National Health
Care Reform
nd Care Act –
– Affordable
Rev 10-07-2013

Jerry Rhinehart, CIC, CLU, ChFC, RHU
Panama City, FL
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NHR - 100 Years in the Making
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Patient Protection and Affordability Care Act
 Signed in to law March 23, 2010
 HealthCare.gov
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Other very useful websites as they relate to NHCR:
 NAHU.org (National Assoc of Health Underwriters)
 KFF.org (Henry J. Kaiser Family Foundation)
 aetna.com/health-reform-connection/
index.html
 UPC.com (United Health Insurance – Reform Resource Center)
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93 TOTAL provisions will be enacted
over the 10 year time span that will
impact: every US citizen, health
insurance coverage, health insurance
companies, pharmaceutical
companies, employers, Medicare,
Medicaid, taxes (21 major),
substantial regulations for hospital &
physicians, … and even required
posting of nutritional content at your
favorite fast food restaurant.
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Health Insurance Premiums and CostSharing Subsidies (2014)
Provides refundable and advanceable tax
credits and cost sharing subsidies to eligible
individuals. Premium subsidies are available
to families with incomes between 133-400%
of the federal poverty level (FPL) to purchase
insurance through the Exchanges, while cost
sharing subsidies are available to those with
incomes up to 250% of the poverty level.
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Understanding Health Insurance Subsidies (2014)
400% FPL _
Required to show proof of a QHP- but
no financial assistance of any form
_400% FPL
Required to show proof of a QHP- and
eligible for advanced premium tax
credits
250% FPL _
133% FPL _
_250% FPL
Per ACA rules… to qualify for
Required to show proof
of a QHP- and
Medicaid medical coverage
eligible for advanced there
premium
tax
is only ONE test a
credits and cost-sharing
reductions
person
must meet – INCOME
_133% FPL
(but NOT assets) – (page 31)
Eligible for Medicaid – little or no cost
100% FPL _
2013: CMS
_100% FPL
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Introduction to Key ACA Terms
 MLR (Medical Loss Ratio – 80% Small Group and
Individual – 85% Large Group) (eff 01-01-2011)
Example of NAIC Calculation Model for MLR Refunds:
Total Premium received
by the insurer from the
enrollee (minus
applicable taxes & fees)
X
The difference
between the required
MLR and the insurer’s
MLR
$400 x 12 = $4,800
x
80% - 77% = 3%
=
=
Rebate
$144
Note: Insurers began making the1st round of rebates to affected
consumers on August 01, 2012
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Introduction to Key ACA Terms
 MLR (Medical Loss Ratio – 80% Small Group and
Individual – 85% Large Group) (eff 01-01-2011)
NOTE: The MLR requirement does
NOT apply to ERISA plans - fully or
partially self-funded. (See page 12)
Also, note on page 12 the
components of the MLR calculation
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Introduction to Key ACA Terms
 MLR (Medical Loss Ratio – 80% Small Group and
Individual – 85% Large Group) (eff 01-01-2011)
 FPL (Federal Poverty Level – 133% - 400%) (eff 0101-2014) (NOTE: Box #1 on the Employees W-2)
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Introduction to Key ACA Terms
Federal Poverty Level (FPL) – National Incomes (Gross)
except for Hawaii and Alaska – 2012-2013
Income
Single
Family of 4
100% FPL
133% FPL
400% FPL
$10,170
$15,282
$45,960
$23,050
$31,322
$94,200
Source: http://www.familiesusa.org/resources/tools-for-advocates/guides/
federal-poverty-guidelines.html
NOTE: Median Household Income for US in 2011 - $50,054
U.S. Census Bureau – http://www.census.gov/prod/2011pubs/p60-239.pdf
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Introduction to Key PPACA Terms
 MLR (Medical Loss Ratio – 80% Small Group and
Individual – 85% Large Group) (eff 01-01-2011)
 FPL (Federal Poverty Level – 133% - 400%) (eff 0101-2014) (NOTE: Box #1 on the Employees W-2)
 FTE (Full Time Employee – 30 hours per week)
(eff 01-01-2014) NOTE: Definition applies to ACA ONLY
 Health Insurance Exchange (eff 01-01-2014)
“Marketplace” as of 01-23-13
 Exchange Navigators (eff 01-01-2014)
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Recent ACA Legislative Changes
 W-2 Reporting (Fall 2010) – DELAYED - Now
voluntary for 2011. Implementation begins in 2012 for ALL
‘ERs that provide health insurance who issued 250+ W-2s in 2011.
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12-D
Recent ACA Legislative Changes
 W-2 Reporting (Fall 2010) – DELAYED – Now
voluntary for 2011. Implementation begins in 2012 for ALL
‘ERs that provide health insurance who issued 250+ W-2s in 2011.
 1099 Reporting ($600) – REPEALED – Spring 2011
 CLASS (LTC Option) – Tabled Late-Summer 2011 –
“killed” by the “fiscal cliff” negotiation - 01/2013
 Employer Penalty (50 or more FTEs) – DELAYED (07/02/13)
– Now to be implemented 01-01-2015
 Per ACA published rules, individuals applying for a
‘subsidy’ would have to should proof of income. Now:
“no proof required – we take your word”. (07/05/13)
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Health Reform Implementation Timeline
2010
 Insurance reforms
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Key Provisions of Insurance Reforms (2010)
 Provide dependent coverage up to age 26 (eff 09-23-10)
- Includes adult children that no longer attending college,
those not living with their parents, and those adult
children who are married (even with their own children).
* This provision does not extend to the spouse or any
children of the adult child being covered.
- Applies to plans that already offer dependent coverage. If
coverage exist, the ‘ER must inform ‘EEs that their
children, who may have aged out of the plan, will again be
eligible starting January 1, 2011.
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Key Provisions of Insurance Reforms (2010)
 Prohibit individual and group plans from placing limits
on coverage (eff 09-23-10)
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Key Provisions of Insurance Reforms (2010)
Policy Limits (Annual and / Lifetime)
- Lifetime limits prohibited on health coverage (2010)
- Annual limits prohibited (2014) (“Mini-Med” issue)
Effective 2014 No Plan Can Have
any Annual Policy Limit cap and
Phased in as Follows:
 2011 - $750,000
 2012 - $1.25 million
 2013 - $2 million
Key Provisions of Insurance Reforms (2010)
Policy Limits (Annual and / Lifetime)
- Lifetime limits prohibited on health coverage (2010)
- Annual limits prohibited (2014) (“Mini-Med” issue)
By August 30, 2011 there had been
1,497 “waivers” granted by HHS.
“Waivers” are granted for 1 year. Any
new “waivers” ended as of 09-22-11.
Currently there @ 3 million EEs
covered under “waived plans” – 1.5
million are in various unions.
Key Provisions of Insurance Reforms (2010)
 Pre-existing conditions
- Creates a temporary program to provide health coverage
to individuals with, 1) pre-existing medical conditions,
and, 2) who have been uninsured for at least six months.
- Children under age 19 cannot be denied insurance
coverage due to a pre-existing condition.
 Tax credit to small employer (25 and under) that provide
health insurance - with wage restrictions.
 MLR (80% - 85%)

