Preparing for the Impact of the Health Care Reform

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This is a portion of the presentaiton given at the recent Health Care Reform Seminar in St. Louis, MO.

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Preparing for the Impact of the Health Care Reform

  1. 1. Preparing for the Impact ofHealth Care ReformMay 7, 2013
  2. 2. Today’s Presenters• William M. Smith, Esq.Managing Director, CBIZ MHM, LLC• David S. Rubadue, FSA, MAAA, CLUSVP, Director Health Care Actuarial ServicesCBIZ B fit d I S i ICBIZ Benefits and Insurance Services, Inc.• Kit Wagar, Affordable Care Act SpecialistOffice of the Regional DirectorU.S. Department of Health and Human Services2
  3. 3. Today’s Agenda• Introductions• The Path to Health Care Reform Compliancep• The 2014 Centerpiece of the Affordable CareAct• Actuarial Modeling of Health Care Reform’sFinancial Impact on Your Business• Health Insurance in the New InsuranceMarketplace• Open Dialogue and Questions3
  4. 4. 4
  5. 5. PPACA provisions, effective in 2014, will have a significant impact on the health care market and significantly increase the number of insured individualsProhibits health plans from denyingcoverage or rating applicants basedon their health statusLevels the playing fieldbetween health plans andmitigates the impact ofguaranteed issue and pricingt i t i th h t tCreates governmentregulated Individual andSmall Group healthinsurance marketplaces Guaranteed IssueInstitutes penaltiesKey ACA i iuncertainty in the short termInstitutes penalties foremployers who fail toinsurance marketplacesRisk Management MechanismsGuaranteed Issue (GI) and Rating ChangesInsurance ExchangesLevies taxes and fees againsth lth i d thInstitutes penaltiesfor failing topurchase healthinsuranceIndividual MandateTaxes andprovisions effective in 2014p yoffer affordablecomprehensivecoverageLowers the cost off th l dEmployer MandateTax Creditshealth insurers and other groupsto fund subsidies and riskmanagement mechanismsTaxes and Feescoverage for the low andmiddle income populationsin the Individual marketTax Credits and Subsidies5Source: Congressional Budget Office
  6. 6. The 2014 Centerpiece of theThe 2014 Centerpiece of theAffordable Care Act6
  7. 7. Shared Responsibility Payment• Enacted as part of the Affordable Care Act(“PPACA”) (section 1541(a)) – now Code §4980H• Effective starting in 2014• Components:– A nondeductible excise tax assessed on largel h d t id ff d bl demployers who do not provide affordable andadequate health coverage to at least 95% of their fulltime employees.• IRS issued proposed regulations in January 7
  8. 8. Shared Responsibility Payment• Note: the Shared Responsibility Payment was notconsidered by the Supreme Court in NationalFederation of Independent Business v SebeliusFederation of Independent Business v. Sebelius.– The Supreme Court reviewed the individual mandateand its treatment as a tax or a penalty.p y• The Shared Responsibility Payment is an excisetax. It is contained in Section 4980H, which is inSubtitle E of the Internal Revenue Code(“Miscellaneous Excise Taxes”), Chapter 43(“Q lifi d P i Et Pl ”)(“Qualified Pension, Etc. Plans”)8
  9. 9. Which Employers Are Affected?• “Large Employers” – Employers with at least 50full-time employees or equivalents.F ll ti l i l d• Full time employees include:– Employees who is employed on average at least 30 hoursper weekpe ee– A percentage of employees who are not full timeemployees (aggregate number for hours/month worked bypart time employees divided by 120)part time employees divided by 120)• Leased employees as defined in IRC § 414(n)(2)are not treated as full time employees.are not treated as full time employees.9
