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How the new law impacts your bottom lineMarcia DávalosJune 18, 2013What Healthcare Reform MeansFor Your Practice
Coverage is Good Medicine
2013-2014"
About Small Business Majority•  Small business advocacy organization – foundedand run by small business owners•  National ...
Small businessesstruggling with costs" Soaring cost of insurance – especially for smallbusinesses – 25% of small business ...
Small businessesstruggling with costsOur most recent opinion survey: Small employers who don’t offercoverage say lack of a...
Small businessesstruggling with costsSmall Business Majority opinion poll: 72% ofthose who do offer say they are strugglin...
Topics for discussion today•  Consumer Protections•  Tax credits•  Cost Containment Provisions•  Health Benefit Exchanges ...
The Affordable Care Act•  Builds on existing healthcare system•  Aims to rein in healthcare costs•  Upheld by U.S. Supreme...
Immediate consumer protections•  Insurers will no longer be ableto deny coverage for patientswith pre-existing conditions•...
Immediate consumer protections•  Health plans can’t drop coverage when someone getssick, if mistake on paperwork•  First-d...
Key provisions smallbusinesses should know about•  Immediate tax credits for most small businesses•  2010-2013- Preexistin...
Small business tax credits•  Available to businesses with employees•  Available now (took effect tax year 2010)•  Which bu...
Small business tax creditsOur report: 4M small businesses eligible (83.7%of all businesses); 1.2M businesses eligible form...
Small business tax credits•  2 in 5 business owners who qualify eligible for max•  19.3M employees work for eligible busin...
Small business tax credits•  Tax credits on a sliding scale:o  Up to 35% 2010–13o  Up to 50% any two years (2014)•  Premiu...
Nonprofits also eligible•  Tax credits on a sliding scale:o Up to 25% 2010–13o Up to 35% any two years (2014)•  Include am...
Wellness programsWellness programs affect plans starting on Jan. 1, 2014•  Two types of wellness programs:1. Participatory...
Medical Loss Ratio: “80/20 rule”•  80% of premium on medicalclaims & quality improvement•  20% on administrative & profits...
Rate review•  Insurance companies required to:o  Publicly disclose and justify rate increases of10% +o  Explain increase o...
State health insurance exchanges:coming in 2014•  Large marketplace to shop for health coverage•  Private insurance plans ...
What is a Health Benefit Exchange?•  One-stop shop web portalwith no wrong doorINSURANCE PLANSEXCHANGEChoiceComparisonBill...
State exchange decisions•  States will enter into the federally-facilitated exchange(FFE), state-federal partnership, or s...
Health Benefit Exchange•  Two Exchanges: individuals; small businesses•  Opening on January 1, 2014 (pre-enroll begins Oct...
California Health Benefit ExchangeOur Exchange: “Covered California”•  First in the nation. Enacted in 2010 –Bipartisan ef...
California’s Key Decisions•  Active Purchaser: Exchange will negotiate with insurerso  Standard products will provide Appl...
Dental Benefits in California•  AB 82  SB 77 - Passed on Saturday June 15, 2013•  Partially restores funding for Medi-Cal ...
Dental Benefits in California•  Proposed Bill AB 18–  Establish a Dental Loss Ratio (DLR) – this would require a minimumpe...
Shared responsibility•  No business mandated to offer coverageo  large firms may pay fee for not offering•  Businesses wit...
Size of American businesses•  Kaiser Family Foundation:o  4.8M businesses with fewer than 50 employees (35.7%)offer health...
For larger employers•  Am I above or below 50 full-time employees?–  At least 50 full-time employees or combination of ful...
Fees for Larger Employers( >50 FTEs, 4% )•  Fail to offer coverage- $2,000 per year for each FTEExcluding the first 30 ful...
Additional Responsibilities•  Summary of health plan – Insurers provide employersa summary of benefits; employers must sha...
•  Beginning in 2014, most individuals requiredto; obtain insurance or pay penalty•  May qualify for tax credits based on ...
•  Exemptions for certain religions and verylow-income individuals (≤ $9,500 per yr)•  Penalty: $95 or 1% (2014)$325 or 1....
" "CONNECT WITH US ONLINE"" """ "FACEBOOK.COM/DOCTORSFORAMERICA"" """ "@DRSFORAMERICA""" "www.drsforamerica.com""""Coverag...