Required “wellness” benefits for most plans
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Health Reform Implementation Timeline
2010
 Insurance reforms
 Medicare (Part D - $250 rebate)
 Tax changes (Indoor Tanning Salons / Health
Insurance Executive compensation)
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Health Reform Implementation Timeline
2011
 Long-term care (CLASS)
 Prevention / Wellness (Included for most
plans – Individual, Group plan AND Medicare)
 Tax Changes
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Key Provisions of Tax Changes (2011)
 New or revised taxes to help pay for NHCR
- Excludes OTC drugs (not prescribed) from reimbursement
or coverage under a CDHP (HSA, FSA, etc.). Insulin is not
included in this provision.
- Increase tax / penalty from 10% to 20% on non-qualified
distributions from CDHP
- New annual fees on the pharmaceutical manufacturing
sector
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Health Reform Implementation Timeline
2012
 Medicare - Reduce rebate by Feds to cover
Medicare Part - C (Advantage Plans)
Released 04/02/2013 - The CMS
announced a reversal of the funding for
Advantage Plans. The ACA had a provision
that would have cut funding by 2.3% - but
a big push by most Republicans and many
Democrats in the U.S. Congress has now
resulted in an increase of funding for 2014
by 3.3%.
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Health Reform Implementation Timeline
2012
 NEW – 08/01/2012 (8 new preventive
health benefits to women at no cost). They
include:
- contraceptives, breast-feeding supplies,
screenings for gestational diabetes and
sexually transmitted infections and
domestic violence, as well as routine
check-ups for breast and pelvic exams,
Pap tests, and prenatal care.
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Health Reform Implementation Timeline
2012
 Summary of Benefit (Standardized
language – eff 09-23-12) (see additional
comments on page 26)
See: www.healthcare.gov
Search: Summary of Benefits and Coverage
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Health Reform Implementation Timeline
2013
 Insurance Reforms (CO-OP; enhanced use of
e-filing)
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Health Reform Implementation Timeline
2013
 Insurance Reforms (CO-OP; enhanced use of
e-filing)
 Employer Notice Requirements – (03-01-13)
Requires employers to provide written notice
informing employees about the Exchange and
potential eligibility for premium credits. (Released
06/2013 – one for coverage / one for no coverage)
This info is NOT in your outline:
Very important … please make a
note at the bottom of page 14.
Search: Jones Day aca exchange notification
Search: Jones Day aca exchange notification
Health Reform Implementation Timeline
2013
 Insurance Reforms (CO-OP; enhanced use of
e-filing)
 Employer Notice Requirements – (03-01-13)
Requires employers to provide written notice
informing employees about the Exchange and
potential eligibility for premium credits. (Released
06/2013 – one for coverage / one for no coverage)
 Medicare (Phase-in federal subsidies for brand
named prescriptions – Part D)
 Tax Change
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Key Provisions of Tax Changes (2013)
 New or revised taxes to help pay for NHCR
- Increase threshold for the itemized deduction for
un-reimbursed medical expenses from 7½% to 10% of AGI
- Increase the Medicare Part A tax rate on wages by 0.9%
(from 1.45% to 2.35%) on earnings over $200K
(individual) and $250K (married/ filing jointly). 3.8%
assessment on unearned income (high income tax payers)
- Max ‘EE contribution to FSA for medical - $2,500 per year
- Excise tax (2.3%) on medical devices (hip replacement, xray machine, etc. – numerous exceptions exists)
- Eliminated ‘ER deduction for retiree Medicare Part D
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Health Reform Implementation Timeline
2014
 Individual and Employer Requirements
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Individual and Employer Requirements (2014)
 Require U.S. citizens and legal immigrants to have
qualified health coverage
- For Individuals: Phased-in tax penalty
- For Large Employers: Possible penalties to “Large ‘ER”
(50 or more FTEs – 30 hrs)
- Complex rules and variables exist
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Individual Non-Compliance - ACA (2014)
 Those who fall under the “requirement” but fail to
carry at least the “Bronze” plans will be subject to a
penalty: (the greater of…)
- $95 per year in 2014, $325 in 2015, $695 in
2016 (half that amount for children under age
18), up to maximum of three times those
penalty amounts per family, OR,
- 1% of income above the tax filing threshold in
2014, 2% in 2015, and 2½% in 2016
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Individual Non-Compliance - ACA (2014)
What are the Potential Financial Penalties
to Individuals who do NOT carry insurance?
- Family of Four (includes 2 children under age 18) $100K Taxable -
Income
2014
2015
2016
$100,000
$285
$975
$2,085
Income
$1,000 (1%) $2,000 (2%) $2,500 (2½%)
The penalty is the greater of the two calculations
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Individual Non-Compliance - ACA (2014)
 The penalty is pro-rated for the number of months
without coverage. However, the rules state there is
no penalty for a single gap of less than 3 months
for the entire calendar year.
 EXAMPLE: The family in the prior slide had no
coverage for 4 months (1/3 of the calendar year).
The penalty in 2014 would be the greater of $86
($285 ÷ .333), or $333 ($1,000 ÷ .333) for the entire
year.
Individual and Employer Requirements (2014)
 So… individuals (and their tax-dependents) will have to
prove they have purchased a QHP in 2014? How does it
appear this will happen?