  10. 10. Which Employers Are Affected?• Certain groups of companies must be aggregated• Certain groups of companies must be aggregatedtogether to determine if they are “Large Employers”:– Controlled group of corporations (IRC § 414(b))– Partnerships, proprietorships, etc. under common control (IRC §414(c))– Affiliated service groups (IRC § 414(m)), and– Employee leasing arrangements and other arrangements treatedby the IRS as a single employer (IRC § 414(o))• Exemption: Employers whose workforce exceeds 50• Exemption: Employers whose workforce exceeds 50full time employees for 120 days or less during thecalendar year, and the employees in excess of 50employed during that 120-days-or-less period were“seasonal workers.” IRC § 4980H(c)(2)(B)(i). 10
  11. 11. Employees with Variable Hours – Notice 2012-58• "Look-back/stability safe harbor method" - an employer determinesLook back/stability safe harbor method an employer determineseach employees status by looking back at the hours worked by theemployee over a defined period (as chosen by the employer) of 3 to12 consecutive calendar months (the "measurement period").• If the employee averaged at least 30 hours/week duringmeasurement period, the employee is treated as a full timeemployee during a subsequent "stability period" so long as heremains an employee (regardless of actual hours worked).– stability period must be at least six consecutive calendar monthsfollowing the measurement period but no shorter in duration than thet i dmeasurement period.• For an employee determined not to be a full time employee duringthe measurement period, the employer may treat the employee ast f ll ti l d i th t bilit i d b t th t bilitnot a full time employee during the stability period, but the stabilityperiod cannot exceed the measurement period.11
  12. 12. New Employees – Notice 2012-58An employer may impose a waiting period of no longer than 90 daysbefore a full-time employee (or dependent) who is otherwise eligiblefor the employers group health plan may enroll in coverage.12
  13. 13. Shared Responsibility Payment – General Rule• Large employers that employed an average of at least 50 or more full-ti l b i d f th di l dtime employees on business days for the preceding calendar yearmust make “shared responsibility” tax payments for each month thatthe employer:H t l t f ll ti l tifi d h i ll d i– Has at least one full time employee certified as having enrolled in aqualified health plan for which a premium tax credit or cost-sharingreduction is allowed or paid (i.e., the employee goes to theMarketplace/Exchange and qualifies for assistance);Marketplace/Exchange and qualifies for assistance);AND either– Does not offer coverage to its employees OR does not offeri i ti l (MEC) t t l t 95% f it f ll timinimum essential coverage (MEC) to at least 95% of its full timeemployees,– Offers MEC to at least 95% its full time employees, but it isff d blunaffordable, or– Offers MEC to at least 95% its full time employees through a planthat does not provide minimum value. 13
  14. 14. Shared Responsibility Payment – Continued• Minimum value: Must provide at least 60% ofthe total allowed cost of benefits for full timeemployees.• Affordable coverage: The cost of coverage to thel i th 9 5% f themployee is no more than 9.5% of theemployee’s household incomeTh f h b• Three safe harbors:• Box 1 of W-2• Average wage method or• Average wage method, or• A federal poverty level method 14
  15. 15. Calculating the Penalty – “No Coverage or No MinimumEssential Coverage for at Least 95% of Employees”Employer fails to offer coverage or fails to offer MEC to 95% its full-time employees (and their dependents in 2015) under an eligibleemployer-sponsored plan for the month, and at least one full-timep y p p ,employee has been certified to the employer as having enrolled forthat month in a qualified health plan (Marketplace/Exchange) and isreceiving assistance.g• Penalty = the “Applicable Payment Amount” × the number of theemployers full-time employees during any month, reduced by 30employees. IRC § 4980H(a) and 4980H(c)(2).employees. IRC § 4980H(a) and 4980H(c)(2).• Applicable Payment Amount: $166.67 for any month (i.e., 1/12 of$2,000, which is adjusted for inflation after 2014). IRC §4980H(c)(1)4980H(c)(1).15
