

• Patient ProtectionsPatient Protections■ Provider choiceProvider choice■ No cost-share for emergenciesNo cost-share for emergencies

• Preventive Care Preventive Care

• New Claims and Appeals ProceduresNew Claims and Appeals Procedures

HealthFlex ConcernsHealthFlex Concerns

• Church Plan Eligibility for the Church Plan Eligibility for the Small Business Tax CreditSmall Business Tax Credit

• Controlled Group RulesControlled Group Rules■ Example—Who is the employer: Example—Who is the employer:

local church, annual conference local church, annual conference or denomination?or denomination?

• Nondiscrimination Rules for Health Nondiscrimination Rules for Health PlansPlans

2012 to 2014 Changes2012 to 2014 Changes

• W-2 Reporting Value (Cost) ofW-2 Reporting Value (Cost) ofHealth Coverage (2012)Health Coverage (2012)

• Medical FSA limited to $2,500 (2013) Medical FSA limited to $2,500 (2013)

• Uniform Summary of Benefits (2013)Uniform Summary of Benefits (2013)

• Automatic Enrollment Automatic Enrollment (large employers, 2013)(large employers, 2013)

• New Taxes on High Earners (2013) New Taxes on High Earners (2013)

Changes to MedicareChanges to Medicare

• Medicare Advantage payments Medicare Advantage payments reduced in 2012reduced in 2012

• Part D donut hole begins to be filledPart D donut hole begins to be filled■ 20112011

50% discount through donut hole in brand-50% discount through donut hole in brand-name Rx (discount increases each year to name Rx (discount increases each year to 2020)2020)

7% discount on generic Rx (discount 7% discount on generic Rx (discount increases each year to 2020)increases each year to 2020)

2014 and Beyond2014 and Beyond

• Exchanges for individuals and Exchanges for individuals and small employerssmall employers■ Exchange plan premiums subsidized for Exchange plan premiums subsidized for

families earning less than 400% of federal families earning less than 400% of federal poverty level (FPL)poverty level (FPL)

■ Employer participation in exchangesEmployer participation in exchanges Small employers eligible to offer in 2014Small employers eligible to offer in 2014 Large employers by 2017Large employers by 2017

• Employer “pay or play” beginsEmployer “pay or play” begins

• Individual mandate applies (tax penalty) Individual mandate applies (tax penalty)

ExchangesExchanges

• State-based (regional pacts allowed)State-based (regional pacts allowed)• Single risk poolSingle risk pool• Only insurance carriers may offer coverageOnly insurance carriers may offer coverage• Rating system based on quality, price Rating system based on quality, price

and enrollee satisfactionand enrollee satisfaction• Premium rate variation limits: age (3:1), Premium rate variation limits: age (3:1),

tobacco use (1.5:1), family structure and tobacco use (1.5:1), family structure and geographic areageographic area

• Platinum, Gold, Silver and Bronze plansPlatinum, Gold, Silver and Bronze plans

Applied ExamplesApplied Examples

• UMC minister making median compensation:UMC minister making median compensation:■ Median pay 2010: $56,795 Median pay 2010: $56,795 ■ Housing allowance: $12,695Housing allowance: $12,695■ MAGIMAGI**: $44,100: $44,100

• UMC minister in lower-paid annual UMC minister in lower-paid annual

conference:conference:■ Lower pay 2010: $49,888Lower pay 2010: $49,888■ Housing allowance: $11,151Housing allowance: $11,151■ MAGI: $38,737MAGI: $38,737

* Modified adjusted gross income (MAGI)

Applied ExamplesApplied Examples

• Lower-paid minister (MAGI $38,737) with spouseLower-paid minister (MAGI $38,737) with spouse

Exchange Plan

UMC Plan

Premium $3,118 $13,000

Cost Share 13% 20%

Out-of-Pocket Maximum $5,950 $6,000

Exchange Plan

UMC Plan

Premium $3,300 $19,000

Cost Share 13% 20%+

Out-of-Pocket Maximum $5,950 $6,000

• Median-paid minister (MAGI $44,100) with spouse Median-paid minister (MAGI $44,100) with spouse and childand child

Applied ExamplesApplied Examples

• Lower-paid minister with part-time working spouse Lower-paid minister with part-time working spouse and child (MAGI $51,987and child (MAGI $51,987))

Exchange Plan

UMC Plan

Premium $4,420 $13,000

Cost Share 27% 20%

Out-of-Pocket Maximum $5,950 $6,000

Exchange Plan

UMC Plan

Premium $6,700 $19,000

Cost Share 30% 20%+

Out-of-Pocket Maximum $7,973 $6,000

• Median-paid minister w/ full-time working spouse Median-paid minister w/ full-time working spouse and child (MAGI $70,600)and child (MAGI $70,600)

Mandates and PenaltiesMandates and Penalties

• Employer penalty:Employer penalty:■ No coverage offered: coverage offered:

Total number of FTEs x $2,000Total number of FTEs x $2,000■ Coverage offered, but one FTE receives an Coverage offered, but one FTE receives an

exchange subsidy—exchange subsidy—lesser oflesser of:: Total number of FTEs receiving a subsidy x $3,000, orTotal number of FTEs receiving a subsidy x $3,000, or Total number of FTEs x $2,000 (i.e., the “Total number of FTEs x $2,000 (i.e., the “nono coverage” coverage”

penalty)penalty)

• Individual mandate tax penalty:Individual mandate tax penalty:■ 2014:2014: greater of greater of $95$95 or or 1% of income1% of income■ 2015:2015: greater of greater of $325$325 or or 2% of income2% of income■ 2016:2016: greater of greater of $695$695 or or 2.5% of income (indexed)2.5% of income (indexed)

HealthFlex ConcernsHealthFlex Concerns

• Church Plan Access to Exchanges Church Plan Access to Exchanges (subsidies)(subsidies)

• Controlled Group Rules (penalties) Controlled Group Rules (penalties)

• ““Minimum Essential Coverage” Minimum Essential Coverage” definitiondefinitionto avoid penalties to avoid penalties

• Unsettled Future: elections in 2010, Unsettled Future: elections in 2010, 2012 and court challenges to the law2012 and court challenges to the law

Retiree Coverage Retiree Coverage StrategyStrategy• Medicare-Eligible Retirees Medicare-Eligible Retirees

■ Part D “donut hole” being filledPart D “donut hole” being filled■ Retiree Drug Subsidy (RDS) remainsRetiree Drug Subsidy (RDS) remains■ Eventual shift to medical-only Eventual shift to medical-only

supplemental coverage coupled with supplemental coverage coupled with Part DPart D

• Early RetireesEarly Retirees■ After exchanges—fixed dollar retiree After exchanges—fixed dollar retiree

health benefitshealth benefits

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