When you file your taxes you will have to attach
documentation from your health insurance carrier,
employer, or Exchange / Marketplace

If you are a W-2 employee and your employer does
provides a QHP they will have to provide that
information on your W-2 (or similar documentation)
Employer Responsibility / Penalties (2014)
 Large Employer (50+ EEs) (* Delayed until 2015)
- Full time employees (30 hrs)
- Part time employees
 Small Employer (1 to 49 EEs)
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Employer Responsibility / Penalties (2014)
 Possible financial penalties for an ‘ERs that DOES NOT
offer coverage *
- If ANY FTE receives premium assistance (due to FPL) from
the government (and through the Exchange) the ‘ER will
face an annual fee of $2,000 imposed on every full-time
‘EE (excluding the 1st 30 ‘EEs). Penalties are pro-rated
monthly.
-
EXAMPLE …
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Employer Responsibility / Penalties (2014)
For Employers That DO NOT Offer Coverage *
- An ‘ER has 65 FTE workers, and does not
offer coverage. There is at least one ‘EE who
receives premium assistance from the gov’t
- To determine the financial penalty
- Deduct the 1st 30 ‘EEs
- Multiply remaining 35 by $2,000 each
- Annual penalty paid by the ‘ER
65 Total EEs
- 30
35 x $2,000 = $70,000
$70,000

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Employer Responsibility / Penalties (2014)
 Possible financial penalties for an ‘ERs that DOES offer
coverage *
- If ANY FTE receives premium assistance (due to FPL) from
the government (and through the Exchange) the ‘ER will
face an annual fee of the lesser of $2,000 imposed on every
full-time ‘EE (excluding the 1st 30 ‘EEs), OR $3,000 for each
FTE that receives a premium subsidy. Penalties are prorated monthly.
-
EXAMPLE …
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Employer Responsibility / Penalties (2014)
For Employers That DO Offer Coverage *
- An ‘ER has 65 FTE workers, and does offer
coverage. There are 15 ‘EE who receives
premium assistance from the government
- To determine the financial penalty
- Deduct the 1st 30 ‘EEs
- Multiply remaining 35 ‘EEs by $2,000 each
- Penalty paid by the ‘ER
- OR
- 15 ‘EEs receiving premium asst x $3,000
- ‘ER assessed penalty – lesser of the two
65 Total EEs
- 30
35 x $2,000 = $70,000
$70,000
$45,000
$45,000
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Employer Responsibility / Penalties (2014)

