This UBA WisdomWorkplace webinar program
is brought to you by United Benefit Advisors
in conjunction with our Partner Firms
Innovative Benefit Planning & Hanna Global Solutions
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Health Care Reform: An
Update On PPACA
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Agenda
• PPACA Compliance 2012-2013
• Individual Mandate & The Health Care
Marketplace (Exchange)
• PPACA Provisions 2014
• Play or Pay 2015
• Reporting Requirements
• Private Corporate Exchange Option
• What Are Employers Doing To Prepare?
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
PPACA Compliance 2012
W-2 Reporting 2013 for 2012 plan year
• Required for employers that filed more than 250 W-2s for tax year 2011.
(Companies in a Controlled Group situation count by their individual
Federal ID rather than the group total)
The Minimum Loss Ratio is:
•
•
85% for large group plans (>100 employees)
80% for small group plans (<100 employees) and individual plans
•
Carriers will have to issue a premium rebate to individuals for plans
that fail to meet the Minimum Loss Ratio requirements
Applies to all fully insured and grandfathered plans. Self-insured plans
are exempt.
•
*First of the rebates were issued August 2012
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
PPACA Compliance 2012
Summary of Benefits and Coverage Requirements and Uniform
Glossary
• Required 1st day of 1st open enrollment period or 1st plan year after 9/23/12
• May be posted on a single webpage or electronically provided the option of a
paper copy is available
• Must be provided no later than 7 days after receiving a “substantially complete”
application
Penalty: up to $1,000 per instance of willfully failing to provide required information
(no penalty 1st year if working in good faith to comply)
Material Modification of Plan Provision
• If any material modification is made by a group health plan or health insurance
issuer in terms of the plan or coverage (during the plan year), enrollees must be
notified 60 days prior to the effective date of the change
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
2013 PPACA
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
2013: WHAT’S HAPPENED SO FAR?
•
FSA Annual Limit – $2,500 per year
o limit applies on a plan year basis and became effective
for cafeteria plans beginning after December 31, 2012.
o May “carry over” up to $500 of unused contributions to
following year. Plan must be amended. May use either
grace period or carry over, not both.
• HRAs – standalone HRAs not permitted after the 2013 plan
year. HRAs integrated with group health plans still allowed.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
2013 Tax for Comparative Research
(PCORI)
• Federal tax on fully and self-insured group health plans used to fund Patient
•
•
Centered Outcome Research (PCORI).
Fee imposed = $1x average # lives covered for plan years ending by
9/30/13. Increases to $2 for plan years starting after 9/30/13. Subsequent
years will be adjusted for inflation accordingly.
DUE DATES:
o Was due July 31, 2013 for plan years ending October 1, 2012 through
December 31, 2012.
o Due July 31, 2014 for plan years ending January 1, 2013 through September
30, 2013.
• Self-funded:
•
o TPAs can’t file the return or pay the fee Plan sponsors must file Form
720 annually
o Fees must be paid by July 31st of each calendar year immediately
following the last day of the plan year.
Fee does NOT apply to policy years ending after September 30, 2019
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
2013 Tax for Comparative Research
(PCORI)
Also Applies to HRA and some FSA Plans
• FSA - For a fully insured plan, sponsors that offer an FSA may be required to
pay the PCORI fee
 If the FSA is considered an excepted benefit , it will not be subject to the
fee. To be considered an excepted benefit the FSA :
o Must be offered in addition to a group health plan,
o And the arrangement is structured so that the maximum benefit
payable to any eligible participant cannot exceed two times the
participant’s salary reduction election (or, if greater, $500 plus the
amount of the salary reduction election).
• HRA – If the medical coverage is fully insured and the HRA is self-insured
a separate payment would be due.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Health Insurance Marketplace
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Individual Mandate
If an individual is uninsured for more than three months in 2014,
he/she may incur the tax penalty for the Individual Mandate as
follows:
 2014 Penalty – Greater of 1% of taxable income or $95
per adult and $47.50 per child (up to $285 per family)
 2015 Penalty – Greater of 2% of taxable income or
$325 per adult and $162.50 per child (up to $975 per
family)
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Exchanges/Marketplace
What is a Health Insurance Marketplace?
