1. The Best In Broker Sales Solutions Presented by: Phil Lebherz, with Ankeny Minoux HEALTH CARE REFORM & THE UNINSURED IN CALIFORNIA All information published herein is gathered from sources which are thought to be reliable, but the reader should not assume that the information is official or final. Reliance on this information or other linked or recommended resources received from LISI shall be at your sole risk, and LISI assumes no responsibility for any errors, omissions, or damages arising. Users of this information are encouraged to confirm with other sources, and to seek qualified advice if embarking on any actions that could carry personal or organizational liabilities.

2. The Best In Broker Sales Solutions Agenda Health Care Reform Legislation Overview The Uninsured in California – Positive Progress Keynote: Phil Lebherz Perspective on Legislation and the Future of Health Insurance Q & A

3. The Best In Broker Sales Solutions Legislative Timeline March 23 rd, 2010: Patient Protection and Affordable Care Act March 30 th, 2010: Health Care and Education Reconciliation Act of 2010

4. The Best In Broker Sales Solutions Approaches to Expanding Coverage Requires most US citizens to have health insurance Create state-based exchanges for individuals Create employer exchanges for small businesses New regulations on health plans Expand Medicaid to 133% of FPL

5. The Best In Broker Sales Solutions Individual Mandates and Subsidies Those without coverage pay tax penalty – exemptions for: Financial hardship Religious objections Native Americans Those without coverage less than 3 months Undocumented immigrants Lowest cost plan option exceeds 8% of income Individual Mandate Income limits for subsidies – 133% - 400% of FPL Premium credits or cost-sharing subsidies. Individual Subsidies

6. The Best In Broker Sales Solutions Individual Tax Consequences $695 fine for non-compliance Exclude OTC Rx in HSA, FSA & HRA Increase excise tax on disallowed distributions from HSAs to 20%. Limit FSA contributions to $2500 per year

7. The Best In Broker Sales Solutions Employer Mandates Employers with 50 or fewer EEs are exempt Employers with >50 EEs who do not offer coverage Employers with >50 EEs who do offer coverage Employers with >200 EEs to automatically enroll their employees

8. The Best In Broker Sales Solutions Small Business Tax Credits For employers with up to 25 employees 2010-2013, up to 35% tax credit 2014 and beyond, up to 50% tax credit

9. The Best In Broker Sales Solutions Insurance Exchanges GI with rating based on age, area and tobacco use Five plan types offered Can allow large groups beginning 2017 Available to individuals and small groups Effective 2014

10. The Best In Broker Sales Solutions Changes to Private Insurance Temporary High Risk Pool (2010) Insurance Exchanges (2014) Carriers’ Medical Loss Ratios 80% for small group (100 and below) 85% for large group. Premium increase review process Excise tax on “Cadillac” plans

11. The Best In Broker Sales Solutions Changes to Private Insurance No lifetime limits Dependent coverage to age 26 No rescinding except in cases of fraud No pre-existing on children (2010), everyone (2014) No experience rating

12. The Best In Broker Sales Solutions Changes to Private Insurance Deductibles not to exceed $2,000/$4,000 Limit waiting periods to 90 days Allow states to merge IFP & small group SG definition changes to 2-100

13. The Best In Broker Sales Solutions ‘Grandfathering’ Provision Current Plans unaffected by mandates Only Changes Allowed: Add or delete new employees/dependents Part of collective bargaining agreement Exceptions: No waiting periods over 90 days Prohibition on Lifetime Limits New standard for recissions Dependent coverage to age 26 Certain annual limits (group only)

14. The Best In Broker Sales Solutions Financing - Taxes ‘Cadillac Plan’ Tax Insurer Fees Health Insurers - $8B (2014) - $14.3B (2018) + Pharma - $27B Medical Device - $20B Medicare Payroll Tax.9% increase for wages > $200k/$250k Tax now applies to unearned income Tanning Services – 10% tax

15. The Best In Broker Sales Solutions Timeline for Change - 2010 Temporary National High Risk pool created Tax credits for small employers Dependent coverage increased to age 26 Remove Lifetime limits & prohibit pre-existing exclusion for children Minimum Preventive service level w/o cost sharing Establish premium increase review process $250 Rebate for Medicare beneficiaries

16. The Best In Broker Sales Solutions Timeline for Change - 2011 Excludes OTC Rx from HSA/HRA/FSA distributions Increase tax on distributions from HAS/FSA not used for qualified medical expenses to 20%

17. The Best In Broker Sales Solutions Timeline for Change - 2013 CO-OP program for non-profit member run insurance companies Operating rules for Health Insurance administration Increase itemized deduction to 10% Limit FSA contributions to $2500

18. The Best In Broker Sales Solutions Timeline for Change - 2014 Require health coverage End exclusions for adults with pre-existing conditions Assess LG employers for not offering coverage Create State-based Exchanges for IFP and SG Require GI coverage for SG market and Exchanges Reduce OOP limits for lower income members Limit Deductibles to $2000/$4000

19. The Best In Broker Sales Solutions Timeline for Change – 2014 (cont…) Limit waiting period to 90 days Create essential health benefits package Allow states to merge IFP and SG markets Require carriers to meet new operating standards and reporting requirements Expand Medicaid to all individuals under age 65 under 133% FPL Impose fees on the health insurance sector

20. The Best In Broker Sales Solutions Timeline for Change – 2015 and later 2016 Permit states to form health care choice compacts and allow insurers to sell policies in any state participating in the compact 2018 Impose an excise tax on insurers of employer- sponsored health plans with high values