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K12 Health Care Reform and Exchanges FERMA July 10, 2013. How to Cover, How to Pay. Expanding/Improving Coverage. Paying for Expanded Coverage. Health Insurance Exchanges with Reformed Rules. Federal Coverage Subsidies. Medicare/Medicaid Payment Changes. Free Rider Penalty.
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Paying for Expanded Coverage
Health InsuranceExchanges with Reformed Rules
Free Rider Penalty
Taxation of High
High-Cost EmployerCoverage Taxation
= Direct impact to employers
= Indirect impact to employers
= Direct and indirect impact to employers
Won’t Create Exchange
Partnership Exchange with Feds
*Source: The Urban Institute
14 States Will Expand Medicaid
6 States Leaning toward expanding Medicaid
8 States Won’t Expand Medicaid
6 States Leaning toward Not Expanding Medicaid
16 States Undecided on Medicaid Expansion
Variable Workers: Uncertain Scheduling
Period of time over which employer tracks employee’s hours of service
Cannot be less than three months or more than twelve months in duration
Initial measurement period for new employees will be based on each employee’s start date
Standard measurement period for ongoing employees will be uniform period of time set by employer
Administrative period—optional (up to 90 days in duration)
Employer looks back at employee’s hours of service in measurement period
May be utilized for conducting calculation and open enrollment
Period of time employer must offer coverage to FTE to avoid ACA penalties
Stability period can be between six months and one year but not less than Measurement Period
If employee is considered full-time in measurement period but falls to part-time in stability period, benefits must be offered through the end of the stability period
Special note for schools: Summer and winter recess may not be used as part of measurement period
Consulting | U.S. Health & Benefits
Proprietary & Confidential | 12/2012
*Denotes group/insurance market reforms applicable to all group health plans.
**Denotes group/insurance market reforms not applicable to grandfathered health plans.
*** This requirement applies to full time employees (e.g., 30 hours per week) and will require coverage that is affordable and satisfies a certain actuarial value to avoid the penalty. Guidance forthcoming.
**** Where effective date determined by plan year, assumes plan year is calendar year.
$8,000 average spent per employee
82% increase of out-of-pocket and payroll contributions
$5,000 average spent per year
Nearly $13,000 per employee annually
With employee pay typically rising at 3%
per year, compare a 19% pay increase to an82% health care cost increase
over the past 5 years.
Experts estimate that health care costs will continue to rise at 8-9% per year
Source: Aon Hewitt HHVI Database
The Opportunity: Companies that target 3 major modifiable risk factors by changing individual behaviors can save an average of $700/employee/year in health care costs and productivity improvements
Source: 2010 World Economic Forum
Play by New Rules
Play on a New Field
How do health care benefits fit into your long-term total rewards strategy?
How committed is your organization to covering and funding health care for non-employees?
What level of cost increase can your company afford for health care benefits over the next 3 years?
Are you willing to hold business managers accountable for improving the overall health of their workforce?
How comfortable is your company with rewarding, penalizing or requiring employees (and covered dependents) to complete specific actions or achieve results or specific outcomes?
Is your organization willing to invest in additional vendor expenses or add internal staff to accommodate the increasing complexity of health care in the next 3 to 5 years?
Are you willing to relinquish control of some of your plans to third-party vendors?
How important is the competitive landscape to your organization?
Are you willing to re-think your workforce composition?
Where do you want to be by 2015 with your Benefit Strategy?