1. 2014- THE REAL
START OF HEALTH
CARE REFORM
Jim Wisdom, CFP
June 13, 2013

2. OVERVIEW
 I. HC Reform- The Big Picture
 2. What changes in 2014?
 3. Who is affected?
 4. Case studies from the field

3. HEALTH CARE REFORM- THE BIG
PICTURE
 HCR = PPACA=ACA=Obamacare
 Signed into law on 3/23/10
 First came “free benefits”
 Now we get to pay for them ( or have somebody else subsidize
them)
 HCR Objective: To insure as much of the uninsured as possible
 Estimated 37 Million uninsured in the U.S.

4. HC REFORM: THE BIG PICTURE (
CONT’D)
 2010-2012- Enhanced benefits introduced
 2011/2018- Taxes ( Including .9% Medicare Tax, 3.8% Tax on
Investment Income, $8 Billion+Tax on Health Insurers, 2.3% Tax
on Medical Device firm sales, $2.5 Billion+ Tax on Pharmaceutical
firms; 40% Health Insurer Tax on “Cadillac Health Plans”)
 2014- Individual Mandate, Employer “Play or Pay” penalty for
groups with 50+ employees

5. WHAT CHANGES IN 2014?
 Mandate to purchase health insurance for individuals
 Employer “Play or Pay” penalty applies for groups with 50+ full-
time equivalent employees who don’t provide:
 “Affordable” coverage or
 “Minimum Essential Benefits” and
 One employee purchases subsidized coverage through the state-based
exchange
 If employers with less than 50 employees offer health insurance
that is either “Un-Affordable” or does not offer “Minimum Essential
Benefits,” employees may be eligible to purchase subsidized
health insurance through state-based Exchange.

6. WHAT CHANGES IN 2014?
 Expansion of Medicaid ( for those states that select this option)
 Subsidies for those individuals purchasing through the state
based exchanges between 138% of the Federal Poverty Level (
FPL) and 400% of the FPL.
 Tax Credits for some Small Businesses that qualify for employers
with 25 employees or less and average annual salary of $50,000
or less

7. 2014 MANDATE PENALTY FOR
INDIVIDUALS
 2014- greater of $95 or 1% of income (max fee = 3X flat fee =
$285)
 2015- greater of $325 or 2% of income (max fee = $975)
 2016- greater of $695 or 2.5% of income (max fee= $2,085)

8. 2014 PLAY OR PAY PENALTY (FOR
EMPLOYERS WITH 50+ EQUIVALENT
EMPLOYEES)
 “No Offer” Penalty- $2,000 X the total # of employees minus the
first 30 employees
 Example: 100 employee group – Annual Penalty = ( 100-30) X
$2,000= $140,000 ( not deductible to the corp.)
 “Unaffordable Coverage” Penalty- The lesser of $3,000 per
subsidized full-time employee OR $2,000 X the total # of
employees minus the first 30 employees
 Note: An employer penalty is only triggered if at least one
employee purchases federally subsidized coverage in the
Exchange.

9. HOW IS AFFORDABILITY DEFINED?
 If an individual or employee of a company is offered coverage and
he/she has pays less than 9.5% of his/her income, that’s deemed
affordable.
 If the cost to that individual or employee exceeds 9.5% of their
income, that’s not deemed to be affordable– and they are eligible
to purchase subsidized health insurance through the state Health
Care Exchange
 CA Exchange known as “Covered California”

10. HOW ARE MINIMUM ESSENTIAL
BENEFITS DEFINED?
 All insured plans must include:
 Ambulatory patient services
 Emergency services
 Hospitalization
 Maternity and newborn care
 Mental health and substance abuse services, including behavioral health
treatment
 Prescription drugs
 Rehabilitative and habilitative services and devices
 Laboratory services and devices
 Preventive and wellness services and chronic disease management
 Pediatric services, including oral and vision care

11. WHO IS AFFECTED?
 Almost all Americans will be affected in some way
 Some will benefit from the new law
 Some will be adversely affected by the new law

12. WHO IS LIKELY TO BENEFIT FROM HC
REFORM?
 The uninsured- who may be eligible for subsidies or get care at no
charge through Medicaid
 The poor- who will be eligible for subsidies or get care at no
charge through Medicaid
 Some employers will benefit from added consumer protections
 Those who have pre-existing conditions
 Small employers who are eligible for tax credits

13. WHO MAY BE ADVERSELY AFFECTED
BY HC REFORM?
 Employers with greater than 50+ employees- subject to “Play or
Pay”
 Medicare recipients – Approx. $500B in spending cuts
 Employer-Based Plans- Taxed for first time, may drop coverage
 Medicaid/CHIP Recipients-System could be overwhelmed
 Employees with rich plans ( i.e. many union plans)- Will be
subject to 40% Cadillac Tax (2018)
 Restaurant, Construction, Agriculture, some Manufacturing
industries
 Companies that don’t offer Employee Benefits to “Attract, Retain
and Motivate” ( A.R.M.) their employees

14. TWO CASE STUDIES
 Client- 200 Employees ( Mgmt. Carve-Out only before 1/1/14)
 Subject to Play or Pay Penalty of about $340,000 in 2014 if they
don’t offer group health insurance
 Prospect- 200 Employees – Never offered health insurance
before 1/1/14
 Objective: To comply with Obamacare and “still survive as a company”

15. SUMMARY
 The 1/1/14 Open Enrollment Period for Covered California ( CA
Health Care Exchange) is from 10/1/13-3/31/14
 Individual rates and benefits have been released
 www.hbex.ca.gov
 www.coveredca.com
 You can follow Covered California on Linked In, Facebook and Twitter
 Small Group ( SHOP) rates to be released any day
 How to open up a potential prospect
 Are you ready for Obamacare? Or, are you looking for an
alternative opinion regarding your (Group or Individual) Health
Insurance?
 Let Ken Wilkinson or me know if we can be of any assistance to
you

16. THANKS FOR YOUR ATTENTION!
 Jim Wisdom, CFP
 James L. Wisdom Insurance Services
 4607 Lakeview Canyon Road-Suite 482
 Westlake Village, CA 91361
 Work: (805)497-9264
 Cell: (818)469-6640
 CA License #0699524
 Follow my Health Care Reform Blog at
www.jimwisdom.wordpress.com
 Continue the conversation on Linked In, Twitter and Facebook
 Twitter = @Wisdom_InsSvcs