{ holmes murphy & associates } we’re for you. health care reform – ready or not presented...

{ Holmes Murphy &

Associates }We’re for you.

1

Health Care Reform – Ready or Not

Presented by: Jeff KirkeHolmes Murphy & [email protected]

Des Moines | Cedar Rapids | Dallas | Davenport | Kansas City| MadisonOklahoma City| Omaha | Peoria | Scottsdale | Sioux Falls | St. Louis 2

Disclaimer

Neither Holmes Murphy nor the Holmes Murphy Compliance Team engages in the practice of law, meaning we provide neither legal advice nor legal opinions.

While Holmes Murphy strives to help our clients maintain compliance with all laws relating to employee benefits, the information contained in this presentation is not and should not be construed to constitute legal advice.


Agenda

1. ACA Update2. Where are we now, and do you

have any responsibility?3. Share/Shift/Influence


ACA Update


Elements of Market Reform

Exchanges

Penalties

Mandates

Subsidies

PPACAMarket Reform

Des Moines | Cedar Rapids | Dallas | Davenport | Kansas City| MadisonOklahoma City| Omaha | Peoria | Scottsdale | Sioux Falls | St. Louis

©2010 Steptoe & Johnson LLP

Exchanges - 2014

A web portal

“marketplace” for health

insurance

A web portal

“marketplace” for health

insurance

Federal Government• Sets criteria for plan participation and purchaser eligibility • Provides subsidies for individuals • Manages state Exchange if a state

fails to

Individuals No subsidies for ones offered

employer-based coverage, unless that coverage is “unaffordable” or doesn’t meet quality test

Small Businesses Groups of up to 100

employees, can buy unsubsidized coverage through the Exchange

States• Each sets up own Exchange

structure and governance• Will be involved in premium

rate reviews; can approve/reject as provided under state law

Grandfathered, self-insured and large fully

insured plans not eligible to participate

10

SHOP


ACA Exchange Activity By State

http://kaiserfamilyfoundation.files.wordpress.com/2013/05/health-insurance-exchanges-or-marketplaces-healthreform.png


Percent of Uninsured Potentially Eligible for Marketplaces*

*Lowest cost bronze premium for a 27-year-old in 36 states.

Premiums Over $250/month

Premiums $200 - $250/month

Premiums $150 - $200/month

Premiums Under $150/month

1%

9%

53%

37%

Premium Costs


A Peek At ExchangesYoung, Healthy, and Wealthy

Perspective• Cost for a similar plan is over 300% higher• Why?

– 3 to 1 underwriting ratio– New taxes and fees– Mandated coverage elements– Elimination of all medical underwriting

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Dec 1, 2013

Jan 1, 2014

Jan 1, 2014

$- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000

$1,164

$2,861

$3,628

$3,500

$3,000

$3,000

Annual Premium

Deductible Annual Premium


A Peek At ExchangesYoung, Healthy, and Wealthy

Perspective• At $34,000 in annual income, this consumer does not

qualify for a government subsidy because their cost for the 2nd lowest silver plan is deemed “affordable”

• To keep their current choice of physicians, their cost increases an additional $767 which would have paid almost 8 months of coverage for the December plan