For more information•  National HHS website:www.healthcare.gov•  Our Website:SmallBusinessMajority.org•  Healthcare Covera...
What Healthcare Reform Means for Your Practice
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What Healthcare Reform Means for Your Practice

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This webinar focused on what the new healthcare law, the Affordable Care Act, means for small businesses and practices like yours. It focused on both federal and state provisions to help local small business owners understand how the law will affect them.

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What Healthcare Reform Means for Your Practice

  1. 1. How the new law impacts your bottom lineMarcia DávalosJune 18, 2013What Healthcare Reform MeansFor Your Practice
  2. 2. Coverage is Good Medicine
2013-2014"
  3. 3. About Small Business Majority•  Small business advocacy organization – foundedand run by small business owners•  National – offices in Washington, DC, Virginia,Ohio, Colorado, Missouri, New York andCalifornia•  Research and advocacy on issues of topimportance to small businesses (<100employees) and the self-employed, includinghealthcare, access to credit and clean energy•  Very focused on outreach to and education ofsmall business owners across the country
  4. 4. Small businessesstruggling with costs" Soaring cost of insurance – especially for smallbusinesses – 25% of small business owners areuninsured (2012 Kaiser study)" 28% self-employed: not covered" Small firms pay 18% more than large businessesOur national study: Small business health costswould more than double by 2018 to $2.4 trillionwithout reform
  5. 5. Small businessesstruggling with costsOur most recent opinion survey: Small employers who don’t offercoverage say lack of affordability is the biggest reason (70%)70%32%16%9%5%2%0% 20% 40% 60% 80%My business cannot afford itMy employees get coverage elsewhereI do not believe it is the responsibility of mybusiness to provide health insuranceWaiting to see what happens with the federalhealth care reform lawToo much paperwork and administrationChoosing the right insurance plan is toocomplicatedWhich one or two of the following best describes the reasons you do not provide healthbenefits?
  6. 6. Small businessesstruggling with costsSmall Business Majority opinion poll: 72% ofthose who do offer say they are struggling to do so72%28%0% 20% 40% 60% 80%My business is really struggling toafford the cost of health coverage.(Asked of those who do providecoverage)
  7. 7. Topics for discussion today•  Consumer Protections•  Tax credits•  Cost Containment Provisions•  Health Benefit Exchanges / Marketplace•  Covered California•  Employer Responsibilities•  Individual Responsibility Requirement•  Your questions and comments
  8. 8. The Affordable Care Act•  Builds on existing healthcare system•  Aims to rein in healthcare costs•  Upheld by U.S. Supreme Court•  Implementation primarily the responsibility of thestates (small business input essential)•  Some important benefitswent into effect immediately•  Others implementedfrom 2010-2014
  9. 9. Immediate consumer protections•  Insurers will no longer be ableto deny coverage for patientswith pre-existing conditions•  Ban on lifetime caps that setlifetime limits on coverage•  Children are now able to stayon their parents’ plan until 26
  10. 10. Immediate consumer protections•  Health plans can’t drop coverage when someone getssick, if mistake on paperwork•  First-dollar coverage for preventive care for all new plans•  Increased access to care: community health centers
  11. 11. Key provisions smallbusinesses should know about•  Immediate tax credits for most small businesses•  2010-2013- Preexisting Condition Insurance Plan forself-employed; pre-existing conditions no longer abarrier for coverage beginning Jan. 1, 2014•  Establishes competitivemarketplace for smallbusinesses (SHOP) andself-employed (individual)
  12. 12. Small business tax credits•  Available to businesses with employees•  Available now (took effect tax year 2010)•  Which businesses are eligible?  Fewer than 25 full-time employees  Average annual wages <$50,000  Employer pays at least 50% of the premiumcost
  13. 13. Small business tax creditsOur report: 4M small businesses eligible (83.7%of all businesses); 1.2M businesses eligible formax credit
  14. 14. Small business tax credits•  2 in 5 business owners who qualify eligible for max•  19.3M employees work for eligible businesses•  Total value of the credit for tax year 2011:$15.4B  An average of $800 in savings per employee
