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Affordable Care Act impact on insurance plans

Affordable Care Act impact on insurance plans. Today’s topics. What we’ll cover: Definitions and employer mandate Overview of 2014 changes Case examples Employer responsibilities Tools and resources. Definition : small and large groups.

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Affordable Care Act impact on insurance plans

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  1. Affordable Care Act impact on insurance plans

  2. Today’s topics • What we’ll cover: • Definitions and employer mandate • Overview of 2014 changes • Case examples • Employer responsibilities • Tools and resources

  3. Definition: small and large groups • Going forward, the state definition of group size for quoting or rating will still apply. For the purposes of the employer mandate (in 2015), the definition of 50+ full-time equivalency is used for compliance. • Small group: • 1-99 • full-time equivalency • Large group: • 100 or more full-time equivalency • Right now, states can define group sizes for quoting and rating. • Small group: • 1 or 2 – 50 or • 1 or 2 – 100employees • Large group: • 51+ • or • 101+ • employees

  4. Employermandate penalty delayed • Employers have one more year to comply with the ACA employer mandate without risk of penalty (delayed until 2015). • Mandate is limited to groups with 50 or more FT employees. • Employers must offer affordable coverage with a minimum value (MV) of 60%: • Affordable coverage: Employee’s share of premium must be less than 9.5% of an employee’s income. • Minimum essential coverage: Plan must pay for at least 60% of the cost of all covered services. • HHS has developed an MV calculator to check if a plan provides minimum value. • If an employer does not meet these standards in 2014, employees may become eligible for subsidies in the Health Insurance Marketplace (until employer complies with these standards).

  5. Overview of 2014 changes

  6. Changes that affect premiums Guaranteed issue No one can be denied coverage New taxes and fees Apply to certain plans Subsidies/credits Help those with low or moderate incomes pay for coverage Broader benefits and limits 10 types of Essential Health Benefits* required, out-of-pocket limits and deductible restrictions Reinsurance program Insurers / TPAs / self-funded plans contribute to fund high claims Change in rating Rates based on age and address (and tobacco use, in some states), not gender and health status New Health Insurance Marketplace (Exchanges) Offers plans for individuals and small groups At least 60% actuarial value Plans pay at least 60% of covered services *Not required for large-group and ASO plans

  7. How each premiumis affected ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ depending on number of required benefits included in plan Increase Decrease Little change

  8. How each premiumis affected ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ for healthy for less healthy for healthy for less healthy young men and older women young women and older men groups younger than average groups older than average young individuals older individuals for customers with more cost share than allowed little change for customers with less cost share for customers with more cost share than allowed little change for customers with less cost share Increase Decrease Little change

  9. How each premiumis affected ~ ~ ~ ~ for those who qualify for those who qualify Increase Decrease Little change

  10. How each premiumis affected ~ ~ ~ ~ Increase Decrease Little change

  11. Essential health benefits (EHBs) *Plans for individuals and small groups must cover: • Outpatient services • Emergency services • Hospitalization • Maternity and newborn care • Mental health and substance use disorder services (including behavioral health treatment) • Prescription drugs • Rehabilitative and habilitative services/devices • Laboratory services • Preventive and wellness and chronic-disease management • Pediatric services(including dental and vision) *Not required for large-group and ASO plans

  12. EHBsand annual/ lifetime dollar limits • NOTE: Medical Policy rules still apply to EHBs • When EHBs are covered, annual/lifetime dollar limits cannot apply • Affects both grandfathered and nongrandfathered plans • Applies for in-network and out-of-network services • Visit limits are allowed on EHBs and can replace dollar limits • Non-EHB annual/lifetime dollar limits are allowed • Rule: All covered EHBs must apply to the OOP limit. • Applies to medical, pharmacy and pediatric vision and dental benefits that are part of the plan • Does not apply to: • Pediatric vision and dental benefits that are not part of the plan • Stand-alone benefits, which are “excepted” under HIPAA

  13. Out-of-pocket (OOP) maximum • HHS sees the complexity of having one OOP for all types of EHBs. So it issued a one-year safe harbor for plans with multiple EHB service providers. • During this time, the plan will be considered compliant as long as the medical OOP does not exceed the maximum. • If a separate pharmacy OOP was already in place, it also must not exceed$6,350/$12,700. • 2014 OOP limits for all individual, small group and large group non-grandfathered plans: • Individual: $6,350 • Family: $12,700 • The OOP cap applies for medical and specialty EHBs • Cap is equal to the amount established for HSA-compatible plans

