PPACA - Informed on Reform

© 2013 Cigna

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Welcome to the Cigna Health Care Reform Web MeetingInsights Heading Into 2014March 21, 2013

Download this presentation on InformedOnReform.com under Reform News

© 2013 Cigna


Insights Heading Into 2014

2© 2012 Cigna


AGENDA

• Employer mandate in 2014• “Affordability” for individuals versus employers • Actuarial Value and Minimum Value calculators• Essential Health Benefits and employer impacts• Other 2014 provisions to consider• Questions Kathy Vaccaro

Cigna VP Health Care Reform

Your Presenter

© 2013 Cigna

EMPLOYER MANDATE IN 2014

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© 2013 Cigna

EMPLOYER MANDATE COVERAGE MANDATE EFFECTIVE 1/1/14

Employers with 50 or more full-time employees/equivalents must offer:

“Affordable” coverage – employee contributions are less than 9.5% of:• Employee’s W-2 wages• Employee’s monthly wages, OR• Federal Poverty Level for a single individual

A plan that provides “minimum value” – pays 60% of the costs of covered health services

Coverage to full-time employees and their dependent children up to age 26

Plans that currently begin on a date other than January 1 will not face penalties if they comply upon the first day of their 2014 plan year.

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© 2013 Cigna

Employer plan not offered to “substantially all”full-time employees

Employer plan “unaffordable” and/or not “minimum value”

EMPLOYER MANDATE2014 PENALTIES


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Triggers (same for both scenarios):One employee receives a subsidy with Exchange plan

$2000 per employeeminus first 30 employees

Penalty amounts are 2014 only. Starting in 2015 they are inflation adjusted annually.

PENALTY LESSER OF:$2000 per employeeminus first 30 employeesOR$3000 for each employeecertified for premium assistance

PENALTY

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© 2013 Cigna

Employer plan offered to “substantially all”full-time employees

EMPLOYER MANDATEOffer to “substantially all” full-time employees


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Offers to 95% of its full-time employees, however one employee within the 5% is certified as subsidy eligible

$3000 per full-time employee not offered coverage in any given month

PENALTY

© 2013 Cigna

EMPLOYER PENALTIES EXAMPLE 1

Penalty$2,000 per employee, minus the first 30 employees

500 EmployeesNO COVERAGE

470500 employees

minus first 30

$2,000per employee

$940,000

Trigger1 employee receives a subsidy

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EMPLOYER PENALTIES EXAMPLE 2

1,200 Employees250 receive subsidy

PenaltyWill be the lesser cost of:• $2,000 / employee, minus the first 30; or• $3,000 / employee who receives a subsidy

1,1701,200 - 30 employees

$2,000per employee

$2,340,000

250employees

receiving subsidy

$3,000per employee

$750,000OR

Penalty is the lesser of:

Trigger1 employee receives a subsidy

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AFFORDABILITY AND ACTUARIAL VALUE VS MINIMUM VALUE

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© 2013 Cigna

EMPLOYER MANDATE

INDIVIDUAL MANDATE

Employee-only plan

costs no more than

9.5% of employee’s

W-2 wages

Self-only coverage

costs no more

than 8% of annual

household income

AFFORDABILITY?

AFFORDABILITY DEFINITIONS


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Americans must maintain

minimum essential coverage

unless “unaffordable”

Employers with 50+ full-time

employees must offer minimum

value coverage that is “affordable”

© 2013 Cigna

AFFORDABILITY EXAMPLE


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Family of four with $43,000 employee wages, ~190% of FPL

ABC Company benefits

Total for family:

$6,500

ABC Company benefitsAccess to affordable, minimum value coverage

What about the spouse and children?

Self-only coverage:

$3,400 (7.9% of wages)

Subsidized Exchange coverage

Total for family:

$6,200

Self-only coverage: $3,400

Self + children:$2,800

Option A Option B

Self + family coverage:$6,500

© 2013 Cigna

CALCULATORS – ACTUARIAL VALUE & MINIMUM VALUE


Actuarial Value Calculatordetermine value of individual and

insured small group plans

Minimum Value Calculatordetermine if “large group” plans

cover 60% of costs

Used byMainly insurers in the non-grandfathered individual and small group markets

CalculationThe combination of deductible, coinsurance and out-of-pocket (OOP) maximums

Used byMainly large employers

CalculationThe total allowed costs of benefit expenses covered by the employer sponsor

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Calculators and methodology are available on the CCIIO website.