A public virtual Marketplace run by the
Government that provides a new place
to shop for, and buy, health
insurance.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Exchanges
Effective no later than 1/1/2014
Levels of coverage to be offered through the Exchange:
•
Bronze Plan -
• Silver Plan •
Gold Plan -
• Platinum Plan -
Provides 60% of actuarial value of
minimum qualifying coverage.
Provides 70% of actuarial value of
minimum qualifying coverage.
Provides 80% of actuarial value of
minimum qualifying coverage.
Provides 90% of actuarial value of
minimum qualifying coverage.
• Catastrophic Plan Available to individuals aged 21-30 at time of enrollment and also those
exempt from coverage mandate due to affordability or hardship.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
What Are Premium Tax Credits?
 Starting in January 2014, a new Federal Tax Credit will be
available to help individuals that qualify to purchase health
insurance in the newly established Health Insurance
Marketplaces (Exchanges).
 To Qualify for Premium Tax Credits
 Income under 400% of federal poverty level
 Not eligible for coverage through a government program such as
Medicare, Medicaid or Chip
 Not eligible for minimum value and affordable coverage through the
employer
 Payments of the premium tax credits can go directly to insurers
to pay a share of the monthly health insurance premiums
charged to individuals and families, offering eligible individuals
and families a reduction in their monthly premiums.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
400% of Poverty level
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
What Are Cost-Sharing Subsidies?
 Cost-Sharing Subsidies will help individuals to pay for costsharing aspects of the plan such as deductibles, copayments,
and other out-of-pocket charges.
 Individuals and families with incomes between 100% and 250%
of the federal poverty level are eligible if they are eligible for
premium tax credits and purchase a Silver Plan.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Subsidy Availability
Family Income in Terms of Federal Poverty Level
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
2014 and 2015 PPACA
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
2014 and 2015 Provisions
• Pre-Existing Conditions – prohibited for all members as of the start
of the 2014 plan year; must guarantee issuance and must be
renewable
• Waiting Period – may not be more than 90 days; effective with the
start of the 2014 plan year
• Annual limits – entirely prohibited for 2014 plan years
• Clinical Trials – Plans must provide coverage for treatment of cancer
or other life-threatening diseases; effective with the start of the 2014
plan year
• Definition of Full-Time Employee – employee averages 30 or more
hours per week; with delay of Play or Pay effective 2015
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
“Essential” Coverage
Beginning with the 2014 plan year, non-grandfathered plans must have a
qualified plan which provides “essential health benefits”. Benefits shall
include the following categories…
• Ambulatory patient services
• Laboratory services
• Emergency Services
• Maternity and newborn care
• Hospitalization
• Rehabilitative & habilitative
devices and services
• Mental Health and substance
use disorders, including
behavioral health treatment
• Prescription drugs
• Preventive and wellness
services and chronic
disease management
• Pediatric services, including
oral and vision care
Self-funded plans do not have the Essential Coverage Requirements.
However, must provide an actuarial benefit of at least 60%, which is
considered “minimum value”.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
2014 Provisions
Wellness Incentives
• Types of programs:
 Participatory: not based on health status
 Activity-Based and Results-Based: rewards are
offered for achieving set goals
• Employers may vary premiums:
 up to 30% (for programs not related to avoidance of
tobacco) or,
 up to 50% (for programs related to tobacco)
• Employers must provide a “reasonable alternative standard”
if employee has medical condition that prohibits them from
participating or accomplishing set goals, as per his/her
doctor’s waiver.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
2014 Additional Fees and Taxes
• The Transitional Reinsurance Program (TRP)
Intended to provide funding to cover additional costs
associated with covering formerly uninsured individuals
who may have unmet health needs. The program will run
from 2014 through 2016 and would be funded by both fully
insured and self-funded plans.
 Applies only to major medical coverage.
