Facts and myths about the Health Reform in 2014.

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Healthcare Reform
Vision For 2014
By:
Joseph E. Ellis, Sr, Senior Vice President
CBIZ Benefits & Insurance Services
610-862-2242
jellis@cbiz.com

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Agenda
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Introduction
Facts and Myths About Healthcare Reform
Financial Impact
Guidance for HR/Financial Professionals
Totally Random Thoughts
Questions

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1. Introduction

4. Healthcare
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2a. Facts about Healthcare Reform

6. Current Environment is Complex
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Government
Carriers
Employers
Affordable
Care Act
Providers
Consumers
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Terms edit Master
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Essential Health Benefits
Minimum Value Coverage
Affordable Coverage
Summary of Benefits and Coverage
Full Time Employee
Individual Mandate
Employer Mandate
Private Exchange
Marketplace
Subsidies
Pay or Play
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What’s Happening in 2014?
 No Annual Limits
 Pre-Existing condition limitations eliminated
 New Employee waiting periods limited to 90 days
 Medical Underwriting eliminated/Guaranteed issue
 Adjusted Community Rating for Small Groups
 Additional Taxes and Fees Implemented
 Medicaid Coverage Expansion
 Individual Mandate
 Public Marketplace (State or Federal)
 Premium Subsidies
 SHOP
 Private Exchange Options
 Preparing for Employer Mandate in 2015
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9. Medical edit Master title style
Click toUnderwriting Eliminated/Guaranteed Issue
2013 Rating based on:
2014 Adjusted Community
Rating:
 Age
 Geography
 Health Status
 Gender
 Wide Rate Bands
 Pre-Existing Conditions
 Age
 Geography
 Tobacco use
 Family size
 3:1 Rate Band

10. Additional Fees and Items Impacting
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Premium / 2014 Renewal
 Annual Fee – Fee for health insurance companies to fund
health insurance Marketplace subsidies. Estimated 2%-3% of fully
insured premiums.
 Premium Stabilization Fund / Transitional
Reinsurance Fee – Fee for insurers to stabilize individual
market for a 3 year period. Estimated $5.25 per covered LIFE per
month ($63 per year).
 Patient-Centered Outcome Research Fee – Fee to
fund research that compares different medical treatments. $2 per
member (includes dependents) per year.
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The Individual Mandate
Beginning 1/1/14, all individuals residing in US required
to maintain minimum essential health coverage for
themselves and their dependents.
 Options for coverage depends on household income as % of FPL
Federal Poverty Level
Option
Under 133%
Minimum essential coverage through
Medicaid, if a state so elects
Between 134%-400%
Premium assistance or cost sharing
possibilities via Marketplace
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12. The Marketplace
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13. SHOP – Delayed To 2015
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14. Private edit Master
Click toExchanges title style
• Offered by Insurance Carriers or Large
Broker/Consultants
• Single Carrier vs. Multi-Carrier
• Typically 8+ Plans offered
• Creates Architecture for Defined Contribution by
Employer
• Employees Choose Best-Fit Plan
• Annual increases in Contribution based on budget, not
Carrier Increases
• Ultimate in Cost Control
• CBIZ Will Offer For 2015

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2b. Myths About Healthcare Reform

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Myths
• Walgreens Dropped Their Healthcare Plan and Sent All
Employees To the “Exchange”.
• Go To The Marketplace and Compare Your Employer
Plans To The Marketplace Plans.
• Enrollment Process is Easy.
• Ask A Fact/Myth Question, Please!

