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Healthcare Plan Design in the Era of PPACA Robert Crisan, Senior Vice President of Health Care Reform and Strategic Growth, Hylant Group, Inc.

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Presentation on theme: "Healthcare Plan Design in the Era of PPACA Robert Crisan, Senior Vice President of Health Care Reform and Strategic Growth, Hylant Group, Inc."— Presentation transcript:

1 Healthcare Plan Design in the Era of PPACA Robert Crisan, Senior Vice President of Health Care Reform and Strategic Growth, Hylant Group, Inc.

2 Strategies First a Look at Affordability

3 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Let’s Look At Affordability In 2011, the Median Household Income was $50,502 In 2013, the average annual total cost of employer-sponsored family coverage was $16,351, and the share of the premium paid by workers was 29%. Between 2003 and 2013, premiums have increased by 80%. 5 5 Kaiser Family Foundation and Health Research and Educational Trust, 2013.

4 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Where Does All the Money Go? Annual Income$50,502$40,000 Monthly Income$4,209$3,333 LessFederal & State Taxes (20% - 15%)$842$500 LessRent/Home$800$600 LessGas (50 gallons per month x $3.50)$175 LessCar plus Insurance$300$200 LessFood ($3 per person, 3 meals per day, 4 in household)$1,080 LessUtilities$200 LessCell Phone$100 =Discretionary Income before Health Insurance$712$478 LessHealth Insurance (29% of Family Coverage)$395 =Discretionary Income after Health Insurance$317$83

5 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable.

6 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable.

7 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable.

8 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Affordability

9 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Percentage of employees who strongly agree, “I am looking to my employer for more help in achieving financial security through employee benefits.” Source: MetLife – 12 th Annual U.S. Employees Benefit Trends Study

10 Basic Employer Advantage

11 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Important Components of Employer Provided Coverage Employer Subsidy is not taxed Employee Portion is pre-tax Tax Deductible to Employer

12 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. ER vs. EE Comparison of Cost “Pay” Scenario

13 Drop Coverage

14 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Drop Coverage In most cases, when we add both $2,000 penalty and consider the employee out-of- pocket it is not a financially feasible or an employee friendly decision, UNLESS you are: Small employer (Under 50 – inc. FTE) –Lower average wages –Higher out-of-pocket –Higher contributions

15 Skinny Plans

16 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. “Skinny” Plans New concept, generally providing only preventive care and mandated benefits (clinical trials) Current definition of MEC includes skinny plans –Relatively simple to qualify as affordable as cost is very low –Questionable on whether such a plan provides minimum value Conflicting language in the proposed regs This was not the intent of the law If this is your “Plan A,” make sure you have a “Plan B” to fall back on!!

17 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. “Skinny” Plans Currently… –Avoids Penalty A - $2,000 –Helps individual avoid Individual Mandate if they are covered by the plan –Can be completely voluntary (100% paid by the employee) –Disagreement on avoiding the Penalty B - $3,000 No Annual and Lifetime Maximum, First Dollar Ideal Industries – staffing, restaurant, home healthcare, hotels, retail, industry with low wages

18 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. “Skinny” Plans – Sample Rates Family StatusMonthly Rate EE$44.97 EE + Child$68.94 EE + Spouse + Child$ Family$153.69

19 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Do “Skinny” Plans Meet Minimum Value? Affordable Care Act – the Law Passed by Congress, Signed by Obama ACA Regulations on various aspects Issued by HHS, DOL, DOT MV defined as % of covered expenses paid by plan Must use CMS MV calculator to determine %

20 Unaffordable or Non-MV

21 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Offer Unaffordable/non-MV Coverage It may be the path of least resistance to offer either unaffordable or non-MV coverage Think real affordability Different participation assumptions for MV or Affordable

22 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Unaffordable/non-MV – For a group with all covered Monthly Rate Employer Subsidy Employer Tax Rate Net Cost to Employer Monthly/Annual Penalty B Single Coverage $500$41530%$290.50/$3,486$250/$3,000 An unaffordable plan may cost employer less!

23 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Examples

24 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable.

25 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable.

26 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable.

27 Drop Spouses

28 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Drop Spouses ACA does not require employers cover spouses If you offer affordable and minimum value coverage, the spouse is not eligible for a subsidy Got a good PR firm?

29 Offer Plans Matching Metal Tiers

30 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Metal Tiers

31 Show Taxes and Fees

32 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Employee Share of ACA Fees SingleTwo PersonFamily Health Insurance Rate $400.00$960.00$1,200 ACA Fees Health Insurer Tax $8.00$19.20$24.00 Transitional Reinsurance Program $5.25$10.50$17.85 PCORI $.083$.166$.283 TOTAL $413.33$989.87$1, Employee Contribution $100.00$240.00$ Employer Subsidy $313.33$749.87$942.13

33 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Another Look SingleTwo PersonFamily Health Insurance Rate $400.00$960.00$1,200 Employer Subsidy $313.33$749.87$ Employee Share of Insurance Rate $86.67$ $ ACA Fees Health Insurer Tax $8.00$19.20$24.00 Transitional Reinsurance Program $5.25$10.50$17.85 PCORI $.083$.166$.283 TOTAL EE COST $100.00$240.00$300.00

34 Medicaid

35 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Help Employees Get Medicaid Availability depends on State Not clear on new approach on old rules Moving an employee from employer family coverage could save an employer $15,000 - $20,000 per year on an insured plan! Way cheaper for employee!

