Preparing for the Impact ofHealth Care Reform

May 7, 2013

Today’s Presenters

• William M. Smith, Esq.Managing Director, CBIZ MHM, LLC

• David S. Rubadue, FSA, MAAA, CLUSVP, Director Health Care Actuarial ServicesCBIZ B fit d I S i ICBIZ Benefits and Insurance Services, Inc.

• Kit Wagar, Affordable Care Act Specialist Office of the Regional DirectorU.S. Department of Health and Human Services

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Today’s Agenda

• Introductions• The Path to Health Care Reform Compliancep• The 2014 Centerpiece of the Affordable Care

Act• Actuarial Modeling of Health Care Reform’s

Financial Impact on Your Business• Health Insurance in the New Insurance

Marketplace• Open Dialogue and Questions

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PPACA provisions, effective in 2014, will have a significant impact on the health care market and significantly increase the number of insured individuals

Prohibits health plans from denying coverage or rating applicants based on their health status

Levels the playing field between health plans and mitigates the impact of guaranteed issue and pricing

t i t i th h t t

Creates government regulated Individual and Small Group health insurance marketplaces Guaranteed Issue

Institutes penaltiesKey ACA 

i i

uncertainty in the short term

Institutes penalties for employers who fail to

insurance marketplaces

Risk Management Mechanisms

Guaranteed Issue (GI) and Rating 

Changes

Insurance Exchanges

Levies taxes and fees against h lth i d th

Institutes penalties for failing to purchase health insurance

Individual Mandate

Taxes and

provisions effective in 

2014

p yoffer affordable comprehensive coverage

Lowers the cost of f th l d

Employer Mandate

Tax Creditshealth insurers and other groups to fund subsidies and risk management mechanisms

Taxes and Fees

coverage for the low and middle income populations in the Individual market

Tax Credits and Subsidies

5Source: Congressional Budget Office

The 2014 Centerpiece of theThe 2014 Centerpiece of the Affordable Care Act

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Shared Responsibility Payment

• Enacted as part of the Affordable Care Act (“PPACA”) (section 1541(a)) – now Code §4980H

• Effective starting in 2014• Components:

– A nondeductible excise tax assessed on large l h d t id ff d bl demployers who do not provide affordable and

adequate health coverage to at least 95% of their full time employees.

• IRS issued proposed regulations in January7

Shared Responsibility Payment• Note: the Shared Responsibility Payment was not

considered by the Supreme Court in National Federation of Independent Business v SebeliusFederation of Independent Business v. Sebelius.– The Supreme Court reviewed the individual mandate

and its treatment as a tax or a penalty.p y• The Shared Responsibility Payment is an excise

tax. It is contained in Section 4980H, which is in Subtitle E of the Internal Revenue Code (“Miscellaneous Excise Taxes”), Chapter 43 (“Q lifi d P i Et Pl ”)(“Qualified Pension, Etc. Plans”)

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Which Employers Are Affected?• “Large Employers” – Employers with at least 50

full-time employees or equivalents.F ll ti l i l d• Full time employees include:– Employees who is employed on average at least 30 hours

per weekpe ee– A percentage of employees who are not full time

employees (aggregate number for hours/month worked by part time employees divided by 120)part time employees divided by 120)

• Leased employees as defined in IRC § 414(n)(2) are not treated as full time employees.are not treated as full time employees.

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Which Employers Are Affected? • Certain groups of companies must be aggregated• Certain groups of companies must be aggregated

together to determine if they are “Large Employers”:– Controlled group of corporations (IRC § 414(b))– Partnerships, proprietorships, etc. under common control (IRC §

414(c)) – Affiliated service groups (IRC § 414(m)), and – Employee leasing arrangements and other arrangements treated

by the IRS as a single employer (IRC § 414(o))

• Exemption: Employers whose workforce exceeds 50• Exemption: Employers whose workforce exceeds 50 full time employees for 120 days or less during the calendar year, and the employees in excess of 50 employed during that 120-days-or-less period were “seasonal workers.” IRC § 4980H(c)(2)(B)(i). 10

Employees with Variable Hours – Notice 2012-58• "Look-back/stability safe harbor method" - an employer determinesLook back/stability safe harbor method an employer determines

each employee's status by looking back at the hours worked by the employee over a defined period (as chosen by the employer) of 3 to 12 consecutive calendar months (the "measurement period").