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3. Financial Impact

18. How do these changes title style of coverage?
Click to edit Master impact cost
Actuarial Value
Patient-Centered
Outcomes Research
Fee ($2 PMPY)
Adjusted
Community Rating
(small group only)
Annual Insurer Fee
(Approx. 2.5% of
Premium)
Essential Health
Benefits
Premium
Transitional
Reinsurance Fee
(Approx. $5.25 per
covered life)
Guaranteed Issue
Ban on PreExisting Condition
Limitations
Elimination of
Annual and
Lifetime Limits
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19. How to Employers Affected?
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 “Small Group” – Employers with fewer than 50 full time
employees or equivalents.
 “Large Group” – Employers with at least 50 full time
employees or equivalents.
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20. Small Group Impact
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 Plan Design Limitations:
 Limited to “Metallic” coverage levels defined by actuarial value
(i.e. Bronze at 60%, Silver at 70%, Gold at 80%, Platinum at 90%)
 Pricing Impact:
 Rates can no longer vary by gender, industry, or health status
 Age factor limited to 3:1 ratio
 Tobacco factor can apply but limited to 1.5:1 ratio
 Pricing will include new taxes and fees
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21. MEC to edit Master title style
Click – For Small Groups
 Must provide “Minimum Essential Coverage” (MEC):
 10 required coverage categories
Hospitalization
Ambulatory Services
Emergency Services
Laboratory Services
Maternity & Newborn Care
Mental Health & Substance Abuse
Prescription Drug
Rehabilitative Services & Devices
Preventive & Wellness Services and Chronic Disease Management
Pediatric Services (including oral and vision care)
*Definition of “Small Group” will be defined at the State level; in most cases will be 2-50 eligible employees
(including in Missouri) but could be up to 100 eligible employees in some States.
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22. Large to edit Master title style Until 2015
Click Group Impact – Delayed
Full Time - Hired to work 30+ hours per week
Part Time - Hired to work <30 hours per week
Seasonal – Hired for less than 120 days
Variable – Hours unknown at time of hire
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Large Group Impact (continued)
Shared Responsibility: Calculating the Penalty
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Minimal essential coverage not offered to at least 95% of full time employees
and at least one employee goes to Marketplace and receives premium tax credit
– $2,000 per year per FTE (less first 30)
Coverage not minimum value (60% actuarial value) or not affordable (i.e.,
employee’s premium exceeds 9.5% of household income) and at least one
employee goes to Marketplace and receives premium tax credit
– Lesser of
• $3,000 per year for each FTE using Marketplace and
qualifying for premium credit, or
• $2,000 per year per FTE (less first 30)
Penalties are indexed on the cost of health care
Transitional Relief for Non-Calendar Year Plans: if, for example, plan
year runs July 1 to June 30, the plan will not risk being subject to
penalties until 1st day of the plan year beginning 2015 (i.e. July 1 in this
example)
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24. Large Group Impact (continued)
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Who Must Be Offered Coverage?
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Employers must offer minimum essential coverage (MEC) to at least 95% of
its full time employees
– If MEC offered to 95% of full time employees, then “no coverage”
penalty would not be triggered
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Full time Employee is defined as averaging at least 30 hours per week. An
employee working 130 hours of service per calendar month is deemed to
meet this requirement of 30 hours of service per week.
Note: Insured group health plans must comply with the nondiscrimination rules (IRC 105 (h)) currently
applicable to self-funded plans. Plans cannot discriminate in favor of highly compensated individuals as to
the eligibility and benefits. This provision is not applicable to grandfathered plans. The IRS has
delayed the effective date of this provision – no penalties imposed until after implementing
regulations are issued.
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25. Large Group Impact (continued)
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Employees edit Master
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"Look-back/stability safe harbor method" 3 to 12 consecutive calendar months -- the
"measurement period“.
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If the employee averaged at least 30 hours/week during measurement period, the
employee is treated as a full time employee during a subsequent "stability period" so
long as he or she remains an employee (regardless of actual hours worked).
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For an employee determined not to be a full time employee during the measurement
period, the employer may treat the employee as not a full time employee during the
stability period, but the stability period cannot exceed the measurement period.
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New variable hour employees must be tracked separately.
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4. Guidance for HR/Financial Professionals

27. Higher Risk – Employer Characteristics
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• High percentage of potentially full time, low pay
workforce
• Provide no medical benefits to a large employee base
working 30 + hours per week
• Have a significant number of “temporary” or “seasonal”
workers
• Cost of health benefits to employees is “very high”
• Manage enrollment using “long” waiting periods (more
than 90 days before employee is eligible)
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28. Variables
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• Some Variables to Consider Adjusting for Employer Shared
Responsibility
– Migration Assumptions: To the Marketplace or the Employer’s
Plan
– Employer Contributions (Example: Raise Employee
Contributions and Lower Dependent Contributions, etc.)
– Plan Value (Lower “value” of Plan). Must exceed actuarial value
of 60%.
– Medical Trend
– Pay Increases
– Family Size
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29. Healthto edit Master title style Assessment
Click Care Reform Organizational
Key Questions - Population
How many full time equivalent employees do you have?
Is your company part of a “controlled group”?
Do you currently offer any differing benefits by class of employees?
Do you currently offer any differing contributions by class of employees?
Do you have any classes of employees that are currently not eligible for benefits?
Do you have any employees that work variable hours?
Do you employ seasonal employees?
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Click to editReform Organizational Assessment
Key Questions - Population
Are you able to track the number of hours worked for the currently non-eligible
population?
Do you have any employees who are currently not eligible for a health care plan that
average more than 130 hours of service per calendar month over the past three months,
six months, twelve months?
What is the monthly cost to the employee for single coverage for your lowest premium
plan option?
What is the lowest monthly salary/hourly wage for your employee population (for those
averaging 30+ hours a week)?
Of the current plan offerings available to each group, which plan options meet the 60%
actuarial value requirement?
What is your current waiting period for new employees for each group?
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5. Totally Random Thoughts

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Totally Random Thoughts
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Should I Drop Health Coverage?
Does My Approach to Benchmarking Change Now?
How Far Can I Go In Cutting My Health Plan
Be Careful Of 3 Tier Plans (e.g.. IBC Proactive)
Where Is Wellness/ Health Risk Management in this
World
• What are the Connections Between Employee Health
Risks and Workers Comp Claims?
• We Gave “Notices” to Employees About the Marketplace.
What More Should We Tell Them?

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5. Questions?

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Joseph E. Ellis, Sr, Senior Vice President
CBIZ Benefits & Insurance Services
610-862-2242
jellis@cbiz.com