Health Care Reform Illinois State Bar Association...– Limits small group plan deductibles -...

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Marsh US Consumer, a service of Seabury & Smith Inc.

Health Care Reform Illinois State Bar Association

MARSH US CONSUMER COPYRIGHT 2013 CONFIDENTIAL AND PROPRIETARY 1

Health Care Reform Discussion Topics

1 ACA Overview

2 Frequent Changes

3 Individual Mandate, Essential Health Benefits Package, and Grandfathered Plans

4 Exchanges – Individual and Small Business (SHOP)

5 Impact on Small Employers

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MARSH US CONSUMER COPYRIGHT 2013 CONFIDENTIAL AND PROPRIETARY

ACA OVERVIEW 2014 REQUIREMENTS


Affordable Care Act Background and Overview •  ACA signed into law March 23, 2010

–  Most transformational change in health insurance since Medicare –  Survived a Supreme Court challenge, presidential election and repeated (40)

congressional attempts to repeal or remove funding

•  Major Changes in 2014 –  Individual mandate — Individuals must have and maintain health insurance that

provides minimum essential coverage –  What are the Individual Penalties?

-  In 2014: greater of $95/individual (3 per family) or 1% of family income -  In 2015: greater of $325/individual (3 per family) or 2% of family income -  In 2016: greater of $695/individual (3 per family) or 2.5% of family income

–  Insurers unable to deny coverage due to pre-existing conditions –  Exchanges — Creation of individual and small group (SHOP) exchanges run by the

states, federal government or both –  Tax credits (subsidies) available only on the exchange if

-  no other available coverage is affordable -  doesn’t meet minimum value requirement

–  Essential benefits for individual and small group plans (non-grandfathered) -  No annual or lifetime limits on essential benefits

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Affordable Care Act Background and Overview •  Major Changes in 2014:

–  Out-of-pocket expense limits for co-pays, co-insurance, deductibles, etc. -  $6,350/individual; $12,700/family

–  Premium may vary only by: -  Age (3:1 ratio) -  Tobacco use (not in all states) -  Geography -  Family composition

–  Limits small group plan deductibles -  $2,000/individual; $4,000/family -  Insurers can exceed annual deductible limits if plans “cannot reasonably reach” the

actuarial value the law sets for a given level of coverage without doing so (proposed rule) –  Waiting period for new full-time employees must not exceed 90-days –  Imposition of new taxes and fees –  Catastrophic Plan for individuals under age 30

-  Does not qualify for tax credit /subsidy

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MARSH US CONSUMER COPYRIGHT 2013 CONFIDENTIAL AND PROPRIETARY 5

Employer Shared Responsibility Delayed Until January 1, 2015 •  Delayed

–  Employer reporting requirements with respect to the health coverage offered to their full-time employees

–  Assessment of shared responsibility payments until 2015

•  To avoid penalties, employers with 50 or more full-time equivalent employees are incented –  To provide adequate coverage (minimum value) –  That is affordable (employee contributions less than 9.5% of household income for 95% of

full time employees)

•  If one employee receives a tax credit (subsidy) from an exchange, the employer is subject to a penalty: –  Employers offering coverage that is not affordable or adequate:

-  The lesser of $3,000 for each employee that receives a tax credit or $2,000 per FT employee (excluding first 30 FT employees)

–  Employers not offering coverage -  $2,000 per FT employee (excluding first 30 employees)

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CHANGING DAILY


Health Care Reform Changes Recent Legislation

•  H.R. 2577, Introduced by Rep. Luke Messer, R-Indiana –  Requirement to either offer coverage or pay a penalty would only apply to

employers with at least 100 FTE employees

•  H.R. 2575, Introduced By Rep. Todd Young, R-Indiana –  Would change the definition of FTE to those working an average of 40 hours per

week

•  S.1330, Introduced By Sen. Mark Begich, D-Alaska –  Employers would have until 2016 to offer coverage to full time employees or face

the employer penalty

•  Representatives Tom Reed (R-NY) and Mike Thompson (D-CA) –  Repeal the $2,000 deductible limit on small-group health insurance plans under

PPACA.