• If the employee averaged at least 30 hours/week during measurement period, the employee is treated as a full time employee during a subsequent "stability period" so long as he remains an employee (regardless of actual hours worked).– stability period must be at least six consecutive calendar months

following the measurement period but no shorter in duration than the t i dmeasurement period.

• For an employee determined not to be a full time employee during the measurement period, the employer may treat the employee as

t f ll ti l d i th t bilit i d b t th t bilitnot a full time employee during the stability period, but the stability period cannot exceed the measurement period.

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New Employees – Notice 2012-58

An employer may impose a waiting period of no longer than 90 days before a full-time employee (or dependent) who is otherwise eligible for the employer's group health plan may enroll in coverage.

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Shared Responsibility Payment – General Rule• Large employers that employed an average of at least 50 or more full-

ti l b i d f th di l dtime employees on business days for the preceding calendar year must make “shared responsibility” tax payments for each month that the employer:

H t l t f ll ti l tifi d h i ll d i– Has at least one full time employee certified as having enrolled in a qualified health plan for which a premium tax credit or cost-sharing reduction is allowed or paid (i.e., the employee goes to the Marketplace/Exchange and qualifies for assistance);Marketplace/Exchange and qualifies for assistance);

AND either– Does not offer coverage to its employees OR does not offer

i i ti l (MEC) t t l t 95% f it f ll timinimum essential coverage (MEC) to at least 95% of its full time employees,

– Offers MEC to at least 95% its full time employees, but it is ff d blunaffordable, or

– Offers MEC to at least 95% its full time employees through a plan that does not provide minimum value. 13

Shared Responsibility Payment – Continued

• Minimum value: Must provide at least 60% of the total allowed cost of benefits for full time employees.

• Affordable coverage: The cost of coverage to the l i th 9 5% f themployee is no more than 9.5% of the

employee’s household incomeTh f h b• Three safe harbors:• Box 1 of W-2 • Average wage method or• Average wage method, or • A federal poverty level method 14

Calculating the Penalty – “No Coverage or No Minimum Essential Coverage for at Least 95% of Employees”Employer fails to offer coverage or fails to offer MEC to 95% its full-time employees (and their dependents in 2015) under an eligible employer-sponsored plan for the month, and at least one full-time p y p p ,employee has been certified to the employer as having enrolled for that month in a qualified health plan (Marketplace/Exchange) and is receiving assistance.g• Penalty = the “Applicable Payment Amount” × the number of the

employer's full-time employees during any month, reduced by 30 employees. IRC § 4980H(a) and 4980H(c)(2).employees. IRC § 4980H(a) and 4980H(c)(2).

• Applicable Payment Amount: $166.67 for any month (i.e., 1/12 of $2,000, which is adjusted for inflation after 2014). IRC §4980H(c)(1)4980H(c)(1).

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Calculating the Penalty – No Coverage or No MEC Offered to At Least 95% of Employees -- Example

• In 2014, Employer fails to offer minimum essential coverage to at least 95% of its full-time employees. It has 100 full-time employees, ten of whom receive a tax credit for the year for enrolling in a state exchange offered planenrolling in a state exchange-offered plan.

• For each full-time employee over the 30-employee threshold the employer owes $2 000employee threshold, the employer owes $2,000, for a total penalty of $140,000 ($2,000 × 70 (100 − 30)). This penalty is assessed on a monthly 30)) s pe a y s assessed o a o ybasis.

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Calculating the Penalty – Coverage Not Affordable or Does Not Meet Minimum Value

Wh l ff MEC b t th t t t l t f ll tiWhere employer offers MEC, but the cost to at least one full-time employee is greater than 9.5% of household income OR the plan does not meet the minimum value standard of 60% (use the Actuarial Value Calculator to determine minimum value) and he/she has been certified toCalculator to determine minimum value) and he/she has been certified to the employer as having enrolled in a qualified health plan (Marketplace/Exchange) and is receiving assistance

• Penalty = Number of full time employees for any month who• Penalty = Number of full-time employees for any month who access Marketplace/Exchange and receive a credit or assistance x $250 (i.e., 1/12 of $3,000).

