Church Pension Group
Info Session
Frank Armstrong, Chief Actuary
September 21, 2013
House of Bishops Fall Meeting
Contents



Denominational Health Plan Status Update
Affordable Care Act (ACA): Healthcare Reform and the
Emerging Marketplace
Appendices
• Appendix A: 2014 Pricing Bands by Diocese
• Appendix B: Emerging Healthcare Marketplace
• Appendix C: ACA Provisions – 2010 through 2013
• Appendix D: ACA Provisions – 2014 and Beyond
2
Denominational Health
Plan Status Update
3
DHP participation is well underway



100% of domestic Dioceses participating by January 1, 2014
45 additional groups currently participating
Individual participation estimated at 95%
• DHP currently serving 25,700 members 1
1
Includes active clergy, lay employees and their covered dependents
4
DHP is delivering expected cost containment


DHP feasibility study estimated 10% cost containment savings
at full implementation of the DHP
To date, the DHP has delivered approximately 11% cost
containment savings to the church – $60 million since 2009
DHP Feasibility
Study Projected
Savings (%)
Actual DHP
Savings (%)
2011
10.0%
8.3%
2012
10.0%
10.4%
2013
10.0%
13.3%
Three-Year Cumulative
10.0%
10.8%
Plan Year
5
DHP is helping to moderate cost increases
Since 2009, Medical Trust average rate increases have
been 2% - 4% below national trend levels
Note: National trend figures based on Aon Hewitt trend study and represent increases prior to plan design changes
6
DHP is addressing cost disparities1


Eliminated pricing bands 7 through 13 over the past three years
82 dioceses at or within one band of national rate for 2014
•
1
51 dioceses positioned at band 5 (up from 13 at 2012)
See Appendix A for list of dioceses and pricing band position effective January 1, 2014
7
89% of each Medical Trust dollar goes to benefits
and an additional percent to member surplus1
1
Materially above ACA regulated minimum requirement of 85% for large groups and 80% for small groups
8
Making strides on health and wellness
VT
WA
ME
ND
MT
NH
MN
OR
MI
WY
UT
CA
AZ
CO
NM
PA
IA
NE
NV
NY
WI
SD
ID
WV
KS
OK
MO
KY
TX
VA
DC
NC
TN
SC
AR
MS
AK
OH
IN
IL
CT
NJ
DE
MD
MA
RI
AL
GA
LA
FL
HI
Wellness Summit Conducted

Robust participation in Wellness Summits
• 14 Summits over past 2 years impacting over 1,200 participants

New resources and programs under development for 2014
9
Non-Domestic Dioceses - Fund for Medical
Assistance


The Fund for Medical Assistance is sponsored and
administered by The Church Pension Fund for non-domestic
dioceses
Provides reimbursement for certain health care expenses not
otherwise covered by public or private insurance programs
• Full-time clergy and lay employees are eligible
• Amounts available for benefits vary by diocese
• Minimal requests for reimbursement have been made to date


5 year pilot program to be reconsidered by CPF Board before
December 31, 2014
For more information, contact Nelida Rivera (nrivera@cpg.org )
10
Affordable Care Act (ACA):
Healthcare Reform and the
Emerging Marketplace
11
DHP is compliant with all current applicable
ACA provisions, for instance…

Preventive services covered at 100%

No pre-existing condition limitations or individual health rating

Coverage of adult children to age 30 (age 26 required by ACA)

No annual or lifetime plan maximums

Women’s preventive health expansion
12
The healthcare market is in a state of change

Introduction of health exchanges (i.e., Marketplace) in 2014
• Varying widely in structure, plan design, choice of providers and
premium rate levels

DHP plans are generally competitive
• Prevailing TEC plan designs provide for most protective levels
of coverage
• Early indications showing competitive DHP rates
13
Marketplace Structure
Three Types of Exchanges under ACA
State-Based
Exchange
Federal
Exchange
Partnership
Exchange
16 states
and D.C.
27 states
7 states
14
Prevailing TEC plans have 15% – 20% higher
coverage levels than emerging Marketplace norm
Typical Marketplace Design Versus Prevailing TEC Plans
Out-ofPocket
Maximum
Plan Option
Total Plan
Value
Prevailing
TEC Plans
85% 90%
$0 - $250
$1,500 $2,000
90% - 100%
Silver Plan
70%
$1,000
$5,000
60%