 Estimated fee for 2014 is $5.25 per covered person
per month, or $63 for the year. This will drop to $44
for 2015. Self-administered, self-funded plans will
possibly be exempt from paying the fee for 2015 and
2016.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
2014 Additional Fees and Taxes
• Health Insurance Provider Tax – Imposes aggregate
annual tax apportioned among health insurers
o
o
o
o
o
o
2014: $8 billion
2015: $11.3 billion
2016: $13.9 billion
2017: $13.9 billion
2018: $14.3 billion
After 2018 the applicable tax is indexed to the rate of
premium growth of the prior year’s premium.
**Self funded employer plans are exempt
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Should You Consider
Self-Funding?
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Tax Advantages of Self-Funding Under PPACA
$175
Admin
Taxes
$150
$125
$59.61
$100
$75
$44.38
$10.10
$50
$77.25
$75.00
$86.95
$0.40
$0.35
$25
Fully
Ins
Insured
Self
SF
Funded
2013
$35.01
$32.99
$32.50
$0
$11.38
Fully
Ins
Insured
2014
Includes Transitional Reinsurance Fee, Federal Carrier
Fee, State Taxes and PCORI fees
Self
SF
Funded
Fully
Ins
Insured
Self
SF
Funded
2018
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Play or Pay 2015
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Play or Pay
• PPACA provides that an employer that has 50 or more
full-time employees or full-time employee equivalents (a
“large employer”) must provide health coverage, or pay
one of two penalties.
o Families of companies are added together.
PPACA calls for two possible penalties:
• one for not offering “minimum
essential” coverage
• one for offering coverage that is
considered inadequate because
it is not “affordable” and/or it does
not provide “minimum value.”
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Employer Penalties
For those with 50+ Full-Time Equivalents
Do you offer
coverage?
No
$2,000 per FTE
(minus first 30)
Yes
Only applies if one full-time employee receives
federal premium assistance (i.e. credit or subsidy)
Does the plan
provide
minimum value?
for exchange coverage.
No
Plan pays 60% of
claims
Yes
Is the coverage
affordable?
Yes
No Penalty
No
Lesser of: $3,000 per FTE
receiving tax credit/subsidy; or
$2,000 per FTE (minus first 30)
Only applies if one full-time employee receives federal
premium assistance (i.e. credit or subsidy) for exchange
coverage.
.
Employer “Safe Harbor”
Coverage would be considered “affordable” if the
premium contribution for single coverage does not
exceed 9.5% of an employee’s W-2 wages.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
“Affordability” Safe Harbors
12/28/12 Proposed Regulations
(clarification expected by early January)
• The employee’s contribution for self-only coverage under
the least expensive plan option over the entire year is
not more than 9.5% of the employee’s Box 1 W-2
income.
• The employee’s contribution for self-only coverage under
the least expensive plan option is not more than 9.5% of
his wage on the first day of the plan year.
• The employee’s contribution for self-only coverage under
the least expensive plan option is not more than 9.5% of
the most recently issued Federal Poverty Level (as of the
start of the plan year) for a single person in his state.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Paying the Penalty
• The penalty will be determined after the end of each
calendar year, after employees have filed their federal tax
returns (so penalties will be assessed sometime after
April 15).
• Although the penalty is calculated monthly, it will be paid
annually. The penalty will not be included in any
standard tax filing but instead will be charged through a
notice of assessment from the IRS. Employers will have
the right to dispute the amount due.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Who Is Considered An Employee ?
Common Law Employee
• Common-Law Employee – no set definition but the
parameters are:
 Hirer has control over how an individual performs a task and
where the tasks are performed
 Length of relationship is indefinite
 Hirer provides material needed to complete the task
 Ability to assign additional tasks
 Sets work hours
 Payment is made on set schedule of time
 Work is part of regular business
 Benefits and perks are provided and person is invited to
company events
 Training is provided
 Expenses are reimbursed
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Controlled Groups and Affiliated
Service Groups
When one business owns a significant part of another business, there may be
a “controlled group”. There are 3 types of Controlled Groups*:
•
•
•
Parent-Subsidiary
Brother-Sister
Combined Group
A group of businesses working together to provide services to each other or
jointly to customers is called an Affiliated Service Group. Each business is a
shareholder in the “first service organization”*. There are 3 types of Affiliated
Service Groups:
•
•
•
A-Organization (A-Org)
B-Organization (B-Org)
Management groups
*All members of a controlled group and affiliated group will be used in combination to
determine if an employer is “large”.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
How To Count Hours
For Play or Pay?
