University of Alaska
Healthcare Reform
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Healthcare Reform
2012
Regulation
2013
Regulation
Plans required to produce 4 page plan summaries
starting with 9/23/2012 – Open Enrollment April
2013
Limit Health FSAs to $2,500 (current is $5,000, will
change at 7/1/2013)
W – 2 reporting of health plan values
(Requires 2012 reporting received Jan 2013)
.9% additional Medicare tax and 3.8% passive
income tax on individuals earning +$200,000
($250,000 for families)
New appeals process with external review (most
claim payers are in compliant with rule)
Health Insurance Taxes and Fees
-Annual Excise Tax Pharmaceutical tax - $2.8B
annually
- Comparative Effective Research assessment
increases to $2 per enrolled employee
Health Insurance Taxes and Fees
- Annual Excise Tax Pharmaceutical tax -$2.8B
annually
-Comparative Effective Research assessment of $1
per enrolled employee (What healthcare
treatments are appropriate in given circumstances)
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Healthcare Reform
2014
Regulation
Free Rider Surcharge – Must offer qualifying
coverage (60%) at an affordable cost (no more
than 9.5% of household income) - $2,000 nondeductible penalty per FTE for not offering a plan
($3,000 for offering non-qualifying/non-affordable
coverage)
Automatic enrollment (deferred until regulations
issued)
Cover Clinical Trials - Insurers will be prohibited
from dropping or limiting coverage because an
individual chooses to participate in a clinical trial.
This applies to all clinical trials that treat cancer or
other life-threatening diseases
All employees working more than 30hrs per week
are eligible for coverage
Transitional Reinsurance Program Fees – Estimated
at $150 PEPY
2018
Regulation
Cadillac Tax – 40% excise tax on health benefits for
“high value” plans.
THE “EFFICIENT FRONTIER”
Optimizing Plan Design and
Contribution Strategies by modeling
over 800 alternative plan design
and contribution strategies to assist
in finding an optimal strategy that
minimizes cost to the employer –
mostly by taking advantage of
Exchange subsidies - and maximizes
value for employees.
2
Pay or Play – Average Additional Costs (Losers) or Savings
(Winners) under the Pay option
PAY or PLAY - Average Additional Costs (Losers) or Savings (Winners)
under the PAY option
$20,000
800
700
$15,000
600
$10,000
$5,000
400
Employee Count
$ Costs / Savings
500
300
$200
$(5,000)
100
$(10,000)
< $10,000
$10,000 $20,000
$20,000 $30,000
$30,000 $40,000
$40,000 $50,000
$50,000 $60,000
$60,000 $70,000
$70,000 $80,000
$80,000 $90,000
$90,000 - $100,000 +
$100,000
Income Band
Winners
Losers
Winner Count
Loser Count
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University of Alaska Health Reform Projections 2014
No Reform
PLAY
Current UNDER
Reform
Current BEFORE
Value – 76%
Reform - 2014
Employees covered in Plan
Employees covered in Exchanges
Employees covered in Plan or Exchange
Expected Net Employer Plan Cost
Employer additional taxes paid
Surcharge
Total Expected Net University Cost (Plan
Cost, Taxes, & Surcharge)
Play – Efficient
Frontier
Winners - 60%
Terminate Plan
Value – 80%
(Household Income)
4,155
0
4,155
0
4,794
4,794
0
4,794
4,794
4,083
119
4,202
$60,557,000
$65,214,000
-----------
-----$1,343,000
$9,528,000
-----$1,343,000
$9,528,000
$63,720,000
($282,000)
$357,000
$60,557,000
$65,214,000
$10,871,000
$10,871,000
$63,795,000
$4,657,000
($54,343,000)
($54,343,000)
($1,419,000)
$40,902,000
$68,784,000
$94,471,000
$39,112,000
$2,972,000
$27,882,000
$53,569,000
($1,790,000)
$106,116,000
$79,655,000
$105,342,000
$102,907,000
$37,930,000
$ Change
University plus Employee Total Costs
Terminate Plan
(Salary)
PAY – Public
Exchanges
3,942
0
3,942
$ Change
Total Expected Employee Cost
(EE Contributions, OOP & Taxes
PAY – Public
Exchanges
$98,487,000
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Illustrated 2014 Exchange Plan Design
UA Plans – 76%
Actuarial Value
90%
85%
80%
75%
70%
65%
60%
Exchange Metal
Platinum
High Gold
Low Gold
High Silver
Low Silver
High Bronze
Low Bronze
Deductible
$250
$500
$750
$1,000
$1,250
$1,700
$2,500
Family Deductible
$500
$1,000
$1,500
$2,000
$2,500
$3,400
$5,000
Embedded
Embedded
Embedded
Embedded
Aggregated
Aggregated
Aggregated
OOP Max (Includes Deductible)
$1,250
$2,000
$2,500
$4,000
$3,500
$6,000
$6,000
Family OOP
$2,500
$4,000
$5,000
$8,000
$7,000
$12,000
$12,000
$0
$0
$0
$0
$0
$0
$0
PCP Copay
$15
$15
$25
$25
20% After Ded.
20% After Ded.
20% After Ded.
Specialist Copay
$15
$25
$45
$50
20% After Ded.
20% After Ded.
20% After Ded.
ER Copay
$50
$100
$100
$200
20% After Ded.
20% After Ded.
20% After Ded.
Rx Deductible
N/A
N/A
N/A
$50/$100
20% After Ded.
20% After Ded.
20% After Ded.
Generic Copay
$5
$5
$10
$10
20% After Ded.
20% After Ded.
20% After Ded.
Preferred Brand Copay
$20
$25
$35
20% After Ded.
20% After Ded.
20% After Ded.
Non-Preferred Copay
$35
$40
$50
20% After Ded.
20% After Ded.
20% After Ded.
Family Deductible Type
Employee Coinsurance
30%, min $35,
max $75
40%, min $50,
max $100
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Healthcare Reform Options

Cost Before Reform - 2014
Estimated Employees in Plan of 3,942
 Estimated University cost of $60,557,000
 Estimated Employee cost of $37,930,000


Option 1 – Play and offer qualifying coverage
Estimated Employees in Plan of 4,155
 Estimated University Cost of $65,214,000
 Estimated Employee Cost of $40,902,000


Option 2 – Pay $2,000 per employee (+30 hours) Penalty
Estimated Employees in Exchange 4,794
 Estimated University Cost of $10,871,000
 Estimated Employee Cost of $68,784,000


Option 3 – Non-Qualifying Plan
Estimated Employees in Exchange of 119 and 4,083 in the plan (4,202)
 Estimated University Cost of $63,795,000
 Estimated Employee Cost of $39,112,000

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