Joe’s Burgers & Shakes *
- 3 locations
- 40 FTEs
- 20 PTEs
20 PTE x 24 hrs x 4 = 1920 hrs /
120 (minimum FTE work hrs in
a calendar month) = 16 EEs
20 PTEs at 24 hrs per week (1920 hrs / month)
1920 ÷ 120 = 16 PTEs + 40 FTEs =
56
- Joe is now considered a “LARGE EMPLOYER”
Employer Responsibility / Penalties (2014)
Joe’s Burgers & Shakes – Coverage NOT Offered
- ‘ER has 40 FTE workers, and does not offer
coverage. There is at least one ‘EE who
receives premium assistance from the gov’t
- To determine the financial penalty
- Deduct the 1st 30 ‘EEs
- Multiply remaining 10 by $2,000 each
- Annual penalty paid by the ‘ER
40 Total EEs
- 30
10 x $2,000 = $20,000
$20,000

Employer Responsibility / Penalties (2014)
Joe’s Burgers & Shakes – Coverage IS Offered
- ‘ER has 40 FTE workers, and does offer
coverage. There are 15 ‘EE who receives
premium assistance from the government
- To determine the financial penalty
- Deduct the 1st 30 ‘EEs
- Multiply remaining 10 ‘EEs by $2,000 each
- Penalty paid by the ‘ER
- OR
- 15 ‘EEs receiving premium asst x $3,000
- ‘ER assessed penalty – lesser of the two
40 Total EEs
- 30
10 x $2,000 = $20,000
$20,000
$45,000
$20,000
Employer Responsibility / Penalties (2014)
Consider this Potential Scenario for the
Uninformed Business Owner in 2014 (Delayed until 2015)

Mountain Top Resort - Golf Course, Lodge & Spa
- 49 FETs
- Provides NO Qualified Health Plan to its EEs
- So … it pays no ACA “shared responsibility payment”
- But business improves … so, they hire a new FTE (#50)
for the entire year. Look what it will cost as mandated
by the ACA if only ONE FTE receives a subsidy:
- $2,000 x 20 (50 – 30) = $40,000
Employer Responsibility / Penalties (2014)
 FPL and how it will work in 2014 (and later)
- Premium assistance for those individuals earning less
than 400% of FPL. Currently (2013 numbers), this is
income at $45,980 for an individual and $94,200 for a
family of four.
- The premium assistance will INCREASE to eligible
individuals / families as the percentage of FPL goes
DOWN.

