The document outlines the impact of the Affordable Care Act (Obamacare) on employer-provided healthcare and business planning, detailing compliance requirements and changes occurring from 2010 to 2014. It emphasizes the necessity for employers to evaluate their health coverage options and the financial implications of both offering and not offering health insurance. The document also discusses the requirements for reporting, coverage documentation, and the long-term considerations of healthcare costs and employee demographics.

1. How Does Obamacare Impact Your
Business Planning?
July 17, 2012

2. Agenda
Today’s Speakers
Impact of Reform on Employers, Employees,
Insurers and Government
Kimberly Hollis, REBC
Employee Benefit Consultant, Tilson
Break
How Reform Impacts
Employer Provided Healthcare
Brent Tilson
President, Tilson

3. Today
 Our goal today is to review the
requirements and provide you tools for
planning your future budgets and
business strategies.
 Due to the size and scope of this new
law we have not addressed all areas
and complexities.
 Disclaimer: This should be used for informational
purposes only. Please seek professional guidance
from your attorneys and CPAs.

4. Part 1 Compliance

5. Part 1
• Historical Update
• Upcoming Requirements
• Exchanges
• Employee Counts

6. Changes since March 23, 2010
• CLASS Act will not be implemented
• Cuts to Medicare Payments to Physicians
delayed
• Increase in 1099 requirements repealed
• Free Choice Vouchers repealed
• Enforcement of non-discrimination rules
delayed
• Auto enrollment for companies with more
than 200 employees delayed until after 2014
pending release of regulations

7. Implemented since March 23, 2010
• Guaranteed coverage for uninsured with
pre-existing conditions (after 6 months)
• Prohibition against lifetime limits and rescissions
• Patient Protections (appeals, emergency
services)
• Guaranteed issue under age 19
• Dependent coverage to age 26
• Preventive care coverage required
• MLR (80% for individual and small group/85% for
large group)
• Salary caps for carrier executives

8. Supreme Court Ruling
• Upheld constitutionality of PPACA and
Individual Mandate
• Mandate not constitutional under
commerce clause, but deemed a tax
• Taxes that encourage citizens or
behaviors is deemed allowable
• Medicaid expansion…

9. Employer Requirements
If you don’t offer coverage, you still have to
meet most of the requirements outlined here.
Determining whether you will continue to
offer group coverage will be addressed
later.

10. If you offer coverage…
2012  September (New Hires after 9/23) Summary of
coverage required to all applicants and enrollees (not
more than 4 pages front and back in 12 point font –
template has been provided by HHS)
 Submit annually to DHHS and to plan enrollees during
the annual open enrollment period a report on whether
the benefits under the plan or coverage include the
specified components
2013  W2 reporting of aggregate cost of employer sponsored
health coverage for taxable years after 12/31/2012 for
employers who issue more than 250 W2s.

11. If you offer coverage…
2014  Waiting periods not to exceed 90 days for employer
sponsored health coverage

12. Whether you offer coverage or not…
2013  January: Collect Employee Medicare payroll tax
increase of 0.9% for earnings over $200,000 for
individuals and $250,000 for joint filers
 March: Provide notice to employees informing them of
the existence of an Exchange, the availability of
premium assistance if the actuarial value of the
employer’s plan is below 60% in the upcoming plan
year (2014)
2014
 (Date TBD) State required to offer premium assistance
to Medicaid beneficiaries for employer sponsored
coverage
 Penalties for employers with 50+ full-time equivalent
employees who have one or more employees receiving
the tax credit

13. Whether you offer coverage or not…
2014  Coverage documentation (by employee) reported to
both individuals and to the IRS, including the following:
– Whether the employer offers minimum essential
coverage to full-time employees;
– Any waiting period for health coverage;
– The monthly premium for the lowest cost option in each
enrollment category under the plan;
– The employer’s share of the total allowed cost of
benefits provided under the plan;
– The number of full-time employees during each month;
– The name, address and taxpayer ID (SSN) of each full-
time employee, and the months each employee was
covered under the employer’s plan, and;
– Other information to be determine by HHS Secretary in
regulations.

14. Benefit Changes
2013  Flexible Spending Account deferrals will be limited to
$2,500 beginning in 2013.
 Additional preventive care benefits, including birth
control covered at 100% with no cost share.

15. Changes still to be implemented
2012  States must submit to HHS by November 16, 2012 if
they wish to operate a state-based exchanges or a
Partnership exchange. Currently Indiana is “studying
options” according to kff.org.
2013  Increases the threshold for the itemized deduction for
unreimbursed medical expenses from 7.5% of adjusted
gross income to 10% of adjusted gross income; waives
the increase for individuals age 65 and older for tax
years 2013 through 2016.
 Imposes an excise tax of 2.3% on the sale of any
taxable medical device.

