2014- THE REALSTART OF HEALTHCARE REFORMJim Wisdom, CFPJune 13, 2013
OVERVIEW I. HC Reform- The Big Picture 2. What changes in 2014? 3. Who is affected? 4. Case studies from the field
HEALTH CARE REFORM- THE BIGPICTURE 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 subsidizethem) HCR Objective: To insure as much of the uninsured as possible Estimated 37 Million uninsured in the U.S.
HC REFORM: THE BIG PICTURE (CONT’D) 2010-2012- Enhanced benefits introduced 2011/2018- Taxes ( Including .9% Medicare Tax, 3.8% Tax onInvestment Income, $8 Billion+Tax on Health Insurers, 2.3% Taxon Medical Device firm sales, $2.5 Billion+ Tax on Pharmaceuticalfirms; 40% Health Insurer Tax on “Cadillac Health Plans”) 2014- Individual Mandate, Employer “Play or Pay” penalty forgroups with 50+ employees
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-basedexchange If employers with less than 50 employees offer health insurancethat is either “Un-Affordable” or does not offer “Minimum EssentialBenefits,” employees may be eligible to purchase subsidizedhealth insurance through state-based Exchange.
WHAT CHANGES IN 2014? Expansion of Medicaid ( for those states that select this option) Subsidies for those individuals purchasing through the statebased exchanges between 138% of the Federal Poverty Level (FPL) and 400% of the FPL. Tax Credits for some Small Businesses that qualify for employerswith 25 employees or less and average annual salary of $50,000or less
2014 MANDATE PENALTY FORINDIVIDUALS 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)
2014 PLAY OR PAY PENALTY (FOREMPLOYERS WITH 50+ EQUIVALENTEMPLOYEES) “No Offer” Penalty- $2,000 X the total # of employees minus thefirst 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 persubsidized full-time employee OR $2,000 X the total # ofemployees minus the first 30 employees Note: An employer penalty is only triggered if at least oneemployee purchases federally subsidized coverage in theExchange.
HOW IS AFFORDABILITY DEFINED? If an individual or employee of a company is offered coverage andhe/she has pays less than 9.5% of his/her income, that’s deemedaffordable. If the cost to that individual or employee exceeds 9.5% of theirincome, that’s not deemed to be affordable– and they are eligibleto purchase subsidized health insurance through the state HealthCare Exchange CA Exchange known as “Covered California”
HOW ARE MINIMUM ESSENTIALBENEFITS DEFINED? All insured plans must include: Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance abuse services, including behavioral healthtreatment 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
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
WHO IS LIKELY TO BENEFIT FROM HCREFORM? The uninsured- who may be eligible for subsidies or get care at nocharge through Medicaid The poor- who will be eligible for subsidies or get care at nocharge through Medicaid Some employers will benefit from added consumer protections Those who have pre-existing conditions Small employers who are eligible for tax credits
WHO MAY BE ADVERSELY AFFECTEDBY HC REFORM? Employers with greater than 50+ employees- subject to “Play orPay” 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 besubject to 40% Cadillac Tax (2018) Restaurant, Construction, Agriculture, some Manufacturingindustries Companies that don’t offer Employee Benefits to “Attract, Retainand Motivate” ( A.R.M.) their employees
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 theydon’t offer group health insurance Prospect- 200 Employees – Never offered health insurancebefore 1/1/14 Objective: To comply with Obamacare and “still survive as a company”
SUMMARY The 1/1/14 Open Enrollment Period for Covered California ( CAHealth 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 analternative opinion regarding your (Group or Individual) HealthInsurance? Let Ken Wilkinson or me know if we can be of any assistance toyou
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 atwww.jimwisdom.wordpress.com Continue the conversation on Linked In, Twitter and Facebook Twitter = @Wisdom_InsSvcs