The CBO’s estimates of the average individual subsidy:
05/2010 was $3,970; 10/2012 was revised to $4,780;
02/2013 was revised to now be $5,510
Employer Responsibility / Penalties (2014)
 In terms of calculating potential penalties, part-time
employees (and their hours) are only used to see if an
employer is a “large employer”.
- Penalties (if any) are ONLY calculated on FTEs
- No penalties on part-time employee, even if that part-time
employee received Premium Assistance.
- If no FTE receives Premium Assistance (only part-time)
the employer will have no possibility of a penalty.
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Potential Penalties for Employers Under PPACA – 2014 *
Does the ‘ER have at
least 50 FTEs?
Start Here
NO
Penalties do
not apply to
small ‘ERs
If ‘ER has 25 or fewer
‘EEs and average
wage up to 25K – ‘ER
may be eligible for a
health insurance tax
credit.
‘ER must pay a
penalty for not
offering coverage
‘ER penalty is $2,000
annually times the
number of FTEs minus
30.The penalty is
increased each year
by the growth of ins
premiums.
‘ER must pay a
penalty for not
offering affordable
coverage
‘ER penalty is $3,000
annually for each FTE
receiving a premium
tax credit, up to max of
$2,000 times the
number of FTEs minus
30. The penalty is
increased each year
by the growth of ins
premiums.
YES
Does the ‘ER offer
coverage to its
workers?
NO
YES
Does the insurance pay
at least 60% of covered
health expenses (for the NO
typical population?)
Did at least one ‘EE
receive Premium
Assistance or costsharing subsidy?
YES
‘EEs can choose to buy
coverage in an
Exchange and receive a
premium tax credit.
YES
Do any ‘EEs have to
pay more than 9.5% of
individual income for
self-only coverage?
YES
‘EEs can choose to buy
coverage in an
Exchange and receive a
premium tax credit.
NO
No penalty to ‘ER
since it offers
affordable
coverage
Source: Kaiser Family Foundation
http://healthreform.kff.org/the-basics/employerpenalty-flowchart.aspix
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Employer Responsibility / Penalties (2014)
 In 2014, Employers (50 + FTE) must decide … *
- Whether to offer medical coverage or potentially face a
financial penalty;
- If coverage is provided to employees … is it considered
“affordable” enough to avoid a potential financial penalty?
NOTE: Employers will not be required to provide
health insurance to employees in 2014.
Individuals will be required to maintain a QHP or
face a penalty. But the possibility of “penalties”
to the employer will probably make them
discuss the various options with their
accountant and health insurance professional.
Employer Responsibility / Penalties (2014)
 In 2014, Employers (50 + FTE) must decide … *
- Whether to offer medical coverage or potentially face a
financial penalty;
- If coverage is provided to employees … is it considered
“affordable” enough to avoid a potential financial penalty?
NOTE: The FPL issue is actually a multiple part
question / test: 1) Is the ‘EE under 400% FPL?; 2) Does
the ‘ER provide a plan that pays least 60% of the
health expenses (for the typical population); 3) Is the
‘EEs required premium contribution “unaffordable” meaning …does it exceed 9.5%* of the employee’s
income for self-only coverage?
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QHP Premium Paid by the Employee – Is It Affordable?
- Sarah’s annual salary is $40,000. Her husband’s salary with
another ‘ER is also $40,000. They have two children under
age 18. They would be eligible for premium assistance due
to the FPL rule. Sarah’s ‘ER provides her a QHP.
- Sarah’s QHP covers all family members. The annual cost of
the self-only portion is $4,800 annually ($400 per month).
- The ‘ER pays 90% of Sarah’s premium ($360 per month) and
Sarah pays the remaining 10% ($40 per month). She pays
100% of the family member’s premium.
- 9.5% of Sarah’s annual income (40,000 x 9.5%) is $3,800.
That works out to be $316.66 per month. Thus the ‘EE
required premium is considered “affordable”. Sarah is NOT
eligible for any premium assistance.
Employer Responsibility / Penalties (2014)
Maximum Premium Payment Under ACA
Percent of Federal Poverty
Level in 2012
Maximum Premium As a
% of Income in 2014
133%
133.01%
150%
200%
250%
300%
400%
2.00%
3.00%
4.00%
6.30%
8.05%
9.50%
9.50%
 Jimmy – Bartender for Beach Grill (has 15 EEs)
 Jimmy is single - his W-2 shows $34,000
(@300% FPL)
 Scenario #1 - Beach Grill provides NO QHP
 Jimmy can go to the Marketplace and apply
for a subsidy and select the plan he desires. He
will pay the balance of the un-subsidized
premium. Beach Grill will have no ACA penalty
placed on them for not providing a QHP.
 Jimmy – Bartender for Beach Grill (has 15 EEs)
 Jimmy is single - his W-2 shows $34,000
(@300% FPL)
 Scenario #2 - Beach Grill provides a plan of
health that is classified as a ‘Mini-Med’ ($50,000
annual limits)
 This plan of insurance is NOT a QHP. Jimmy
can go to the Marketplace and apply for a
subsidy and select the plan he desires. He will
pay the balance of the un-subsidized premium.
Beach Grill will have no ACA penalty placed on
them for not providing a QHP.
 Jimmy – Bartender for Beach Grill (has 15 EEs)
 Jimmy is single - his W-2 shows $34,000
(@300% FPL)
 Scenario #3 – ER provides a Bronze Plan (QHP)
and pays 70% of Jimmy’s premium. What Jimmy
has to pay works to be 15% of his income.
 Jimmy’s premium is ‘unaffordable’. He can
go to the Marketplace and apply for a subsidy
and select the plan he desires. He will pay the
balance of the un-subsidized premium. Beach
Grill will have no ACA penalty placed on them
when Jimmy receives a subsidy.
 Jimmy – Bartender for Beach Grill (has 15 EEs)
 Jimmy is single - his W-2 shows $34,000
(@300% FPL)
 Scenario #4 – Beach Grill provides a Bronze Plan
(QHP) and pays 90% of Jimmy’s premium. What
Jimmy has to pay works to be 8% of his income.
But Jimmy wants a Gold plan… one that will pay
more of covered claims.
 The premium is considered ‘affordable’. Jimmy is
NOT eligible for a subsidy since the employer’s plan is
both a QHP and is ‘affordable’. If he wants a broader
plan he will pay the FULL cost. Beach Grill will have no
ACA penalty - even if they were to have 50+ EEs.
Health Reform Implementation Timeline
2014
 Individual and Employer Requirements
 Insurance Reforms
19
Key Provisions of Insurance Reform (2014)
 Create state-based Health Benefit Exchanges & SHOP
(Small Business Health Options)
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Key Provisions of Insurance Reform (2014)
 Create state-based Health Benefit Exchanges
(Marketplace) & SHOP
QUESTIONS:
What is an Exchange?
Who will operate it?
What will it physically look like?
What if a state says “NO”? (which 27 states
– including Louisiana – have done so)
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States Health Insurance Marketplace Decisions, May 10, 2013
VT
WA
ME
ND
MT
N
H
MA
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
RI
DC
NC
TN
SC
AR
MS
AK
NY
WI
SD
ID
AL
GA
LA
FL
HI
State-based Marketplace (16 states and DC)
Partnership Marketplace (7 states)
Federally-facilitated Marketplace (27 states)
* In Utah, the federal government will run the marketplace for individuals while the state will run the small business,
or SHOP, marketplace.
Health Insurance Marketplace (2014)

