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Health Care Reform After The Supreme Court Ruling

Health Care Reform After The Supreme Court Ruling



Health Care Reform after the Supreme Court Ruling

Health Care Reform after the Supreme Court Ruling



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    Health Care Reform After The Supreme Court Ruling Health Care Reform After The Supreme Court Ruling Presentation Transcript

    • August 23, 2012 Jim Wisdom, CFPJames L. Wisdom Insurance Services
    •  Introduction Summary of Supreme Court Ruling Impact of „12 Election on Health Care Reform What to expect prior to 1/1/14 The Main Event: What to expect after 1/1/14 Impact on Employers/Providers/Insurers/Brokers Key Benefits of Health Care Reform Trends / Consequences of Health Care Reform Impact on your firm What can you do to assist your clients? Q&A
    •  Employed in the Insurance/Financial Services Industry since 1985 Insurance Broker/Consultant since 1996 Started James L. Wisdom Insurance Services in 2003 Goal: To share my perspective/opinions in hopes that we can more effectively serve our clients in the coming years. Note: We do not provide tax or legal advice
    •  Individual mandate deemed unconstitutional under the Commerce Clause Individual mandate (effective 1/1/14) deemed constitutional under taxing power States can‟t be compelled to comply with enhancements to Medicaid effective 1/1/14
    •  Health Care Reform likely to stay regardless of our next President Any chance of GOP Repeal efforts would require 1) keeping the House; 2) winning the White House; and 3) a filibuster proof (60+) majority in the Senate Budget reconciliation a possibility for certain provisions
    •  Certain provisions already in effect Insurance carriers will avoid rate increases greater than10% per year (bad P.R.) Carriers will control health care claims costs via reduced benefits, tiered networks and more pre-authorization New taxes to pay for PPACA
    •  Reduced benefits Increased Out-of-Pocket Maximums Increased Deductibles Separate buckets for Network and Non- Network Deductibles Separate buckets for Network and Non- Network Out-of-Pocket Maximums Increased Coinsurance % paid by insureds
    •  Ways that carriers can use tiered networks: Create a subset of their existing HMO networks (“most cost-effective providers”) Ditto for existing PPO networks The bottom line: reduction in patient access to providers
    •  Employees: +.9% Medicare tax on earnings ($200K for singles; $250K for joint filers) 3.8% tax on net investment income (not indexed for inflation) Flex Spending Accounts capped at $2,500/yr. 2.3% excise tax on Medical Device manufacturers Itemized deduction threshold for unreimbursed medical expenses rises to 10% of AGI from 7.5% of AGI ◦ This tax postponed for those over 65 until 2017
    •  It‟s a whole new ball game State Based Exchanges start up Individual mandate kicks in Guaranteed Issue applies Employer “pay or play” provision applies 3:1 ratio in pricing between youngest and oldest age bands 40% “Cadillac Tax” effective 1/1/18 ◦ This tax is not indexed for inflation
    •  To be up and running by 1/1/14 CA is leading the way Exchanges are state-created marketplaces where insurance products can be easily compared. Available to individuals and small groups Some states are creating exchanges, others are not Fed. Govt. can establish a state-based exchange if the state doesn‟t do so
    •  16 states have created exchanges as of August 1, 2012 Subsidies in the form of tax credits available to people who earn up to 400% of FPL ◦ In 2012, 400% of FPL= $44,680 (individual) and $92,200 (family of four)
    •  Some individuals who obtain Exchange coverage eligible for federal subsidies Subsidies available for Exchanges established by states It is unclear if subsidies will be available in federally-run state Exchanges. ◦ If no, then no penalty may apply
    •  Individuals must prove they purchased minimum essential coverage or face a penalty Penalty increases from 2014 to the greater of $695/year or 2.5% of income (indexed thereafter) Federal premium subsidies available on a sliding scale for individuals up to 400% of FPL as described earlier (available only through Exchanges)
    •  Health Insurers must take all applicants No Pre-Existing Conditions No Underwriting
    •  Applies to employers with 50+ Full Time Employees (and their Dependents) or 50+Full Time Equivalent Employees (and their Dependents) Employer must offer minimum essential coverage to all Employees and Dependents
    •  Annual Tax of $2,000 for each F/T Employee (less the first 30), if at least one F/T Employee obtains federally subsidized coverage through an “Exchange”
