In 1950 the average person spent less than $100 per year (or
$500 in todays dollars) on healthcare. In 2010 the average person
spent over $8,400 per year on healthcare and spending on healthcare
is currently 18% of GDP. Future cost of healthcare?
Slide 5
Reasons for increased cost? One third of the country is obese?
Increased technology? Lawsuits (Preventive Medicine)? Advances in
medicine/Rx? Lack of Transparency? Free Riders? Treating symptoms
and not causes? Abuse of ER? Government Regulation? Inefficiencies
and duplications? Aging demographic?
Slide 6
Healthcare costs continue to increase every year and are
expected to increase into the future.. More and more uninsured.
Fewer and fewer employers offering medical coverage. No one
solution that will fix all of the problems. Nobody stepped up.so
government stepped in.
Slide 7
Slide 8
Signed into law in March 2010. Over 2,000 pages. Over 1,000
times the secretary shall determine or something similar Funded by
approximately $500 billion in tax increases and $500(+) billion in
Medicare cuts over 10 years Primary focus is to decrease number of
uninsured by 30 million Multiple new regulations on health
insurance carriers Individual and employer mandates Insurance
Exchanges Community Rates for small group and individuals Phased in
over 8 years majority in 4 years
Slide 9
Slide 10
Constitutionality of Individual Mandate 3 Unconstitutional 3
Constitutional Appeals Court RulingsSupreme Court Ruling 2
Constitutional 2 Vacated for Lack of Standing 1
Unconstitutional
Slide 11
Guidance released to date: Age 26 Requirement Early Retiree
Reinsurance Program High Risk Pools (State and Federal) Small
Employer Tax Credit Grandfathered Plan Status Patient Protections
(no pre-ex under 19 yrs) Preventive Care Appeals Procedures &
Limited Delay OTC Reimbursement Limitations HSA Penalties Annual
Limit Waivers Class Act LTC Program (Suspended) W-2 Reporting
Medical Loss Ratio Requirements (MLR) and Rebates Student Health
Insurance Summary of Benefits and Coverage Essential Benefits
Employee Notification Requirements FSA Limits to $2,500
(1/1/13)
Slide 12
Individual Mandate Employer Mandate Community Rating Public and
Private Exchanges Pre-existing conditions & GI Ca dillac Tax
Other: Comparative Effective Research Fee Medicare Tax Increase
Part D drug subsidy elimination Itemized medical expense deduction
changes
Slide 13
Minimum Essential Coverage Virtually all group health plans
Virtually all other health benefits Individual policies
Medicare/Medicaid, CHIP, VA, TRICARE State risk pools Other (as
recognized by HHS) Does not include excepted benefits Exclusions:
accident/disability, liability, workers comp., onsite medical
clinics, limited scope dental or vision (if under separate policy),
LTC, med. Supp. & hospital indemnity, specified disease or
illness Minimum Essential Coverage
Slide 14
Exceptions and Exemptions Unaffordable Required contribution
exceeds 8% of the individuals household income* Household income*
below income tax filing threshold Native Americans Prisoners
Undocumented aliens Short lapses Lack Minimum Essential Coverage
for 3 months Religious exceptions Health care sharing ministry
Conscientious objectionsException * Modified Adjusted Gross
Income
Slide 15
Year 2014 2015 2016 After 2016 Flat Dollar Amount** (max of 300
% for family) $95 $325 $695 $695, indexed for inflation in $50
increments % of Household Income 1.0 2.0 2.5 *Capped at the
national average of the annual cost of a bronze level health
insurance plan, for the family size, offered through the state
exchange. **Halved for dependents under age 18 (but do not halve
when determining 300% cap on dollar amount for those NOT insured by
taxpayer) Penalty amount is the greater of*: Penalty
Slide 16
No penalty applies! Lesser of: $3,000 per FTE receiving premium
assistance* $3,000 per FTE receiving premium assistance*or $2,000
per FTE (minus first 30) $2,000 per FTE (minus first 30) Lesser of:
$3,000 per FTE receiving premium assistance* $3,000 per FTE
receiving premium assistance*or $2,000 per FTE (minus first 30)
$2,000 per FTE (minus first 30) $2,000 penalty per FTE (minus first
30) if at least one FTE receives premium assistance No penalty
applies! Is coverage affordable (less than 9.5% of employees
income? Plan provides minimum required value (60% actuarial value)?