Goal of PPACA: 1) provide health care to millions of
uninsured Americans, and, 2) making that coverage
more affordable.
- Introduce managed retail competition into the
marketplace and encourage better pricing and
quality coverage
- Easier “comparison” shopping
- Offer choices in standard benefit plans and levels of
coverage
- Clear communication regarding plans and rates 19
Health Insurance Marketplace (2014)
 Marketplace and the PPACA (in 2014)
O Marketplaces will be eligible to most “nonemployees”, but not an “open market” to go shopping
-
Work at companies with less than 100 Employees
Work for a company that does not provide health insurance
Self-employed
Unemployed
Retired, but not eligible for Medicare
Small business
After 2017, medium and large businesses will be eligible
Health Insurance Marketplace (2014)
PPACA – Four Levels (“Tiers”) of Coverage:
Plan Level
Percent of Average
Medical Cost Covered
Consumer CostSharing
Platinum
Gold
90%
80%
10%
20%
Silver
Bronze
70%
60%
30%
40%
Note: Insurance carriers can sell in or out of the Marketplace.
The PPACA will allow states the option to require additional
“state specific mandates”. Additionally, insurance carriers
(and agents) may find a niche sales area in the FSA,
supplemental accident, critical illness, or similar products. 20
Tax
“Dumpster”
(Subsidy)
Exchange / Marketplace
(State or Federal)
Application (on-line or paper)
Social
Security
Subsidy $$
Goes to
Insurance
Company
Homeland
Security
After Approval – Selects Ins
Company and Medal Plan
Internal Rev
Service
Applicant
Pays
Balance of
Premium
USA Today family glitch
Applying For, Renewals and Making Changes - ACA
 Applying for and Renewal – including new and revised
subsidy
- Oct 1st and then for approximately three month
each year (until March 31, 2014 for this sign-up period only)
 What about changes during the calendar year?
- Only for special events:
M - Marriage
A - Adoption
D - Death
M - Maternity
D - Divorce
Health Insurance Marketplace (2014)
35 - 43
ACA Marketplace Navigators (2014)

Navigators
- Each Marketplace is required to establish a
“Navigator” program, which will award grants to
“navigators” who educate and enroll individuals
and small businesses in the Marketplace plans
according to established criteria.

Functions of an Marketplace Navigator:
20
ACA Marketplace Navigators (2014)
- Conduct public education activities to raise awareness
of the availability of QHP
- Distribute fair and impartial information concerning
enrollment in QHPs and the availability of premium
tax credits (subsidies) and cost-sharing reductions
- Facilitate enrollment in QHPs
- Provide referrals for enrollees with grievances,
complaints or questions to any applicable office of
health insurance consumer or appropriate agency
20
Health Reform Implementation Timeline
2014
 Individual and Employer Requirements
 Insurance Reforms / Delivery System
Released December 09, 2012: starting 01-01-2014
every Qualified Health Plan will contain a $63.00
annual per-enrollee fee ($5.25 per month). It will
continue for 3 years and raise @ $25 billion. It will
be split as follows: 17½% going to the ACA to “for
various ACA plans” and the balance (82½%) will go
to the health insurance companies to “cushion the
potential initial expenses and potential losses”
regarding “guaranteed issue and no-pre-existing
conditions” starting in 2014.
20
Google: PPACA transitional reinsurance fee crawford
The 2014 Transitional Reinsurance Fee in Action …
-
176 ‘EEs (‘ER currently pay 80% of premium for ‘EE
only)
164 Individuals covered
103 Spouses
209 Dependents
476 Total covered “heads” (2.7 “covered heads”
per ‘EE)
11 COBRA QB & 9 retirees = 496 total “heads”
- $63 x 496 = $31,248
-
$31,000 … plus renewal premium that everyone
feels will increase in 2014 over 2013 levels!
Key Provisions of Insurance Reform (2014)
 Create state-based Health Benefit Marketplaces
 Require Guaranteed Issue and Guaranteed Renewable
plans in the individual, small groups and Marketplaces
- Premiums / rates must follow required thresholds
concerning ages (3 to 1 limit), rating area, family
composition and tobacco use (max ratio: 1.5 to 1).
Note: No FPL subsidy is allowed for the tobacco
surcharge portion on individual plans. Nor is it
eligible for a group coverage participation UNLESS
they enroll in a “smoking / tobacco cessation
program”.
19
How Might Tobacco Use Impact Your Health Insurance
Premiums and Potential Subsidy in 2014 and Beyond?
- Al is 58, single, an auto mechanic, earns $35,000
annually and is not provided a QHP through his
employer (Al’s Garage). He is also a smoker. Assume his
individual QHP cost $9,000 annually. His FPL subsidy
(through the Marketplace) may bring his premium
down to $5,000. If the carrier uses the full 1.5 tobacco
surcharge the premium is increased by $4,500 (50%
surcharge of $9,000) …now a total of $9,500. Rules DO
NOT allow the subsidy to apply to the surcharge ($4,500).
24
How Might Tobacco Use Impact Your Health Insurance
Premiums and Potential Subsidy in 2014 and Beyond?
- Consider this possibility: (assuming Nat Avg Prem - @$14,000)
- Husband & wife (no dependants) / $100,000 annual
income … thus, NOT eligible for a premium subsidy
- Both are tobacco users and their health insurance
carrier uses the maximum allowable surcharge (1.5)
- $14,000 x 1.5 = $21,000
- Options: 1) Pay the premium; 2) Shop the Marketplace
for a better deal; 3) forgo the insurance and pay the
annual penalty ($1,000) – But They Risk Bankruptcy!
24
The ACA and Tobacco Rating
 The tobacco surcharge rating can be “state-specific”
(Meaning: YES; NO; Percentage less than 1.5)
 A carrier may charge less than 1.5 – some have
announced there will be no tobacco rating
 Tobacco usage is defined in terms of regular usage
and time last used: average of 4+ in a week / within
the last 6 months
 An interesting fact: there are no provisions, questions
nor surcharge regarding the usage of marijuana,
cocaine, etc.
Key Provisions of Insurance Reform (2014)
 Create state-based Health Benefit Marketplaces
 Require Guaranteed Issue and Guaranteed Renewable
plans in the individual, small groups and Marketplaces
- Premiums / rates must follow required thresholds
concerning ages (3 to 1 ratio), rating area, family
composition and tobacco use (1.5 to 1 ratio)
 Reduce out-of-pocket limits for those with income below
certain Federal Poverty Levels (FPL)
 Deductible limitations for small groups (various rules)
 Limit new coverage waiting period to 90 days
19
Key Provisions of Insurance Reform (2014)
 Create a health benefit package (Essential Health
Benefits) …
- who has to comply,
- what are the coverage requirements, and,
- who are exempt?
19
Who Has to Comply? (2014)
 … will be included in ALL PLANS …
- various government-sponsored programs
- eligible employer-sponsored plans
- plans in the individual market
- grandfathered group health plans
- others (as recognized by HHS)
So… who has to comply with the ACA?
All for-profits companies, all non-profits
(churches, universities, schools, etc.),
governmental entities (state, local,
municipalities, etc.), and, of course,
individuals. Basically, NO one is exempt!
22
What are the Coverage Requirements? (2014)