    •  If one F/T Employee obtains federally subsidized coverage through an Exchange, the employer must pay an annual tax of the lesser of (1) $3,000 per subsidized F/T Employee; or (2) $2,000 for each F/T Employee (less the first 30 F/T Employees)
    •  Employer pays $2,000 X the number of F/T employees, if at least one F/T employee obtains subsidized health coverage in an Exchange Employer can subtract the first 30 employees from this calculation Annual Penalty = (51 Employees – 30 Employees) X $2,000= $42,000 1/12 of penalty assessed monthly
    •  Employer offers minimum essential coverage Three employees purchase subsidized health coverage through the Exchange Employer pays the lesser of (1) $3,000 X number of F/T employees who received subsidized coverage through the exchange OR (2) $2,000 X the number of F/T employees. Employer can subtract the first 30 employees from this calculation
    •  Employer pays the lesser of: $3,000 X 3 Employees= $9,000 $2,000 X (51Employees – 30 Employees) = $42,000 Employer pays $9,000 per year 1/12 of penalty assessed monthly
    • Young adults not only have to buy coverage, but their premiums may double or triple. Example: 2012 Age Rating (6:1 Ratio) 62 yr. old - $600/month 28 yr. old- $100/month 2014 Example (3:1 Ratio) 62 yr. old- $600/month 28 yr. old- $200/month
    •  For industries that haven‟t offered Health Insurance- premiums likely to increase significantly. Industries that have offered Health Insurance ◦ Unknown: The rates/benefits of the CA Exchange ◦ Employers offering H.S.A. plans may be forced to offer lower deductible plans (increased premiums) ◦ Guarantee Issue Underwriting is likely to drive up premiums
    •  For industries that haven‟t offered Health Insurance - Costs likely to increase significantly For industries that have offered Health Insurance- ◦ Incentive to reduce # of F/T Employees below 50 to avoid penalties ◦ Guarantee Issue should raise premiums ◦ Unknown: The rates/benefits of the CA Exchange
    •  35 Million More Insureds Supply of providers fairly constant Demand for services likely to increase substantially Expect longer wait times Examples: Canada, Massachusetts More doctors may forgo insurance and practice concierge medicine
    •  More customers= more premiums However, profits regulated due to Medical Loss Ratio (Medical Loss Ratio) requirements After 2014 (Guaranteed Issue), maintaining profitability may prove to be difficult
    •  Ranks of Agents specializing in individual health insurance is declining Commissions likely to be reduced Agents/Brokers are diversifying their books of business prior to 1/1/4 Unclear of whether Agents/Brokers will have a role in the Exchanges
    •  You may be able to buy insurance you cannot now afford If you have a pre-existing condition, you will be able to buy insurance for the same premium as that paid by people in good health If you have a very expensive, ongoing health problem, there will be no annual limitation for your health coverage No charge for routine preventive care 35 Million more Americans will be insured Strong incentives for employers to adopt a company sponsored wellness program
    •  Value Based Plans will gain popularity Ditto for Company Sponsored Wellness Programs Enrollment in Health Savings Accounts will decline somewhat Costs may escalate due to many factors: more insureds, guarantee issue, watered down penalty Young adults will be forced to buy coverage at a high rate to subsidize the older folks The Exchanges are an unknown at this point Certain industries will shrink and/or raise prices substantially Some employers may drop health coverage and pay the penalty IPAB could prove to be controversial
    •  You will probably start getting more questions on this topic (if not already) A lot of confusion about this comprehensive, complex law This law will be fully implemented in 2018 A number of new taxes- however, they won‟t apply to many Americans There will be administrative requirements ◦ Example: Employee notice of benefit summary
    •  Pay particular attention to employers who may be subject to a penalty (50+ employees) Your clients will have questions-we can assist Develop a business relationship with a broker/agent that is knowledgeable about this law Keep your broker/agent informed of what CPA‟s are being told regarding Health Care Reform The regulations are still being written
    •  Jim Wisdom, CFP James L. Wisdom Insurance Services 4607 Lakeview Canyon Road - Suite 482 Westlake Village, CA 91361 Work: (805)497-9264 Cell: (818)469-6640 E-Mail: jim@wisdomhealthplans.com Web Site: www.wisdomhealthplans.com Blog: www.jimwisdom.wordpress.com Also on Linked In, Twitter and Facebook