HBAK should expect major changes from health care reform taking full effect in 2014. This will be the most significant reform since Social Security and will guarantee coverage regardless of health status. Premiums for healthy individuals are estimated to increase 60-90% on average due to community rating and not being able to medically underwrite. HBAK is establishing a health insurance trust that would pool members into a large risk pool to avoid some risk rating provisions and associated premium increases for lower risk members. The trust will be fully insured by Anthem and provide other benefits like dental and vision.

1. What should HBAK expect

3.  Barring some unforeseen successful legal
challenge, Health Care Reform will take full effect on
January 1, 2014.
 This will be the most comprehensive reform
legislation to affect the country since Social
Security.

4. Low Risk Mid Point High Risk
Low Premium High Premium
 Insurance is the spreading of risk among many people to assist a few
who have a loss.
 In theory, your insurance coverage, be it
health, life, auto, home, business will fall somewhere on this
continuum
 In this model, the low risk/low premium policy is likely paying more
than they actually should, and the high risk/high premium policy is
likely NOT paying enough for the claims that they generate

5.  Guaranteed coverage
regardless of health
status
 Community Rating
 No Pre-existing
condition waiting
period
 Mandated Health plan
coverage’s
 Premiums will go UP!

6. $150
$450$405$300
Community Rate
These people are happy.These people will be negatively affected by law.
Good Risk Bad Risk
 It is estimated that premiums for healthy clients will increase
somewhere between 60% to 90% on average as a result of
Health Care Reform.
 Many employers will look for alternative ways to cover
employees or drop coverage and pay a potential penalty

8. These are the rates we will have
available because we can still
“Risk Rate”$150
$450$405$300
Community Rate
These people are happy.These people will be negatively affected by law.
Bad Risk
 Establish a Health Insurance Trust to pool resources and employee
lives into one large pool to spread the risk of the overall population of
our eligible members
 Treated as one Single Large Employer, we would avoid some of the
risk rating provisions of the act.
 This is an employer based group plan. Individuals are not eligible to
participate.

9.  The health insurance portion of the HBAK
Program is provided by Anthem
 This is a fully insured program
 We do not envision utilizing any “self insured”
products as an offering through the trust
 Other products such as dental, vision, STD, LTD
and Life are available to members

10.  Originated in late 1970’s
 Program grew in scope
 Currently covers approximately 50,00 lives in Kentucky
 Has been a consistent membership recruitment and
retention tool

11.  First, the endorsing Trade Association must meet the
purpose, operational structure and membership rules described by
the Department of Labor to be considered a “bona fide” Association.
 We believe you meet those criteria
Requirements

12.  Second, as a “bona fide” Association, you are eligible to offer a
group health plan with the following conditions:
◦ It is a “Single Plan”: The Association must be the health plan
sponsor and fiduciary, as defined by ERISA and the DOL.
◦ Group Size: The Plan can only be offered to groups of two or
more employees. (Pending approval for 1 man groups)
◦ Like-Business or Common industry: The plan must be eligible
to like-businesses who are active members of the sponsoring
Association
◦ Common renewal date: The Plan needs to act as a “single Plan”
and thus, all employers will move to a common anniversary date
which for KRMCA will be April 1 of each year.
Requirements

13.  Third, because the Association Health Plan is now considered a
“large group”, all other state and federal large‐group provisions
apply. Therefore, beginning with the 2013 renewal, all subscribing
groups will be eligible for:
◦ State and Federal large group benefits such as autism, MHP and
Medicare as secondary payer.
◦ Section 125 services
◦ COBRA services
Requirements

14.  This is employer based coverage, not individual
coverage
◦ 75% of eligible employees must have credible coverage
◦ 50% of eligible employees must be on the plan
◦ Employer must contribute at least 50% of single premium
◦ Employer must be a member in good standing of the
association
◦ Employer must maintain association membership to
remain eligible