Offer Coverage? *Only applies to FTEs with household incomes of
400% of FPL or less Have at least 50 FTEs (30 hours per week
avg)?
Slide 17
Employee Contribution as % of Income for employee- only
coverage* for employers lowest cost plan Employee Contribution as %
of Income for employee- only coverage* for employers lowest cost
plan More employees staying on company plan Fewer employees on
premium assistance = fewer federal penalties More employees staying
on company plan Fewer employees on premium assistance = fewer
federal penalties Low %High % Fewer employees staying on company
plan More employees on premium assistance = more federal penalties
Fewer employees staying on company plan More employees on premium
assistance = more federal penalties Affordable Coverage
Unaffordable Coverage * Proposed guidance.
Slide 18
To qualify for premium assistance credit, an individual must:
Not be eligible for an employer-sponsored plan that is affordable
and has a minimum value Have a household income between 133% and
400% of the Federal Poverty Level Not receive benefits through
Medicare, Medicaid, CHIP, TRICARE, VA or other coverage as
determined by HHS Be a citizen or legal immigrant Be a resident of
the state where the Exchange is located Not be claimed as a
dependent on anyones tax return Purchase a qualified health plan
through the Exchange (not including a catastrophic plan) Premium
Assistance
Slide 19
Premium assistance is based on: The cost of the second-lowest
cost plan offered through the exchange, AND The household income of
the applicant Maximum premium allowed to charge is sliding scale
from 2% (for 133% of FPL) up to 9.5% (300%-400% of FPL) of
household income Premium assistance covers the remaining cost
Example: Family of 4 2014 income: $70,200 (300% FPL) Silver level
plan cost: $11,010 Premium Assistance: $4,348 (covers 39% of
premium) Family premium cost: $6,669 (covers 61% of premium)
Premium Assistance
Slide 20
Premium Assistance Credit Most individuals who are eligible for
employer-sponsored coverage will not be eligible to receive premium
assistance As long as: The employer-sponsored coverage provides the
minimum required value (60% of actuarial value) The
employer-sponsored coverage is affordable (premiums for
employee-only coverage of the lowest cost plan do not exceed 9.5%
of the employees income*) * Proposed regulations
Slide 21
Happy Company, Inc. Offers comprehensive medical coverage that
meets minimum required value (60% actuarial value) Contributes 75%
toward employee-only coverage and 0% toward dependent coverage
Slide 22
Employee #1: Arthur Analyst Employee-only coverage Annual
salary of $44,000 404% of the FPL Does not qualify for subsidy
income over 400% of the FPL No penalty to employer
Slide 23
Employee #2: Johnny Janitor Employee-only coverage Annual
salary of $15,000 138% of the FPL $100 premium contribution is less
than 9.5% of income Coverage is affordable No penalty to
employer
Slide 24
Employee #3: Annie Admin Employee-only coverage Annual salary
of $27,225 250% of the FPL $100 premium contribution is less than
9.5% of income Coverage is affordable No penalty to employer
Value of Benefits & Household Income Value of Benefits
& Household Income $$ Medicaid Spouse Employer Bronze Plan
Silver Plan Gold Plan Platinum Plan HEALTH INSURANCE EXCHANGE
Catastrophic Plan
Slide 27
Employer NoticeCall Center WebsiteNavigator
Slide 28
Large Group 2017? Premium Assistance Individuals Small Group
PROVIDERS CHOICE POOL Bronze Plan Silver Plan Gold Plan Platinum
Plan Catastrophic Plan CONSISTENT MARKET RULE BASE
Slide 29
Charge the same premium as plans purchased outside of the
Exchange Community Rates Actual rates wont be determined until
closer to 2014 Exchange will determine eligibility for premium
assistance credit to help pay premiums No Wrong Door Set up by each
state??