Deductible
Plan’s
Coinsurance
Marketplace plans categorized into four levels of coverage,
ranging from least to most protective
• Bronze < Silver < Gold < Platinum
• Silver Plan being positioned as the emerging Marketplace norm
15
Prevailing TEC plans are Platinum and Gold Level
Platinum Plans
Silver Plans
Cigna HDHP/HSA
Empire BCBS HSA
Gold Plans
Cigna POS (OAP)
Empire PPO 75/50
Empire PPO 80/60
Empire EPO 80
Kaiser Low Option EPO
UHC Choice 80
UHC Choice Plus 80/60
Aetna Choice POS II
Aetna National HMO
Aetna Select EPO
Cigna EPO (OAPIN)
Empire EPO 100
Empire EPO 90
Empire High Option PPO
Empire PPO 90/70
Kaiser High Option EPO
Kaiser Mid Option EPO
UHC Choice
UHC Choice Plus
16
Platinum plans are popular across majority of Dioceses
(as percent of total enrollment)
VT
WA
ME
ND
MT
NH
MN
OR
MI
WY
UT
CA
AZ
CO
NM
PA
IA
NE
NV
NY
WI
SD
ID
WV
KS
OK
MO
KY
TX
VA
DC
NC
TN
SC
AR
MS
AK
OH
IN
IL
CT
NJ
DE
MD
MA
RI
AL
GA
LA
FL
HI
Plan Type
Platinum (30 states and DC)
Gold (12 states)
Silver (8 states)
17
Early indications showing competitive DHP rates

17 states plus D.C. have recently filed 2014 Marketplace rates
• Early look showing wide variation in rate levels within and
across rating areas

DHP plan rates are generally competitive
• DHP rates are at similar, and in some cases lower, levels for
similar plans, rating areas and age
• Medical Trust will continue to benchmark against the
Marketplace as more data emerges
18
DHP at competitive disadvantage - Premium Tax Credits


Premium tax credits (PTCs) are tax subsidies that will lower
the cost of premiums for certain individuals that buy their
own coverage from the Marketplace
Two key criteria needed to qualify:
Household Income
100% - 400% of FPL1
Qualify
For
Premium Tax
Credits
No Access to
Affordable Healthcare
1
FPL = Federal Poverty Level
19
However, less than 5% of Medical Trust participants
estimated to qualify for PTCs*
Total
DHP
Age 65
and Over
13,000
800
6.2%
Household
Household
Income
Income >
300% 400% FPL 400% FPL
2,300
17.7%
Household Income 100% - 300%
Access to Eligible for
Affordable Meaningful
Coverage
PTC
800
6.2%
600
4.6%
8,500
65.3%
*Based on 2013 CPG and Medical Trust clergy and lay employee census data, available employee contribution
levels and ESI Tapestry household income database; analysis and results validated by external source
20
Church Health Plan Act requesting equal
treatment for church plans in the Marketplace


Would allow the 600 eligible clergy and lay employees to:
1. Gain access to premium tax credits
2. Continue to receive benefits of Medical Trust plan offerings
Status:
• Introduced in Senate (S. 1164) on June 13th by Senator Pryor
(D-AR) and Senator Coons (D-DE)
• Outreach to Senators to support bill
21
Ongoing communication outreach to the Church









Regular Diocesan Administrator Teleconferences
Monthly Administrator Emails
EBAC
Benefits Partnership Conference
House of Bishops & Provincial Bishop Meetings
Provincial Synod Meetings
Executive Council
CEEP, CODE, NACBA, etc.
FAQ document, instructions and other resources on cpg.org
https://www.cpg.org/administrators/insurance/health-andwellness/health-care-reform/
22
Summary

