Healthcare Plan Design in the Era of PPACA

1. Healthcare Plan Design in the Era of PPACA Robert Crisan, Senior Vice President of Health Care Reform and Strategic Growth, Hylant Group, Inc.

2. StrategiesFirst a Look at Affordability

3. Let’s Look At Affordability Kaiser Family Foundation and Health Research and Educational Trust, 2013. In 2011, the Median Household Income was $50,502 In 2013, the average annual total cost of employer-sponsored family coverage was $16,351, and the share of the premium paid by workers was 29%. Between 2003 and 2013, premiums have increased by 80%.5

4. Where Does All the Money Go?

8. Affordability

9. Percentage of employees who strongly agree, “I am looking to my employer for more help in achieving financial security through employee benefits.” Source: MetLife – 12th Annual U.S. Employees Benefit Trends Study

10. Basic Employer Advantage

11. Important Components of Employer Provided Coverage Employer Subsidy is not taxed Employee Portion is pre-tax Tax Deductible to Employer

12. ER vs. EE Comparison of Cost “Pay” Scenario

13. Drop Coverage

14. Drop Coverage • In most cases, when we add both $2,000 penalty and consider the employee out-of-pocket it is not a financially feasible or an employee friendly decision, UNLESS you are: • Small employer (Under 50 – inc. FTE) • Lower average wages • Higher out-of-pocket • Higher contributions

15. Skinny Plans

16. “Skinny” Plans • New concept, generally providing only preventive care and mandated benefits (clinical trials) • Current definition of MEC includes skinny plans • Relatively simple to qualify as affordable as cost is very low • Questionable on whether such a plan provides minimum value • Conflicting language in the proposed regs • This was not the intent of the law • If this is your “Plan A,” make sure you have a “Plan B” to fall back on!!

17. “Skinny” Plans • Currently… • Avoids Penalty A - $2,000 • Helps individual avoid Individual Mandate if they are covered by the plan • Can be completely voluntary (100% paid by the employee) • Disagreement on avoiding the Penalty B - $3,000 • No Annual and Lifetime Maximum, First Dollar • Ideal Industries – staffing, restaurant, home healthcare, hotels, retail, industry with low wages

18. “Skinny” Plans – Sample Rates

19. Do “Skinny” Plans Meet Minimum Value? MV defined as % of covered expenses paid by plan Affordable Care Act – the LawPassed by Congress, Signed by Obama MV defined as % of covered expenses paid by plan ACA Regulations on various aspectsIssued by HHS, DOL, DOT Must use CMS MV calculator to determine %

20. Unaffordable or Non-MV

21. Offer Unaffordable/non-MV Coverage It may be the path of least resistance to offer either unaffordable or non-MV coverage Think real affordability Different participation assumptions for MV or Affordable

22. Unaffordable/non-MV – For a group with all covered An unaffordable plan may cost employer less!

23. Examples

27. Drop Spouses

28. Drop Spouses • ACA does not require employers cover spouses • If you offer affordable and minimum value coverage, the spouse is not eligible for a subsidy • Got a good PR firm?

29. Offer Plans Matching Metal Tiers

30. Metal Tiers

31. Show Taxes and Fees

32. Employee Share of ACA Fees

33. Another Look

34. Medicaid

35. Help Employees Get Medicaid Availability depends on State Not clear on new approach on old rules Moving an employee from employer family coverage could save an employer $15,000 - $20,000 per year on an insured plan! Way cheaper for employee!

37. Help COBRA Event Employees get Coverage Elsewhere • COBRA Event • Individual Marketplace allows for enrollment if lose coverage • Individual Market may subsidize former employee • If experience-rated or self-funded, reduced liability on employer

38. Private Exchange

39. What is an Health Insurance Exchange/Marketplace? A health care exchange is a marketplace that connects insurance companies with individuals or employees wishing to purchase heath insurance The more exchange participants the greater the economies of scale that increase insurers ability to offer competitive prices In the insurance marketplace, the popular thought is the element of competition will ultimately reduce prices

40. Private Exchanges • One big reason for a private exchange is to move employers and their employees to a defined contribution model • Also, to give employees more choice ( And Responsibility) • Flexibility of an employer has also been a cited value proposition of an employer, however, flexibility will depend on the size of the employer and the ability of the technology. • Flexibility may include: • Number of Medical Plans • Number of Dental Plans • What other ancillary plans to be offered? • Even non-insurance will be offered?

41. The Private Exchange Model • Online Mall • Consumer shops for services • Private Exchange • (Technology) • Created by: • Insurer or Agent or Technology • Insurer or agent partners with technology • Manages health accounts for employees • Has various products and services “on the shelf” • Helps individuals buy services tailored to their needs • Can offer many more options than most employers can offer outside of exchange • Brings stakeholders closer to impending health care reform changes (Can be designed with metal tiers to look like Health Insurance Marketplace) • Employer • Decides on Partner/ Technology/Insurer • Deposits money on behalf of each member into account (HRA) or makes credits/cash available through cafeteria plan Health Insurance Pharmacy $ Wellness $ • Consumer • Uses dollars to purchase insurance and other benefits • Educated about available options and tradeoffs Ancillary Other Source: Society of Actuaries - 2013

42. Defined Contribution

43. Defined Contribution Disability Life Dental Medical

44. Defined Contribution Disability Life Dental Medical

45. Defined Contribution Medical

46. Defined Contribution Medical

47. Trade Dollars

48. Cadillac Tax Cadillac Tax Ceiling Minimum Value Affordability

49. Cadillac Tax

50. “Cadillac” Tax on High-Cost Health Coverage • For taxable years beginning in 2018, the Affordable Care Act (ACA) imposes a 40 percent excise tax on high-cost group health coverage. This tax, also known as the “Cadillac tax,” is intended to encourage companies to choose lower-cost health plans for their employees. • The aggregate cost of an employee’s applicable employer-sponsored coverage is the sum of the costs for each coverage. In general, the cost of a particular coverage is determined under rules similar to the rules for determining the “applicable premium” for COBRA purposes. • The cost of the health FSA coverage is the sum of the employee’s salary reduction contributions plus the cost of any reimbursement in excess of the employee’s salary reduction contributions. • If reimbursements are limited to the amount of the employee’s salary reduction contributions, the cost of coverage will be the dollar amount of the employee’s aggregate salary reduction contributions for the year.