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INDIVIDUAL MANDATE ESSENTIAL HEALTH BENEFITS PACKAGE GRANDFATHERED PLANS


Affordable Care Act Individual Mandate

•  Individuals must have and maintain health insurance that provides minimum essential coverage through: –  Private insurance market –  Employer plan –  State or federal health insurance exchange –  Government program

•  Exceptions: –  Religion –  Income below tax filing thresholds –  Incarcerated –  Undocumented –  Native American heritage –  Gap in coverage of less than three months

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Affordable Care Act Essential Health Benefits Package •  All non-grandfathered plans offered in the individual and small group markets (both

inside and outside exchanges) must provide essential health benefits, such as: –  Ambulatory services –  Emergency services –  Hospitalization –  Maternity and newborn care –  Mental health/substance abuse treatments –  Prescription drug coverage –  Rehabilitative services –  Laboratory services –  Preventive/Wellness services –  Pediatric services

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EXCHANGES INDIVIDUAL AND SMALL BUSINESS

January 1, 2014 effective date Open Enrollment begins October 1, 2013

DOL Employee Notice: No later than October 1, 2013 “New Health Insurance Marketplace Coverage Options and Your Health Coverage”

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Affordable Care Act Individual Exchanges

•  States select one of the following health plans to benchmark : –  One of the three largest small group plans –  State employee health plans –  Federal employee health plan –  Largest HMO plan offered

•  Out-of-pocket maximums for all plans equal to HSA limits –  New limits for 2014:

-  Individual: $6,350 -  Family: $12,700

•  Provider networks narrower inside many exchanges

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Platinum

Gold

Silver

Bronze

•  Plan pays 90% •  Enrollee pays 10%





Individual Exchanges Financial Assistance

•  Premium tax credits –  Sliding scale of tax credits paid directly to insurers to help pay for the insurance –  Household income between 100% and 400% of the federal poverty level (FPL)

-  (Max: $45,960 for individuals and up to $94,200 for a family of four) –  Not eligible for affordable and minimum value coverage through an employer –  Are US citizens or legal residents

•  Cost-sharing subsidies –  Those with incomes below 250% FPL will have lower deductibles and co-pays –  Individuals must be

-  Eligible for premium tax credits -  Enrolled in a silver plan through an exchange

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Individual Exchanges Covered California’s 2014 Standard Plans for Individuals

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Individual Exchanges Rating Region – Los Angeles North (15*) Sample Rates

40 YEAR OLD INDIVIDUAL - ESTIMATED MONTHLY RATES (15)

Plan Bronze Silver Silver

Subsidized 250% FPL

Gold Platinum

Health Net HMO n/a $222 $162 $253 $285

Blue Shield PPO $210 $252 $193 $300 $344

L.A. Care HMO $188 $253 $194 $287 $317

Anthem HMO na $254 $195 $322 $368

Molina PPO $204 $259 $200 $285 $342

Anthem EPO $207 $274 $214 $333 $386

Health Net PPO $248 n/a n/a n/a n/a

Kaiser HMO $221 $294 $234 $361 $388 *Region 15 (ZIP Codes: 90601 – 91226, 91501 – 91526, 91702 – 93599)

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IMPACT ON SMALL EMPLOYERS


Affordable Care Act Small Business Health Options Program (SHOP) Exchange

•  Elimination of risk adjustment factors (.90 to 1.10) in and out of the exchange

•  Maximum deductibles of $2,000/individual; $4,000/family*

•  Small business tax credits available to employers: –  Providing at least 50% of the cost of health care

coverage –  Employ less than 25 full-time employees (excludes

business owners and family members who work for the company)

–  Paying annual wages averaging less than $50,000 per FT employee

–  Maximum tax credit — For employers with ten or less full-time employees and averages annual wages below $25,000

•  Maximum credit for tax years 2014 and beyond –  For Profit — 50% of the employer’s contribution –  Tax-Exempt — 35% of the employer’s contribution

* With exceptions

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Affordable Care Act Impact on Small Employers •  Don’t provide medical today

–  Continue to not provide benefits -  Educate employees on ACA requirements

and possible subsidy

-  Assist them with individual mandate compliance, in or out of the exchange

-  Direct employees to Marsh for assistance -  Direct members to Marsh for themselves

(carrier prison?) and dependent children attaining age 26

–  Begin providing benefits -  Offer qualifying small group benefits through

the traditional market or SHOP exchange -  Direct employees to purchase individual

policy on or off the Exchange

•  Do provide medical today –  Continue providing benefits

-  Determine if plan is grandfathered -  Consider Early Renewal Option -  Investigate new options available through the

SHOP Exchange -  2015-Multiple insurer choice for

employees at a metal level -  Consolidated billing for employer -  Possible tax benefits to employer

–  Consider not providing medical benefits -  See Column 1 -  Employer loss of tax deductibility of

premiums, recruitment, and retention tool)

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Provide exchange notice to all employees by October 1, 2013, plus new employees in the future.