DHP is driving positive results
• Participation is well underway
• Delivering expected cost containment
• Keeping annual rate actions down
• Addressing cost disparities
• Continued focus on wellness

Proactively addressing healthcare reform
• Compliant with all current applicable provisions
• DHP generally competitive with developing marketplace
• Medical Trust exploring opportunities for enhanced value
23
Appendix A
2014 Pricing Bands
24
2014 Pricing Bands by Diocese
DHP
Enroll
2014
Band
Diocese of East Carolina
67
5
5
Diocese of East Tennessee
108
5
34
4
Diocese of Eastern Michigan
29
3
Diocese of Arizona
116
4
Diocese of Eastern Oregon
6
6
Diocese of Arkansas
72
4
Diocese of Easton
26
6
Diocese of Atlanta
272
6
Diocese of Eau Claire
5
6
Diocese of Bethlehem
36
5
Diocese of El Camino Real
69
6
Diocese of California
351
3
Diocese of Florida
118
5
Diocese of Central Florida
126
5
Diocese of Fond Du Lac
23
6
Diocese of Central Gulf Coast
107
3
Diocese of Fort Worth
19
6
Diocese of Central New York
61
3
Diocese of Georgia
71
5
Diocese of Central Pennsylvania
63
5
Diocese of Idaho
12
5
Diocese of Chicago
211
5
Diocese of Indianapolis
167
4
Diocese of Colorado
117
5
Diocese of Iowa
28
6
Diocese of Connecticut
220
6
Diocese of Kansas
39
5
Diocese of Dallas
156
5
Diocese of Kentucky
22
5
Diocese of Delaware
59
6
Diocese of Lexington
58
5
DHP
Enroll
2014
Band
155
1
Diocese of Alaska
7
Diocese of Albany
Diocese
Diocese of Alabama
Diocese
25
2014 Pricing Bands by Diocese
DHP
Enroll
2014
Band
Diocese of Newark
123
6
2
Diocese of North Carolina
281
3
93
5
Diocese of North Dakota
9
2
Diocese of Maine
52
5
Diocese of Northern California
67
5
Diocese of Maryland
213
5
Diocese of Northern Indiana
15
5
Diocese of Massachusetts
280
5
Diocese of Northern Michigan
6
5
Diocese of Michigan
89
4
51
5
Diocese of Milwaukee
39
6
Diocese of Northwest Texas
Diocese of Northwestern
Pennsylvania
18
4
Diocese of Minnesota
77
5
Diocese of Ohio
96
5
Diocese of Mississippi
74
5
Diocese of Oklahoma
79
5
Diocese of Missouri
64
5
Diocese of Olympia
169
1
Diocese of Montana
23
4
Diocese of Oregon
89
5
Diocese of Nebraska
25
5
Diocese of Pennsylvania
233
5
Diocese of Nevada
7
5
Diocese of Pittsburgh
45
2
Diocese of New Hampshire
45
5
Diocese of Quincy
5
5
Diocese of New Jersey
143
5
Diocese of Rhode Island
58
5
Diocese of New York
788
5
Diocese of Rio Grande
40
6
DHP
Enroll
2014
Band
Diocese of Long Island
192
5
Diocese of Los Angeles
321
Diocese of Louisiana
Diocese
Diocese
26
2014 Pricing Bands by Diocese
DHP
Enroll
2014
Band
Diocese of Virgin Islands
11
2
5
Diocese of Virginia
382
2
11
5
Diocese of Washington
196
5
Diocese of South Dakota
19
6
Diocese of West Missouri
50
6
Diocese of Southeast Florida
117
6
Diocese of West Tennessee
83
5
Diocese of Southern Ohio
102
5
Diocese of West Texas
107
4
Diocese of Southern Virginia
116
5
Diocese of West Virginia
37
6
Diocese of Southwest Florida
134
5
Diocese of Western Kansas
5
5
Diocese of Southwestern Virginia
66
2
37
6
Diocese of Spokane
30
4
Diocese of Western Louisiana
Diocese of Western
Massachusetts
50
6
Diocese of Springfield
18
6
Diocese of Western Michigan
44
5
Diocese of Tennessee
83
3
50
1
Diocese of Texas
590
6
Diocese of Western New York
Diocese of Western North
Carolina
70
5
Diocese of Upper South Carolina
196
5
Diocese of Wyoming
31
5
Diocese of Utah
38
6
5
30
1
Episcopal Church in Navajoland
The Episcopal Church in South
Carolina
5
Diocese of Vermont
50
3
DHP
Enroll
2014
Band
Diocese of Rochester
58
2
Diocese of San Diego
110
Diocese of San Joaquin
Diocese
Diocese
27
Appendix B
Healthcare Marketplace
28
The healthcare market is in a state of change



