CPE Event: Affordable Care Act

Health Care Reform Review
Howard Einstein – President, Rosenfeld Einstein/ A Marsh & McLennan Agency
Updates & Overviews

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MARSH & McLENNAN AGENCY, LLC
November 9, 2014
Health Care Reform
Topics of Discussion
All material contained herein is confidential and the sole property of Marsh & McLennan Agency, LLC.
For plan sponsor use only. Unauthorized distribution is prohibited.
•MANDATED FEES AND REPORTING REQUIREMENTS
•HEALTH PLAN IDENTIFIERS (HPID)
•MEDICAID EXPANSION AND INSURANCE EXCHANGES
•INDIVIDUAL AND EMPLOYER MANDATES
•HIGH-VALUE PLAN TAX – Cadillac Tax
•“PAY OR PLAY” STRATEGIES

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November 9, 2014
MANDATED FEES AND REPORTING REQUIREMENTS

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November 9, 2014
Tax and Fee Provisions of PPACA
DATE
TAX OR FEE PROVISION
FINANCIAL IMPACT
2010
10% tax on indoor tanning services
Individual direct
2011
Tax on non-qualified withdraws increased from 10% to 20% for HSAs and from 15% to 20% for MSAs
Individual direct
2011
Annual fees on pharmaceutical manufacturers/importers – increases from $2.3B to $4.8B per year over 10 years, apportioned among entities by market share
Pass through in product costs
2012
Annual fee on insured and self-funded health plans to fund Patient Centered Outcomes Research, applicable plan years ending 10/1/12 through 9/30/19 – $1 per covered life in 1st year, $2 in 2nd year, indexed thereafter
Pass through in insured premiums; employer direct for self-funded
2013
Employee Medicare tax increases from 2.9% to 3.8% for those earning $200K+/single or $250K+/couple; 3.8% tax also applied to investment income for same individuals
Individual direct
2013
Elimination of business expense tax deduction for Medicare D expenses for employers receiving Part D subsidies
Employer direct
2013
Annual fees on medical device manufacturers/importers – 2.3% of product sale price
Pass through in product costs
2013
$500K per person limit on tax-deductible salary expenses for insurance companies
?
2013
Threshold for itemized medical deductions increases from 7.5% to 10% of income
Individual direct
2014
Annual fees on health insurers – increases from $8B to $14.3B over 5 years and indexed thereafter, apportioned among insurers by market share
Pass through in insured premiums
2014
Fees on insurers and self-funded plans for state transitional reinsurance programs for first 3 years state marketplaces are available – $63/person 1st year, $44 2nd year
Pass through in insured premiums or employer direct
2018
40% excise tax on value in excess of thresholds for high-value health plans
Employer direct

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November 9, 2014
Trio of Plan Fees
Patient-Centered Outcomes Research Fee
Transitional Reinsurance Fee
Health Insurance Industry Fee
What is it?
•Annual plan year fee on insured and self insured plans beginning on/after 10/2/2011
•Annual calendar year fee on insured and self- insured plans, 2014-2016
•Annual fee on all insured plans beginning in 2014
Excludes Dental/Vision
Excludes Dental/Vision
Includes Dental/Vision
How Much?
•Annual fee of $1 PMPY, then $2 PMPY; indexed to medical inflation until 2019
•First payable July 2013
•$63 PMPY in 2014, $44 PMPY in 2015
•Projected to decrease again in 2016
Estimated costs:
•2 to 2.5% for 2014
•3 to 4% for later years
Who Pays?
•FI: Carrier pays
•SF: Employer must calculate and pay own fee
•FI: Carrier pays
•SF: Employer must calculate and pay own fee
•Carrier pays
•Applies to all insured plans and will be based on each insurer’s share (among all U.S. insurers)

ROSENFELD EINSTEIN • MARSH & McLENNAN AGENCY, LLC
Section 6055 & 6056 Reporting Requirements Purpose
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November 9, 2014
•The new ACA reporting for Applicable Large Employers are designed to answer the following questions to the IRS:
•Who has coverage?
•Section 6055
•Who might be eligible for a subsidy?
•Section 6056

Section 6055 Enforcing the Individual Mandate
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November 9, 2014
Important to Note –
Reporting requirements are for calendar year, without regard to plan year
•Who has to file?
–Anyone issuing Minimum Essential Coverage
-Insurers
-Self-Insured Plan Sponsors
•Who gets filings?
–IRS gets detail filing
–Individual statements will go to employees who were covered by the plan during the calendar year.