1)
2)
3)
4)
5)
Coverage must include benefits for:
Ambulatory patient services;
emergency services;
hospitalization;
maternity and newborn care;
mental health and substance use disorder
services, including behavioral health treatment;
6) prescription drugs;
7) rehabilitative services and devices;
8) laboratory services;
9) preventive/ wellness/ disease management;
10) pediatric services, including oral and vision care.
22
Who are Exempt? (2014)
Coverage will be required to be maintained by all
individuals, with EXCEPTION:
-
religious objections,
financial hardships,
undocumented immigrants,
American Indians,
those incarcerated,
citizens not residing in the U.S.,
people earning under the tax-filing threshold, and,those with short gaps in coverage
22
“Coverage Requirements” (2014)
 Recently announced by HHS: If an
Employer provides a QHP for its
employees, it must also make available:
… but the employer is NOT required to make any
contribution toward the dependant coverage
Key Provisions of Insurance Reform (2014)
 Create a health benefit package (Essential Health
Benefits) : States can add to the ACA mandated list,
but cannot restrict, or take away from the ACA list.
Everyone in that state will have to purchase at least

the “minimum plan”.
What is your state doing regarding ACA essential
health benefits and required state mandates?
http://www.ncsl.org/issues-research/health/
state-ins-mandates-and-aca-essential-benefits.aspx
22
Health Reform Implementation Timeline
2014
 Individual and Employer Requirements
 Insurance Reforms
 Premium Subsidies
19
NOTE: As of January 1, 2014 … an
individual / family that receive
an ACA subsidy (Exchange) will
have a 90 DAY grace period for
premium payments! For nonsubsidy contracts, it will be 30
days.
30
- Continue coverage – Insurer covers for 1st 30
- Notify HHS of non-payment
- Notify providers of the possibility of denied
claims during 2nd and 3rd months (providers on the hook!)
- Notify the insured he / she is delinquent
- Continue to collect the advanced tax credit on
behalf of the policyholder (in case they catch-up premiums!)
- Return the tax credit for the 2nd and 3rd month
to the Treasury Department (if insured fails to pay)
- End of grace period - issue termination notice
30
- … AND – the insurance carrier must also
determine whether the insured has a disability as
defined by the Americans With Disability Act …
and if so, then make “reasonable
accommodations” for such individuals.
30
Health Reform Implementation Timeline
2015 and Later
 Insurance Reforms – States can form
“Compacts” to sell QHPs effect in 2015
 Medicare - Close the “dough-nut hole” (Part – D
Medicare Prescription Drug Benefit - Eff 01-01-2020)
 Tax Change - “Cadillac Plan” (2018)
21
How Will the Cost of Health Care
Reform Be Paid? (Note: Not a Complete List)
1. (2010) Drug manufactures
2. (2010) 10% Indoor Tanning services
3. (2011) Doubles (to 20%) tax on non-qualified
HSA distributions
4. (2013) Raises Medicare Part A on wages by 0.9%
(over $250,000). Also, 3.8% assessment on
“unearned income” (interest, dividends, capital gains,
annuities, royalties & rents - $250K excess)
23
How Will the Cost of Health Care
Reform Be Paid? (Note: Not a Complete List)
5. (2013) Increase from 7½% to 10% of AGI –
medical expenses itemized on Schedule A
6. (2013) Eliminates ‘ER deductions for Part D
Medicare for retirees
7. (2013) Limits FSA contributions for medical
expenses to $2,500 annually
8. (2013) Imposes 2.3% excise tax on certain
medical devices
23
How Will the Cost of Health Care
Reform Be Paid? (Note: Not a Complete List)
9. (2014) Phased-in tax penalty for US citizens
failing to maintain health insurance (see note on pg 16)
10. (2014) Fine imposed on employers (50 or more
full time EEs * ) that do not offer coverage (see note
on pg 16)
23
How Will the Cost of Health Care
Reform Be Paid? (Note: Not a Complete List)
9. (2014) Phased-in tax penalty for US citizens
failing to maintain health insurance (see note on pg 14)
10. (2014) Fine imposed on employers (50 or more
full time EEs *) that do not offer coverage
11. (2018) Imposes excise tax on “Cadillac Plans”.
The tax is paid by the employer.
23
How Will the Cost of Health Care
Reform Be Paid? (Note: Not a Complete List)
- The Employer
 Insurance premiums are still deductible
(with exceptions).
 50+ Full Time FTEs – The TWO questions that
all Employers will ask?
- Do I provider coverage?
- Do I NOT provide coverage?
A possible penalty in either scenario - (2014)*