Marketplaces (i.e., health exchanges) expected to vary
widely in structure, plan design, choice of providers
and premium rate levels
Silver Plan positioned as the normative benefit
coverage level
Premium tax credits (PTCs) are only available through
coverage purchased on an Individual Marketplace
29
Three key factors driving change…
Uninsured
Population
Marketplace
Structure
Carrier
Pricing
Strategies
…and degree of choice, price, network, vendor and
quality of available options in the Marketplace
30
Marketplace Structure
Three Types of Exchanges under ACA
State-Based
Exchange
Federal
Exchange
Partnership
Exchange
16 states
and D.C.
27 states
7 states
Two main health plan contracting models
1. Clearinghouse => contract with all Qualified Health Plans
2. Active Purchaser => direct negotiations and selective
contracting with health plans on value, choice, quality,
service, and price
31
Plan contracting models vary by State with most
taking a more passive approach
VT
WA
ME
ND
MT
NH
MN
OR
MI
WY
UT
CA
AZ
CO
NM
PA
IA
NE
NV
IL
OH
IN
WV
KS
OK
MO
KY
TX
VA
CT
NJ
DE
MD
MA
RI
DC
NC
TN
SC
AR
MS
AK
NY
WI
SD
ID
AL
GA
LA
FL
HI
Clearinghouse (44 states and DC)
Active Purchaser (6 states)
32
25 Million estimated to be covered through the
Marketplace by 2017
Uninsured
Medicaid/CHIP
Private / Other
Employersponsored
Insurance
NOTE: This assumes that all states choose to expand Medicaid eligibility up to 138% FPL January 2014.
SOURCE: Congressional Budget Office, February 2013. Total may not equal 100% due to rounding
Uninsured
Medicaid/CHIP
Exchange
Private / Other
Employersponsored
Insurance
33
The Big Bet….what will make up that 9%?
Source of PreExchange Coverage

Number of
Individuals
(in millions)
Percent of
Nonelderly
Population
Uninsured
14.0
5%
Private / Other
5.5
2%
Employer Sponsored
5.5
2%
Total
25.0
9%
What is the size and characteristics of this population?
• How many of the 14M uninsured will be low utilizers?
• Will the young and healthy purchase healthcare insurance?
• Underlying financial model of ACA is based on the premise
that they will buy
34
New Pricing Considerations for Health Plans

Limits on rating methodology
• No gender
• No adjustment for health status or experience
• Age rating limited to 3:1 ratio

Regulatory Fees
• ACA requires insurers to pay several new fees
• Estimated to add about 7-10% to cost of insurance

Access to risk mitigation programs and subsidies
• Provide premium stabilization in early years of Marketplace
• Mitigate impact of selection
35
What does this all mean for healthcare premium rates?