Section 6055 Reporting Detail
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November 9, 2014
•Taxpayer ID number for all covered individuals, including spouses and dependents
•What months were they covered?
•Plan sponsor name, address and employer identification number
•Individual employee statements will need to contain additional contact information of the plan sponsor

Section 6056 Enforcing the Employer Shared Responsibility Mandate
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November 9, 2014
Important to Note – Reporting requirements are for calendar year, without regard to plan year
•Who has to file?
–All Employers with 50 or more full time equivalents
–Applicable Self Insured Plan Sponsors will file both 6055 & 6056
•Who gets filings?
–IRS gets detail filing
–All employees get year end statements

Section 6056 Reporting Detail
•Some of the detail information required on the return:
–Certify appropriate coverage was offered to full time employees and their dependents
-by month
–Employee’s cost for the lowest cost plan for employee only tier
-by month
–Number of full time employees for each calendar month
-by month
–Name, address, taxpayer identification number of each full time employee
- and months which they were covered under the plan, if applicable
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November 9, 2014

Section 6056 Additional Information
•Alternative Reporting is available in some circumstances, and will lessen the burden of providing lowest level detail. Specific criteria must be met in each case:
–Certification of Qualifying Offers
–Certification of 98 Percent Offers
•Transition Relief Certification
–Medium Sized Employers, 50-99, will need to certify
-FTE count
-Workforce or hours were not significantly changed in order to comply with Transitional Relief between Feb 2014 and Dec 2014
-Health coverage was not significantly changed between Feb 2014 and Dec 2015
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November 9, 2014

Section 6055 & 6056 Reporting Key Dates
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November 9, 2014
Statements to employees by 1/31
Hard copy filings to IRS must be postmarked by 2/28
Electronic filings to IRS by 3/31 –
required for 250 or more individuals
IRS Forms not available yet– Drafts released July 2014

ACA Mandated Fees Patient Centered Outcome Research Institute Fees (PCORI)
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November 9, 2014
•Effective for calendar year plans through 2018 and non-calendar year plans through October 2, 2018
•Apply to accident and health coverage and self insured group plans
–Fees typically do not apply to FSAs unless:
-Employer contribution is at least $500 and
-More than 2 x the employee salary reduction
–Applies to COBRA or continuation coverage that provides accident and health coverage
–May also apply to retiree-only plans, although typically exempt from other ACA requirements
•The participant count is based on plan year and not calendar year

ACA Mandated Fees Patient Centered Outcome Research Institute Fees (PCORI)
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•Cost per participant:
-$1 plan years ending before October 1, 2013
-$2 plan years ending on, or after, October 1, 2013 to October 1, 2014
-Fees after October 1, 2014 will be adjusted by HHS
•Self Insured Plan sponsors can calculate PCORI fees by using one of the following methods:
–Actual Count – using the sum of actual lives covered by day, dividing by number of days in the plan year
–Snapshot – use count of lives on a specific day of the month or quarter, and divide by the number of dates picked (12 for monthly, 4 for quarterly)
–Form 5500 – based on formulas using the totals on the form – details following
November 9, 2014

ACA Mandated Fees PCORI – Sample Table of Participant Count
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November 9, 2014
Description of Plan
HRA/105
FSA
No Group Medical Plan
Count each participant who is eligible to be reimbursed as a single life. No spouses or dependents
Count each participant for whom there is an employer contribution as a single life. No spouse or dependents
Fully Insured Group Medical Plan
Count each eligible to be reimbursed participant as a single life. No spouses or dependents
Count each participant for whom there is an employer contribution as a single life. No spouse or dependents
Self Insured Group Medical Plan
Count each participant who is not enrolled in the Group Medical as a single life. No spouses or dependents
Count each participant who waived Group Medical and has an employer contribution.
All plans covering dental/vision are not required to report. Including Limited Purpose FSA plans
This should not be construed as legal or tax advice. Contact your tax advisor for complete filing instructions