© 2013 Cigna

ESSENTIAL HEALTH BENEFITS AND EMPLOYER IMPACTS

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© 2013 Cigna

A BETTER UNDERSTANDING OF ESSENTIAL HEALTH BENEFITS


Who must cover EHBs:• All individual and fully insured small group non-grandfathered plansWho doesn’t have to cover EHBs:• Large group plans, self-funded small group plans and grandfathered individual

and small group policies are not required to cover EHBs Dollar Limits:• All plans of any size, funding, grandfathered/non-grandfathered status that

cover any EHBs cannot impose annual or lifetime dollar limits

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More clarity:• All benefits in the benchmark plan become EHBs for the state• Self-funded, large and grandfathered group plans must use an EHB definition

authorized by HHS• Pediatric is defined as under the age of 19• States can define Habilitative Services if the benchmark plan does not• MHSA Parity is extended to individual and small group markets• EHB applies to In-Network services only

• Effective for plans beginning on or after 1/1/14• Limits apply to all In-Network benefits included in the plan

BENEFIT PLAN COST SHARING LIMITS


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NoYesNon-GFIndividual

Plan/Funding TypeGrandfather

Status

Out of Pocket Maximums limited to

$6,400 / $12,800*Deductible limited to

$2,000 / $4,000

Fully Insured Small Group

Non-GF Yes Yes

GF No No

Fully Insured Large Group

Non-GF Yes No

GF No No

ASO Small Group and Large Group

Non-GF Yes No

GF No No

Large group = 50 or more; will be 100 or more in 2016

*OOP limits are estimates until formal amounts are published

© 2013 Cigna

OTHER PROVISIONS WITH EMPLOYER RESPONSIBILITIES TO CONSIDER

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© 2013 Cigna

OTHER EMPLOYER CONSIDERATIONS

• Intended to inform employees of: • The public Exchanges and the services provided by them• Employer plan requirements and their potential eligibility for a subsidy

with a plan purchased on an Exchange

• The March 1, 2013 effective date delayed to late summer or fall

• The Department of Labor is considering:• Providing model language• A template for employers • Flexibility and adequate time to comply

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Employee Notice of the ExchangeA written notice to all employees from all employers

© 2013 Cigna

OTHER EMPLOYER CONSIDERATIONS

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Due July 31, 2013 for effective dates based on plan or ERISA year:

• 11/2/11 – 10/31/12

• 12/1/11 – 11/30/12

• 01/1/12 – 12/31/12

Cigna support resource:

www.cigna.com/CERF-Toolkit

Comparative Effectiveness Research Fee No Annual Limits

Annual limits will be completely phased out by 1/1/14

Cigna Voluntary Starbridge Limited Medical Plans will sunset when the waivers expire on 12/31/13

COBRA will not be available

Options for those currently in Starbridge plans:

Exchanges

Family/Individual plans

Employer-sponsored plans

Parent plan (under age 26)

Spouse plan

Medicaid

© 2013 Cigna

OTHER EMPLOYER CONSIDERATIONS, CONTINUED

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No Pre-existing Conditions Guaranteed Issue

90 Day Waiting Period Auto Enrollment

No one, at any age, can be denied coverage based on a pre-existing health condition

The ban includes benefit limitations and coverage denials

Fully insured coverage must accept every individual and group applicant

Coverage must be renewed or continued at the plan sponsor or individual’s choice

Enrollment waiting periods cannot exceed 90 days

Implementation date is TBD, effective date in the law is January 1, 2014

Employers with more than 200 employees must automatically enroll new and renew current employees

© 2013 Cigna

NEXT STEPS AND QUESTIONS

Visit ouraward-winning website,InformedOnReform.com• News Alerts• Fact Sheets• Timeline• Tools

Try our new tool,Health Care Reform for YOU

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© 2013 Cigna

"Cigna" is a registered service mark and the "Tree of Life" logo is a service mark of Cigna Intellectual Property, Inc., licensed for use by Cigna Corporation and its operating subsidiaries. All products and services are provided by such operating subsidiaries and not by Cigna Corporation. Such operating subsidiaries include Connecticut General Life Insurance Company, Cigna Health and Life Insurance Company, and HMO or service company subsidiaries of Cigna Health Corporation and Cigna Dental Health, Inc. All models are used for illustrative purposes only.

3/13 © 2013 Cigna. Some content provided under license.

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Health & Medicine

PPACA - Informed on Reform