PRICE will be primary competitive driver in the
Marketplace
Medical Loss Ratio (MLR) requirements limit returns at
the global level
Health plans will look to remaining levers to lower price:
• Market share versus profit strategy
• Narrow networks, tiered products, Rx formularies
• Treatment of risk adjustment and reinsurance
• Benefit design within de minimis range (+/-2%)
• Product array on versus off Marketplace
36
Silver Plan positioned as norm in Marketplace
Sample Silver Marketplace Design Versus Prevailing TEC Plan
Out-ofPocket
Maximum
Plan Option
Total Plan
Value
Prevailing
TEC Plans
85% 90%
$0 - $250
$1,500 $2,000
90% - 100%
Silver
70%
$1,000
$5,000
60%


Deductible
Plan’s
Coinsurance
Prevailing TEC plans are 15% – 20% higher in value than
emerging Marketplace norm
PTCs only sufficient to cover a portion of Silver Plan
premium rates offered in the Marketplace
37
Different Shades of Silver
Sample Silver Plan Designs
PCP/SCP
Office Visit
Copay
Deductible1
Out-ofPocket
Maximum1
Plan’s
Coinsurance
Silver A
$25/$40
$1,000
$5,000
60%
Silver B2
$45/$65
$2,000
$6,400
various
copays
Silver C
$35/$70
$2,500
$6,350
70%
20%
$2,700
$4,200
80%
Silver Plan
MT HDHP

1
2
Meaningful differences among Silver plan designs
• All should result in similar out-of-pocket (OOP) costs for the
“average” utilizer (from 68% to 72% Actuarial Value)
• Materially different OOP costs for low and high utilizers
Represent individual (single) amounts; family amounts are twice individual amounts
$250 copay for hospital care and outpatient surgery, imaging; additional $250 deductible for brand drugs
38
Prevailing TEC plans are Platinum and Gold Level
Platinum Plans
Silver Plans
Cigna HDHP/HSA
Empire BCBS HSA
Gold Plans
Cigna POS (OAP)
Empire PPO 75/50
Empire PPO 80/60
Empire EPO 80
Kaiser Low Option EPO
UHC Choice 80
UHC Choice Plus 80/60
Aetna Choice POS II
Aetna National HMO
Aetna Select EPO
Cigna EPO (OAPIN)
Empire EPO 100
Empire EPO 90
Empire High Option PPO
Empire PPO 90/70
Kaiser High Option EPO
Kaiser Mid Option EPO
UHC Choice
UHC Choice Plus
39
Platinum plans are popular across majority of Dioceses
(as percent of total enrollment)
VT
WA
ME
ND
MT
NH
MN
OR
MI
WY
UT
CA
AZ
CO
NM
PA
IA
NE
NV
NY
WI
SD
ID
WV
KS
OK
MO
KY
TX
VA
DC
NC
TN
SC
AR
MS
AK
OH
IN
IL
CT
NJ
DE
MD
MA
RI
AL
GA
LA
FL
HI
Plan Type
Platinum (30 states and DC)
Gold (12 states)
Silver (8 states)
40
Summary of Emerging Marketplace

Material variability across and within markets
• Number of health plans participating differing widely
across markets
• Wide spread in rates (range of lowest to highest over 200%)
• Variety of network types (e.g., select, tiered networks)

Competitiveness with DHP offerings
• Early indications showing competitive DHP rates
• Prevailing TEC plan designs are on high end of design
spectrum (provide for most protective levels of coverage)
• Network of providers in Medical Trust plans is generally broader
than network types in emerging Marketplace
41
What does the future hold?
1.
2.
3.
4.
5.
6.
7.
Exchanges shelf-life
Role of Accountable Care Organizations
Employer strategies
Information technology wave
Telemedicine and self-care
New drug therapies
Patient demand for integrated experience
Fight for cheese among government,
providers and health plans
42
Appendix C
ACA Provisions:
2010 through 2013
43
2010: Key provisions



Small Business Tax Credit
• 2010-2013: Available to small church employers (fewer than 25 fulltime equivalent employees with average wages of less than $50,000)
• 2014-2016: Only available to small employers purchasing insurance
through Marketplace
• Note that sequestration will reduce credit for 2013
• For further information and detailed instructions on how to apply for
the credit, see memo available on www.cpg.org
Nursing Mother Provisions
• Mandatory for large employers (those with more than 50 employees)
• Must provide private space and reasonable break
Early Retiree Reinsurance Program (ended in 2012)
44
2011: Key Provisions