36 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable.

37 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Help COBRA Event Employees get Coverage Elsewhere COBRA Event –Individual Marketplace allows for enrollment if lose coverage –Individual Market may subsidize former employee –If experience-rated or self-funded, reduced liability on employer

38 Private Exchange

39 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. What is an Health Insurance Exchange/Marketplace? A health care exchange is a marketplace that connects insurance companies with individuals or employees wishing to purchase heath insurance The more exchange participants the greater the economies of scale that increase insurers ability to offer competitive prices In the insurance marketplace, the popular thought is the element of competition will ultimately reduce prices

40 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Private Exchanges One big reason for a private exchange is to move employers and their employees to a defined contribution model Also, to give employees more choice ( And Responsibility) Flexibility of an employer has also been a cited value proposition of an employer, however, flexibility will depend on the size of the employer and the ability of the technology. –Flexibility may include: Number of Medical Plans Number of Dental Plans What other ancillary plans to be offered? Even non-insurance will be offered?

41 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. The Private Exchange Model Employer Decides on Partner/ Technology/Insurer Deposits money on behalf of each member into account (HRA) or makes credits/cash available through cafeteria plan Consumer Uses dollars to purchase insurance and other benefits Educated about available options and tradeoffs Private Exchange (Technology) Created by: Insurer or Agent or Technology Insurer or agent partners with technology Manages health accounts for employees Has various products and services “on the shelf” Helps individuals buy services tailored to their needs Can offer many more options than most employers can offer outside of exchange Brings stakeholders closer to impending health care reform changes (Can be designed with metal tiers to look like Health Insurance Marketplace) Health Insurance Pharmacy Wellness Ancillary Other Online Mall Consumer shops for services $ $ Source: Society of Actuaries

42 Defined Contribution

43 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Defined Contribution Disability Life Dental Medical

44 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Defined Contribution Disability Life Dental Medical

45 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Defined Contribution Medical Single Two Person Family

46 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Defined Contribution Medical Single Two Person Family

47 Trade Dollars

48 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Cadillac Tax Cadillac Tax Ceiling Affordability Minimum Value

49 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Cadillac Tax

50 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. “Cadillac” Tax on High-Cost Health Coverage For taxable years beginning in 2018, the Affordable Care Act (ACA) imposes a 40 percent excise tax on high-cost group health coverage. This tax, also known as the “Cadillac tax,” is intended to encourage companies to choose lower-cost health plans for their employees. The aggregate cost of an employee’s applicable employer-sponsored coverage is the sum of the costs for each coverage. In general, the cost of a particular coverage is determined under rules similar to the rules for determining the “applicable premium” for COBRA purposes. –The cost of the health FSA coverage is the sum of the employee’s salary reduction contributions plus the cost of any reimbursement in excess of the employee’s salary reduction contributions. –If reimbursements are limited to the amount of the employee’s salary reduction contributions, the cost of coverage will be the dollar amount of the employee’s aggregate salary reduction contributions for the year.

51 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Cadillac Tax The annual limitation will be adjusted each year to reflect the cost of living. The initial dollar amounts may be adjusted in 2018 if there are significant increases in the cost of health care between 2010 and 2018, and may also be increased by an age and gender adjustment in 2018 and later calendar years. Family StatusAnnual Amount Single$10,200 Two Person$27,500 Family$27,500 Amounts included include, applicable premium, employer funded HSA, HRA and/or employee funded FSA.

52 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Trade Dollars For groups concerned about “Cadillac Tax” Move dollars spent on medical by reducing to lowest level (Bronze) –Remove possibility of Cadillac Tax for as long as possible “Buy Back” dollars employees spend with better benefits in other areas Think holes! –Deductibles –Lower Paid need more disability –Ancillary coverage can supplement medical but not count against Cadillac Tax OR Affordalitiy

53 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Trade Dollars STD –2013 Survey 40% of employers do not offer Of 60% who do, 45% of those have employees pay some portion of premium LTD –2013 Survey 36% of employers do not offer Of the 64% who do, 36% of those have employees pay some portion of premium

54 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Trade Dollars to Fill Holes

55 Other Thoughts

56 Employee Benefits Affordable Care Act This seminar was presented on April 30, Because regulatory guidance is evolving rapidly, reliance on this information after that date may not be advisable. Other Thoughts Advocacy Services Tele-Doc Healthcare Blue Book Consider self-funding

57 Questions ?


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