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Health Care Reform

Health Care Reform. From an Insurer’s Perspective. Providers and their employees. What Small Employers Need to Know. Important Dates. October 1 – Health Insurance Marketplaces (Exchanges) open across the country

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Health Care Reform

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  1. Health Care Reform From an Insurer’s Perspective Providers and their employees

  2. What Small Employers Need to Know Important Dates October 1 – Health Insurance Marketplaces (Exchanges) open across the country December 15-must be enrolled by this date for coverage to be effective January 1, 2014 January 1 – Much of the regulation impacting employers starts becoming effective March 31-last day for individuals to enroll for coverage during 2014 unless you have a qualifying event

  3. What Small Employers Need to Know Regulations changing in small group market • New rating rules • New benefits and coverage requirements • Medicaid expansion

  4. What Small Employers Need to Know New Rating Methodology Effective for non-grandfathered groups with 2-50 employees at the first renewal on or after January 1, 2014 • Gender rating removed • Industry rating removed • Common geographic rating established by regulators • Tobacco load nationally 50% (Arkansas 20%) • Health status and pre-existing conditions no longer considered • Age rating reduced from 6:1 ratio oldest to youngest to 3:1

  5. What Small Employers Need to Know Premium Rate Calculation • Unique rate calculation for every member • Member-level, rather than employee-level, census required to comply • Every member on an employee contract has a unique rate • Rates developed for up to 3 minor children • 4th minor child (and any additional) is free • Children age 21+ must be rated as adults

  6. What Small Employers Need to Know Essential Health Benefits Non-grandfathered small group health plans – offered on or off the Small Employer Health Options Program (SHOP), must provide these government-mandated essential health benefits Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substanceuse disorder services, including behavioral health treatment Essential health benefits include services in the following 10 categories: • Prescription drugs • Rehabilitative and “habilitative”services and devices • Laboratory services • Preventive and wellness servicesandchronic disease management • Pediatric services, including dentaland vision care 1 6 2 7 3 8 4 9 5 10

  7. What Small Employers Need to Know Additional Benefit and Coverage Requirements No greater than $2,000/$4,000 (adjusted annually) unless required by “reasonable” product design Deductibles No annual or lifetime dollar limits on essential health benefits Annual Limits Coinsurance Maximums Must be replaced by true out-of-pocket maximums

  8. What Small Employers Need to Know Metallic Coverage Levels Actuarial Values for Levels of Coverage Provided by Qualified Health Plans 100% 90% 80% 70% 70% Actuarial Value for Levels of Coverage 60% BRONZE SILVER GOLD PLATINUM 10%

  9. What Small Employers Need to Know Examples: Small Group Metallic Plans Standard Benefits Silver Gold Platinum Bronze $3,000 60% $6,350 $2,000 80% $6,350 $1,000 80% $3,000 Deductible Coinsurance True Out-of-Pocket Max $500 90% $1,000 Additional Options Silver Gold Platinum Bronze PCP Copay Drug Copay $20/$40 $10/$30/$50 $20/$40 $10/$30/$50 n/a n/a $30 $10/$40/$60

  10. Offering Coverage to Employees How Employers Win

  11. What Small Employers Need to Know Arkansas’ Medicaid “Private Option” • Arkansas Health Care Independence Program • Adults between 17% and 138% of FPL now are eligible to participate in the Medicaid program • In Arkansas, these newly eligible participants will shop for coverage on the Health Insurance Marketplace and purchase Medicaid-approved benefit plans offered by private carriers • Very desirable benefits at no premium cost • Employees may be eligible for Medicaid-no penalty or cost to the employer

  12. What Small Employers Need to Know Employer-shared Responsibility Provisions: “Play or Pay” Penalties • Offer minimum essential coverage (group health plan) or pay $2,000 per employee (after the first 30) • Coverage must meet minimum value requirements (60%) and affordability requirements (employee contribution of 9.5% of W-2 income or less) or pay $3,000 for every employee receiving subsidized coverage except those on Medicaid • Enforcement postponed until 2015 ONLY APPLIES TO Employers with 51 or more FTEs:

  13. What Small Employers Need to Know Small Employer Health Options Program Subsequent Years First-Year Employers Available For Subsidies May be employee choice Employers with 2-50 employees in 2014 (2-100 in 2016) No subsidies are available for employees; employer contribution takes its place Will choose plan from one carrier on behalf of all employees

  14. What Small Employers Need to Know Small Employer Tax Credit • Must buy through the SHOP to qualify • Available for 2014 and 2015 only • Available to employers who: • Have fewer than 25 FTEs (excluding owner and family members) • Have average annual wages below $50,000 • Contribute uniform amount of at least 50% of employee-only premium

  15. What Small Employers Need to Know Small Employer Tax Credit • Maximum tax credit 50% of employer contribution • Tax credit decreases with average wage and firm size increases • Reduction to the 50% maximum credit when employee count exceeds 10 and/or the average annual wage exceeds $25,000 • Lose grandfathered status

  16. What would happen to their employees Small Employers Might Drop Coverage

  17. What Small Employers Need to Know 2013 Federal Poverty Level (FPL) PERSONS IN FAMILY 133% 200% 400% 300% 100% Medicaid $11,490 $15,510 $19,530 $23,550 $27,570 $31,590 $35,610 $39,630 9.5% $45,960 $62,040 $78,120 $94,200 $110,280 $126,360 $142,440 $158,520 Medicaid $15,282 $20,628 $25,975 $31,322 $36,668 $42,015 $47,361 $52,708 6.3% $22,980 $31,020 $39,060 $47,100 $55,140 $63,180 $71,220 $79,260 Premium Cap 1 2 3 4 5 6 7 8 9.5% $34,470 $46,530 $58,590 $70,650 $82,710 $94,770 $106,830 $118,890 Note:Federal minimum wage employee working 50 weeks per year, 40 hours per week would earn $14,500.

  18. What Small Employers Need to Know Personal Responsibility Federal definition of affordability MAXIMUM Monthly Premium Family of 4 MAXIMUM % of INCOME Family of 4 INCOME % of FPL $31,321 $35,325 $47,100 $58,875 $70,650 $94,200 3% 4% 6.30% 8.05% 9.50% 9.50% $78.30 $117.75 $247.28 $394.95 $559.31 $745.75 133% 150% 200% 250% 300% 400%

  19. What Small Employers Need to Know Remember That Group Coverage Remains a Valuable Benefit • People at 300% or more of the FPL are often key employees or family members in small businesses • Little or no subsidy will be available for them and comprehensive coverage in the reformed individual marketplace will be more expensive than existing coverage Cancelling group coverage is likely to present the greatest burden on those most critical to your business

  20. What Small Employers Need to Know Group Coverage: Considerations • When groups cancel coverage, they are withdrawing a form of compensation • To avoid employee dissatisfaction, groups may consider replacing some or all of the contribution amount made to the group health plan with additional income to the employee • By doing so, the group will have replaced a form of compensation that is tax deductible for both employer and employee with a form of compensation that is taxable for both

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