Healthcare Reform and
Employee Benefit Trends:
What’s the Latest in Both?
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Presenters
• Nancy Sylvester, CPCU, ARM-P
– Managing Director, Arthur J. Gallagher & Co.
• Eric Pearson
– Area Vice President, Gallagher Benefit Services, Inc.
• Justin Sylvester
– Benefit Consultant, Gallagher Benefit Services, Inc.
• Petula Workman, J.D. CEBS
– Compliance Consultant, Gallagher Benefit Services,
Inc.
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PPACA
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The Supreme Court Decision
Four Basic Issues
• Standing
• Constitutionality of
Individual Mandate
• Severability of Individual
Mandate if unconstitutional
• Constitutionality of
Medicaid Expansion
requirements
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Individual Mandate – Exceptions
• The Individual Mandate – Exceptions and Exemptions:
– Unaffordability
• Required contribution exceeds 8% of the individual’s
household income
– Household income below income tax filing threshold
– Native Americans
– Short lapses
• Lack Minimum Essential Coverage for a period of less than
3 months
– Prisoners
– Undocumented aliens
– Religious Exceptions
• Health Care Sharing Ministry
• Conscientious objections
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Individual Mandate – Exceptions
• The Individual Mandate Exception – Tax Filing Threshold
IF your filing status is...
AND at the end of 2011
you were...*
THEN file a return if your
gross income was at
least...**
single
under 65
$9,500
65 or older
$10,950
under 65
$12,200
65 or older
$13,650
under 65 (both spouses)
$19,000
65 or older (one spouse)
$20,150
65 or older (both spouses)
$21,300
head of household
married, filing jointly
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Individual Mandate – Penalties
Year
Flat Dollar
Individual
Penalty
Amount
% of Income
Amount*
Penalty
2014
$95
1.0
2015
$325
2.0
2016
$695
2.5
After 2016
$695, indexed for 2.5
inflation in $50
increments
*Halved for dependents under age 18 (but do not
halve when determining 300% cap on dollar
amount for those not insured by taxpayer)
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Timeline of Key Changes for Plan
Sponsors
• Comparative Effectiveness Research
Fee
• FSA limits to $2,500
• OTC drug
reimbursements
• Early retiree
reinsurance
• Itemized medical expense deduction
changes
• HSA penalties
• High-risk pools
• Medicare tax increase
• Employee notification
requirements
• Part D drug subsidy deduction
eliminated
• Employee Exchange notification
6/23/10
9/23/10
1/1/11
1/1/12
• W-2 Reporting
• Coverage expansion
mandates
• “CLASS” LTC program
(Suspended)
• Patient protections
• Uniform Explanation
of Coverage (Delayed)
1/1/13
1/1/14+
• Employer and individual
mandates
• Insurance exchanges
• Patient protections
• “Cadillac” plan excise tax (2018)
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Key Changes
– New claims and appeals regulations
– Expansion of Women’s Preventive
Services
– Cap on employee contributions to
healthcare FSAs
– Removal of lifetime dollar maximums
– Expansion of dependent coverage to
age 26
– Waiting periods no longer than 90 days
beginning in 2014
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Reporting and Disclosure
• Form W-2 Reporting
– Mandatory for Form W-2s issued for 2012
• Summary of Benefits and Coverage
– First open enrollment beginning on or after 9/23/12
• Quality of Care Reporting
– ????
• Employer Explanation of Exchange
– March 1, 2013
• Employer Reporting of Health Insurance Coverage to
IRS
– 2014
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Revenue Raisers for 2013
• Comparative Effectiveness (or
PORCI) Fees
• Cap on healthcare FSA
contributions
• Medical Device Tax
• Tax on unearned income
• Additional Social Security Taxes
• Limits on itemized deductions
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Revenue Raisers for 2014
•Transitional Reinsurance
Fee
•Annual Fee on Health
Insurance Premiums
•Employer Shared
Responsibility Penalties
•Individual Mandate
Penalties
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Individual Mandate -2014
Minimum
Essential Coverage
Exception
Penalty
Penalty
OR
OR
Premium
Assist.
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Individuals
Small Group
CHOICE POOL
Government
Subsidy
Silver Plan
Gold Plan
Platinum Plan
PROVIDERS
Bronze Plan
CONSISTENT MARKET RULE BASE
Exchanges - 2014
Large Group
Catastrophic Plan
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Employer Shared Responsibility
Have at least 50 FTEs?
No penalty applies!
Offer Coverage?
$2,000 penalty per FTE (minus
first 30) if at least one FTE
receives the tax credit *
Plan provides minimum
required value?
Lesser of:
•$3,000 per FTE receiving tax
credit*
Is coverage affordable?
or
•$2,000 per FTE (minus first 30)
* Only applies to FTEs with household incomes of 400% of FPL or less
No penalty applies!
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Model Potential Impact of Mandates
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Impact of Medicaid Expansion
Decision
• Around 150,00 Louisiana residents
would be Medicaid eligible under
PPACA’s Medicaid expansion
provisions
• If the Governor continues to state
that Louisiana will NOT expand
Medicaid eligibility, then all of
those from 100-138% of FPL will be
Exchange eligible
• Increased likelihood for Employer
Shared Responsibility penalties
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Online Healthcare Reform Resources
GBShealthcarereform.com
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Louisiana
33,364
3,630
5
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Thank You!
The intent of this analysis is to provide you
with general information regarding the
provisions of PPACA. It does not necessarily
fully address all of your organization’s specific
issues. It should not be construed as, nor is it
intended to provide, tax or legal advice.
Questions regarding specific issues should be
addressed by your organization’s general
counsel or an attorney who specializes in this
practice area.
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