  16. 16. Calculating the Penalty – No Coverage or No MECOffered to At Least 95% of Employees -- Example• In 2014, Employer fails to offer minimumessential coverage to at least 95% of its full-timeemployees. It has 100 full-time employees, tenof whom receive a tax credit for the year forenrolling in a state exchange offered planenrolling in a state exchange-offered plan.• For each full-time employee over the 30-employee threshold the employer owes $2 000employee threshold, the employer owes $2,000,for a total penalty of $140,000 ($2,000 × 70 (100− 30)). This penalty is assessed on a monthly30)) s pe a y s assessed o a o ybasis. 16
  17. 17. Calculating the Penalty – Coverage Not Affordable or DoesNot Meet Minimum ValueWh l ff MEC b t th t t t l t f ll tiWhere employer offers MEC, but the cost to at least one full-timeemployee is greater than 9.5% of household income OR the plan doesnot meet the minimum value standard of 60% (use the Actuarial ValueCalculator to determine minimum value) and he/she has been certified toCalculator to determine minimum value) and he/she has been certified tothe employer as having enrolled in a qualified health plan(Marketplace/Exchange) and is receiving assistance• Penalty = Number of full time employees for any month who• Penalty = Number of full-time employees for any month whoaccess Marketplace/Exchange and receive a credit or assistance x$250 (i.e., 1/12 of $3,000).• Limitation: the aggregate amount of tax of an applicable large• Limitation: the aggregate amount of tax of an applicable largeemployer for any month cannot exceed the applicable paymentamount × the number of the employers full-time employees duringthat month (reduced by 30 employees)that month (reduced by 30 employees).17
  18. 18. Calculating the Penalty – Coverage Not Affordable orDoes Not Meet Minimum Value – Example• In 2014, Employer offers health coverage and has 100 full-time employees, 20 of whom access the Exchange becausecoverage is either not affordable or does not meet minimumcoverage is either not affordable or does not meet minimumvalue standard and they receive a premium tax credit• For each full-time employee receiving a tax credit, thel $3 000 l bl t femployer owes a $3,000 annual assessable payment, for atotal penalty of $60,000. The maximum penalty for thisemployer is limited to the amount of the penalty that it wouldh b d f f il t idhave been assessed for a failure to provide coverage, or$140,000 ($2,000 × 70 (100 − 30)). Since the calculatedpenalty of $60,000 is less than the maximum amount,$Employer pays the $60,000 calculated penalty. This penalty isassessed on a monthly basis. 18
  19. 19. Summary• Minimal essential coverage not offered to at least 95% of fullgtime employees and at least one employee goes to Exchangeand receives premium tax credit$2 000 per year per full-time employee (less first 30)– $2,000 per year per full-time employee (less first 30)• Either coverage does not meet minimum value standard (i.e.,does not cover at least 60% of medical costs) OR coverage notff d bl (i l ’ i d 9 5% faffordable (i.e., employee’s premium exceeds 9.5% ofhousehold income) and at least one employee goes toMarketplace/Exchange and receives assistance– Lesser of• $3,000 per year for each full-time employee usingMarketplace/Exchange and qualifying for assistance orMarketplace/Exchange and qualifying for assistance, or• $2,000 per year per full-time employee (less first 30)19