• Limitation: the aggregate amount of tax of an applicable large• Limitation: the aggregate amount of tax of an applicable large employer for any month cannot exceed the applicable payment amount × the number of the employer's full-time employees during that month (reduced by 30 employees)that month (reduced by 30 employees).

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Calculating the Penalty – Coverage Not Affordable or Does Not Meet Minimum Value – Example

• In 2014, Employer offers health coverage and has 100 full-time employees, 20 of whom access the Exchange because coverage is either not affordable or does not meet minimumcoverage is either not affordable or does not meet minimum value standard and they receive a premium tax credit

• For each full-time employee receiving a tax credit, the l $3 000 l bl t femployer owes a $3,000 annual assessable payment, for a

total penalty of $60,000. The maximum penalty for this employer is limited to the amount of the penalty that it would h b d f f il t idhave been assessed for a failure to provide coverage, or $140,000 ($2,000 × 70 (100 − 30)). Since the calculated penalty of $60,000 is less than the maximum amount,

$Employer pays the $60,000 calculated penalty. This penalty is assessed on a monthly basis. 18

Summary• Minimal essential coverage not offered to at least 95% of full g

time employees and at least one employee goes to Exchange and receives premium tax credit

$2 000 per year per full-time employee (less first 30)– $2,000 per year per full-time employee (less first 30)• Either coverage does not meet minimum value standard (i.e.,

does not cover at least 60% of medical costs) OR coverage not ff d bl (i l ’ i d 9 5% faffordable (i.e., employee’s premium exceeds 9.5% of

household income) and at least one employee goes to Marketplace/Exchange and receives assistance– Lesser of• $3,000 per year for each full-time employee using

Marketplace/Exchange and qualifying for assistance orMarketplace/Exchange and qualifying for assistance, or• $2,000 per year per full-time employee (less first 30)

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Procedure• An employer must make payment upon notice and

demand by the Secretary of the Treasury. • The payment is assessed and collected in the same• The payment is assessed and collected in the same

manner as other IRS assessable penalties• Section 6056 requires employers to reportSection 6056 requires employers to report

information on employer-provided health care coverage provided on or after January 1, 2014– First Information returns will be filed in 2015– IRS will use this information to administer the penalties– IRS intends to issue guidance on Section 6056 reporting– IRS intends to issue guidance on Section 6056 reporting

and has recently closed the request for comments20

Indexing the Payment• For years after 2014, the $2,000 and $3,000 amounts y , $ , $ ,

used in determining the assessable payment amount will be indexed for inflation.Th i ill l th $2 000 $3 000 t• The increase will equal the $2,000 or $3,000 amount multiplied by the “premium adjustment” amount for the calendar year.

• Premium Adjustment Amount – Secretary of Health and Human Services (HHS)

determines by Oct 1 the percentage (if any) by whichdetermines by Oct. 1 the percentage (if any) by which the average U.S. per capita premium for health insurance coverage for the preceding calendar year

d th it i f 2013exceeds the average per capita premium for 2013 21

Indexing the Payment

Assuming 9% inflation in the costs of premiums, by 2019:– The $2,000 per year per employee penalty increases

to over $3,000The $3 000 per qualifying employee penalty– The $3,000 per qualifying employee penalty increases to over $4,600 per year

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Actuarial Modeling of Health C R f ’ Fi i l I tCare Reform’s Financial Impact

on Your Business

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CBIZ HCR Analyzer Tool • CBIZ is currently actively engaged in assessing• CBIZ is currently actively engaged in assessing

the financial impact of the PPACA provisions with employer groupsp y g p

• CBIZ Proprietary model - "The CBIZ HCR Analyzer“y

• The tool was created with employer Input. Led to favorable employer feedback

• Used for all employers over 50 lives with initial studies performed for “High Risk” Employers

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High Risk Employers• High percentage of potentially full time low pay• High percentage of potentially full time, low pay

workforce• Provide no medical benefits to a large employee base g p y

working 30 + hours per week• Have a significant number of “temporary” or “seasonal”

workersworkers• Cost of health benefits to employees is “very high”• Manage enrollment using “long” waiting periods (moreManage enrollment using long waiting periods (more

than 90 days before employee is eligible)