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Handling Employees Expected to
Work Full-Time
To avoid penalties, a new employee
who is reasonably expected to
work 30 or more hours per week
must be offered coverage
following satisfaction of the
eligibility waiting period.
Under PPACA, the waiting period
cannot be more than 90 days.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Handling Seasonal and Variable
Employees
“Seasonal employee” is not defined in
the new notice and at least for 2014, an
employer’s good faith determination that an
employee is seasonal will be honored. Also for
2014 only, employers can take into
consideration the anticipated termination date.
Usually, seasonal employment means
employment for a limited period to perform a
specific function, such as retail during
holiday seasons.
“Variable hours employees” are those whose hours are variable
or are otherwise uncertain and who are not reasonably expected to
average 30 or more hours per week over the measurement period. This
would include both those expected to work full-time when initially hired but
who are expected to have their hours reduced at some point.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
How Will Employers Count Hours?
• It is expected that current DOL rules for counting hours
for pension plan purposes will be used to count an
employee’s hours of service as a full-time employee or
full-time employee equivalent. Under these rules, a
person is considered to have completed an “hour of
service” with each hour for which he is paid for
work, vacation, holiday, sick time, layoff, jury duty,
military duty, etc.
• When converting time to a monthly basis, 30 hours per
week would mean 130 hours per calendar month.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Determining Average Hours Worked
• An employer may simply look at its population on a
current, month by month basis if it wishes to.
However, to avoid the complications that may arise if an
employee alternates between working more and less
than 30 hours, or to simply reduce calculation frequency,
IRS Notice 2012-58 gives an employer the option of
using longer calculation periods to get a smoother,
more predictable result if it prefers to do that.
• If the employer wants to use a smoothing technique,
different processes apply to existing and new
employees.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Standard Measurement and
Stability Period
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Standard Measurement and
Stability Period for Ongoing Employees
Standard Measurement Period
• A “lookback” period of 3-12 months used to track and determine
how many hours he worked on average during this time period.
• The employer can select any start date for the Standard
Measurement Period.
Stability Period
• Period for which the employee is considered Full-Time or not FullTime and must be:
o At least as long as the Standard Measurement Period.
o At least 6 months if the employee is Full-Time but not more
than 12 months.
• Must immediately follow Standard Measurement Period and any
applicable Administrative Period.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Administrative Period
• A period of up to 90 days given to employers to determine
whether an employee is “full-time” during a Standard
Measurement Period, and to enroll the employee if he is
eligible.
• Can include time at both the beginning and the end of the
Measurement Period.
• Cannot reduce or lengthen the Standard Measurement
Period or Stability Period.
• Must overlap the prior Stability Period.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Example of Ongoing Seasonal or
Variable Hours Employee
If seasonal or variable hourly employee works an average of 30 hours in the Standard
Measurement Period, they must be offered coverage through the next Stability Period.
•
Ridge, Inc. has chosen to use a 12-month standard measurement period for on-going
employees running from November 1st to October 31st.
•
Administrative period of 61 days will be from November 1st to December 31st.
•
Stability period of 12 months from January 1st to December 31st.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
New, Seasonal or Variable
Employees
•
“Initial Measurement Period” of 3-12 months
•
Combined “Initial Measurement Period” and “Administrative Period”
cannot exceed 13 months plus a fraction of a month (dependent on the
hire date).
•
Initial Stability Period:
 Must be the same length as the Stability Period for ongoing
employees
 For new employees deemed to be full-time:
o must be at least as long as Initial Measurement Period and at
least 6 months
 For new employees that are deemed not to be full-time:
o may not be more than one month longer than the Initial
Measurement Period
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
ABC Company
Transitioning New Hires Into Standard Measurement Period
12 Month Standard – 11 Month Initial
•
•
•
•
•
Tim was hired on November 10, 2014.