  20. 20. Procedure• An employer must make payment upon notice anddemand by the Secretary of the Treasury.• The payment is assessed and collected in the same• The payment is assessed and collected in the samemanner as other IRS assessable penalties• Section 6056 requires employers to reportSection 6056 requires employers to reportinformation on employer-provided health carecoverage provided on or after January 1, 2014– First Information returns will be filed in 2015– IRS will use this information to administer the penalties– IRS intends to issue guidance on Section 6056 reporting– IRS intends to issue guidance on Section 6056 reportingand has recently closed the request for comments20
  21. 21. Indexing the Payment• For years after 2014, the $2,000 and $3,000 amountsy , $ , $ ,used in determining the assessable payment amountwill be indexed for inflation.Th i ill l th $2 000 $3 000 t• The increase will equal the $2,000 or $3,000 amountmultiplied by the “premium adjustment” amount for thecalendar year.• Premium Adjustment Amount– Secretary of Health and Human Services (HHS)determines by Oct 1 the percentage (if any) by whichdetermines by Oct. 1 the percentage (if any) by whichthe average U.S. per capita premium for healthinsurance coverage for the preceding calendar yeard th it i f 2013exceeds the average per capita premium for 201321
  22. 22. Indexing the PaymentAssuming 9% inflation in the costs of premiums,by 2019:– The $2,000 per year per employee penalty increasesto over $3,000The $3 000 per qualifying employee penalty– The $3,000 per qualifying employee penaltyincreases to over $4,600 per year22
  23. 23. Actuarial Modeling of HealthC R f ’ Fi i l I tCare Reform’s Financial Impacton Your Business23
  24. 24. CBIZ HCR Analyzer Tool• CBIZ is currently actively engaged in assessing• CBIZ is currently actively engaged in assessingthe financial impact of the PPACA provisions withemployer groupsp y g p• CBIZ Proprietary model - "The CBIZ HCRAnalyzer“y• The tool was created with employer Input. Led tofavorable employer feedback• Used for all employers over 50 lives with initialstudies performed for “High Risk” Employers24
  25. 25. High Risk Employers• High percentage of potentially full time low pay• High percentage of potentially full time, low payworkforce• Provide no medical benefits to a large employee baseg p yworking 30 + hours per week• Have a significant number of “temporary” or “seasonal”workersworkers• Cost of health benefits to employees is “very high”• Manage enrollment using “long” waiting periods (moreManage enrollment using long waiting periods (morethan 90 days before employee is eligible)Industries Include: Retail (Restaurants, Hotels, Convenience Stores,( , , ,Gas Stations, etc.), Construction, Transportation, Cleaning, StaffingFirms, Other 25
  26. 26. CBIZ HCR Analyzer ToolCBIZ’s Tool Utilizes 3 Steps to Determine aCompany’s PPACA Risk Profile:1. Data DiagnosisDetailed checklist of data needed & questions toask in order to prepare a custom HCR FinancialI t St d f i tiImpact Study for an organization26
  27. 27. CBIZ HCR Analyzer Tool2. Comprehensive AnalysisWe utilize data to carefully evaluate benchmarksand provide options to consider whenestablishing your long tem benefit programestablishing your long-tem benefit programstrategy27
  28. 28. CBIZ HCR Analyzer Tool3. Report and OptimizeWe provide you with a report that shows the costto your organization under multiple scenarios,enabling us to work with your organization toenabling us to work with your organization toOptimize your health care package28