Industries Include: Retail (Restaurants, Hotels, Convenience Stores, ( , , ,Gas Stations, etc.), Construction, Transportation, Cleaning, Staffing Firms, Other 25

CBIZ HCR Analyzer Tool

CBIZ’s Tool Utilizes 3 Steps to Determine a Company’s PPACA Risk Profile:

1. Data DiagnosisDetailed checklist of data needed & questions to ask in order to prepare a custom HCR Financial I t St d f i tiImpact Study for an organization

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CBIZ HCR Analyzer Tool

2. Comprehensive AnalysisWe utilize data to carefully evaluate benchmarks and provide options to consider when establishing your long tem benefit programestablishing your long-tem benefit program strategy

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CBIZ HCR Analyzer Tool

3. Report and OptimizeWe provide you with a report that shows the cost to your organization under multiple scenarios, enabling us to work with your organization toenabling us to work with your organization to Optimize your health care package

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The “Levers”

• Once data is “entered” the Employer or his/her Advisor can change the following variables (levers) and the “financial” results will change:financial results will change:– Migration Assumptions: To the Exchange or the Employer’s

Plan– Employer Contributions (Example: Raise Employee

Contributions and Lower Dependent Contributions, etc.)– Plan Value (Lower “value” of Plan). Must exceed actuarial value

f 60%of 60%.– Medical Trend– Pay Increases – Family Size– Household Income 29

HCR Analyzer Inputs

Plan Summaries

Minimum Plan

ValuesAlternative

Contributions

Medicaid

Current & Trended

Premiums

Employer Contributions

ThresholdPayroll Tax

Rates

Migration to ER Plan,

Medicaid & Exchange

Corporate

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Corporate Fed &

State Tax Rates

Example # 1: XYZ IncExample # 1: XYZ Inc

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XYZ Inc’s Expected Results2013 2014

A (Baseline) B C D E F G H

Not Eligible Group Made EligibleUnder Current

Plan; No Other

Not Eligible Group Made Eligible

No Plan Changes, Migration to

Exchange and

Scenario C but Offering Lean Plan as the Base Plan

Scenario C (No Plan Changes)

with 30% of Not Eligible

Scenario D (Lean Plan) with 30% of Not Eligible

Terminate Plan all Not

Eligible Employees

Terminate Plan after making

CurrentCurrent

(Baseline)

No Other Implications of HCR

Are Considered

Exchange and Contribution

Changes

the Base Plan (employees can

buy up)

Not Eligible is Made Eligible

Not Eligible Is Made Eligible

Employees are Made

Eligible

making 30% of Not

Eligible

Eligible Group(s)

Removed 30 Lives from Eligible Grp

Total 17 17 17 17 17 17 17 17 17

Enrolled 13 13 13 14 14 14 14 0 0

Mo'ly Px: $7,290 $8,886 $8,886 $10,752 $6,817 $10,752 $6,817 $0 $0

Er Monthly Cost $3,217 $3,922 $3,922 $3,500 $2,556 $3,500 $2,556 -$3,333 -$3,333

Ee Monthly Cost $4,073 $4,964 $4,964 $7,252 $4,260 $7,252 $4,260 $0 $0

Not Eligible Group(s)

Total 155 155 155 155 155 45 45 155 45

Enrolled 0 0 49 26 80 6 21 0 0

M 'l P $0 $0 $30 723 $17 978 $35 483 $4 424 $9 767 $0 $0

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Mo'ly Px: $0 $0 $30,723 $17,978 $35,483 $4,424 $9,767 $0 $0