16. Changes still to be implemented
2014  Create state-based Exchanges and SHOPs through
which individuals and small businesses can purchase
qualified coverage
 Creates a temporary reinsurance program to collect
payments from health insurers in the individual and
group markets to provide payments to plans in the
individual market that cover high-risk individuals
 Limit deductibles for health plans in small group
market to:
– $2,000 for individuals
– $4,000 for families
(unless contributions are offered that offset the
deductible amounts above these limits)

17. Modified Community Rating Requirements
2014  Applies to all individual health insurance policies, all
fully insured group policies 100 lives and under,
and all plans offered through Exchanges
 Premium variations only allowed for:
– Age 3:1
– Tobacco Use 1.5:1
– Family Composition
– Geographic Region (defined by state)
 Experience rating will be prohibited
 Wellness discounts are allowed under specific
circumstances

18. Minimum Loss Ratio Requirements
2011  Applies to insurers in all markets
 85% for large group plans
 80% for individual and small group plans (100 and
below)
 Carriers will have to issue a premium rebate to
individuals for plans that fail to meet the minimum MLR
requirements
August  In Indiana, small groups for Anthem will receive rebates
2012 this year. No markets for United Healthcare will receive
rebates. Average rebate from Anthem:
$86/participating employee. Will be sent to employer to
either return to employees or offset future premium
costs.

19. Employee Requirements
2013  Individuals with earnings over $200,000 (or $250,000
for joint filers) will pay an additional $0.9% Medicare
Hospital Insurance Tax (HI)
 Same individuals will pay an additional 3.8% HI tax on
unearned income
 Itemized deduction for unreimbursed medical expenses
increased from 7.5% of AGI to 10% of AGI for regular
tax purpose; increase waived for individuals age 65
and older for t.ax year 2013 through 2016.
Note: Individuals are required to increase their tax
withholdings to pay for increased Medicare Tax

20. Employee Requirements
2014  TBD: Medicaid eligibility increased to 133% of FPL
 Premium assistance for employer-sponsored coverage
Each state for Medicaid beneficiaries
will be  All American citizens and legal residents required to
allowed to purchase qualified health insurance coverage
determine  Exceptions:
next steps on
– religious objectors
eligibility for
Medicaid – individuals not lawfully present
– incarcerated individuals
Indiana: TBD – taxpayers with income under 100 percent of poverty, and
those who have a hardship waiver
– members of Indian tribes
– those who were not covered for a period of less than three
months during the year
– People with no income tax liability

21. Requirements to Buy Coverage
Under the
Affordable
Care Act
Beginning
2014

22. Requirements to Buy Coverage
Under the
Affordable
Care Act
Beginning
2014

23. Requirements to Buy Coverage
Under the Key Facts:
Affordable •Premiums for health insurance bought through
Care Act Exchanges would vary by age. The Congressional
Budget Office estimates that the national average
Beginning annual premium in an Exchange in 2016 would be
2014 $4,500-$5,000 for an individual and $12,000-$12,500 for
a family for Bronze coverage (the lowest of the four tiers
of coverage that will be available.
•In 2010 employees paid $899 on average towards the
cost of individual coverage in an employer plan and
$3,997 for a family of four.
•A Kaiser Family Foundation subsidy calculator
illustrating premiums and tax credits for people in
different circumstances is available at:
http://healthreform.kff.org/subsidycalculator.aspx

24. Exchange
Benefit
Tiers
Bronze
plan
represents
minimum
creditable
coverage

25. Exchange
Out-of-
pocket
limits (For
Silver Plan
Only)
Scale for
incomes up
to 400% of
FPL:

26. Exchange
2014  Exchanges must offer:
– At least 2 multi-state plans
– At least one plan must be offered by a non-profit
entity
– At least one plan must not provide coverage for
abortions beyond those permitted by federal law
 Allow states to merge the individual and small
group markets

27. Employer Flowchart

28. Employer Flowchart (continued)

29. How do you count employees?
Some provisions are based on employer size.
The number of “full-time” employees you have
is based upon the following Full-Time
FTE = Equivalent (FTE) formula:
Full-time  Employees working at least 30 or more hours
Equivalent per week (averaged monthly) = 1 FTE
 Full-time Seasonal employees working less
than 120 days during the year are excluded.
Per the  Part-time employees: Total hours for
PPACA 4 weeks/120 = # FTE