ACA Mandated Fees Transitional Reinsurance Fees
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November 9, 2014
•New for 2014 calendar year
•Apply to accident and health coverage and self insured group plans
–HRAs, and FSAs plans are generally not required to assess the fee
-contact your legal or tax advisor for your specific plan information
–COBRA, continuation and retiree coverage typically assess the fee
•The participant count is based calendar year not plan year
•Cost per participant
-2014 $63.00 or $5.25 per month
-2015 $44.00 or $3.67 per month

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November 9, 2014
•Calculating Transitional Reinsurance Fee
•Self Insured plans use Form 5500 method
•If employee only coverage is offered:
•Add the beginning and ending count shown on the form
and divide by 2
•All other tiers offered:
•Add beginning and ending counts together – effectively calculating 2 lives

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November 9, 2014
November 15, 2014
Plans send HHS headcount for the first 3 quarters of 2014
December 15, 2014
HHS will send out bills based on headcount submitted
January 2015
Payment of $52.50 per covered life is due within 30 days to HHS
4th Quarter 2015
Balance of $10.50 is due to US Treasury
REPORTING AND PAYMENT DATES

HEALTH PLAN IDENTIFIER

Health Plan Identification Number (HPID) General Information
•ACA requires a national unique identification number be assigned to each health plan - HPID
•The 10 digit number will be used to streamline recording of standard transactions and designed to make processing more efficient
•Health Insurers will be applying for HPIDs for fully insured plans
•Self Insured Plan Sponsors will have to apply directly
–Medical
–HRA
–FSA
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November 9, 2014

Health Plan Identification Number (HPID) When to Apply
•When to Apply:
–Plans with more than $5 million in annual receipts
-November 5, 2014
–Plans with less than $5 million in annual receipts
-November 5, 2015
•All plans must be using the HPID number for
transactions by November 2016
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November 9, 2014
D E L A Y E D

Health Plan Identification Number (HPID) How to Apply
•How to Apply
–Online application process managed by CMS at CMS.gov
-http://www.cms.gov/
-Regulations-and-Guidance
-HIPAA-Administrative-Simplification
-Affordable-Care-Act
-Health-Plan-Identifier.html
–Sponsors will be directed to the online enumeration system called HPOES - Health Plan and Other Entity Enumeration System
-CMS estimates approximately 20 minutes to apply
-You Tube videos are also available to walk through the process Search “HPID Controlling Health Plan Application Process”
-Additional detailed written documentation available through your Account Manager
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November 9, 2014

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November 9, 2014
MEDICAID EXPANSION AND INSURANCE EXCHANGES

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November 9, 2014
Medicaid Expansion - Summary
Family Size
100% of 2014 FPL
133% of 2014 FPL
138% of 2014 FPL
1
$11,670
$15,521
$16,105
2
$15,730
$20,921
$21,707
3
$19,790
$26,321
$27,310
4
$23,850
$31,721
$32,913
5
$27,910
$37,120
$38,516
6
$31,970
$42,520
$44,119
7
$36,030
$47,920
$49,721
8
$40,090
$53,320
$55,324
–Prior to this decision a state would have lost all federal Medicaid funding if it declined to expand eligibility
–This provision was deemed unconstitutional, since it would have threatened existing funding as well
•The following slide has a map outlining the state-by-state status of Medicaid expansion
*Medicaid expansion is up to 133% of FPL; however, the first 5% of income is disregarded when assessing eligibility, which effectively makes the eligibility threshold 138% of FPL.
•PPACA originally expanded Medicaid coverage to almost any individual under age 65 that had an income up to 133%* of the Federal Poverty Level
–This expansion was designed to significantly reduce the number of uninsured Americans
–The federal government will pay a very high share of Medicaid cost to states who expand their eligibility to 133%*
•The SCOTUS decision on PPACA determined that states are not required to expand Medicaid coverage

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November 9, 2014
State Medicaid Expansion Status as of January 2014
Source: The Kaiser Family Foundation http://kff.org/medicaid/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/#map, accessed 2/6/14. States that are implementing the Medicaid Expansion in 2014 and states not moving forward at this time are based on data from the Centers for Medicare and Medicaid Services, available at: http://medicaid.gov/AffordableCareAct/Medicaid- Moving-Forward-2014/Medicaid-and-CHIP-Eligibility-Levels/medicaid-chip-eligibility-levels.html. States noted as “Open Debate” are based on Kaiser Commission on Medicaid and the Uninsured analysis of State of the State Addresses, recent public statements made by the Governor, issuance of waiver proposals or passage of a Medicaid expansion bill in at least one chamber of the legislature.
Expanding Coverage (26)
Open Debate (6)
IL
NY
PA
NJ
DE
MD
WV
MT
WA
ID
OR
TX
ND
MN
WI
MI
VA
NC
SC
GA
FL
AL
MS
LA
NM
AZ
WY
SD
NE
CO
KS
OK
IA
MO
AR
IN
KY
TN
HI
AK
CA
NV
UT
ME
NH
VT
CT
RI
MA
DC
OH
Not Moving Forward At This Time (19)