Er Monthly Cost $0 $0 $11,574 $6,500 $14,607 $1,500 $3,834 $39,744 $11,538

Ee Monthly Cost $0 $0 $19,149 $11,478 $20,876 $2,924 $5,933 $0 $0

2013

2014 Current

Scenario A

XYZ Inc’s Expected Results

Current (Baseline) B C D E F G H

Shared Responsibility Penalties

Waivers 4 4 110 132 78 42 27 172 62

Waivers Trigger Penalty 0 0 0 83 18 26 6 0 0

Medicaid 0 0 0 42 42 12 12 0 0Medicaid 0 0 0 42 42 12 12 0 0

Others 4 4 110 7 18 4 9 172 62

Penalty $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $2,000 $2,000

Tax Rate 35% 35% 35% 35% 35% 35% 35% 35% 35%

Additional Cost $0 $0 $0 $31,923 $6,923 $10,000 $2,308 $0 $0

AGE FACTOR 361.80 81% 84% 85% 97% 89%

Average Age 41.3 32.2 35.5 34.6 41.0 37.3

Grand Total

Total Employees 172 172 172 172 172 62 62 172 62

Enrolled 13 13 62 40 94 20 35 0 0

Total Mo'ly Cost: $7,290 $8,886 $39,609 $60,654 $49,222 $25,176 $18,891 $0 $0

Er Monthly Cost $3,217 $3,922 $15,495 $41,923 $24,086 $15,000 $8,698 $36,410 $8,205

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Ee Monthly Cost$4,073 $4,964 $24,113 $18,731 $25,136 $10,176 $10,193 $0 $0

ER Monthly Cost Increase (Decrease) NA $0 $11,574 $38,001 $20,164 $11,078 $4,776 $32,488 $4,283

XYZ Inc.’s Pay AdjustmentPay Adjustment Illustration for Scenario G

Estimated Monthly Savings Under Scenario G: NANo Estimated

Savings

Number of EEs Above 400% of the FPL: NA

(EEs that fall below 400% of the FPL will receive subsidies,while EEs above 400% will pay retail at the Exchange.)

Employer Allocation to Employees via Additional PayER Payroll Tax: NA

Net Pay to Breakeven: NA

Employee Allocation

Pay Increase Per EE Per Month: NA

EE Payroll Taxes: NAy

Net Take Home Per EE Per Month: NA

Illustrative Pricing - 80% PlanE ES EC F

Under 30 $325 $650 $585 $975

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Under 30 $325 $650 $585 $97530 - 40 $423 $845 $761 $1,26840 - 50 $570 $1,141 $1,027 $1,71150 - 60 $770 $1,540 $1,386 $2,31060 - 65 $975 $1,950 $1,755 $2,925

Example # 2: ABC IncExample # 2: ABC Inc

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ABC Inc’s Expected Results2013 2014

A (Baseline) B C D E F G H

Not Eligible Group Made EligibleUnder Current

Plan; No Other

Not Eligible Group Made Eligible

No Plan Changes, Migration to

Exchange and

Scenario C but Offering Lean Plan as the Base Plan

Scenario C (No Plan Changes)

with 30% of Not Eligible

Scenario D (Lean Plan) with 30% of Not Eligible

Terminate Plan all Not

Eligible Employees

Terminate Plan after making

CurrentCurrent

(Baseline)

No Other Implications of HCR

Are Considered

Exchange and Contribution

Changes

the Base Plan (employees can

buy up)

Not Eligible is Made Eligible

Not Eligible Is Made Eligible

Employees are Made

Eligible

making 30% of Not

Eligible

Eligible Group(s)

Removed 30 Lives from Eligible Grp

Total 334 334 334 334 334 334 334 334 334

Enrolled 265 265 265 283 283 283 283 0 0

Mo'ly Px: $160,272 $197,472 $197,472 $200,455 $151,900 $200,455 $151,900 $0 $0

Er Monthly Cost $124,022 $152,807 $152,807 $158,204 $134,911 $158,204 $134,911 $77,949 $77,949

Ee Monthly Cost $36,251 $44,664 $44,664 $42,251 $16,989 $42,251 $16,989 $0 $0

Not Eligible Group(s)

Total 9 9 9 9 9 3 3 9 3

Enrolled 0 0 8 9 9 3 3 0 0

M 'l P $0 $0 $3 511 $4 177 $3 549 $1 109 $942 $0 $0

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Mo'ly Px: $0 $0 $3,511 $4,177 $3,549 $1,109 $942 $0 $0

