This document summarizes a presentation about self-insurance under the Affordable Care Act. The presentation discusses what self-insurance is, the impact of the ACA on self-insured plans, advantages and disadvantages of self-insurance, and updates about ACA requirements. It provides an overview of stop loss insurance, cost-sharing limits, reinsurance fees, employer penalties, and reporting requirements under the ACA. The presentation aims to educate companies on health care reform and compliance obligations for self-insured plans.

1. Thrive. Grow. Achieve.
Self-Insurance
Under the ACA
Matthew Roberts – Senior Account Executive
February 3, 2015

2. AGENDA
 Overview
 Stop Loss Insurance
 ACA Impact on Self-Insured Plans
 Advantages and Disadvantages
 ACA Update
Self-Insurance Under the ACA 2

3. ABOUT THE PRESENTER
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Matthew Roberts, Senior Account Executive
 Worked throughout the country – Chicago, Upstate NY and Albuquerque.
 Educates companies on Health Care Reform and other compliance
obligations.
 Empowers organizations to find knowledge-based solutions to problems
ingrained in their employee benefits programs by maximizing human
potential.
 Improves the overall health of an organization through strategic planning
and reducing both direct and indirect costs.
Self-Insurance Under the ACA

4. FULLY-INSURED VS.
SELF-INSURED
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Fully-Insured Plan
Insurance
Company
State
Regulation
Premium
Self-Insured Plan
Employer
Federal
Regulation
Unbundled
Fees
Risk
Governance
Funding
Self-Insurance Under the ACA

5. SELF-INSURANCE
 Employer assumes all or a portion of
this risk
 3 Components
 Administration
 Claims
 Stop loss
 Individual
 Aggregate
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Costs
Stop Loss
Administration
Claims
Self-Insurance Under the ACA

6. WHO SELF FUNDS? ALL FIRMS
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61%
61%
60%
60%
59%
57%
55%
55%
0% 20% 40% 60% 80% 100%
2014
2013
2012
2011
2010
2009
2008
2007
% of covered workers in partially or completely self-funded plans
The Kaiser Family Foundation and Health Research & Educational Trust Employer Health Benefits
2014 Annual Survey.
Self-Insurance Under the ACA

7. WHO SELF FUNDS? SMALLER FIRMS
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15%
16%
15%
13%
16%
15%
12%
12%
0% 20% 40% 60% 80% 100%
2014
2013
2012
2011
2010
2009
2008
2007
% of covered workers in partially or completely self-funded plans – 3 – 199 workers
The Kaiser Family Foundation and Health Research & Educational Trust Employer Health Benefits
2014 Annual Survey.
Self-Insurance Under the ACA

8. TYPES OF SELF-INSURANCE
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Complete Partial
HRAs
Level
Funding
Self-Insurance Under the ACA

9. TERMINOLOGY
 Administration - claims adjudication, billing, eligibility, customer
service, plan document maintenance, network access, etc.
 Expected claims – actuarial calculation based on past claims
experience, demographics and risk profile (known ongoing claims).
 Stop loss insurance – reduces the risk associated with large individual
claims or high claims from the entire plan.
 Maximum claims liability – worst case scenario – most employer will
pay out in a plan year.
9Self-Insurance Under the ACA

10. 10
Stop Loss Insurance
Self-Insurance Under the ACA

11. STOP LOSS – WHY?
 Limits risk/exposure
 Reduces claims fluctuation
 Peace of mind
11Self-Insurance Under the ACA

12. TYPES OF STOP LOSS
Specific/Individual – driven by
underwriting guidelines
oPaid Contract – covers all claims paid during the
policy year, regardless of incurred date
oRolling Contract – limits coverage to a defined
number of paid and incurred months each year
Aggregate – usually 10% - 25% above
expected claims; determines maximum
claims liability
12Self-Insurance Under the ACA

13. 12/12 PAID CONTRACT
13
Jan 2015 Jan 2016
12 months
Paid Claims
12 months
Paid Claims
Self-Insurance Under the ACA

14. 12/12 INCURRED CONTRACT
14
Jan 2015 Jan 2016
12 months
Incurred Claims
12 months
Paid Claims
Self-Insurance Under the ACA

15. 12/15 INCURRED CONTRACT
15
Jan 2015 Jan 2016 Apr 2016
12 months
Incurred Claims
15 months
Paid Claims
Self-Insurance Under the ACA

16. 12/18 INCURRED CONTRACT
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Jan 2015 Jan 2016 Apr 2016
12 months
Incurred Claims
18 months
Paid Claims
Jul 2016
Self-Insurance Under the ACA

17. 17
ACA Impact on Self-
Insured Plans
Self-Insurance Under the ACA

18. ACA REFORMS THAT APPLY
 Dependent coverage for children to age 26
 Preventive health services without cost-sharing
 No rescissions of coverage
 No lifetime or annual dollar limits on essential
health benefits
 No waiting periods exceeding 90 days
 No pre-existing condition exclusions
 No discrimination against participants who
participate in clinical trials
18Self-Insurance Under the ACA