  15. 15. Small business tax credits•  Tax credits on a sliding scale:o  Up to 35% 2010–13o  Up to 50% any two years (2014)•  Premium expenses: comprehensivemedical coverage, incl. dental,vision, long-term care•  Do not cover premium expenses ofowners or their families•  Tax credits can not be claimed by theself-employed•  Can amend your taxes
  16. 16. Nonprofits also eligible•  Tax credits on a sliding scale:o Up to 25% 2010–13o Up to 35% any two years (2014)•  Include amount on line 44f of Form 990-T•  Does not have to bepublicly reported•  Refund for tax-exemptemployers
  17. 17. Wellness programsWellness programs affect plans starting on Jan. 1, 2014•  Two types of wellness programs:1. Participatory wellness programs- Do not provide reward ORdo not include conditions for obtaining a reward that are basedon an individual satisfying a standard related to a health factor.2. Health-contingent wellnessprogram- Require individuals tomeet a specific standard relatedto their health obtain a reward(namely a specified % of the costof health coverage)
  18. 18. Medical Loss Ratio: “80/20 rule”•  80% of premium on medicalclaims & quality improvement•  20% on administrative & profits•  Rebates to customer if exceed•  Estimated $1.1B given back in 2012;321 in the small group market•  Average rebate per enrollee in small group plan: $174
  19. 19. Rate review•  Insurance companies required to:o  Publicly disclose and justify rate increases of10% +o  Explain increase on HealthCare.gov; eachstate’s rate review program will give customersa chance to comment•  State can approve or reject unreasonable or excessiveincrease if has its own law•  No state program: federal government will conductreviews
  20. 20. State health insurance exchanges:coming in 2014•  Large marketplace to shop for health coverage•  Private insurance plans will compete•  RAND study:Expand coverage to 85.9%of small businessemployees (60.4% today);an increase of 10.5 millionworkers
  21. 21. What is a Health Benefit Exchange?•  One-stop shop web portalwith no wrong doorINSURANCE PLANSEXCHANGEChoiceComparisonBillingTax CreditsSMALL BUSINESSES /INDIVIDUALS•  Large marketplace tobuy commercialinsurance•  Compare plans forinformation about price,quality and service•  Plans organized bylevel: bronze, silver,gold, platinum•  Calculator to comparecosts across planoptions•  Streamlined billingprocess
  22. 22. State exchange decisions•  States will enter into the federally-facilitated exchange(FFE), state-federal partnership, or set up a state-basedexchangeExchange Decision StateState-based exchange(18)CA, CO, CT, DC, HI, ID, KY,MA, MD, MN, NM, NV, NY,OR, RI, UT, VT, WAState-federal partnership(7)AR, DE, IA, IL, MI, NC, WVFederally-facilitatedexchange or FFE (26)AK, AL, AZ, FL, GA, IN,KS, LA, ME, MO, MS, MT,ND, NE, NH, NJ, OH, OK,PA, SC, SD, TN, TX, VA,WI, WY
  23. 23. Health Benefit Exchange•  Two Exchanges: individuals; small businesses•  Opening on January 1, 2014 (pre-enroll begins Oct. 1)•  Voluntaryo Members of Congress and staff required to useExchange•  Exchanges designed by states -- or by federal gov’t ifa state so chooseso State-based exchanges mean increased flexibility andmore input from small businesses and otherstakeholders•  Not a new concept - Business groups, non-profits andstate gov’ts already run similar programs in CA, CT,MA, NY, UT
  24. 24. California Health Benefit ExchangeOur Exchange: “Covered California”•  First in the nation. Enacted in 2010 –Bipartisan effort•  Governed by independent public board•  Holding dozens of public board meetings•  Executive Director is a former business leader;hiring more staff now•  Received federal $$ for planning; Exchange self-funding by 2015; no state dollars spent•  Stakeholder advisory panels providing inputfrom small business owners and businessorganizations    
  25. 25. California’s Key Decisions•  Active Purchaser: Exchange will negotiate with insurerso  Standard products will provide Apples-to-applescomparison•  Employee Choice: Employer selects “tier” of coverage;worker selects insurer; employer receives one bill•  Brokers can sell Exchange products; will be paid marketcommission rates by Exchange.•  HR Services: COBRA administration, HSAs, wellnessplans, etc.•  Public-private partnership: Administrative managementof small business Exchange to be done by private-sectorvendor
  26. 26. Dental Benefits in California•  AB 82 SB 77 - Passed on Saturday June 15, 2013•  Partially restores funding for Medi-Cal Adult Dental and NutritionBenefits•  Starting May 14, 2014 the following Dental benefits for persons 21 andolder will be reinstated :–  Examinations, radiographs/photographic images, prophylaxis,and fluoride treatments.–  Amalgam and composite restorations.–  Stainless steel, resin, and resin window crowns.–  Anterior root canal therapy.–  Complete dentures, adjustments, repairs, and relines, includingimmediate dentures.