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November 9, 2014
•Public (State/Federal) Insurance Exchanges
–Exchanges are to be set up by each state to provide a platform for individuals to purchase health coverage
–If a state does not set up an exchange by 2014 a federal exchange will be set up in place of the state exchange
–Small employers (1-100) will have access to purchase coverage through Small Business Health Options Program (SHOP) exchanges (states can restrict this to 1-50 until 2016)
–Large employers (100+) may have access to purchase coverage through state exchanges starting in 2017, at the state’s discretion
–The following slide has a map outlining the state by state status of exchange setup
•Private Insurance Exchange
–Marketplace with health only or core and supplemental product offerings across many benefits and services
–Exchange sponsor stocks products and manages end-to-end consumer experience
Insurance Marketplace Summary

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November 9, 2014
State Health Insurance Marketplace 2014 Status
Federal Marketplace (27)
State Marketplace (17)
State-Federal Partnership Marketplace (7)
Source: Kaiser Family Foundation http://kff.org/health-reform/state-indicator/health-insurance-exchanges, accessed 1/15/14
IL
NY
PA
NJ
DE
MD
WV
MT
WA
ID
OR
TX
ND
MN
WI
MI
VA
NC
SC
GA
FL
AL
MS
LA
NM
AZ
WY
SD
NE
CO
KS
OK
IA
MO
AR
IN
KY
TN
HI
AK
CA
NV
UT
ME
NH
VT
CT
RI
MA
DC
OH

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November 9, 2014
Subsidies available, employer shared responsibility penalties may apply
Marketplace Subsidy & Medicaid Expansion Income Segments
Single Individual
Family of Four
% of FPL
Annual Household Income
Those with household income in excess of 400% of Federal Poverty Level NOT eligible for subsidy through marketplace
400%
$46,680
$95,400
300%
$35,010
$71,550
200%
$23,240
$47,700
150%
$17,505
$35,775
138%
$16,105
$32,913
133%
$15,521
$31,721
100%
$11,670
$23,850
* Medicaid expansion eligibility threshold is 133% of FPL; however, first 5% of income is disregarded when determining household income level
Note: Numbers represent 2014 FPL figures
<138%* FPL
<100%
FPL
138%*- 400% FPL
100%-400% FPL
>400%
FPL
>400%
FPL
0%
100%
200%
300%
400%
500%
600%
With Medicaid Expansion
Without Medicaid Expansion
Household Income as % of FPL
Income Segments Under Health Reform

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November 9, 2014
INDIVIDUAL AND EMPLOYER MANDATES

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November 9, 2014
Employer Plan
Federal or State Exchange
Medicaid
Pay Penalty
Employee Choices
2014 Individual Mandate Summary
•Individuals must have qualifying minimum coverage or pay tax penalty. Potential annual penalties are:
–2014: greater of $95 per individual or 1% of household income*
–2015: greater of $325 per individual or 2% of household income*
–2016: greater of $695 per individual or 2.5% of household income*
•Individuals with no employer coverage or with “insufficient” or “unaffordable” employer coverage are eligible for public Exchange coverage and may receive a federal tax credit subsidy (sliding scale based on income).
*Penalty cannot exceed the national average cost for Bronze plans in the exchange