30. Part 2 How the Reform Impacts
Employer Provided
Healthcare

31. 7 Step Process
• Step 1 – Prepare employee census and cost
analysis
• Step 2 – Identify future coverage options
• Step 3 – Calculate and project estimated
cost from each option
• Step 4 – Analyze the cost of offering
healthcare or not
• Step 5 – Conduct analysis of workforce
• Step 6 – Compare cost analysis against
workforce dynamics
• Step 7 – Make decision

32. Step 1 – Current Cost Support
• Prepare a spreadsheet with the
following details:
– Employee
– Status (full time, part time, seasonal)
– Age
– Compensation
– Health Coverage
– Cost support

33. Step 2 – Identify Coverage Options
Commercial Assoc Private
Carriers Exchanges Self-Funded Health Plans PEO Exchange
Small
Today <50 EEs N/A >100 EEs Small Groups N/A
Groups
Small Groups Small Groups Large Groups Small
Future Small Groups New
<100 EEs <50 <100 >25 Groups
Expected to Depends ??
Community Community No – actual
Pricing Controls be Community on plan Community
Pricing 3:1 Pricing 3:1 claims
Pricing 3:1 type Pricing 3:1
Group: Yes
Pre-Tax Yes Yes Yes Yes Yes
Individual: No
Negotiate
Only pay Negotiate Negotiate
Older/High Risk Older/High Risk Lower rates
Actual Claims lower MLR Lower rates
Groups – Groups – as maybe
Advantages – Appeal to as MLR may
Pricing Should Pricing Should able to
young/healthy Self- be lower
Decrease Decrease decrease
groups funded?
MLR
Large
Young/Healthy Young/Healthy Adverse
Disadvantages Higher $ Risk group W-2 Unknown
Prices Increase Prices Increase Selection
reporting
Government Subsidy Group: No
No No No No No
for 133%-400% Individual : Yes
Minimum Essential
Yes Yes Not required Yes/No Yes/No Yes
Benefits

34. Price
Price Controls – Community Rating
controls
today for
small
group that
allow for
5:1 but
now it will
move to
3:1 plus
removing
health
conditions
will amplify
changes

35. Step 3 – Calculate and Project Costs
• Initially this will require both math and
creativity
• As 2014 nears your numbers will
become more accurate
• Today you will need to use some of
the variables to guess impact your
future rates
– average age, health conditions, impact of
price controls

36. Step 4 - Analyze Cost to Offer or Not
• Using the employee census
• Calculate for both offering coverage
and not offering coverage
• Offering coverage:
– Estimate costs for each current employee
based upon coverage options
(commercial carrier, self-funded)
– Calculate your total cost support
– Economic value of pre-tax deductions

37. Step 4 - Continued
• Not offering coverage:
– Calculate compensation increase to
adjust for economic equality
– Calculate ER penalties if applicable
– Based upon compensation calculate
government subsidies per employee (this
is problematic to know family income)
– Economic disadvantage of post-tax
• Determine total with our without

38. Step 5 – Workforce Analysis
• Size of your company
• Growth plans
• Average wage
• Sophistication
• Culture
• Competition for employees
• Retention
• Competition

39. Step 6 – Weigh Costs vs. Workforce
• Will you need to increase pay to retain
employees?
• Will competition for employees force
you to keep employees?
• Are your insurance costs so high and
workforce demographics encourage
dropping coverage?
• Can you find a more competitive and
affordable solution?

40. Step 7 – Make the Decision
• This should provide you with the major
components to make an informed
decision….
• The challenge is now employees will
be also viewing their employment
opportunities differently….

41. Lets Discuss the Employee’s Perspective
• Age
• Wage
• Family health
• Geographic location (states)
• Employer provided health or
compensation subsidized

42. In Summary
• Regulatory and reporting challenges
• Coverage options
• Alignment of workforce and
economics
• Decisions, decisions, decisions

43. 2014 Premium Assistance Credit
Contributions will
increase based Available on a sliding scale to eligible individuals and
upon the excess families with incomes between 133-400% FPL to
of the premium purchase insurance through the Exchanges. Credit
growth over the will be tied to the second lowest cost silver plan in the
rate of income area and will be set on a sliding scale such that the
growth for premium contributions are limited to the following
2014-2018. percentages of income for specified income levels:
Beginning in
2019 further Income Premium Contribution
adjustment to Up to 133% FPL 2% of Income
reflect excess of
133-150% FPL 3-4% of Income
premium growth
over CPI if 150-200% FPL 4-6.3% of Income
aggregate 200-250% FPL 6.3-8.05%of Income
premiums & cost
250-300% FPL 8.05-9.5% of Income
sharing subsidies
exceed .54% of 300-400% FPL 9.5% of Income
GDP

45. THA Y
NK OU