Er Monthly Cost $0 $0 $3,015 $3,611 $3,068 $933 $792 $2,308 $769

Ee Monthly Cost $0 $0 $497 $566 $481 $176 $150 $0 $0

2013

2014 Current

Scenario A

ABC Inc’s Expected Results

Current (Baseline) B C D E F G H

Shared Responsibility Penalties

Waivers 69 69 70 51 51 51 51 343 337

Waivers Trigger Penalty 0 0 0 0 0 0 0 0 0

Medicaid 0 0 0 8 8 8 8 0 0Medicaid 0 0 0 8 8 8 8 0 0

Others 69 69 70 43 43 43 43 343 337

Penalty $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $2,000 $2,000

Tax Rate 35% 35% 35% 35% 35% 35% 35% 35% 35%

Additional Cost $0 $0 $0 $0 $0 $0 $0 $0 $0

AGE FACTOR 438.68 99% 97% 97% 98% 98%

Average Age 47.0 46.5 45.9 45.9 46.3 46.3

Grand Total

Total Employees 343 343 343 343 343 337 337 343 337Total Employees 343 343 343 343 343 337 337 343 337

Enrolled 265 265 273 292 292 286 286 0 0

Total Mo'ly Cost: $160,272 $197,472 $200,983 $204,632 $155,449 $201,564 $152,842 $0 $0

Er Monthly Cost $124,022 $152,807 $155,822 $161,815 $137,979 $159,137 $135,703 $80,256 $78,718

Ee Monthly Cost $36 251 $44 664 $45 161 $42 817 $17 470 $42 427 $17 139 $0 $0

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y $36,251 $44,664 $45,161 $42,817 $17,470 $42,427 $17,139 $0 $0

ER Monthly Cost Increase (Decrease) NA $0 $3,015 $9,008 ($14,828) $6,330 ($17,104) ($72,551) ($74,089)

ABC Inc.’s Pay AdjustmentPay Adjustment Illustration for Scenario G

Estimated Monthly Savings Under Scenario G: $72,551

Number of EEs Above 400% of the FPL: 43

(EEs that fall below 400% of the FPL will receive subsidies,while EEs above 400% will pay retail at the Exchange.)

Employer Allocation to Employees via Additional PayER Payroll Tax: 12%

Net Pay to Breakeven: $64,777

Employee Allocation

Pay Increase Per EE Per Month: $1,506

EE Payroll Taxes: 37%

Net Take Home Per EE Per Month: $949Net Take Home Per EE Per Month: $949

Illustrative Pricing - 80% PlanE ES EC F

Under 30 $325 $650 $585 $97530 40 $423 $845 $761 $1 268

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30 - 40 $423 $845 $761 $1,26840 - 50 $570 $1,141 $1,027 $1,71150 - 60 $770 $1,540 $1,386 $2,31060 - 65 $975 $1,950 $1,755 $2,925

Non – High Risk Companies Generally will Have Two Areas of Concernwill Have Two Areas of Concern

• Employee Classification and Measurement of Hours• Plan Value & Plan Value Limits

Employee Classification

• The measurement period and stability period must be the same for all i di id l i ti l l ifi ti f lindividuals in a particular classification of employees.

• The rules only allow four types of classifications of employee; 1 Collectively bargained employees and non collectively bargained1. Collectively bargained employees and non-collectively bargained

employees; 2. Each group of collectively bargained employees covered by a

separate collective bargaining agreement; p g g g ;3. Salaried employees and hourly employees; and 4. Employees whose primary places of employment are in different

States.

Employee Classification

Example – New Variable Hour Employee

2014 2015 2016 2017

10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

Standard Measurement Period Admin Stability Period

John's Initial Measurement Period Admin Stability Period

If over 30, subject to penalty

For this period XYZ is not subject to penalty If under 30, not subject to penalty

Overlap Rules

Standard Measurement Period Admin Stability Period

Retest John If over 30, subject to penalty

If under 30 not subject to penaltyIf under 30, not subject to penalty

PLAN VALUE & PLAN VALUE LIMITES

• Non-grandfathered plans must comply with the annual limitation on Out of Pocket (OOP) maximums.

• OOP maximum is applicable to all coverage under the plan (Co-pp g p (pays, Coinsurance, Etc. )

• Plans currently using multiple claim payers (separate medical TPA and a separate pharmacy benefit manager) will effectively p p y g ) yhave until the 2015 plan year to design a single OOP maximum and coordinate vendor arrangements under a special transition rule described below.