  29. 29. The “Levers”• Once data is “entered” the Employer or his/her Advisorcan change the following variables (levers) and the“financial” results will change:financial results will change:– Migration Assumptions: To the Exchange or the Employer’sPlan– Employer Contributions (Example: Raise EmployeeContributions and Lower Dependent Contributions, etc.)– Plan Value (Lower “value” of Plan). Must exceed actuarial valuef 60%of 60%.– Medical Trend– Pay Increases– Family Size– Household Income 29
  30. 30. HCR Analyzer InputsPlanSummariesMinimumPlanValuesAlternativeContributionsMedicaidCurrent &TrendedPremiumsEmployerContributionsThresholdPayroll TaxRatesMigration toER Plan,Medicaid &ExchangeCorporate30CorporateFed &State TaxRates
  31. 31. Example # 1: XYZ IncExample # 1: XYZ Inc31
  32. 32. XYZ Inc’s Expected Results2013 2014A (Baseline) B C D E F G HNot Eligible GroupMade EligibleUnder CurrentPlan;No OtherNot Eligible GroupMade EligibleNo Plan Changes,Migration toExchange andScenario Cbut OfferingLean Plan asthe Base PlanScenario C(No PlanChanges)with 30% ofNot EligibleScenario D(Lean Plan)with 30% ofNot EligibleTerminatePlan all NotEligibleEmployeesTerminatePlan aftermakingCurrentCurrent(Baseline)No OtherImplications of HCRAre ConsideredExchange andContributionChangesthe Base Plan(employees canbuy up)Not Eligibleis MadeEligibleNot EligibleIs MadeEligibleEmployeesare MadeEligiblemaking30% of NotEligibleEligible Group(s)Removed 30 Lives fromEligible GrpTotal 17 17 17 17 17 17 17 17 17Enrolled 13 13 13 14 14 14 14 0 0Moly Px: $7,290 $8,886 $8,886 $10,752 $6,817 $10,752 $6,817 $0 $0Er Monthly Cost $3,217 $3,922 $3,922 $3,500 $2,556 $3,500 $2,556 -$3,333 -$3,333Ee Monthly Cost $4,073 $4,964 $4,964 $7,252 $4,260 $7,252 $4,260 $0 $0Not Eligible Group(s)Total 155 155 155 155 155 45 45 155 45Enrolled 0 0 49 26 80 6 21 0 0M l P $0 $0 $30 723 $17 978 $35 483 $4 424 $9 767 $0 $032Moly Px: $0 $0 $30,723 $17,978 $35,483 $4,424 $9,767 $0 $0Er Monthly Cost $0 $0 $11,574 $6,500 $14,607 $1,500 $3,834 $39,744 $11,538Ee Monthly Cost $0 $0 $19,149 $11,478 $20,876 $2,924 $5,933 $0 $0
  33. 33. 20132014CurrentScenario AXYZ Inc’s Expected ResultsCurrent (Baseline) B C D E F G HShared Responsibility PenaltiesWaivers 4 4 110 132 78 42 27 172 62Waivers Trigger Penalty 0 0 0 83 18 26 6 0 0Medicaid 0 0 0 42 42 12 12 0 0Medicaid 0 0 0 42 42 12 12 0 0Others 4 4 110 7 18 4 9 172 62Penalty $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $2,000 $2,000Tax Rate 35% 35% 35% 35% 35% 35% 35% 35% 35%Additional Cost $0 $0 $0 $31,923 $6,923 $10,000 $2,308 $0 $0AGE FACTOR 361.80 81% 84% 85% 97% 89%Average Age 41.3 32.2 35.5 34.6 41.0 37.3Grand TotalTotal Employees 172 172 172 172 172 62 62 172 62Enrolled 13 13 62 40 94 20 35 0 0Total Moly Cost: $7,290 $8,886 $39,609 $60,654 $49,222 $25,176 $18,891 $0 $0Er Monthly Cost $3,217 $3,922 $15,495 $41,923 $24,086 $15,000 $8,698 $36,410 $8,20533Ee Monthly Cost$4,073 $4,964 $24,113 $18,731 $25,136 $10,176 $10,193 $0 $0ER Monthly CostIncrease (Decrease) NA $0 $11,574 $38,001 $20,164 $11,078 $4,776 $32,488 $4,283
  34. 34. XYZ Inc.’s Pay AdjustmentPay Adjustment Illustration for Scenario GEstimated Monthly Savings Under Scenario G: NANo EstimatedSavingsNumber of EEs Above 400% of the FPL: NA(EEs that fall below 400% of the FPL will receive subsidies,while EEs above 400% will pay retail at the Exchange.)Employer Allocation to Employees via Additional PayER Payroll Tax: NANet Pay to Breakeven: NAEmployee AllocationPay Increase Per EE Per Month: NAEE Payroll Taxes: NAyNet Take Home Per EE Per Month: NAIllustrative Pricing - 80% PlanE ES EC FUnder 30 $325 $650 $585 $97534Under 30 $325 $650 $585 $97530 - 40 $423 $845 $761 $1,26840 - 50 $570 $1,141 $1,027 $1,71150 - 60 $770 $1,540 $1,386 $2,31060 - 65 $975 $1,950 $1,755 $2,925
  35. 35. Example # 2: ABC IncExample # 2: ABC Inc35