Form W-2 reporting of value of health insurance
• Delayed for employer participating in church health plans (earliest
effective date is 2014 Forms W-2)
Coverage of adult children through age 26
• Note: The Medical Trust provides coverage through age 30
Health FSAs, HRAs and HSAs - over-the-counter drugs are not
eligible for reimbursement unless prescribed or insulin
Restrictions on lifetime and annual limits
Zero cost preventive care services
No pre-existing exclusions for dependents under age 19
Restrictions on retroactive rescission of coverage
Revised claims procedures with access to external review
Increase in excise tax on ineligible distributions from health
savings accounts (HSAs) from 10% to 20%.
45
Tax Implications of Health Coverage For Adult Children


Under the ACA, healthcare benefits are tax-free through the
calendar year the child turns age 26
The Medical Trust provides coverage through age 30
•
•
The value of benefits provided to adult children in year child turns age 27
through age 30 may be taxable if child is not a tax dependent who is a
qualifying child or qualifying relative under the Internal Revenue Code
Report “value” of benefit as imputed income on employee’s Form W-2
Note: Similar imputed income requirement applies to domestic partners
and partners in civil union. Due to recent DOMA ruling, no imputed
income on Form W-2 for coverage provided to same gender spouse.
Required, however, for civil unions and domestic partners.
2012: Key Provisions


•
•
•
Summary of Benefits and Coverage
Report and pay Patient-Centered Outcomes Research
Institute Fee (2012 through 2019)
$1 per member (for 2012)/ $2 per member (2013-2019)
The Medical Trust files the Form 720 and pays this fee for the
health plans it sponsors
Note that if you sponsor separate medical plans or HRAs, you
may be required to file a Form 720 and pay this fee
47
2013: Key Provisions



$2,500 limit on Employee Pre-Tax Health FSA Contributions
Additional Medicare Payroll Tax on High Earners
• New additional .9% Medicare tax on high income earners
• Employers must begin withholding in payroll period in which
wages exceed $200,000
• Note: Employers are not required to match the additional .9%
Health Insurance Marketplace Notifications
48
Health Insurance Marketplace Notifications


Employers must provide notice of the availability of coverage
through the Marketplace by October 1, 2013
• Employers subject to the Fair Labor Standards Act
• All employees – full-time, part-time, with or without coverage
• Must provide notice to new employees within 14 days of hire
• DOL announced that there will be no penalty for noncompliance
The Department of Labor created Model Notices
• CPG created resources to assist in completing the Notices
• Includes instructions, model cover letters, FAQs for employees
• Go to administrator’s page on www.cpg.org
49
Appendix D
ACA Provisions:
2014 and Beyond
50
Miscellaneous 2014 Provisions





Limits on Out-of-Pocket Costs
• Annual out-of-pocket costs limited to $6,350 for individuals and
$12,700 for families
• In 2014, ancillary benefits that are separately administered (such
as pharmacy) may provide a separate out-of-pocket maximum
Maximum waiting period of 90 days
• Employers participating in Medical Trust plans are not permitted
to have waiting periods
Must cover certain clinical trials
No pre-existing conditions regardless of age
Increase permitted for wellness incentives
• Employers may offer up to a 30% premium reduction (up to 50%
for tobacco cessation programs)
• Programs may not discriminate based on health factors
51
Elimination of annual limits - Impact on HRAs



Effective January 1, 2014, employers cannot offer “standalone” Health Reimbursement Accounts (HRAs)
The HRA must be integrated with a high deductible plan
or other health plan in order to impose a limit
Note: Can offer stand-alone HRAs that cover retirees only
due to special exception for retiree-only plans.
52
Individual Responsibility Provision




Effective January 1, 2014, each individual must:
• Have basic health insurance, referred to as minimum essential
coverage (all Medical Trust plans provide this coverage),
• Qualify for an exemption, or
• Make shared responsibility payment when filing tax return
Shared responsibility payment is equal to the greater of:
Year
Individual $ Penalty
Individual % Penalty
2014
$95
1%
2015
$325
2%
2016 (and thereafter)
$695
2.5%
Penalty will be assessed for your dependents, but reduced by
50% for individuals under age 18.
Minimum Essential Coverage reporting (to IRS and individuals)
effective for 2015 calendar year.
53
Individual Responsibility Provision

