Donna Lively
Director, Insurance Sales
Patient Protection and
Affordable Care Act (PPACA)
Healthcare Reform
Overview
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Passed March 23, 2010
Supreme Court substantially upheld PPACA
Election further solidifies direction
Tweaks are expected
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Key Goals of the Law
• Insurance reforms
◦ Eliminate pre-existing condition limitations
◦ Expand dependent coverage to age 26
◦ Eliminate underwriting barriers
◦ Simplify benefit options
◦ Reduce consumer out-of-pocket exposure
◦ Expand preventive care
Four Complex
Mechanisms
• Individual Mandate
• Health insurance exchanges
◦ Government Assistance for Modest Income
◦ Premium Tax Credit
• Shared Responsibility (for employers with
>50 employees)
◦ “Pay or play”
• Expanded Medicaid
2013 Consumer/Employer
Impact
2013 Impacts:
Consumer/Employer
• Contributions to FSAs limited
◦ 2012: No limit
◦ 2013: $2,500 pre-tax (sheltered) per year
• Employers required to provide notices of exchange
and federal subsidy availability (delayed until
late summer)
• Summary of Benefits and Coverage (SBC)
distribution rules
• Expanded coverage for women’s preventive care
(at no cost sharing)
2013 Impacts:
Insurance and Self-Funded
• Increased Taxes
◦ PCORI Fee
◦ Unearned income tax
◦ Medicare tax increase
◦ Increased unreimbursed medical tax
2014 Consumer/Employer
Impact
2014 Impacts:
Consumer/Employer
• Plans must be modified to be considered “Qualified
Health Plans”
• Minimum Essential Health Benefits
Minimum Essential Health Benefits
Ambulatory patient services
ER services
Hospitalization
Prescription
Maternity and newborn
Rehabilitative services
Mental health and SA
Preventive/wellness
Laboratory services
Pediatric services
Chronic condition
Habilitative services and devices
2014 Impacts:
Consumer/Employer
• Guaranteed issue and renewability for everyone —
no one can be denied health insurance coverage
• Restrictions on the amount premium —
rates can vary due to health status, age, gender, etc.
2014 Impacts:
Consumer/Employer
• Health plan benefit changes
◦ Creation of standard metallic benefit plans
◦ End of limited benefit plans
◦ TROOP maximums — no deductible or coinsurance level can be greater than the HSA
contribution limits for a given tax year (indexed
for inflation)
◦ End of very high deductible plans
2014 Impacts:
Individual Mandate
• Everyone must purchase insurance who:
◦ Has an income above threshold level
$9,350 — single
 $18,700 — married filing jointly
• Those who are in the above category and choose
not to be insured will pay a penalty (tax):
◦ 2014: $95 or 1.0% of income
◦ 2015: $325 or 2.0% of income
◦ 2016: $695 or 2.5% of income
• Family penalty capped at 300% of individual rate
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Complexity: Individual
Access
Kaiser Family Foundation
2014 Impacts:
Exchanges — Marketplace
• Health insurance exchanges open in each state —
provide individual and small business coverage
• Designed as state run entities
• Politics of the states
◦ Governors = stewards of federalism
◦ 30 Republican governors — majority not
supporting state exchange
◦ Democratic governor challenged due to
Medicaid expansion
• Current state of exchange — 2/3 of all states and
2/3 of U.S. population will be covered under a
federal exchange
State Decisions
for Creating Health Marketplaces
Kaiser Family Foundation – January 4, 2013
2014 Impacts:
Exchanges — Marketplace
• Tax credits (premium credits) and cost-sharing
reductions (deductible, co-pays and co-insurance
credits) are available on the exchanges
◦ Tax credits are offered to Americans
(<400% of poverty level)
◦ Tax credits are designed to help people afford the
cost of coverage
◦ Cost-sharing reductions are designed to reduce
the out-of-pocket exposure for lower-income
individuals and families
2014 Impacts:
Exchanges — Marketplace
• Premium charged in exchange can be limited
based on household income — full price expected
to be 10–50% greater than today’s premiums
• Clergy housing allowance is not included
in income calculation
• Small Employer Tax Credit only available
if employee’s purchase coverage through
SHOP exchanges
Example of Premium
Tax Credit
FPL 2014 (estimated)
Individual
Family of four
100%
$11,850
$24,450
400%
$47,400
$97,800
PTC’s are not available to employees of plan sponsors adopting
exchange plans as employers.
Who Qualifies for PTC?
Individuals purchasing a Qualified Health Plan on an
exchange who are not:
• Covered by Medicare or Medicaid
• Covered by another government coverage
• Offered an affordable employer plan that covers
minimum value
• Enrolled in an employer plan (even if
not affordable)
Complexity:
Exchange — Marketplaces
2014 Impacts:
Large Employer
Shared responsibility for employers with >50
• Penalties for providing no coverage, inadequate
coverage or unaffordable coverage
• A “large employer” is one with 50 or more full-time
equivalent employees (FTE). Who is an FTE?