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November 9, 2014
Employer Mandate Summary
Applicable to employers with 100 or more full-time equivalent employees in 2015; applicable to employers with 50 or more full-time equivalent employees in 2016:
Yes
Yes
Yes
Do you offer coverage to at least or 95% of FT employees and their children (70% of employees only in 2015)?
Are plan benefits sufficient?
Is the coverage affordable?
No Penalty
Employer pays the lesser
of $3,000 per affected FT employee who receives a tax credit, or $2,000 for every FT employee minus the first 30
Employer pays $2,000 for every FT employee minus the first 30 (minus 80 in 2015) if at least 1 FT employee receives a tax credit
No
No
No
“Insufficient” Benefits – plan’s actuarial value is <60% (benefits pay less than 60% of cost of services)
“Unaffordable” Benefits – household income <400% federal poverty level ($46K single, $94K family) and single-tier contribution for lowest cost sufficient plan is >9.5% of employee’s W-2 income
Full-Time Employee – employee working avg. 30+ hrs/wk
•“Pay” – If employer plan is not offered at all or is offered to less than 95% of FT employees and their children (70% of employees only in 2015) and 1 or more FT employee receives the marketplace coverage tax credit subsidy, employer pays penalty of $2,000/FT employee minus the first 30 FT employees (minus 80 in 2015)
•“Play” – If coverage is offered to 95%+ of FT employees and children (70% of employees only in 2015) but is “insufficient” or “unaffordable” and 1 or more FT employee receives the marketplace coverage tax credit subsidy, employer pays penalty of $3,000/FT employee receiving subsidy (or $2,000 per FT employee, if less)

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November 9, 2014
Employer Mandate Example
Employer Penalty
Insurance Not Offered OR
Is Insufficient or Unaffordable
Full-Time Employee Obtains Insurance in an Exchange
That Is Subsidized
EE Contribution
Plan A
Plan B
Plan C
EE Only
$50
$100
$150
EE+Sp
$250
$350
$450
EE+Ch
$300
$400
$500
EE+Fam
$500
$600
$850

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November 9, 2014
Additional Clarifications Affecting Employer Mandate
•Offering major medical to 95% or more of full-time (30 or more hours/week) employees and their children will be seen as offering to all employees for determining an employer’s exposure to the $2,000 eligibility penalty under the employer mandate (threshold is 70% of employees only in 2015)
–Still exposure to $3,000 penalty for employees under threshold who are not offered coverage or for employees offered unaffordable coverage
–Spouses do not have to be offered coverage
–Does not apply to employees during time working overseas
–Affordability test can be based on end-of-year W-2 income, rate of pay or FPL method
•Transitional relief is available for non-calendar year plans that meet certain requirements, e.g. 1/3 or 1/4 rule on all employees or 1/2 or 1/3 rule on all full-time employees
•Common control employer groups will only be considered in determining if a member employer is a large employer; penalties will be determined separately for each employer in the applicable controlled group
•Measurement and stability period safe harbor process has been proposed to assist employers in determining FT status of variable hour and seasonal employees, which allows a window of 3 – 12 months in which to do so
•IRS will contact employer if there’s potential liability, but not before individual tax filing dates for that previous calendar year

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November 9, 2014
2015
Auto Enrollment
Individual Mandate
Medicaid Expansion
Expanded Eligibility
How Do I Account For:
Penalties
Compensation increases due to loss of benefits?
Employer Mandate Financial Considerations

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November 9, 2014
MMA “Pay or Play” Benchmark Data – General Impact & Cost Impact by Industry
20%
80%
Impacted
Not Impacted
42%
58%
Impacted
Not Impacted
0%
10%
20%
30%
40%
50%
60%
70%
Biotech/Rx
Financial
Hospital/Healthcare
Municipality/Non-Profit
Manufacturing
College/University
Construction
Energy/Transportation/Utility
Staffing
Hospitality
Compliant Strategy
Current Strategy
Employers Impacted By “Pay” Penalty
Employers Impacted By Affordability & Sufficiency Penalties
Cost Impact Of Compliance
Source: MMA National Benchmark Database of over 600 Employers, data as of 12/31/13

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November 9, 2014
HIGH-VALUE PLAN TAX

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November 9, 2014
High Value (“Cadillac”) Plan Excise Tax Summary
Source: Mercer Survey of Employer-Sponsored Health Plans 2011
•Includes medical/Rx, individual reimbursement accounts, EAP, and onsite medical clinics
•2018 thresholds are $10,200 for single coverage and $27,500 for family coverage – will be indexed annually thereafter based on CPI
•40% excise tax on the coverage value that exceeds these thresholds
•Threshold adjustments permitted for pre-65 retirees, high-risk professions, significant age/gender factors, and multi-employer plans
Most Likely Employer Actions Regarding Excise Tax
21%
36%
4%
39%
Will do whatever is necessary to bring
plan cost below threshold amounts
Will attempt to bring cost below threshold
amounts, but may not be possible
Will take no special steps to reduce cost
below threshold amounts
Believe plan(s) are unlikely to ever trigger
excise tax
Cadillac Tax Cost Benchmarks (Tax Cost as % of Total Plan Costs)
0%
2%
4%
6%
8%
10%
Energy/Transportation/Utility
College/University
Hospital/Healthcare
Construction
Financial
Hospitality
Manufacturing
Biotech/Rx
Municipality/Non-Profit
Staffing
Source: MMA National Benchmark Database of over 600 Employers, data as of 12/31/13