His Initial Measurement Period goes from November 10, 2014 to October 9, 2015 and
the Administrative Period is October 10, 2015 to December 31 ,2015.
He works an average of 32 hours.
He must be offered coverage for a Stability Period that runs January 1, 2016 through
December 31, 2016.
ABC Company must also test Tim’s hours during the Standard Measurement Period 3
of September 1, 2015 through August 31, 2016
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Standard Measurement and
Stability Period
Employers may use different standard
measurement and stability periods start dates for
these classes of employees:
•
•
•
•
Collectively bargained and non-collectively bargained
Hourly and salaried
Employees of different entities
Employees located in different states
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Excise Tax on High Value Health
Plans “Cadillac Plans”
Taxable years beginning after December 31, 2017
• Employers offering health plans that exceed
a certain cost (the total employee and
employer cost) would be subject to 40%
excise tax on amount above that value.
• For individual coverage, the threshold would
be $10,200; for family coverage the threshold
would be $27,500. These thresholds would be indexed at CPI plus
one percentage point.
• Certain high-risk professions would have higher cost thresholds.
(Calculation includes value of medical, dental, vision,
reimbursement from HRA and FSA, and employer contributions to
H.S.A)
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Reporting Requirements
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Proposed: Minimum Essential Coverage
Reporting (6055 Requirement)
•
Prepared by the insurer for insured plans and the plan sponsor for self-funded plans.
•
Only required on individuals who actually elect coverage.
•
Much like the W-2, both the employee and the IRS will receive copies with information
pertinent to them.
Must report:
 The insurer’s or plan sponsor’s name, address, and employer identification number
(EIN)
 The name, address, and Social Security number of the named insured
 The name, address, and Social Security number (or date of birth if a Social Security
number is not available) of each covered spouse and dependent.
 The number of months each covered person was covered for at least one day
 The name, address, and EIN of an employer sponsoring the plan
 Whether coverage is through a SHOP exchange, and if so the SHOP’s unique identifier
*Effective January 1, 2015 with the first report due January 31, 2016 for employees,
and employer “roll-up” report due 2/28, or 3/31 if filing electronically.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Proposed: Minimum Value/Affordable Coverage
Reporting (6056 Requirement)
•
•
•
Must be filed by all “large” employers.
Employers in a controlled or affiliated service group are combined for purposes of deciding if
an employer is “large”, but each employer in the group will file the 6056 report separately.
Much like the W-2, both the employee and the IRS will receive copies with information
pertinent to them.
Must report:
 The employer’s name, address, and employer  For each full-time employee:
identification number (EIN)
 The months during the year that
 The name and telephone number of a contact
minimum value coverage was offered
person
 The employee’s share of the cost of
 The calendar year for which the information is
self-only coverage for the least
being reported (non-calendar year plan MUST
expensive minimum value plan offered
report on a calendar year basis)
to the employee, by calendar month
 A certification, by calendar month, as to
 The employee’s name, address, and
whether minimum essential coverage was
Social Security number and the number
offered to employees (and dependents)
of months, if any, that the employee was
 The number of full-time employees for each
actually covered
month
*Effective January 1, 2015 with the first report due January 31, 2016 for employees,
and employer “roll-up” report due 2/28 or 3/31 if filing electronically.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
What Are The Penalties?
6055 and 6056 Non-Compliance
Penalties assessed for:
• Any failure to furnish a statement
• Any failure to include all of the information required
• Submitting incorrect information on a furnished
statement
Penalty: $100 for each statement, up to a maximum of
$1.5MM; penalties reduced accordingly if corrected within
30 days, or on or before August 1st.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Additional Reporting Requirements
Return Filing Requirements for Large
Employers Not Offering Coverage
 Name, date, and employer ID
 Certification that they do not offer coverage
 The number of full-time employees for each
month of the calendar year
 Any other information required by the
Secretary
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
What Are Employers Doing?