◦ Employee who works 30 or more hours/week
◦ Full-time equivalent employees (total, aggregate
monthly part-time hours/120)
◦ Seasonal/temporary employees are not counted
• Penalties apply only if at least one full-time employee
receives subsidies from an exchange
2014 Impacts:
Large Employer
Shared responsibility for employers with >50
• Coverage must be “adequate” and “affordable”
• If your plan is either of these you pay an “excise tax”
which is the lesser of:
◦ $3000 for each FTE who receives a subsidy due
to the plan being unaffordable, or
◦ $2000 for each FTE not receiving a subsidy (not
including the first 30 employees)
◦ Note: Part time employees are not included in
penalty calculation but they are included to
determine if you meet the 50 FTEE threshold.
2014 Impacts:
Large Employer
Shared responsibility for employers with >50
• Minimum value requirement:
◦ Employer plan must pay 60% of total costs of plan
(actuarial determination)
◦ Employees whose employer plan does not cover
minimum value can opt-out and seek PTC’s for
exchange coverage
• Penalty if large employer coverage does not
include “minimum value coverage”
◦ Must pay excise tax for each FTE (after
subtracting the first 30 FTEs)
◦ Excise tax = 1/12 of $2000 for each month in
which at least on FTE receives subsidy from
the exchange
2014 Impacts:
Large Employer
Shared responsibility for employers with >50
• “Affordable coverage” for employer plan
◦ Employee’s required contribution for participant
only coverage can not exceed 9.5% of household
income
◦ Safe Harbor (proposed): employer may use
employees W-2 compensation
◦ Employer can charge more for dependent
coverage — dependent coverage seems to be
excluded from affordability parameters;
however, still unclear
2014 Impacts:
Small Employer
Small employers do not have to offer insurance but
only qualify for the small business tax credit if they
offer coverage purchased through the exchanges
2014 Impacts:
Insurer New Taxes
• $8 billion in 2014 increasing to $14.3 billion in 2018
to pay for cost of health reform
◦ For every dollar in tax, $1.50 will be added
to premium
◦ Will increase fully-insured cost by 2.2% in 2014
◦ Tax assessed according to insurer’s market share
◦ Tax does not apply to self-insured plans
2014 Impacts:
Insurer New Taxes
• Tax on insurers and TPAs to cover cost of individual
high risk coverage
◦ 2014: $12 billion
◦ 2015: $8 billion
◦ 2016: $5 billion
◦ Note: Will increase cost $10-$15 per employee
per month
2015–2020 Impacts
• 2015: Large employer (200+) automatic enrollment
• 2017: Exchanges for large employers (100+)
• 2018: 40% tax to employer offering “cadillac” plans.
“cadillac” plan — cost of benefits plan is greater than
$27,500 annually for family coverage and $10,200
annually for single coverage
• 2020: Medicare Part D coverage gap for prescription
drugs will be closed
Women’s Expanded Preventive Health
and the Contraception Discussion
Contraceptive Coverage
• For non-grandfathered plans only
• Eight new women’s preventative benefits are
mandated effective the first day of plan years
beginning on or after August 1, 2012
• The services must be provided at no cost
• Insurance company can decide how to cover
contraceptives
◦ Can choose to offer coverage for in-network
services only
◦ Can choose to only allow generic prescription
drugs at no cost
Women’s Preventive
Regulations
The effect on GuideStone and its employers
Exempted:
Accommodated:
No Resolution:
Churches and denominational
organizations
Religious non-profits
Non-religious non-profits
and for-profits
Non-church
Religious Employers
For non-church religious employers (university, etc.)
• Recently proposed rules expand and provide
direction to non-steeple entities
• Must self-certify:
◦ A classified non-profit
◦ Considered religious
◦ Holding concerns with some or all of the
mandated contraceptives
Accommodated
Organizations
• Can offer some but not all contraceptive options
• Offer plans in alignment with Biblical convictions
• Process:
• Organization self-certifies to third party
administrator or insurance company
• Third party administrator or insurance
company notifies employees of available
no cost contraceptive coverage through
separate arrangement
Reporting and Regulations
New Reporting
Requirements
• W-2 reporting of employer-sponsored
medical coverage
• Employer reporting
◦ Exchange
◦ Large group
• Medical loss ratio reporting
Looking Forward
Potential Changes
• Repeal of limits on OTC drugs being covered by
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HSA/FSA monies
Delay in effective date of exchanges
Delay in effective date of federal assistance
Reduction in federal control over certain
state mandates
Incentives for states to expand Medicaid
General Market
Predictions
• HC Reform will spawn more HDHP Plans
• Plan offerings will be different in each state
• Large employers will seek administration efficiencies
through private exchanges
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Employer Checklist
for 2013
 Notification of $2500 FSA limit (for off cycle plans)
 Notification of Exchanges (further guidance coming in
summer 2013)
 Plan for increased rates on top of trend
 0.2-1% for benefit mandates
 0-3% for cost shifting from providers
 2-4% related to new fees and taxes
Employer Checklist
for 2013
 Determine if you have 50+ FTEs
 Begin high level analysis to determine for which
employees you will be required to provide coverage
 Review contribution strategy
 Defined benefit
 Defined contribution
 Encourage healthy lifestyles through the
implementation of a wellness program
 Stay informed www.GuideStone.org/HealthReform
Questions and Answers
The preceding information is general in nature and
is intended to keep you apprised of certain
important developments. This information may be
subject to interpretation or clarification over time,
so we cannot guarantee its accuracy or how it
might be determined to apply in certain situations.
However, we hope it will provide you a useful
frame of reference as you endeavor to carry out
your responsibilities and serve your employees.