  36. 36. ABC Inc’s Expected Results2013 2014A (Baseline) B C D E F G HNot Eligible GroupMade EligibleUnder CurrentPlan;No OtherNot Eligible GroupMade EligibleNo Plan Changes,Migration toExchange andScenario Cbut OfferingLean Plan asthe Base PlanScenario C(No PlanChanges)with 30% ofNot EligibleScenario D(Lean Plan)with 30% ofNot EligibleTerminatePlan all NotEligibleEmployeesTerminatePlan aftermakingCurrentCurrent(Baseline)No OtherImplications of HCRAre ConsideredExchange andContributionChangesthe Base Plan(employees canbuy up)Not Eligibleis MadeEligibleNot EligibleIs MadeEligibleEmployeesare MadeEligiblemaking30% of NotEligibleEligible Group(s)Removed 30 Lives fromEligible GrpTotal 334 334 334 334 334 334 334 334 334Enrolled 265 265 265 283 283 283 283 0 0Moly Px: $160,272 $197,472 $197,472 $200,455 $151,900 $200,455 $151,900 $0 $0Er Monthly Cost $124,022 $152,807 $152,807 $158,204 $134,911 $158,204 $134,911 $77,949 $77,949Ee Monthly Cost $36,251 $44,664 $44,664 $42,251 $16,989 $42,251 $16,989 $0 $0Not Eligible Group(s)Total 9 9 9 9 9 3 3 9 3Enrolled 0 0 8 9 9 3 3 0 0M l P $0 $0 $3 511 $4 177 $3 549 $1 109 $942 $0 $036Moly Px: $0 $0 $3,511 $4,177 $3,549 $1,109 $942 $0 $0Er Monthly Cost $0 $0 $3,015 $3,611 $3,068 $933 $792 $2,308 $769Ee Monthly Cost $0 $0 $497 $566 $481 $176 $150 $0 $0
  37. 37. 20132014CurrentScenario AABC Inc’s Expected ResultsCurrent (Baseline) B C D E F G HShared Responsibility PenaltiesWaivers 69 69 70 51 51 51 51 343 337Waivers Trigger Penalty 0 0 0 0 0 0 0 0 0Medicaid 0 0 0 8 8 8 8 0 0Medicaid 0 0 0 8 8 8 8 0 0Others 69 69 70 43 43 43 43 343 337Penalty $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $2,000 $2,000Tax Rate 35% 35% 35% 35% 35% 35% 35% 35% 35%Additional Cost $0 $0 $0 $0 $0 $0 $0 $0 $0AGE FACTOR 438.68 99% 97% 97% 98% 98%Average Age 47.0 46.5 45.9 45.9 46.3 46.3Grand TotalTotal Employees 343 343 343 343 343 337 337 343 337Total Employees 343 343 343 343 343 337 337 343 337Enrolled 265 265 273 292 292 286 286 0 0Total Moly Cost: $160,272 $197,472 $200,983 $204,632 $155,449 $201,564 $152,842 $0 $0Er Monthly Cost $124,022 $152,807 $155,822 $161,815 $137,979 $159,137 $135,703 $80,256 $78,718Ee Monthly Cost$36 251 $44 664 $45 161 $42 817 $17 470 $42 427 $17 139 $0 $037y$36,251 $44,664 $45,161 $42,817 $17,470 $42,427 $17,139 $0 $0ER Monthly CostIncrease (Decrease) NA $0 $3,015 $9,008 ($14,828) $6,330 ($17,104) ($72,551) ($74,089)
  38. 38. ABC Inc.’s Pay AdjustmentPay Adjustment Illustration for Scenario GEstimated Monthly Savings Under Scenario G: $72,551Number of EEs Above 400% of the FPL: 43(EEs that fall below 400% of the FPL will receive subsidies,while EEs above 400% will pay retail at the Exchange.)Employer Allocation to Employees via Additional PayER Payroll Tax: 12%Net Pay to Breakeven: $64,777Employee AllocationPay Increase Per EE Per Month: $1,506EE Payroll Taxes: 37%Net Take Home Per EE Per Month: $949Net Take Home Per EE Per Month: $949Illustrative Pricing - 80% PlanE ES EC FUnder 30 $325 $650 $585 $97530 40 $423 $845 $761 $1 2683830 - 40 $423 $845 $761 $1,26840 - 50 $570 $1,141 $1,027 $1,71150 - 60 $770 $1,540 $1,386 $2,31060 - 65 $975 $1,950 $1,755 $2,925
  39. 39. Non – High Risk Companies Generallywill Have Two Areas of Concernwill Have Two Areas of Concern• Employee Classification and Measurement of Hours• Plan Value & Plan Value Limits
  40. 40. Employee Classification• The measurement period and stability period must be the same for alli di id l i ti l l ifi ti f lindividuals in a particular classification of employees.• The rules only allow four types of classifications of employee;1 Collectively bargained employees and non collectively bargained1. Collectively bargained employees and non-collectively bargainedemployees;2. Each group of collectively bargained employees covered by aseparate collective bargaining agreement;p g g g ;3. Salaried employees and hourly employees; and4. Employees whose primary places of employment are in differentStates.