 Mom & Dad, Inc. – 60 ‘EEs in 2013
 Mom, Inc – 30 ‘EEs in 2014
 Dad, Inc – 30 ‘EEs in 2014
 Be VERY Careful! Potential HEAVY
penalties under ACA!!
24
Employer Responsibility / Penalties (2014)
So … Let’s Review – Potential Employer Penalty
Under 50 FTEs
50+ FTEs - No QHP
50+ FTEs – Provides QHP
- No chance of
ANY penalty
- Chance of a tax
credit for certain
size groups
- One FTE receives FPL
subsidy through the
Marketplace and ‘ER will
have a $2,000 annual penalty
on ALL FTEs, excluding the
first 30 ‘EEs. Penalty prorated monthly. *
- Same rule as to the left, but
penalty is the lesser of:
EXAMPLE: 100 ‘EEs. One ‘EE
receives a subsidy. 100 – 30 =
70 x $2,000 = $140,000
(“Shared Responsibility
Payment” … which is not
deductible)
-1) Did ‘EE receive FPL
subsidy? 2) Is the plan broad
enough (60%)? 3) Is ‘EEs
required portion of premium
for QHP deemed “unaffordable”? If fail on any*, $3,000
for EACH qualifying ‘EE. *
EXAMPLE: 100 ‘EEs. 30
qualifies. 30 x 3,000 = $90,000
(or lesser of table to left).
24
* - Exceptions apply
Employer Incentives / Penalties (2014)
 In 2014 will be a critical year for Employers as it relates
to National Health Care Reform
- Certain tax incentives will be in place for a business that
has 25 or fewer FTEs (tax incentives will vary depending
on “average income”)
- Potential penalties will exist for a business that has 50 or
more FTEs
- At present there are no tax incentives nor potential
penalties for a business that has 26 to 49 FTEs
The balance of the outline (from the middle of
page 25 thru page 46) reviews how the ACA
addresses …
 Grandfathering
 The impact on Medicare and Medicaid
 Children’s Health Insurance Program (CHIPs)
 Grace Period / “10 Things to Know About Exchange”
 The impact on traditional health insurance carriers
 The impact on Consumer Driven Health Plans (FSAs,
HRAs, HSAs)
 The impact on Medicare Supplement and Medicare
Advantage plans (Medicare - Part C)
26
55
Are Changes Ahead for the ACA?
Various components of the ACA has been
challenged in several courts. SCOTUS ruled
(June 28, 2012) that the “individual mandate”
is constitutional. There are still a few
challenges in the courts regarding various
components of the law. But the Presidential
election has settled the issue regarding the
law’s implementation.
See article at the end of this outline regarding Taxes, Fees and Premiums
56
- How Can You Understand the ACA Let’s Compare it to Property & Casualty Insurance – 2014
ACA Rule - 2014
Property & Casualty Analogy
No one denied coverage
Fully underwritten
No underwriting questions (pre-ex)
Guaranteed renewable
No annual / lifetime limits
Fully underwritten
Could be “non-renewed”
Values: Replacement / ACV
Everyone must have coverage*
Only if required by bank / state
Subsidized premiums (133-400 FPL)
80% - 85% Medical Loss Ratio
No Cost Wellness / Prevention
N/A
Applies to some lines / states
N/A
… and remember, more finalized
rules are still to be released!
56
National Health
Care Reform
- Affordable Care Act -
THANK YOU FOR YOUR ATTENDANCE
AND PARTICIPATION
Jerry Rhinehart, CIC, CLU, ChFC, RHU
Panama City, FL
jerhinehart@comcast.net