Exemptions include the following:
• Individuals whose contribution for the lowest cost plan would be
in excess of 8% of household income
• Taxpayers with income below filing threshold
• Members of Indian tribes
• Hardships
• Individuals who experience short coverage gaps (three months)
• Religious conscience
• Members of health sharing ministry
• Incarcerated individuals and
• Individuals who are not lawfully present
54
Employer Shared Responsibility Provision- 2015






Postponed until 2015!
Applies to large employers – 50+ full-time or full-time
equivalent employees
Must provide all full-time employees and their dependents
(not spouses) affordable and adequate healthcare coverage or
pay a penalty
Two types of penalties:
• No Offer Penalty: $2,000 (annual, calculated monthly) per fulltime employee (excepting the first 30 employees), if at least one
employee obtains federally-subsidized coverage on the
Marketplace
• Unaffordable or Inadequate Penalty: lesser of $3,000 per
subsidized employee or the “No Offer” penalty
Subject to IRS reporting
The Medical Trust will be offering webinar with detailed
guidance
55
Transitional Reinsurance Fee (2014-2016)
 $20 Billion to fund reinsurance pool plus $5 Billion to
reimburse government for the Early Retiree Reinsurance
Program (EERP) payments
 Estimated annual costs to the Medical Trust:
• 2014: $1,300,000
• 2015: $900,000
• 2016: $600,000
56
The “Cadillac Tax” – 2018+



40% excise tax paid on the “Excess Amount” of coverage
Excess Amount defined as the annual cost for coverage in
excess of established thresholds, 2018 amounts:
• $10,200 for single coverage
• $27,500 for family coverage
Threshold amounts will be adjusted for certain factors
• Indexed at CPI+1% for 2019 & 2020; at CPI for 2021+
• High risk profession (unlikely to include church employees)
• Age and gender (likely to result in higher thresholds for Medical
Trust plans)
57
How might the Cadillac tax impact the DHP rates?
1
Band 5, 3-tier rates. Annual healthcare cost trend assumption of 7%, CPI of 3%, 10% adjustment for high average age
58
How might the Cadillac tax impact the DHP rates?

The Medical Trust could be subject to significant excise
taxes with potential impact on DHP healthcare costs:
• $2.7 million in 2018 (1.2% of total annual contributions)
• $14.8 million in 2023 (4.8% of total annual contributions)
• Note: Assumes threshold amounts are increased by 10% due
to higher average age
59
Two key criteria to qualify for PTCs
Household Income
100% - 400% of FPL

No Access to
Affordable Healthcare
Qualify
for PTCs
Affordable minimum essential coverage through employer
defined as:
• Affordable:
•

when the required contribution for self-only
coverage does not exceed 9.5% of household income
(excluding housing); and
Minimum Value (MV): when benefit provisions cover at least
60% of the plan costs (all MT plans meet MV requirement)
Must enroll in a plan offered through an Individual
Marketplace to gain access to PTCs
60
Annual Federal Poverty Level
Federal Poverty Guidelines for the 48 Contiguous States and the
District of Columbia – 2014 Projected1
Family
Size
Poverty
Guideline
133% of
FPL
200% of
FPL
300% of
FPL
400% of
FPL
1
$11,820
$15,720
$23,640
$35,460
$47,280
2
$15,900
$21,150
$31,800
$47,700
$63,600
3
$19,980
$26,570
$39,960
$59,940
$79,920
4
$24,060
$32,000
$48,120
$72,180
$96,240
5
$28,140
$37,430
$56,280
$84,420
$112,560
6
$32,220
$42,850
$64,440
$96,660
$128,880
7
$36,300
$48,280
$72,600
$108,900
$145,200
8
$40,380
$53,710
$80,760
$121,140
$161,520
Note: clergy housing allowance excluded for purposes of determining
eligibility for PTCs
1
2014 figures based on applying 2013 percentage increases (over 2012) to the 2013 Federal Poverty Guidelines
61
Less than 5% of Medical Trust participants estimated to
qualify for PTCs*
Total
DHP
Age 65
and Over
13,000
800
6.2%
Household
Household
Income
Income >
300% 400% FPL 400% FPL
2,300
17.7%
Household Income 100% - 300%
Access to Eligible for
Affordable Meaningful
Coverage
PTC
800
6.2%
600
4.6%
8,500
65.3%
*Based on 2013 CPG and Medical Trust clergy and lay employee census data, available employee contribution
levels and ESI Tapestry household income database; analysis and results validated by external source
62
Premium Tax Credits (PTCs) – Levels of Subsidies
Income Level (in terms of
FPL)
Up to 132%
133 - 149%
150 - 199%
200 - 249%
250 - 299%
300 - 399%