• The level of the new OOP maximums will be the same OOP dollar maximums that apply to HSA-qualifying high-deductible health plans in 2014. Those amounts are $6,350/single and $$12,700/family

Health Insurance in the NewHealth Insurance in the New Insurance Marketplace

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Places To Go To Access Health Insurance in 2014(With Anticipated Growth/Decline)(With Anticipated Growth/Decline)

Employer Employer Individual Individual MedicaidMedicaid

p y(Marginal/to High Decline)

p y(Marginal/to High Decline)

Market & COBRA (Heavy Decline)

Market & COBRA (Heavy Decline)

Medicaid (Enhanced Growth)

Medicaid (Enhanced Growth)

Decline)Decline)

M diM di PublicMedicare (HeavyGrowth)

Medicare (HeavyGrowth)

Other 

(Tri Care)

Other 

(Tri Care)

Public Exchange (HeavyGrowth)(Tri‐Care)(Tri‐Care) Growth)

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Health Care Reform Creates a Platform (Launch Pad) for Access Change(Launch Pad) for Access Change

• KEY Health Insurance Access Points for most i di id l b i i i 2014 & B dindividuals beginning in 2014 & Beyond– Employer’s Plan

Medicaid– Medicaid– Medicare– The Federal Public ExchangeThe Federal Public Exchange

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Let’s explore thel t h b i i ithplaces to shop beginning with

The Public Exchangeg

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Things to know before you go shopping @The Public Exchange

• Products Value (Richness of Benefits) are designed using Olympic Medals:• Products Value (Richness of Benefits) are designed using Olympic Medals:– Platinum Plan (Actuarial Value of 90%)– Gold Plan (Actuarial Value of 80%)

Silver Plan (Actuarial Value of 70%)– Silver Plan (Actuarial Value of 70%)– Bronze Plan (Actuarial Value of 60%)

• Actuarial ValueEx: Platinum Plan on average covers 90% of all essential benefit expenses– Ex: Platinum Plan on average covers 90% of all essential benefit expenses, Gold 80%, etc.

• Premium Rates vary by: Plan, Area, Family Size and AGE (NOT GENDER and NOT HEALTH STATUS!) Note: Only health factor is tobacco use (1.5:1 limit)) y ( )

• Premium Rates for the Old cannot be more than 3X’s that of the Young. If Young Rate is $100 Max Old Rate $300

• Premium Subsidies: If an individual’s household income is below 400% and above 100% of the Federal Poverty Level (FPL) they may be eligible for premium subsidies

• No Pre-Existing Conditions

2012 Federal Poverty Level ChartFederal Poverty Level Chart for 2012 (Excludes HI and AK)

Household size 100% 138% 150% 200% 300% 400%

1 11,170$ 15,415$ 16,755$ 22,340$ 33,510$ 44,680$ ,$ ,$ ,$ ,$ ,$ ,$

2 15,130$ 20,879$ 22,695$ 30,260$ 45,390$ 60,520$

3 19,090$ 26,344$ 28,635$ 38,180$ 57,270$ 76,360$3 19,090$ 26,344$ 28,635$ 38,180$ 57,270$ 76,360$

4 23,050$ 31,809$ 34,575$ 46,100$ 69,150$ 92,200$

5 27 010$ 37 274$ 40 515$ 54 020$ 81 030$ 108 040$5 27,010$ 37,274$ 40,515$ 54,020$ 81,030$ 108,040$

6 30,970$ 42,739$ 46,455$ 61,940$ 92,910$ 123,880$

7 34 930$ 48 203$ 52 395$ 69 860$ 104 790$ 139 720$

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7 34,930$ 48,203$ 52,395$ 69,860$ 104,790$ 139,720$

8 38,890$ 53,668$ 58,335$ 77,780$ 116,670$ 155,560$

Cost & Plan Subsidy Provisions For IllustrationMaximum Cost to Employee is based on Silver Plan:Maximum Cost to Employee is based on Silver Plan:

- Up to 133% FPL: 2.0% of income- 133-150% FPL: 3 0% - 4 0% of income133 150% FPL: 3.0% 4.0% of income- 150-200% FPL: 4.0% - 6.3% of income- 200-250% FPL: 6.3% - 8.05% of income

