Affordable Care Act Update May 2014

1. Affordable Care ActUpdateMay 2014 Donna LivelyDirector of Insurance PlansGuideStone Financial Resources

2. Agenda • Individual Mandate • Employer Mandate • Reporting and Taxes

3. Background • Core of law is an attempt to reduce number of uninsured • Requires most in U.S. to have health insurance • Creates state-based Exchanges (federal as well) • Large employers required to offer coverage or pay penalties • Expands Medicaid to 138% of the federal poverty level • 26 states have expanded Medicaid

4. Happening Now • 23 delays to the law • 50 regulations in process of being written right now • Recent changes to HRA/EPP/FSA • Recent changes to Employer Mandate • Congress in a deadlock

5. Individual Shared Responsibility — Individual Mandate

6. 2014 Impact: Individuals and Families • Individual Shared Responsibility provision began January 1, 2014 • Everyone with income above the poverty level must have “minimum essential coverage” • Some exemptions to individual mandate do apply • Hardship • Indian Tribe • Religious Objection • Incarcerated/Not in U.S. legally • Coverage under health care sharing ministry — such as Medi-Share or Samaritan’s Trust – considered MEC

7. 2014 Impact: Individuals and Families • Penalty is $95 or 1% of Householdincome in 2014 • There are penalty maximums • 2014 penalty collected with 2015 tax refund • If you aren’t owed a refund, you don’t pay the penalty • Penalty never goes away • If you ever have a refund the penalty will be deducted • Penalty increases year over year • $325 or 2% in 2015 • $695 or 3% in 2016

8. 2014 Impact:Exchanges/Marketplaces • Exchanges opened as an alternative for people with: • No other available coverage • Lower to moderate income • Pre-existing medical conditions • Open enrollment period: • Annual time to enroll for coverage • October 01, 2013 – March 31, 2014 (extended for 2014) • HIPAA Qualifying Event for off-annual-enrollment • Non-HIPPA QE for short term coverage would include medical underwriting

9. 2014 Impact:Exchanges/Marketplaces • Who will be offering coverage in the exchanges? • Fully insured, state-regulated insurance companies • Participating carriers (varies by state) • No church plans or unions are allowed to offer benefits in the Exchanges and their participants are not eligible for a subsidy • What networks and benefits will be available? • Majority are more narrow provider networks • High-tech, sub-specialty providers probably not available through the exchanges • Variety of benefit options

10. 2014 Impact:Exchanges/Marketplaces • Would the exchanges save me money? • Premium tax credit (subsidy) • Tax credit offered to Americanswho earn less than 400% of poverty level. • Note: Clergy housing allowance is not included in household income calculation. • Cost-sharing reductions (subsidy) • Lower deductible and higher co-insurance level for persons earning less than 300% of poverty level. • Claims paid at the “higher” level regardless of chosen plan.

11. Eligibility for PremiumTax Credit *Federal Poverty Level (FPL) The premium tax credit is not available to employees of employers that adopt theSmall Business Health Options Program (SHOP).

12. 2014 Impact:Exchanges/Marketplaces and SMALL GROUP Rating rules? • Guaranteed issue and renewability • Restrictions on rate flexibility — rates can vary by: • Community rating • Age — 1:3 slope from younger to older • Family size • Larger the family the higher the rate • Geography • Smoking habits — 1:1.5 upcharge

13. 2014 Impact:Exchanges/Marketplaces and SMALL GROUP • What will the plans look like? • Creation of standard metallic benefit plans • Essential health benefits required • No coverage dollar limit for the 10 identified categories of services • Maximum out-of-pocket spending (MOOP) limits: • No more co-insurance maximums • MOOP are an aggregate of all eligible, in-network medical and RX including co-pays, deductibles, co-insurance, • $6,350 — Individual (2014) • $12,700 — Family (2014)

14. Premium Tax Credit is NOT available if you are… • Offered an employer sponsored health plan that is affordable and of minimum value • Enrolled in an employer plan • Are covered by Medicare or Medicaid • Are covered by another government coverage • Have income above 400% of poverty level

