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How The Supreme Court Ruling on
Health Care Reform Impacts You
Wednesday, July 11, 2012
Presented by:
Sherrie Zenter, Senior Vice President
Momentous Insurance Brokerage
Jill Jacoby, Vice President
Momentous Insurance Brokerage
www.momentousins.com
Mark Morgan, Vice President & General Manager
Anthem Blue Cross – Small Group
Agenda
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Supreme Court Upholds Health Care
Reform Law
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What It Means for Individuals
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What It Means for Employers
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The Big Year “2014” with Mark Morgan
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Questions & Answers
www.momentousins.com
Supreme Court Upholds Health
Care Reform Law
Health Care Reform
What is It?
•
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Patient Protection and Affordable Care Act
(PPACA) – signed on March 23, 2010
The health care reform law makes
sweeping changes to our nation’s health
care system to provide health coverage to
ALL Americans effective 2014.
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Challenges to the Individual
Mandate
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On June 28, 2012, the U.S. Supreme Court upheld the entire
Affordable Care Act (ACA) as constitutional.
The main issue in the case was whether Congress had the
authority under the U.S. Constitution to enact ACA’s individual
mandate that beginning in 2014 individuals will need to obtain
health care coverage or pay a penalty.
Opponents of the law argued that Congress exceeded its
constitutional authority by enacting the individual mandate.
Since the mandate is intertwined with the rest of ACA’s
reforms, the law’s opponents also argued that the entire law
should be struck down.
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Challenges to the Individual
Mandate – Future Implications
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Because the individual mandate was upheld, all aspects of the
health care reform law will remain in effect.
Additionally, the remaining provisions of the health care reform
law that are not currently in effect will continue to be
implemented as planned.
Many of the health care reform law’s provisions require agency
guidance to be implemented. The Departments of Labor (DOL),
Health and Human Services (HHS) and Treasury have been
regularly issuing guidance to implement the health care
reforms. These agencies will continue to promulgate regulations
relating to the health care reform law.
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Challenges to the Individual
Mandate –Future Implications
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Employers and health plans will be required to
comply with these to the same extent that they are
required to comply with the various provisions of the
health care reform law.
Although the Supreme Court held that the individual
mandate is constitutional, opponents of the health
care reform law may challenge other provisions
using various legal arguments. If any further
challenges arise, courts will address these
accordingly.
National Election in November can tilt the scales.
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Viewpoint - 6/28/12
•
The Affordable Care Act (ACA) was largely upheld.
•
Penalty is now called a tax.
•
States can “opt out” to expand Medicaid Programs.
•
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What if it had been struck down? Back to square one
with 50 million uninsured and a healthcare system
that continues to increase.
Difficult to obtain insurance in the current individual
marketplace and the reason for so many uninsured
(e.g., underwriting approval, rated or declined). New
York individual rates averaging $1,400 per month for
individual and $4,272 per month for family.
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Viewpoint - 6/28/12
ACA Affects on Individual Medical Insurance Market.
What will 2014 Look Like?
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No Medical Underwriting, Waiting Periods or Ratings.
•
Tax Penalties for individuals failing to Buy Coverage.
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People won’t get coverage until they need it. Can an
individual apply and get coverage before going to a
doctor or hospital?
Need to work on Modifying the Individual Market.
As passed, Legislation began at 2700 Pages. By 2018
the final Legislation will expand to 250,000 Pages.
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Viewpoint - 6/28/12
Many tweaks needed for individual mandate to run
smoothly:
•
•
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Via open enrollment periods when someone
can apply for coverage
Carrier Flexibility in Offerings
Make it tougher to apply if late or miss open
enrollment window
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Supreme Court Ruling:
What it Means for Employers
Employers must continue to
comply with ACA’s reforms
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ACA changes that have already been
implemented will remain in effect, such as
the requirement to cover adult children until age
26 and the requirement for non-grandfathered
plans to cover certain preventive care services
without cost-sharing.
ACA’s provisions that are not currently in
effect will continue to be implemented as
planned. For example, effective for 2013 plan
years, participants’ pre-tax contributions to
health flexible spending accounts (FSAs) will be
limited to $2,500 per year.
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Employers must continue to
comply with ACA’s reforms

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While it is possible that changes will be made to
ACA through future legislation or court rulings, ACA
is the health care reform law currently in effect.
Thus, employers should continue to prepare for ACA
changes that become effective in 2012 and 2013.
Employers should also keep in mind the ACA
reforms that will take place in 2014.
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ACA REFORMS - 2012 AND 2013
Form W-2 Reporting Requirements
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Beginning with the 2012 tax year, large employers
that are required to issue 250 or more W-2 Forms
must report the aggregate cost of employersponsored group health coverage on employees’ W-2
Forms. The cost must be reported beginning with the
2012 W-2 Forms, which are due in January 2013.
This requirement is optional for smaller employers for
the 2012 tax year and until further guidance is
issued. This reporting is for informational purposes
only; it does not affect the taxability of benefits.
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ACA REFORMS - 2012 AND 2013
Women’s Preventive Care Services