  14. Community rating Premiums for small groups and individuals are not based on gender or health, but on: • Family size • Age – with maximum 3:1 rating bands • Where people live • Tobacco use • no more than 50% more for users • exceptions may apply in some states

  15. Studies on premium impact • Center Forward • Increases likely in the individual and small group markets • Some groups up by 49%, others down by 39% • American Action Forum • Increase in costs for young, healthy people in the individual and small group markets • Costs for older, less healthy would drop about 22% • Milliman actuarial firm • 75% to 95% rise in premiums in the individual market • Rates for others would drop • Jonathan Gruber of MIT • Premiums in individual market may increase as much as 85% • Small group market may increase more than 20%

  16. Small group: Early renewal option • Small groups with renewal dates in 2014 can: • Renew off-cycle in late 2013. • Lock in Q4 rates without the new community ratings. • Have a new 12-month rate guaranteed. • Sync their renewal dates for medical, dental, vision, disability and life coverage. * Not offered in all states. Please contact your sales representative for details.

  17. Case examples

  18. The big picture for small groups • Health coverage options for groups with 50 or fewer employees: • 2013 Option • Early renewal for groups with effective renewal dates in 2014 • 2014 Options • A fully insured plan through: • The SHOP in the Health Insurance Marketplace • Other channels outside the Marketplace • An ASO plan, if allowed by state law • No coverage – let employees buy through the individual market

  19. Case example Early renewal • Mike’s Accounting Firm, with 31 employees, chose early renewal in 2013. • The reasons: • Can lock in 12-month rate before the higher community ratings kick in • Happy with current coverage • Not sure yet how reform will affect coverage; need more time to understand the changes • Can roll up coverage into one easy renewal date • How it works: • Mike renews off-cycle in late 2013 for a 12/1 renewal date • Mike locks in Q4 prices before community rating • When renewal comes next year, 12/1/14, reform changes will apply and Mike can choose what options are right for the business • Mike might want to help his employees with funding, but he should be cautious and seek legal and tax advice.

  20. Case example No coverage • Billy’s Bike Rentals, a small business with 35 employees, chose to stop offering coverage to their employees. • His reasons: • Costs are too high • Save on administrative expenses • Focus on growing business • How it works • He drops coverage and provides employees information on obtaining coverage through the Marketplace • His employees shop for coverage through traditional selling channels • Some may qualify for subsidies through the Health Insurance Marketplace only

  21. Case examples Individuals • Health coverage options for individuals: • People not already on a government plan: • Employer-sponsored coverage • Individual coverage through Health Insurance Marketplace (the Exchange) or a plan outside the Marketplace • No coverage – pay the penalty

  22. Case exampleShop in the Marketplace • Melanie’s employer has decided to quit offering coverage. Melanie needs coverage for her family and herself, so she’s going to shop in the Marketplace. • Her reasons: • She can compare plans side by side from different insurers. • She wants to explore the new Marketplace to find coverage that meets her needs. • She can work with her producer to find out if she qualifies for a subsidy or tax credit when she buys a plan in the Marketplace.

  23. Case exampleNo coverage • Mandy is 27 and recently aged off her parent’s plan. She has opted not to buy any coverage. • Her reasons: • She thinks the cost is too high. • She can always go to the ER if she needs to. • Mandy may save money on premiums, but she’ll pay a penalty for not having insurance. The penalty goes up each year: 2014: 2015: 2016: Penalty is $95or 1% of taxable earnings* Penalty is $325 or 2% of taxable earnings* Penalty is $695 or 2.5% of taxable earnings* *whichever is larger Mandy should work with her producer to see if she qualifies for a subsidy or a tax credit before deciding to go without insurance.

  24. Employer responsibility

  25. Notice of options for coverage • Coverage is available through the newHealth Insurance Marketplace. • Employees may be able to get a tax credit or subsidy through the Marketplace. • Employees may lose employercontribution if they buy a plan through the Marketplace, and this may have a tax impact to employees. Employers must provide the notice to employees by October 1, 2013 All employers – whether they offer health plans or not – are required to tell employees:

  26. Tools to help you

  27. HCR website and tools • Redesigned site for producers and employers: www.makinghealthcarereformwork.com • With a new suite of tools and resources such as: • Interactive decision support • Educates on the basics of ACA impact • Provides recommendations • ACA financial calculator • Online interview gathers plan and employee information • Provides a customized report showing the financial impact of ACA on employer plans

  28. Legal Blue Cross and Blue Shield of Georgia, Inc. is an independent licensee of the Blue Cross and Blue Shield Association. The Blue Cross and Blue Shield names and symbols are registered marks of the Blue Cross and Blue Shield Association.

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