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Dec 1, 2013

Jan 1, 2014

Jan 1, 2014

$- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000

$1,164

$2,861

$3,628

2,740

213

2,740

Annual Premium and Physician Choice

PCPs within 50 miles Annual Premium


Percentage of Poverty Examples 2013

Persons in FPL

family 100% 133.01% 150% 200% 250% 300% 400%

1 $11,490 $15,283 $17,235 $22,980 $28,725 $34,470 $45,960

2 $15,510 $20,630 $23,265 $31,020 $38,775 $46,530 $62,040

3 $19,530 $25,977 $29,295 $39,060 $48,825 $58,590 $78,120

4 $23,550 $31,324 $35,325 $47,100 $58,875 $70,650 $94,200

5 $27,570 $36,671 $41,355 $55,140 $68,925 $82,710 $110,280

6 $31,590 $42,018 $47,385 $63,180 $78,975 $94,770 $126,360

7 $35,610 $47,365 $53,415 $71,220 $89,025 $106,830 $142,440

8 $39,630 $52,712 $59,445 $79,260 $99,075 $118,890 $158,520

Maximum Annual Premium Within Exchange

Plan Value 94% 94% 87% 73% 70% 70% 70%

# in Family 2.00% 3.00% 4.00% 6.30% 8.05% 9.50% 9.50%

1 $230 $458 $689 $1,448 $2,312 $3,275 $4,366

2 $310 $619 $931 $1,954 $3,121 $4,420 $5,894

3 $391 $779 $1,172 $2,461 $3,930 $5,566 $7,421

4 $471 $940 $1,413 $2,967 $4,739 $6,712 $8,949

5 $551 $1,100 $1,654 $3,474 $5,548 $7,857 $10,477

6 $632 $1,261 $1,895 $3,980 $6,357 $9,003 $12,004

7 $712 $1,421 $2,137 $4,487 $7,167 $10,149 $13,532

8 $793 $1,581 $2,378 $4,993 $7,976 $11,295 $15,059

Federal Poverty Level (FPL) Thresholds100%-400% of FPL Premiums

Gov’t subsidy fixed on 2nd lowest “silver” plan

$35,325x 4.0%= $1,413

Bob earns $35,325 per year as his family’s only breadwinner

Bob’s employer charges $100 per month for single coverage but doesn’t subsidize dependents

“Affordability” for Bob’s employer health plan is $280 per month or $3,356 per year

Family coverage costs $1,100 per month or $13,200 per year

No one in Bob’s family is eligible for a subsidy


Safe Harbor Trap

Mary earns $38,000 per yearShe is single with two children

Single Coverage$4800 annual premium

Employer Subsidy$2000

Mary’s Cost$2800

Affordability @ 9.5% of W-2$3610

Family Coverage$10,000 annual premium

Employer Subsidy$4000

Mary’s Cost$6000

Affordability for family is not applicable

$- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000

Family Cover-

age Em-

ployer; $6,000

Family Cover-age Ex-

change; $2,394

Employer vs Exchange Net Cost


Pay or Play Penalties

PenaltiesIndividual

2014

$95 or 1%

2015

$325 or 2%

2016

$695 or 2.5%

Employer

<50 FTE

No penalty

No Plan

$2000First 30

Free

Not Affordable

$3000 per person

with subsidy


July 4th Delays

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No employer penalty for 2014 Relaxation of individual income and eligibility

verification requirements

$0

$10 Billion Lost Revenue

$14.5 Billion in Add’l

Subsidies 1 Year net cost of $24.5 billion


Employer Play or Pay Delay

• Employer responsibility– Offer affordable coverage of

appropriate value to full-time employees in 2014

– Pay penalty if coverage not offered to “substantially all” employees

• 95% rule

– Pay penalty if coverage is not affordable

– Report on coverage offered– Report on who received coverage



• Two changes in 2014– Penalty not applicable to employers– Reporting requirement not applicable

to employers

• Employers urged to perform real world testing of reporting systems, plan designs

• Employers may offer coverage to full-time employees



• What to do in 2014?– Don’t stop progress– Create tracking systems/hiring

vendors/ gathering data– Track variable hour employees

• Start/end

– Await further guidance


Still Applicable To Employers In 2014

• Obligations that STILL apply to employers in 2014– Maximum 90-day waiting period– No annual/lifetime dollar limits– Maximum out-of-pocket/cost-sharing limits

($6350,$12,700)– Clinical trial coverage– Guaranteed availability– Guaranteed renewability– End of pre-existing condition limits for adults– Essential health benefits (EHBs)

• Self-funded plans are not required to cover EHBs, but if they do, the ACA requires them to remove dollar limits

• Will require large employers to choose an EHB state


Small Group Market Reform

• No pre-existing condition• Age and region are the only criteria

used for underwriting• 3 to 1 age band requirement

– Rates variance between 20 year old and 64 year old can only vary by 300% (currently 600%)

• 50% Smoker Premium (delayed until 2015)


Do I Offer Health Coverage?

• Attract and Retain

• Avoid Penalties• Competition• Its what we do!

• Allows Subsidies

• Can’t afford dependents

• Compliance24

OFFER DON’T OFFER


Share/Shift/Influence


InfluenceAttack disease as the enemy

SharePass burden to

shareholders, taxpayers, or customers

ShiftPass burden to employees

Pressure on the Employer’s Doorstep

Employer

Network

ProduceDisease

MedicalProviders

VariableQuality

Gov’t Cost Shifting

U.S. Health Status

Price Use


Metabolic Syndrome

Clusters of Risk Can Create a Toxic Recipe

7x more likely to get diabetes

3x more likely to get

heart disease

Highblood

pressure

Low HDL (good)cholesterol

Hightriglycerides

Highblood sugar

Highwaist

circumference

2x more likely to have a stroke

4x higher medication spend

2x more lost work days

Reverse Met-S and produce less heart attacks, strokes, diabetic events and

cancer


Questions?

{ holmes murphy & associates } we’re for you. health care reform – ready or not presented...

Documents

louisaca update

state exchange

louisaca exchange activity

holmes murphy associates

holmes murphy compliance

state lawgrandfathered

legal advice

jeff kirkeholmes murphy