- 250-300% FPL: 8.05% - 9.5% of income- 300-400% FPL: Capped to 9.5% of income

O t f P k t C t M b R d dOut of Pocket Costs May be Reduced- 94% AV for between 100%-150% FPL

- 87% AV for between 150%-200% FPL

50- 73% AV for between 200%-250% FPL

- 70% AV for between 250%-400% FPL

Contribution Strategies in 2014: Maximizing Employer/Employee Value When setting contribution rates, it is important that the Employer consider premium and plan subsidies available to eligible employees at the State P bli E h If th E l f hi i l ff d bilit i it lf it ld lt i di i i hi E l d

A CURRENT EMPLOYER CONTRIBUTION FORMULA

Public Exchange. If the Employer focuses on achieving plan affordability in among itself, it could result in diminishing Employee and Employer plan value. The CBIZ Analyzer assesses the costs to Employees and the Employer under various contribution alternatives - the CBIZ Analyzer assists the Employer in deriving a structure that maximums Employer and the Employee value. What follows is an illustration:

A. CURRENT EMPLOYER CONTRIBUTION FORMULA

Example: Family of 4 (E, Sp, 2C) with an Income of $46,100 (200% of the Federal Poverty Level). Age of Employee and Spouse is 35 (Non-Smoker). ILLUSTRATION - Note: Tax ramifications not incorporated in this simple illustration

Exchange Annual PxMaximum Px as

a % HHIMax Cost to

Family Subsidy Plan ValuePlan Subsidy

Value

Single Coverage $7,500 6.30% $2,904 $4,596 70% 73%

F il C $22 500 6 30% $2 904 $19 596 70% 73%

Affordability Test

NA

NAFamily Coverage $22,500 6.30% $2,904 $19,596 70% 73%

Employer PlanAnnual Px Employer Cost Employee

Cost Plan ValuePlan Subsidy

ValueAffordability

Test

NA

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Single Coverage: $6,000 $4,500 $1,500 73% NA

Family Coverage $18,000 $9,000 $9,000 73% NA

Affordable

MEDICAID Alternative

• Consider State Expansion (for adults) to 138% of Household Income– Quite a few States “fighting” this expansion– Arizona = 102%: Alabama = 24%: DC = 206%

If d d ill b t ti ll i b f– If expanded, will substantially increase number of eligible‘s

• Very Rich Benefits (Rich Plan and Very Low• Very Rich Benefits (Rich Plan and Very Low Premiums)

• If employee qualifies & enrolls in MedicaidIf employee qualifies & enrolls in Medicaid– No Employer Penalties Apply 52

MEDICARE Alternative• Plans are being enhanced as the doughnut hole

shrinks • Becoming more attractive plans to consider with

the enhancement of drug coverage and the li i ti f th d t h lelimination of the donut hole

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Don’t Forget “Hiring Incentives”

• Tax Credits for Federal and State Returns for hiring employees that meet certain criteria.  g p yThese include:

• Work Opportunity Tax Credit (WOTC)Work Opportunity Tax Credit (WOTC)

• Veteran Hiring Credits

S B d Hi i C di• State Based  Hiring Credits 

• WOTC was recently renewed for  2012/2013

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The Program Overview• To qualify for the program the employer must• To qualify for the program, the employer must have employees “screened” for qualification.

S i MUST i hi fi 28 d f• Screening MUST occur within first 28 days of hire.

• CBIZ handles the screening and certification of employees through phone, internet or survey

• CBIZ coordinates the process and assists reporting in the taxpayer’s tax returnp g p y

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The Business Opportunity• National Average: 1 in 6 employees qualify for a• National Average: 1 in 6 employees qualify for a credit

• Average WOTC Credit is $1 500 per qualifiedAverage WOTC Credit is $1,500 per qualified employee

• Other credits are identified after receiving WOTCOther credits are identified after receiving WOTC data

• 80% success from certification to actual credit

• Highest Opportunity industries are typically coextensive with high risk for Shared Responsibility Excise Tax

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Health Care Reform

QUESTION TIME

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Th k Y f Y TiThank You for Your Time

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