  27. 27. Dental Benefits in California•  Proposed Bill AB 18–  Establish a Dental Loss Ratio (DLR) – this would require a minimumpercentage of a dental plan’s gross premium collections to be spenton actual treatment and care and limits the amount of premiumcollections that can be applied to the plan’s administration of thebenefit.–  If the plan fails to do so, the plan must reimburse each policyholder.–  The proposed DLR percentage is still being determined.
  28. 28. Shared responsibility•  No business mandated to offer coverageo  large firms may pay fee for not offering•  Businesses with fewer than 50 FTEso  96% of all businesses exempt from any fees
  29. 29. Size of American businesses•  Kaiser Family Foundation:o  4.8M businesses with fewer than 50 employees (35.7%)offer health insuranceo  1.7M businesses with 50 or more employees (95.7%) offerhealth insurance.Small Business Majority and Kaiser Permanente poll:After learning about features in the exchange,percentage of California small business owners whosaid they’d be likely to offer insurance jumped from32% offering to 42%
  30. 30. For larger employers•  Am I above or below 50 full-time employees?–  At least 50 full-time employees or combination of full-time/part-time employees equivalent to 50 full-time employees–  Full-time employees: at least 30 hours per week–  Part-time employees: at least 15 hours a week–  Seasonal employees (≤120 days per year)•  Size determined annually•  Amount owed determined monthly
  31. 31. Fees for Larger Employers( >50 FTEs, 4% )•  Fail to offer coverage- $2,000 per year for each FTEExcluding the first 30 full-time employeeso  Firms only pay fee if at least one worker qualifies for federalfinancial assistance in Exchange.•  Failing to offer “affordable” coverage- $3,000 per year foreach FTE receiving federal financial assistance inexchangeo  What is “Affordable”?o  Employee’s required contribution must not exceed 9.5% ofincomeo  Plan covers less than 60% (average) of healthcare expenses
  32. 32. Additional Responsibilities•  Summary of health plan – Insurers provide employersa summary of benefits; employers must share info withworkers (Sept. 2012)•  W2 reporting –informational onlyo Allows workers to see howmuch employer is spending onhealth benefitso Firms with fewer than 200workers exempt until furthernotice
  33. 33. •  Beginning in 2014, most individuals requiredto; obtain insurance or pay penalty•  May qualify for tax credits based on income for100% - 400% of fed poverty level (family of 4 =$23,000 to $92,000)•  Not eligible for tax credits in Exchange ifemployer offers affordable insurance•  Acceptable coverage: Employer, individual,Medicare, Medi-Cal, Covered CA, etc.Individual ResponsibilityRequirement (incl. Self-Employed)
  34. 34. •  Exemptions for certain religions and verylow-income individuals (≤ $9,500 per yr)•  Penalty: $95 or 1% (2014)$325 or 1.5%(2015) $695 or2.5% (2016)•  Aims to reduce “hidden tax” of $1,000 peryear•  About 1-2% of population expected to pay feeIndividual ResponsibilityRequirement (incl. Self-Employed)
  35. 35. " "CONNECT WITH US ONLINE"" """ "FACEBOOK.COM/DOCTORSFORAMERICA"" """ "@DRSFORAMERICA""" "www.drsforamerica.com""""Coverage is Good Medicine"
  36. 36. For more information•  National HHS website:www.healthcare.gov•  Our Website:SmallBusinessMajority.org•  Healthcare Coverage Guide:HealthCoverageGuide.org•  Health Law Guide for Business:HealthLawGuideForBusiness.org•  Covered California:CoveredCA.comEmma Hollister,Network Coordinatorehollister@smallbusinessmajority.org(202) 828-8357Connect with us!@SmlBizMajoritySmall Business MajorityMarcia Dávalos,So Cal Outreach Managermdavalos@smallbusinessmajority.org(818) 804-8229

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