15. Small Group Insurance • 96% of all organizations are less than 50 FTE • Small group has no mandate to offer coverage • Small group defined as: • <50 in 2014 and 2015 • <100 in 2016

16. Applicable Large Employer and the Pay-or-Play Penalty

17. 2014 Impact:Large Employer Large Employer Mandate Delayed until 2016 for • Employers with 50 to 99 full-time equivalent employees (FTEE) • IF they meet transitional relief rules Transitional Relief Rules for 50-99 Size Groups • No reduction in size of work force or overall hours of services to qualify for the transition relief • Employer does not eliminate or materially reduce any health coverage offered on February 9th, 2014 • Employer certifies that it satisfies these requirements (on Section 6056 report)

18. 2014 Impact:Large Employer Effective 2015 • Employers with 100+ FTEE are defined Applicable Large Employers • Applicable Large Employers must : • (a) Offer coverage to at least 70% of employees working 30 hours or greater • Moves back to 95% in 2016 • (b) Coverage must be affordable and ofminimum value

19. 2014 Impact:Large Employer • Affordable – Contribution limits for Employee Only coverage • 9.5% is maximum contribution an employee can make to the “employee only” coverage • Determined by: • W-2 wages • Employee’s hourly rate • Federal poverty level • Adequate - Plan provides Minimum Value, meaning plan pays an actuarially equivalent 60%of required health care expenses

20. 2014 Impact:Large Employer • No Offering Penalty (a): $2,000 penalty assessed for all FT employees if not offering coverage to all 30-hour workers and one receives a subsidy • In 2015 first 80 workers will not count toward penalty calculation • In 2016 first 30 workers do not count toward penalty calculation • Affordable/Adequacy Penalty (b): $3,000 per employee who receives a subsidy because coverage is not affordable and not of minimum value

21. Additional Taxes, Rules, Reportingand Regulations 2014–2018

22. 2014 Impact:All Employers • January 1, 2014 • 90-day waiting period limitation • Eligible employees will wait no more than 90 calendar days for coverage to begin • End of pre-existing coverage limitations • Certificate of Credible Coverage isnolonger required

23. 2015 Impact:Employers • IRC Section 6055 – All size employers • Information to IRS, employer, employees substantiating the plans’ provision of Minimum Essential Coverage • IRS Form 1095-B for all employers regardless of size • IRC Section 6056 – Greater than 50 FTEE • Report health plan information to the IRS and to employees • IRS Forms 1095-C for employers with 50 or more employees

24. 2014 Impact:Taxes • PCORI – 2014 - $2 per covered life • Transitional Reinsurance – • 2014 - $63 per covered life • 2015 - $44 per covered life • Health Insurance Industry Fee – 2.3% of premium • Federal Exchange User Fee - 3.5% of premium

25. In the wings… • W-2 reporting of health benefits • Less than 250 employees — not required to report • If the organization is not required to provide COBRA benefits — reporting is optional • Nondiscrimination rules for fully insured health plans • Automatic enrollment for employers with>200 employees • Cadillac tax on high-cost health plans -2018

26. Keep Informed • Count your employees • Watch and wait • More delays and modifications to come • Watch for subsidy to be reduced • Watch for non-coverage penalty to be increased • Election year will continue conversation about “keep or repeal” ACA

27. Website Bookmarks • http://www.guidestoneinsurance.org/HealthcareReform2/ReimbursementVehicles • http://www.guidestoneinsurance.org/HealthcareReform2 • http://www.guidestoneinsurance.org/HealthcareReform2/EmployerMandate

28. The preceding information is general in nature and is intended to keep you apprised of certain important developments. • This information may be subject to interpretation or clarification over time, so we cannot guarantee its accuracy or how it might be determined to apply in certain situations. • However, we hope it will provide you a useful frame of reference as you endeavor to carry out your responsibilities and serve your employees.