  41. 41. Employee ClassificationExample – New Variable HourEmployee2014 2015 2016 201710 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12Standard Measurement Period Admin Stability PeriodJohns Initial Measurement Period Admin Stability PeriodIf over 30, subject to penaltyFor this period XYZ is not subject to penalty If under 30, not subject to penaltyOverlap RulesStandard Measurement Period Admin Stability PeriodRetest John If over 30, subject to penaltyIf under 30 not subject to penaltyIf under 30, not subject to penalty
  42. 42. PLAN VALUE & PLAN VALUE LIMITES• Non-grandfathered plans must comply with the annual limitationon Out of Pocket (OOP) maximums.• OOP maximum is applicable to all coverage under the plan (Co-pp g p (pays, Coinsurance, Etc. )• Plans currently using multiple claim payers (separate medicalTPA and a separate pharmacy benefit manager) will effectivelyp p y g ) yhave until the 2015 plan year to design a single OOP maximumand coordinate vendor arrangements under a special transitionrule described below.• The level of the new OOP maximums will be the same OOPdollar maximums that apply to HSA-qualifying high-deductiblehealth plans in 2014. Those amounts are $6,350/single and$$12,700/family
  43. 43. Health Insurance in the NewHealth Insurance in the NewInsurance Marketplace44
  44. 44. Places To Go To Access Health Insurance in 2014(With Anticipated Growth/Decline)(With Anticipated Growth/Decline)Employer Employer Individual Individual MedicaidMedicaidp y(Marginal/to High Decline)p y(Marginal/to High Decline)Market & COBRA (Heavy Decline)Market & COBRA (Heavy Decline)Medicaid (Enhanced Growth)Medicaid (Enhanced Growth)Decline)Decline)M diM di PublicMedicare (HeavyGrowth)Medicare (HeavyGrowth)Other (Tri Care)Other (Tri Care)Public Exchange (HeavyGrowth)(Tri‐Care)(Tri‐Care) Growth)45
  45. 45. Health Care Reform Creates a Platform(Launch Pad) for Access Change(Launch Pad) for Access Change• KEY Health Insurance Access Points for mosti di id l b i i i 2014 & B dindividuals beginning in 2014 & Beyond– Employer’s PlanMedicaid– Medicaid– Medicare– The Federal Public ExchangeThe Federal Public Exchange46
  46. 46. Let’s explore thel t h b i i ithplaces to shop beginning withThe Public Exchangeg47
  47. 47. Things to know before you go shopping @The Public Exchange• Products Value (Richness of Benefits) are designed using Olympic Medals:• Products Value (Richness of Benefits) are designed using Olympic Medals:– Platinum Plan (Actuarial Value of 90%)– Gold Plan (Actuarial Value of 80%)Silver Plan (Actuarial Value of 70%)– Silver Plan (Actuarial Value of 70%)– Bronze Plan (Actuarial Value of 60%)• Actuarial ValueEx: Platinum Plan on average covers 90% of all essential benefit expenses– Ex: Platinum Plan on average covers 90% of all essential benefit expenses,Gold 80%, etc.• Premium Rates vary by: Plan, Area, Family Size and AGE (NOT GENDER andNOT HEALTH STATUS!) Note: Only health factor is tobacco use (1.5:1 limit)) y ( )• Premium Rates for the Old cannot be more than 3X’s that of the Young. IfYoung Rate is $100 Max Old Rate $300• Premium Subsidies: If an individual’s household income is below 400% andabove 100% of the Federal Poverty Level (FPL) they may be eligible for premiumsubsidies• No Pre-Existing Conditions
  48. 48. 2012 Federal Poverty Level ChartFederal Poverty Level Chart for 2012 (Excludes HI and AK)Household size 100% 138% 150% 200% 300% 400%1 11,170$ 15,415$ 16,755$ 22,340$ 33,510$ 44,680$,$ ,$ ,$ ,$ ,$ ,$2 15,130$ 20,879$ 22,695$ 30,260$ 45,390$ 60,520$3 19,090$ 26,344$ 28,635$ 38,180$ 57,270$ 76,360$3 19,090$ 26,344$ 28,635$ 38,180$ 57,270$ 76,360$4 23,050$ 31,809$ 34,575$ 46,100$ 69,150$ 92,200$5 27 010$ 37 274$ 40 515$ 54 020$ 81 030$ 108 040$5 27,010$ 37,274$ 40,515$ 54,020$ 81,030$ 108,040$6 30,970$ 42,739$ 46,455$ 61,940$ 92,910$ 123,880$7 34 930$ 48 203$ 52 395$ 69 860$ 104 790$ 139 720$497 34,930$ 48,203$ 52,395$ 69,860$ 104,790$ 139,720$8 38,890$ 53,668$ 58,335$ 77,780$ 116,670$ 155,560$