Using a Defined Contribution approach to benefits
through a Private Exchange…
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Agenda
• ACA Catalyst
• Challenges and Objectives facing Employers
• Exchanges
o Traditional v. Exchange Strategy for Benefit
Program
• Components of Private Exchanges
• Projected Development of Exchanges in
Market
• Profile of Exchange Adopters
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
PPACA
Bank of America Merrill Lynch 2013 Survey “CFO Outlook”
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Challenges and Objectives for
Employers
Challenges
Objectives
• Do I continue to offer
medical benefits?
• How do I cover new
populations affordably?
• How do I continue to meet
changing employee needs
and manage complexity?
• How do I meet new
regulatory requirements and
manage compliance risk?
• How do I manage everincreasing costs and
financial risk?
• Financial
o Cost control
o Budget certainty
• Legal
o Risk avoidance
o Overhead avoidance
• Employee Engagement
o Increase in choice
o Decision / buying support
• Administration
o Overhead reduction
o Employee experience
54
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Traditional v. Exchange Benefit Strategy
Plan type
Funding
Plan Choices
Actuarial Value
Carriers
Customization
Consistency
Tax Treatment
Member Support
Traditional Large
Employer Coverage
Public
Exchanges
Private
Exchanges
Group
Individual
Typically group
Typically “Defined
Benefit” (self-funded)
Fully insured
“Defined Contribution”
(fully insured) or selffunded
Typically 2-3
4
4-plus
Averages 80-plus
percent, with few if any
low-cost plans
60-90 percent
Typically broader –
60-90 percent
One or more
TBD –
Varies by state
Varies per exchange
High, as requested by
employer
None
Limited
High nationwide
Low,
impacted by each state’s
Exchange approach, rules
High,
impacted by state mandates
Deductible by employer
“Pay or Play” penalties not
deductible by employer
Deductible by employer
Varies by employer
TBD – Much work to do
Generally high
55
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Components of Private Exchanges
Decision
Support
Plan Resources
and Support
HRAs and Sec
125 Accounts
Defined
Contribution Plan
That Funds a
Diverse Selection
of Health Plans
Benefits
Eligibility,
Enrollment and
Administration
Voluntary
Ancillary
Benefits
Premium
Processing and
Billing Services
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
What
A
Private
Exchange
Offers
What A Private Exchange Offers…
• Cost mitigation due to plan migration
o Choice of multiple plans for employees
o Findings
 80% of employees moved to lower cost plan
 15% moved to higher cost plan
 5% stayed with same plan
• Employer can define a level contribution
o Define budget for benefit program and design from there
• Plans offered on a marketplace platform
o Interactive technology to engage and educate employees in
buying experience
• Employees given decision support tools and telephonic
support to help purchase
o Web based predictive modelers and live support
• Compliance load on employer transferred to carrier*
o Additional requirements due to ACA (PCORI, etc.)
*for fully insured plans
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Private Exchange Projected Growth
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Exchange Adopter Profile
Key Qualities
• Large employer – 50+
eligible employees
• Objective to keep benefit
program
• Objective to educate
employees to better
consumer
• Applies to all industries
Adopters
• IBM (retirees)
• Trader Joes
• Sears
• Time Warner
• Walgreens
• AON Hewitt
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
What Are Employers Doing?
•
In-depth analysis on how employee population is
affected by Health Care Reform


•
Use a Certified Actuarial Tool
Evaluate the Exchange plan rates available to Employees
Be proactive in managing health risk within population


Predictive Modeling/Data Analytics
Results Based Plan Design
•
Consider Self-Funding
•
Develop a Defined Contribution approach to benefits
•
Benchmark your health plan
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
This program has been submitted for
1.25(General) recertification credit hours
toward PHR, SPHR and GPHR recertification
through the HR Certification Institute.
All attendees will receive an email with the HRCI
credit code once UBA receives approval for this
program.
For more information about certification or
recertification, please visit the HR Certification
Institute website at www.hrci.org.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved
Thank you for your participation
in the UBA WisdomWorkplace Webinar Series.
To obtain a recording of this presentation,
or to register for future presentations,
contact your local UBA Partner Firm.
Copyright © Innovative Benefit Planning LLC 2013. All Rights Reserved