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November 9, 2014
“PAY OR PLAY” STRATEGIES

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November 9, 2014
•Plan alternatives
–Offer a 60% value plan and position current plan as a buy-up option
–Implement consumer-driven health plan
–Consider alternative funding options (e.g., ASO, level funding, captives)
–Private exchange
•Contribution strategies
–Increase dependent tier contributions to offset cost increases resulting from single tier contribution reduction and new opt-ins due to individual mandate
–Create salary-based contribution, i.e. lower contributions only for those potentially eligible for penalty- generating subsidies (income below 400% of FPL)
–Consider defined contribution approach
•Health management
–Implement results-driven population health management program
–Leverage increased limits for results-based wellness incentives
•Workforce management
–Decrease number of staff working 30+ hours per week (reduce hours of those currently working just over 30 hrs/week)
•Employee communications
“PAY”
Large ERs 2017 State Marketplace Options
“PLAY”
CDHP/Health Management/ Plan Design/ Contribution Strategy
Defined Contribution/ Private Exchanges
Alternatives to Consider for 2015

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November 9, 2014
•CDHPs typically far exceed the 60% “test” but cost about 20% less than PPO and HMO coverage.
–Enrollment nearly doubled in the last 3 years
–40% of recently surveyed employers will offer CDHP 2013
Medical Plan Cost Per Employee
SAMPLE Minimum Value Plan Design
High Deductible + HSA (Minimum 60% value; can be increased)
In Network
Out of Network
Deductible
$3,500 / $7,000
$5,000 / $10,000
HSA Account
Employer and Employee Can Contribute up to $3,300/$6,550
Plan Coinsurance
80%
Preventive Services
100%
Not covered
Out of Pocket Maximum
$6,3500 / $12,700 (incl. deductible)
$10,000/ $20,000 (incl. deductible)
Pharmacy
Subject to deductible & coinsurance
•Offer a base medical and pharmacy plan that equates to the minimal “sufficient” benefit plan under ACA
CDHP MINIMUM VALUE
Plan Design – CDHP & Minimum Value Plans

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November 9, 2014
Plan Design – Minimum Essential Coverage Plan
•Minimum Essential Coverage (MEC): Broadly defined as government-sponsored program, employer-sponsored plan, individual coverage and “other coverage” as determined by HHS (no value specification)
–Satisfies individual mandate and requirement that employer offer coverage to 95% of FT employees and children (70% of employees in 2015) or pay $2,000 per FT employee (- first 30 (-80 in 2015))
•Minimum Value (MV): Plan pays at least 60% of costs for allowed benefits
–Employees with household incomes <400% FPL may qualify for a marketplace subsidy if the employer- sponsored plan (MEC) does not meet MV and/or is unaffordable, which triggers an employer penalty of $3,000 per FT employee that receives a subsidy
•Lower-cost MEC that does not meet MV might be incorporated into a strategy that still enables employees to avoid individual penalties and employer to avoid some or all employer penalties:
No coverage
Minimum essential coverage (MEC)
Affordable MEC meeting minimum value (MV)
<
<
MEC is only option offered
MEC is offered alongside affordable MV plan
•Employee satisfies individual mandate
•Employer avoids $2,000 penalty on all FT employees (-30 (-80 in 2015)) by offering coverage, but could be subject to $3,000 penalty for employees who receive subsidy due to insufficient plan value
•Employee satisfies individual mandate
•Employer avoids all penalties because affordable, sufficient coverage is offered, even if employees choose MEC plan