  49. 49. Cost & Plan Subsidy Provisions For IllustrationMaximum Cost to Employee is based on Silver Plan:Maximum Cost to Employee is based on Silver Plan:- Up to 133% FPL: 2.0% of income- 133-150% FPL: 3 0% - 4 0% of income133 150% FPL: 3.0% 4.0% of income- 150-200% FPL: 4.0% - 6.3% of income- 200-250% FPL: 6.3% - 8.05% of income- 250-300% FPL: 8.05% - 9.5% of income- 300-400% FPL: Capped to 9.5% of incomeO t f P k t C t M b R d dOut of Pocket Costs May be Reduced- 94% AV for between 100%-150% FPL- 87% AV for between 150%-200% FPL50- 73% AV for between 200%-250% FPL- 70% AV for between 250%-400% FPL
  50. 50. Contribution Strategies in 2014: Maximizing Employer/Employee ValueWhensettingcontribution rates, it is important that the Employer consider premiumand plansubsidies available to eligible employees at the StateP bli E h If th E l f hi i l ff d bilit i it lf it ld lt i di i i hi E l dA CURRENT EMPLOYER CONTRIBUTION FORMULAPublic Exchange. If the Employerfocuses on achieving plan affordability in among itself, it could result in diminishing Employee andEmployerplan value. The CBIZAnalyzerassesses the costs to Employees and the Employer under various contributionalternatives - the CBIZAnalyzer assists the Employer in derivinga structure that maximums Employer and the Employee value. What follows is anillustration:A. CURRENT EMPLOYER CONTRIBUTION FORMULAExample: Family of 4 (E, Sp, 2C) with an Income of $46,100 (200% of the Federal Poverty Level). Age of Employee and Spouse is35 (Non-Smoker). ILLUSTRATION - Note: Tax ramifications not incorporated in this simple illustrationExchange Annual PxMaximumPx asa % HHIMax Cost toFamily Subsidy Plan ValuePlan SubsidyValueSingle Coverage $7,500 6.30% $2,904 $4,596 70% 73%F il C $22 500 6 30% $2 904 $19 596 70% 73%AffordabilityTestNANAFamily Coverage $22,500 6.30% $2,904 $19,596 70% 73%Employer PlanAnnual Px Employer Cost EmployeeCost Plan ValuePlan SubsidyValueAffordabilityTestNA51Single Coverage: $6,000 $4,500 $1,500 73% NAFamily Coverage $18,000 $9,000 $9,000 73% NAAffordable
  51. 51. MEDICAID Alternative• Consider State Expansion (for adults) to 138%of Household Income– Quite a few States “fighting” this expansion– Arizona = 102%: Alabama = 24%: DC = 206%If d d ill b t ti ll i b f– If expanded, will substantially increase number ofeligible‘s• Very Rich Benefits (Rich Plan and Very Low• Very Rich Benefits (Rich Plan and Very LowPremiums)• If employee qualifies & enrolls in MedicaidIf employee qualifies & enrolls in Medicaid– No Employer Penalties Apply 52
  52. 52. MEDICARE Alternative• Plans are being enhanced as the doughnut holeshrinks• Becoming more attractive plans to consider withthe enhancement of drug coverage and theli i ti f th d t h lelimination of the donut hole53
  53. 53. Don’t Forget “Hiring Incentives”• Tax Credits for Federal and State Returns for hiring employees that meet certain criteria.  g p yThese include:• Work Opportunity Tax Credit (WOTC)Work Opportunity Tax Credit (WOTC)• Veteran Hiring CreditsS B d Hi i C di• State Based  Hiring Credits • WOTC was recently renewed for  2012/201354
  54. 54. The Program Overview• To qualify for the program the employer must• To qualify for the program, the employer must have employees “screened” for qualification.S i MUST i hi fi 28 d f• Screening MUST occur within first 28 days of hire.• CBIZ handles the screening and certification of employees through phone, internet or survey• CBIZ coordinates the process and assists reporting in the taxpayer’s tax returnp g p y55
  55. 55. The Business Opportunity• National Average: 1 in 6 employees qualify for a• National Average: 1 in 6 employees qualify for a credit• Average WOTC Credit is $1 500 per qualifiedAverage WOTC Credit is $1,500 per qualified employee• Other credits are identified after receiving WOTCOther credits are identified after receiving WOTC data• 80% success from certification to actual credit• Highest Opportunity industries are typically coextensive with high risk for Shared Responsibility Excise Tax56
  56. 56. Health Care ReformQUESTION TIME57
  57. 57. Th k Y f Y TiThank You for Your Time58
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