The document discusses key changes to US health care reform taking effect in 2014. It outlines the individual mandate requiring all Americans to purchase health insurance or pay a penalty. It also discusses the employer mandate, which penalizes companies with 50+ employees that do not provide affordable, minimum coverage. It explains subsidies available for individuals and small businesses purchasing plans. The summary concludes by presenting two case studies of companies navigating these new health insurance requirements.

1. 2014- THE REAL
START OF HEALTH
CARE REFORM
Jim Wisdom, CFP
June 13, 2013

2. OVERVIEW
 I. HC Reform- The Big Picture
 2. What changes in 2014?
 3. Who is affected?
 4. Case studies from the field

3. HEALTH CARE REFORM- THE BIG
PICTURE
 HCR = PPACA=ACA=Obamacare
 Signed into law on 3/23/10
 First came “free benefits”
 Now we get to pay for them ( or have somebody else subsidize
them)
 HCR Objective: To insure as much of the uninsured as possible
 Estimated 37 Million uninsured in the U.S.

4. HC REFORM: THE BIG PICTURE (
CONT’D)
 2010-2012- Enhanced benefits introduced
 2011/2018- Taxes ( Including .9% Medicare Tax, 3.8% Tax on
Investment Income, $8 Billion+Tax on Health Insurers, 2.3% Tax
on Medical Device firm sales, $2.5 Billion+ Tax on Pharmaceutical
firms; 40% Health Insurer Tax on “Cadillac Health Plans”)
 2014- Individual Mandate, Employer “Play or Pay” penalty for
groups with 50+ employees

5. WHAT CHANGES IN 2014?
 Mandate to purchase health insurance for individuals
 Employer “Play or Pay” penalty applies for groups with 50+ full-
time equivalent employees who don’t provide:
 “Affordable” coverage or
 “Minimum Essential Benefits” and
 One employee purchases subsidized coverage through the state-based
exchange
 If employers with less than 50 employees offer health insurance
that is either “Un-Affordable” or does not offer “Minimum Essential
Benefits,” employees may be eligible to purchase subsidized
health insurance through state-based Exchange.

6. WHAT CHANGES IN 2014?
 Expansion of Medicaid ( for those states that select this option)
 Subsidies for those individuals purchasing through the state
based exchanges between 138% of the Federal Poverty Level (
FPL) and 400% of the FPL.
 Tax Credits for some Small Businesses that qualify for employers
with 25 employees or less and average annual salary of $50,000
or less

7. 2014 MANDATE PENALTY FOR
INDIVIDUALS
 2014- greater of $95 or 1% of income (max fee = 3X flat fee =
$285)
 2015- greater of $325 or 2% of income (max fee = $975)
 2016- greater of $695 or 2.5% of income (max fee= $2,085)

8. 2014 PLAY OR PAY PENALTY (FOR
EMPLOYERS WITH 50+ EQUIVALENT
EMPLOYEES)
 “No Offer” Penalty- $2,000 X the total # of employees minus the
first 30 employees
 Example: 100 employee group – Annual Penalty = ( 100-30) X
$2,000= $140,000 ( not deductible to the corp.)
 “Unaffordable Coverage” Penalty- The lesser of $3,000 per
subsidized full-time employee OR $2,000 X the total # of
employees minus the first 30 employees
 Note: An employer penalty is only triggered if at least one
employee purchases federally subsidized coverage in the
Exchange.

9. HOW IS AFFORDABILITY DEFINED?
 If an individual or employee of a company is offered coverage and
he/she has pays less than 9.5% of his/her income, that’s deemed
affordable.
 If the cost to that individual or employee exceeds 9.5% of their
income, that’s not deemed to be affordable– and they are eligible
to purchase subsidized health insurance through the state Health
Care Exchange
 CA Exchange known as “Covered California”

10. HOW ARE MINIMUM ESSENTIAL
BENEFITS DEFINED?
 All insured plans must include:
 Ambulatory patient services
 Emergency services
 Hospitalization
 Maternity and newborn care
 Mental health and substance abuse services, including behavioral health
treatment
 Prescription drugs
 Rehabilitative and habilitative services and devices
 Laboratory services and devices
 Preventive and wellness services and chronic disease management
 Pediatric services, including oral and vision care

11. WHO IS AFFECTED?
 Almost all Americans will be affected in some way
 Some will benefit from the new law
 Some will be adversely affected by the new law

12. WHO IS LIKELY TO BENEFIT FROM HC
REFORM?
 The uninsured- who may be eligible for subsidies or get care at no
charge through Medicaid
 The poor- who will be eligible for subsidies or get care at no
charge through Medicaid
 Some employers will benefit from added consumer protections
 Those who have pre-existing conditions
 Small employers who are eligible for tax credits

13. WHO MAY BE ADVERSELY AFFECTED
BY HC REFORM?
 Employers with greater than 50+ employees- subject to “Play or
Pay”
 Medicare recipients – Approx. $500B in spending cuts
 Employer-Based Plans- Taxed for first time, may drop coverage
 Medicaid/CHIP Recipients-System could be overwhelmed
 Employees with rich plans ( i.e. many union plans)- Will be
subject to 40% Cadillac Tax (2018)
 Restaurant, Construction, Agriculture, some Manufacturing
industries
 Companies that don’t offer Employee Benefits to “Attract, Retain
and Motivate” ( A.R.M.) their employees

14. TWO CASE STUDIES
 Client- 200 Employees ( Mgmt. Carve-Out only before 1/1/14)
 Subject to Play or Pay Penalty of about $340,000 in 2014 if they
don’t offer group health insurance
 Prospect- 200 Employees – Never offered health insurance
before 1/1/14
 Objective: To comply with Obamacare and “still survive as a company”

15. SUMMARY
 The 1/1/14 Open Enrollment Period for Covered California ( CA
Health Care Exchange) is from 10/1/13-3/31/14
 Individual rates and benefits have been released
 www.hbex.ca.gov
 www.coveredca.com
 You can follow Covered California on Linked In, Facebook and Twitter
 Small Group ( SHOP) rates to be released any day
 How to open up a potential prospect
 Are you ready for Obamacare? Or, are you looking for an
alternative opinion regarding your (Group or Individual) Health
Insurance?
 Let Ken Wilkinson or me know if we can be of any assistance to
you

16. THANKS FOR YOUR ATTENTION!
 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
 CA License #0699524
 Follow my Health Care Reform Blog at
www.jimwisdom.wordpress.com
 Continue the conversation on Linked In, Twitter and Facebook
 Twitter = @Wisdom_InsSvcs