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November 9, 2014
PUBLIC
PRIVATE
Plan Design – Private Insurance Exchange vs. Public Marketplace
State or Federal Government
Consultant/Broker, Insurer, Tech Firm
SPONSOR
Medical/Rx
Dental, Vision, Life, Voluntary, +More
PRODUCTS
Individual
Group
CONTRACTS
Single or Multiple
CARRIERS
Actives, Retirees
ELIGIBLES
Self-funded
FUNDING
Insured
TOOLS
Comparison
Tools
Decision Support, Education
PAYMENT
Employer Pre-Tax, Employee Pre-Tax
Individual Post-Tax, Federal Subsidies
ENROLLMENT
Online and Telephonic
Open
ACCESS
Closed

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November 9, 2014
•Why are employers looking at a defined contribution approach to medical?
–Reset how the employer and employee share the cost of coverage
–Connect employees to their health care and its cost – and be a catalyst for employees to make better choices
–Improve financial predictability in medical program budgeting
–Parallel retirement plans’ transition from defined benefit to defined contribution
Contribution Strategy – Defined Contributions
Total percent of employers noted above using or considering a DC approach is 58%; the remaining 42% of employers surveyed are not considering a DC approach.

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November 9, 2014
Implement Results Driven
Population Health Management Program
Establish Cross Sectional Team
Goals & Objectives
Action Plan
Leverage Data to Identify:
Gaps in Care
Predictive Modeling
Value Based Benefits
Health Management

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November 9, 2014
Strategies
Monitor employees that are expected to work less than 30 hours/week
Reset status for full-time employees to 30 hours per week
Create additional classes for employees working between 30 & current FTE level that are FT Healthcare only
Workforce Management
•Under ACA some of labor pool and part time employees will be considered FTEs for health insurance in 2015

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November 9, 2014
•Leverage changes in the health care landscape to reposition company value proposition and value of benefits package
•Take advantage of public awareness to engage employees
•Identify your audiences and their different needs/perceptions
–Full-time employees
–Part-time or variable hour employees
–Union employees
–Retirees
•Incorporate educational themes that tie in with global strategies
–How benefits work
–Why health and engagement matters
–Employee accountability
–Reform and what employees need to know
-What is the PPACA?
-Why is it important to me?
-What action must I take?
-What’s in it for me if I act or don’t act?
-Where do I go for more info?
Employee Communications

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November 9, 2014
Decision to Keep Coverage
•Will employers keep coverage after 2015?
–Recent surveys have shown that only 10-15% of employers plan to drop coverage
•Why employers choose to keep coverage?
–If employers wish to maintain the same level of employee compensation they will need to increase employee salaries to account for the cost of coverage elsewhere
–Remain competitive in the marketplace for recruiting talent and reducing turnover
–Allows employer to have control over the employee population’s overall health and productivity
Employers Likely To Drop Coverage Within Next Five Years*
Employer’s Likely Actions Regarding Employees Working 30+ Hours/Week**
6%
18%
32%
45%
Make all employees working 30+ hours/week eligible for full-time employee plan(s)
Make no change and pay penalty as necessary
Add a lower-cost plan for employees that work fewer than 40 hours/week
Change workforce strategy so that fewer employees work 30+ hours/week
What Employers Are Considering
Source: * Mercer Survey of Employer-Sponsored Health Plans 2012, ** Mercer Survey of Employer-Sponsored Health Plans 2011
20% 6% 3% 19% 9% 4% 22% 7% 5% 10-499 employees500+ employees5000+ employees201020112012

47
November 9, 2014
What’s Next?
“Pay or Play” Strategy
•Determine whether additional modeling is required – e.g., alternative plan design, contribution or eligibility strategies
•Evaluate potential workforce management strategies
•Consider private exchange or SHOP (small employers) options
•Review fiscal year transition relief status
•Establish the use of safe harbors for the eligibility and affordability requirements – select measurement, stability and administrative periods and establish processes
Other Upcoming HCR Requirements (2014)
•Budget for additional HCR fees
•Determine benchmark plan for EHB
•Evaluate impact of:
•EHB dollar limit prohibition
•OOP maximum restriction
•90-day waiting period limit
•Dental & vision plan integration
•Consider taking advantage of increased wellness incentive limits

48
November 9, 2014
No part of this document may be reproduced, quoted, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or by any information storage and retrieval system), without express, prior permission, in writing from Marsh & McLennan Agency, LLC Company.
©2013 Marsh & McLennan Agency, LLC Company All Rights Reserved

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