Effective for plan years starting on or after
Aug. 1, 2012, non-grandfathered plans must
cover specific preventive health services for
women without cost-sharing, such as deductibles,
co-payments and coinsurance. These services
include well-woman visits, breastfeeding support,
domestic violence screening, STD screening and
contraceptives. Exceptions to the contraceptive
coverage requirement apply to certain exempt
religious employers.
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ACA REFORMS - 2012 AND 2013
Medical Loss Ratio Rebates
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Fully insured plans may receive rebates in August 2012 if
they qualify for a rebate from their health insurance issuers
due to the medical loss ratio (MLR) rules. The MLR rules
require insurance companies to spend a certain percentage of
premium dollars on medical care and health care quality
improvement, rather than administrative costs.
Employers may receive rebates from issuers in the form of a
premium credit, lump-sum payment or premium holiday, if
permissible under state law. Any portion of a rebate that is a
plan asset must be used for the exclusive benefit of the
plan’s participants and beneficiaries. This may include, for
example, reducing participants’ premium payments.
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ACA REFORMS - 2012 AND 2013
Summary of Benefits and Coverage
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Plans and insurance issuers must provide a summary of
benefits and coverage (SBC) to participants and
beneficiaries. The SBC is intended to provide simple and
consistent information about health plan benefits and
coverage in plain language.
Plans and issuers must provide the SBC to participants and
beneficiaries who enroll or re-enroll during an open
enrollment period beginning with the first day of the first
open enrollment period that begins on or after
Sept. 23, 2012.
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ACA REFORMS - 2012 AND 2013
FSA $2,500 Contribution Limit

Effective for plan years beginning on or
after Jan. 1, 2013, an employee’s salary
reduction contributions to a health FSA
offered under a cafeteria plan are limited to
$2,500.
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ACA REFORMS - 2012 AND 2013
Elimination of Retiree Drug Subsidy Deduction

Employers that receive the Medicare Part D
retiree drug subsidy have been able to take a
tax deduction for their prescription drug costs,
including costs attributable to the subsidy. Also,
these employers do not have to pay tax on the
drug subsidy amount. Effective for 2013, the
deduction for the retiree drug subsidy will be
eliminated.
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ACA REFORMS - 2012 AND 2013
Additional Medicare Tax Withholding
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Effective Jan. 1, 2013, an additional 0.9%
Medicare tax will apply to high-income
individuals.
Employers are required to withhold the additional
Medicare tax on an employee’s wages in excess
of $200,000 ($250,000 for married couples filing
jointly).
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ACA REFORMS - 2012 AND 2013
Health Insurance Exchanges – Notice of
Availability

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Employers must provide all new hires and current employees
with a written notice about ACA’s health insurance Exchanges
and the consequences if an employee decides to forgo
employer-sponsored coverage and purchase a qualified
health plan through an Exchange.
This notice requirement generally becomes effective as of
March 1, 2013. The Department of Health and Human
Services (HHS) has indicated that it intends to issue model
Exchange notices. More agency guidance is also expected on
this notice requirement.
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ACA REFORMS - 2012 AND 2013
Nondiscrimination Rules for
Fully Insured Plans
Effective date delayed for regulations.
Important to review each renewal date.

Fully-insured plans must follow rules regarding
nondiscrimination in favor of highly-compensated
employees
◦ Cannot discriminate with respect to eligibility or benefits (e.g.,
Doesn’t allow for Class Carve-Outs. Must be consistent on
contributions toward cost of insurance paid by Employer, etc.)

Highly Compensated Employees (Testing Applies):
◦ 5 highest paid officers, more than 10% shareholder, or highest
paid 25% of all employees
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ACA REFORMS – 2014
Additional ACA coverage mandates and reforms
become effective in 2014.
For example, group health plans may not:
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Impose pre-existing condition exclusions on
any covered individual, regardless of the
individual’s age;
Have a waiting period for coverage that exceeds
90 days; or
Apply any annual limits on essential health
benefits.
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ACA REFORMS – 2014
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ACA’s state-based insurance Exchanges are
scheduled to be operational.
Also in 2014, the individual mandate will become
effective, as will ACA’s “pay or play” penalties for
employers. Under the pay or play rules, certain
employers with at least 50 full-time equivalent
employees will face penalties if one or more of their
full-time employees obtains a premium credit
through an Exchange. An individual may be eligible
for a premium credit either because the employer
does not offer health care coverage or the employer
offers coverage that is either not “affordable” or does
not provide “minimum value.”
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Supreme Court Ruling:
What it Means for Individuals
Health Care Reform:
What Does it Mean for You?
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How health care reform legislation affects you
varies greatly depending on your age, who you
work for and many other factors.
So what does it mean for you? The following is
a list of how health care reform affects a
number of common categories.
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Health Care Reform:
What Does it Mean for You?
The 65+ now receive:
 Free preventive services under Medicare
 Once those with Medicare prescription drug
coverage enter the “doughnut hole” coverage
gap, they will be entitled to 50 percent off certain
brand-name medications.
 Medicare beneficiaries earning $85,000 or more
will pay higher Part B premiums until 2019.
 Those with Medicare Advantage plans may lose
some benefits or experience an increase in copayments.
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Health Care Reform:
What Does it Mean for You?
Employees of a large company:

Employers with 50 or more employees will
be required to provide coverage or pay a
penalty starting in 2014. Existing coverage
packages will be grandfathered in, but new
plans have to meet minimum requirements.
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Health Care Reform:
What Does it Mean for You?
Low-income employees:
 Even without children or a disability, those
among the lowest-income workers will be eligible
for Medicaid as of 2014.
 Those who earn less than 400 percent of the
federal poverty level (about $88,000 for a family
of four) will be eligible for subsidies to help buy
coverage.
 The expansion of funding for community health
centers, designed to offer free and reduced-cost
care, will also provide relief.
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Health Care Reform:
What Does it Mean for You?
Children with a pre-existing condition:
Group health plans and health insurance
issuers may not impose exclusions on
coverage for children with a pre-existing
condition. Provision applies to all employer
plans and new plans in the individual market.
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Health Care Reform:
What Does it Mean for You?
Adults with a pre-existing condition:
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Starting 2014, adults with pre-existing
conditions will be able to obtain individual
coverage through an insurance exchange.
Insurers cannot place annual or lifetime
limits on coverage, nor can they deny
coverage or charge higher premiums due to
a pre-existing condition.
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Health Care Reform:
What Does it Mean for You?
Unemployed and uninsured:
 Most individuals who are unemployed and
uninsured likely qualify for Medicaid under the
coverage expansion that began in 2010.
 The expansion of funding for community health
centers, designed to offer free and reduced-cost
care, will also provide relief.
 Certain uninsured individuals with pre-existing
conditions can obtain coverage through the
temporary high-risk pool as well (e.g., PCIP).
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Health Care Reform:
What Does it Mean for You?
Small-business owners:
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
Organizations with 25 or fewer workers may
be eligible for a tax credit to help provide
coverage for employees (e.g., average annual
wages of less than $50,000 per FTE).
Those with 50 or more employees must
provide benefits or incur a penalty tax
starting in 2014.
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Health Care Reform:
What Does it Mean for You?
Young adults:

Children may stay on their parents’ policies
until age 26.
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The “Big Year” – 2014
Health Insurance Exchanges
2014 – Exchange Responsibilities
Only Available in Exchanges
• Subsidies for individuals from 133%-400% of FPL
• Small employer tax credits
Exchange Functions
Operate a toll-free telephone hotline to help users
Enroll applicants in their chosen plan
Maintain a website to sell plans
Work with federal and state agencies regarding subsidies
and tax credits
Enroll eligible individuals into Medicaid
Set annual Open Enrollment Period and special Enrollment Periods
Certify and rate plans
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2014 – Product Framing
Plus catastrophic plan offering for individuals
younger than 30/financial hardship
The benefit requirements listed above for exchange plans will
also apply to Individual and small group fully insured plans sold
outside of the exchanges
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2014 – Questions Remain
•
What will the Exchange look like?
•
Will the Individual Exchange “work”?
•
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•
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Will employers drop coverage and move
employees into the Exchange?
Small Group 2 – 100 Lives - 2016
Will the SHOP (Small Employer) Exchange
“work”?
Will Anthem Blue Cross be in the Exchange?
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Individual Responsibility
•
Jan. 1, 2014: Individuals must enroll in
coverage or pay a tax penalty
Penalty amount:
•
Greater of $ amount or a % of income
– 2014 = $95 or 1%
– 2015 = $325 or 2%
– 2016 = $695 or 2.5%
– Family penalty capped at 300% of the adult flat dollar
penalty or “bronze” level premium
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Family Responsibility
Penalty amount:
Greater of $ amount or a % of income
– 2014 = $285 or 1%
– 2015 = $975 or 2%
– 2016 = $2,085 or 2.5%
– Family penalty capped at 300% of the adult flat dollar
penalty or “bronze” level premium
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Health Care Reform Resources
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Momentous Provides Continued Updated
Resources www.momentousins.com
The U.S. Department of Health and Human
Services maintains a website:
www.HealthCare.gov
The White House Website http://www.whitehouse.gov/healthreform
California PCIP is available at:
www.pcip.ca.gov/Home/default.aspx
California Health Benefit Exchange is available at:
www.healthexchange.ca.gov/Pages/Default.aspx
www.momentousins.com
Additional Resources Posted on
www.momentousins.com
By Monday, July 16th
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Today’s PowerPoint Presentation
Health Care Reform Timeline 2010 – 2018
Medical Loss Ratio Rules
Health Care Reform: General Q&A for Employers
State of Employment Laws California – Health
Care Reform
Health Care Reform: Who, What, When
IRS Provides Guidance on $2,500 Health FSA
Limit effective January 1, 2013
Health Care Reform: Common Acronyms
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Questions?
Please feel free to ask now and/or
contact Momentous directly at:
Sherrie Zenter
szenter@mmibi.com
P: 818-933-2739
Jill Jacoby
jjacoby@mmibi.com
P: 818-933-2778
www.momentousins.com