Maximum Percentage of Household
Income to Pay Premiums for Healthcare
Coverage
2%
3 - 4%
4 - 6.3%
6.3% - 8.05%
8.05% - 9.5%
9.5%
Three types of subsidies available to those that qualify
• Premium credits (2.0% to 9.5% of income)
• Increase in benefit plan value (from 70% up to 94%)
• Limits on out-of-pocket expenses (ranging from $1,983 to $7,973)
63
Additional complexities come with PTCs

Loss of employer contributions towards healthcare coverage

Loss of pre-tax treatment on employee contributions


Additional cost to purchase Gold/Platinum coverage or any
Silver coverage costing more than 2nd lowest priced Silver
Plan in the market
Available plan designs, provider networks, level of premium
rates and PTCs in each market

Nondiscrimination rules

Changes in household income during the year
64
Church Health Plan Act requesting equal treatment
for church plans in the Marketplace

Would allow eligible clergy and lay employees to:
1. Continue to receive benefits of the DHP
– Cost containment
– Higher levels of benefits and services
2. Gain access to premium tax credits

Status:
• Introduced in Senate (S. 1164) on June 13th by Senator
Pryor (D-AR) and Senator Coons (D-DE)
• Outreach to Senators to support bill
65
Church Health Plan Act of 2013


Why ask for relief?
• For parity between for-profit health insurers and church
plans
• Unlike for-profit health insurers, church plans cannot offer
plans on the Marketplace
• Members cannot access the premium tax credit unless
they purchase insurance through a Marketplace plan
Will church employees receive special tax benefits?
• No. Similar to employees who purchase insurance on the
Marketplace, an employee who receives a premium tax
credit, will be taxed on all contributions made to the
Medical Trust Plan.
66
Estimated impact of PTCs
Under Current Guidance
If Church Bill Passes
% Qualify
Total Annual
PTCs
(in millions)
% Qualify
Total Annual
PTCs
(in millions)
Clergy
0.2%
$0.1
5.1%
$2.2
Lay
7.0%
$4.9
13.1%
$9.1
Total
4.8%
$5.0
10.5%
$11.3
Under current guidance, most clergy and lay employees will not
qualify for PTCs as they currently have access to affordable
healthcare coverage
• Material employer behavior change not expected
If Church Bill passes, church plans will be treated the same as
for-profit health plans allowing clergy and lay employees to
remain in Medical Trust plans and gain access to PTCs
67
Premium Tax Credit Recap

Limited percentage of Medical Trust participants expected to
qualify for meaningful level of PTC
•
•
Under current guidance: Less than 5% of MT participants with annual
PTCs of about $5 million
Church Health Plan Act could increase percentage to 11% and annual
PTCs to about $11 million
 Will employer behavior change?
•
•
…stop offering healthcare coverage?
…materially decrease current cost sharing levels?
 Additional points of consideration
•
•
•
•
•
Loss of pre-tax treatment on contributions
Loss of employer contributions
Available plan designs, provider networks, level of premium rates and
PTCs in each market
Nondiscrimination rules
Changes in household income during the year
68