Affordable Care Act Employer Exchange Notice

•  Regardless of whether or not an employer offers employees health insurance, employers subject to the Fair Labor Standards Act (FLSA) are required to provide notification of purchasing options and subsidies available through the exchange by October 1, 2013 (model notices are available at www.marshhealthoptions.com)

–  One notice for employers that provide coverage –  One notice for employers that do not provide

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Affordable Care Act 2018 Excise Tax

•  Excise tax on high cost plans

•  If annual premium exceeds: –  Individual - $10,200 –  Family - $27,500

•  40% excise tax on amounts exceeding these limits

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Health Care Reform Support and Solutions

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Health Care Reform Resources

•  Individual Health Insurance –  Website available soon –  Ability to compare rates and benefits of

individual plans on and off the exchange –  Support through on-line chat or dial into

call center –  Estimate the size of the subsidy, if any –  On-line enrollment –  Private market plans and certain exchange

plans

•  Call Center Support –  Explain individual plan options –  Determine if they qualify for a subsidy –  Assist shopping experience in and out of

exchange –  Offer ancillary products (for example,

dental, vision, etc.)

•  For Small Groups (2-50 employees) –  Traditional Small Group (2-50 employees)

market access for employers who want to buy small group products in the private market

–  Access through the SHOP Exchange -  Employee choice with consolidated

billing -  Possible tax credits

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Marsh U.S. Consumer’s Association, Employer Benefits, and Sponsored Program & Franchise businesses are a service of Seabury & Smith, Inc. Arkansas Insurance License #245544. In California d/b/a Seabury & Smith Insurance Program Management, California Insurance License #0633005.

Private Client Services, a division of Marsh USA Inc., in California d/b/a Marsh Risk & Insurance Services. California License #0437153. Marsh Private Client Life Insurance Services, California License #0250553, Arkansas License # 245886 d/b/a in New York Marsh Private Client Life Insurance Services Agency, Securities offered through Interlink Securities, a division of MMC Securities Corp., Member FINRA/SIPC. Variable insurance products distributed through Interlink Securities Corp. (Interlink Insurance and Financial Services in California.) MMC Securities Corp., Interlink Securities Corp., Marsh Private Client Life Insurance Services and Marsh are affiliated companies owned by Marsh & McLennan Companies, Inc.

Marsh Executive Benefits, a division of MMC Securities Corp. (MMCSC). Securities offered by MMCSC, member FINRA/SIPC. Variable insurance products distributed through Marsh Insurance & Investments Corp. (MIIC Insurance Services in CA; Marsh Insurance Agency & Investments Corp. in NY). Marsh Executive Benefits, Marsh USA Inc., Marsh Insurance & Investments Corp. and MMCSC are affiliated companies owned by Marsh & McLennan Companies, Inc. California License OC32125, NY LC-939184, Arkansas 245154.

This document and any recommendations, analysis, or advice provided by Marsh (collectively, the “Marsh Analysis”) are intended solely for the entity identified as the recipient herein (“you”). This document contains proprietary, confidential information of Marsh and may not be shared with any third party, including other insurance producers, without Marsh’s prior written consent. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Any modeling, analytics, or projections are subject to inherent uncertainty, and the Marsh Analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Except as may be set forth in an agreement between you and Marsh, Marsh shall have no obligation to update the Marsh Analysis and shall have no liability to you or any other party with regard to the Marsh Analysis or to any services provided by a third party to you or Marsh. Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or reinsurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.

Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer, and Oliver Wyman.

Copyright 2013 Marsh Inc. All rights reserved.

Health Care Reform Illinois State Bar Association...– Limits small group plan deductibles -...

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