19. ACA REFORMS THAT APPLY
 Distribution of Summaries of Benefits and
Coverage (SBCs)
 Patient-Centered Outcomes Research Institute
(PCORI) fee
 Reinsurance fees
 Cost-sharing limits ($6600/$13,200 out-of-pocket
maximums for 2015)
19Self-Insurance Under the ACA

20. ACA REFORMS THAT
DO NOT APPLY
 Essential health benefits package
 Medical loss ratio rules
 Review of premium increases
 Health insurance industry fee
 Insurance market reforms
o Guaranteed issue and renewability
o Insurance premium restrictions
20Self-Insurance Under the ACA

21. DC STOP LOSS BILL – B20-0797
 City council passed legislation that would ban stop loss in the
small group market (2-50).
 Would set an individual attachment point at $40K and an
aggregate attachment point at 120% for larger groups.
 This new law would not impact any 2015 renewals, however, if
signed by the mayor would take effect sometime in 2015.
 The Insurance Department (DISB) Commissioner McPherson
and Exchange Director Kofman were most prominent in
support of this bill.
 Advocacy efforts around the negative impacts of this law on
employers are ongoing with the new Mayor and administration.
21Self-Insurance Under the ACA

22. ADVANTAGES/
DISADVANTAGES
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Advantages Disadvantages
Flexibility in plan design – not bound
by state mandates and carrier filings
Increased risk
Transparency – renewal workup Additional reporting requirements
Reduced state taxes – 2%
Reduced federal taxes –
approximately 3%
Reporting – data is king
Improved cash flow – pay as you
go; run-in
Increased competition
Self-Insurance Under the ACA

23. 23Self-Insurance Under the ACA

24. GRANDFATHERED PLANS
 If you have one, determine whether it will
maintain status for next plan year
 If your plan will lose its status, confirm required
patient rights and benefits are in order
 If keeping its status, continue to provide Notice
of Grandfathered Status
24Self-Insurance Under the ACA

25. COST-SHARING LIMITS
For 2015 plan years, out-of-pocket maximum limits
for non-HSA plans:
 Employee only - $6600
 Family - $13,200
For 2015 plan years, out-of-pocket maximum limits
for HSA plans:
 Employee only - $6450
 Family - $12,900
25Self-Insurance Under the ACA

26. REINSURANCE FEES
 For 2014, $5.25 per member per month (PMPM)
or $63 annually
 For 2015, $3.67 PMPM or $44 annually
 If fully-insured, these fees are built into your
premium rates.
26Self-Insurance Under the ACA

27. EMPLOYER PENALTY RULES
 Applies only to Applicable Large Employers
(ALEs)
 Fifty (50) or more full-time employees (including
full-time equivalents) on business days during
the preceding calendar year
 Special rule allows employers to select a period
of at least 6 calendar months in 2014 to
determine 2015 ALE status
27Self-Insurance Under the ACA

28. MEDIUM SIZED ALES
 May have an additional year to comply with
shared responsibility rules
 Cannot change plan year after February 9, 2014
 Must employee at least 50 FTEs but fewer than 100 FTEs
in 2014
 May not reduce its workforce or overall hours of service to
satisfy the previous condition
 May not eliminate or materially reduce health coverage
 Must certify on Form 1094-C when performing
IRS Code Section 6056 reporting
28Self-Insurance Under the ACA

29. TRANSITION RELIEF FOR NON-
CALENDAR YEAR PLANS
 Maintained non-calendar year plan as of
December 27, 2012
 Significant % (all employees)
 Had at least 1/4 of its total employees covered; or
 Offered coverage to 1/3 of total employees
 Significant % (full-time employees)
 Had at least 1/3 of its full-time employees covered; or
 Offered coverage to 1/2 of full-time employees
29Self-Insurance Under the ACA

30. HEALTH PLAN COVERAGE
 Full-Time Employees – 30 hours per week
 Monthly measurement method
 Look-back measurement method
 Affordability of Coverage – 9.56%
 W-2 wages
 Rate of pay
 Federal poverty level
 Minimum Value – 60% actuarial value
30Self-Insurance Under the ACA

31. REPORTING OF COVERAGE
 Section 6056
 Large ALEs
 Medium-sized ALEs
 Section 6055
 Health insurance issuers
 Sponsors of self-insured health plans
 Due in 2016
 Filed with IRS by 2/28 or 3/31 (electronically)
 Written statements to employees by 1/31
31Self-Insurance Under the ACA

32. 32
Questions?
Self-Insurance Under the ACA

33. THANK YOU!
Matthew Roberts – Senior Account Executive
Matthew@raffafinancial.com
240-403-2574
Jeyalene Baron – Sr. Account Manager/Broker
jeyalene@raffafinancial.com
240-403-2556
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