Donna LoschSenior Employee Benefits ConsultantOctober 18, 2012

Health Care Reform

How it all started

Where we are now

What lies ahead?

It began with…

Patient Protection and Affordable Care Act March 23, 2010

Health Care Education Reconciliation Act • March 30, 2010

Already should be in your plan now…

• Prohibitions on:• Lifetime and annual limits• Pre-existing condition exclusions• Rescissions of coverage• Excessive waiting periods

• Requires coverage of children to age 26• First dollar coverage for Preventive care• Limits on preauthorization requirements• Limits on out-of-pocket expenses and cost sharing• Guaranteed issue and renewal

Will it really happen?• Many people for and against it…• Many took a wait and see approach…

• Brought to the U. S. Supreme Court • To decide - All, Part or None • Biggest issue seen as the Individual Mandate

June 2012

• SCOTUS in a 5 to 4 decision• Votes the law is Constitutional (except)

• Calls Individual Mandate a Tax

• Government cannot hold committed Medicaid funds hostage

• Implementation full speed ahead

Past compliance activities not a waste of time!

Policies still need to be issued:• Department of Labor • Internal Revenue Service • Health and Human Services

Change has and will continue to happen:

• Discrimination testing for highly compensated - delayed

• Long Term Care – found to be undoable - dead

Health Care Reform (a.k.a.) Insurance Reform

Many details remain unknown

Costs are guesstimates both pro and con

Individuals will be responsible for purchasing coverage

Employers (50+) will be responsible for providing coverage

Individuals and small employers will be able to purchase coverage through state exchanges

New reporting and compliance duties for employers

Additional Requirements on the Horizon

• Contraceptives covered as preventive (non-Grandfathered) August 1, 2012

• Summary of Benefits and Coverage must meet unified guidelines September 23, 2012

• 2012 W-2’s must show Health Benefit Costs – (250+)

• Medical FSA capped at $2,500 January 1, 2013

• March 1, 2013 notice of exchange availability in 2014

• Employers interact with State Exchanges on eligibility information and data in 2013

Additional Requirements on the Horizon

• Waiting period for newly eligible 90 day maximum 2014

• 2014 Cost-sharing limits for non-Grandfathered plans must be in line with the deductible and out of pocket maximums

• 2014 Employers with 50+ FTE’s required to offer of minimal essential coverage or pay penalty

• State Exchanges open for business

January 1, 2014

Premium Tax - Comparative clinical effectiveness• $1 for each covered life effective at renewal October 2012 • $2 for October 2013 to October 2019 when it sunsets

Medicare Hospital Insurance Payroll Tax - 2013 • .9% increase for income earners in excess of $200K and subject

to 3.8% tax on net investment income

Cap on Itemized Deductions for Medical Expenses• Change in threshold from current 7.5% to 10% in 2013

Temporary Reinsurance Program• Designed to shift some of the risk from the individual market • Collected by carriers and TPA’s

Small Employer Tax Credit• Began in 2010 • 25 or fewer FTE’s • Annual wages average $50K or less for employees• 35% of premium tax credit until 2013• 50% from 2014

Medical Loss Ratios• Designed to control the cost of administrative fees and carrier margins• 15% cap for large groups 51+• 20% cap for small groups 50-• Rebates issued on excess begins 2012

Wellness• To encourage better life choices/lower medical costs employers can

provide an incentive/penalty for participation• Current max 20% • 2014 30% limit with possible increase to 50%

Employers with 50+ employees must offer health coverage • Those that don’t will be charged a $2K per employee penalty

for all FTE’s (first 30 waived)

• Employee costs greater than 9.5% of employee’s wages – Employer subject to penalty of $3K

• Employer subject to penalty only if plan offered does not meet standards for care and affordability – Minimum essential coverage

Look at your options and plan now!

• Pay or Play – what does each look like for your company

• Review your current and planned offerings - do they meet the minimum and affordable standards

• Plan for implementation for what is already known

• Prepare for more details to come• Automatic Enrollment – 30 hours for eligibility• Discrimination Testing for high-income earners

Both WA and OR have received funding for exchanges

Individuals and small employers (under 50) can purchase coverage through the exchange

In 2017, states can allow employers of any size to purchase coverage through exchange

Employers that purchase coverage through the exchange can let employees pay pretax through cafeteria plan

Questions?

THANK YOU!