Slide 30
Slide 31
Source: The Henry J. Kaiser Family Foundation
http://healthreform.kff.org/the-states.aspx
Slide 32
Applies to small group and individual coverage Everyone will
share in cost Health status and gender will no longer apply.
Certain exclusions will still apply Tobacco Use (1.5 to 1 rating)
Family Size Geography Age (maximum 3 to 1 rating)
Slide 33
Who: Large Employers and Offering Employers What: Whether
employees can enroll in minimum essential coverage, what waiting
periods apply, premium cost, and employer contribution, &
number of FTEs When: Periods beginning after December 31, 2013
Effective date: December 31, 2013
Slide 34
Employers with more than 200 full-time employees who offer
enrollment in one or more health benefits plans are required to
automatically enroll new employees in one of the plans offered
Program must include adequate notice and opportunity for employees
to opt-out DOL says automatic enrollment guidance will NOT be ready
by 2014
Slide 35
No waiting periods longer than 90 days NOT first of the month
after 90 days! Effective first plan year on or after January 1,
2014 Elimination of Pre-existing Condition Exclusions for all In
2014, a plan may not impose a pre-existing condition exclusion on
any enrollee (no longer up to 19 years)
Slide 36
Formerly the Comparative Effectiveness Research Fee Applies to
all plan sponsors and issuers of individual and group policies
ending after Sept. 30, 2012 Must pay a fee of $1 per covered life
per year The fee adjusts to $2 per covered life for policy or plan
years ending Oct. 1, 2013 Applies to clinical trials to treat
cancer or other life-threatening diseases For policy or plan years
ending after Sept. 30, 2014, the shall be adjusted by the Secretary
of Treasury based on the percentage increase in the projected per
capita amount of national health expenditures. Purpose of Fee is to
evaluate and compare health outcomes and the clinical
effectiveness, risks, and benefits of two or more medical
treatments and/or services
Slide 37
Part D drug subsidy deduction eliminated Federal subsidies paid
to plan sponsors of retiree prescription drug benefits (Retiree
Drug Subsidy - RDS) payments will become taxable in tax years
beginning after December 31, 2012. Medicare Tax Increase Applies to
individuals making more than $200k filing single or $250k filing
jointly. Itemized medical expense deduction changes (1/1/13)
Threshold changing from 7.5% to 10%.
Slide 38
COBRA Rate $10,200 for individual or $27,500 for family Special
Provisions High risk professions High risk professions Early
retirees Early retirees Age & Gender Age & Gender = 40% of
plan value that exceeds threshold Excise Tax
Slide 39
Make certain you are receiving expert/qualified counsel
Determine health plan strategy as part of total compensation moving
forward Perform quantitative and qualitative analyses on approaches
Learn about and prepare for Private and Public Exchanges Remain
attentive to large changes as well as small details Develop an
implementation plan Develop a communication plan
Slide 40
DOL Audits of group health plans have spiked since 1/1 No
longer complaint driven Very small to very large groups
Fully-Insured and Self-Funded Within and outside Texas Audit focus
expanded Compliance with PPACA HIPAA Compliance/HITECH Act Required
notices to employees SPD Delivery Written policy procedures for
obtaining COCCs.
Slide 41
Repeal and replace House passed; Failed in Senate Defund the
bill or scrutinize the process Delay or stop funding certain
provisions of the law Highlight certain provisions that are opposed
Scrutinize the regulatory implementation process Actions by States
Oppose Exchanges & Medicaid expansion 2012 Presidential &
Congressional Elections
Slide 42
Slide 43
A recent study by consulting company Deloitte predicts that
about 1 in 10 employers in the US will drop health coverage for
their employees over the next few years, as the Affordable Care Act
goes into effect. The report also predicted even more would in the
future. Deloitte's findings are less than those released last year
by McKinsey, which said up to 3 in 10 employers would drop
coverage.