January Delaware Ave Wilmington, DE Affordable Care Act (ACA) 2013

Affordable Care Act (ACA) 2013 January 2013

Allen Insurance Group Independent Insurance Agency and Benefits Broker, since 1932 Servicing clients in our tri state community Third generation agency Provides coverage for Individuals, Businesses and Employees. January 2013

Today, we will briefly cover: January 2013 History of Healthcare Reform Individual Mandates How To Get Insurance Penalties and Taxes What do you do next

January 2013 Healthcare Reform March 23 rd, 2010 Affordable Care Act Became Law It all began…….

Provide accessibility to health insurance for all Americans. Control and reduce health insurance costs. Standardization of health care coverage. Create accountability for health insurers. Provide guaranteed coverage with no pre-existing exclusions. Increased transparency and consumer protection. January 2013 The Foundation Behind Reform

Coverage Mandates Essential Health Benefits Exchanges – Public and Private Pre-Existing Transparency Penalty Taxes Non-Profit Plans Other Regional Markets January 2013 Healthcare Reform Components

January 2013 Healthcare Reform Implementation Timeline

2010 New national risk-pool Small business tax credit Prohibits lifetime benefits limits Annual limits for essential benefits Rescissions are prohibited Preventative services without copays Dependent coverage up to age 26 No Pre-existing condition exclusion for dependent children January 2013

% MLR for large group (with refund) is mandated 80% MLR for individual and small group (with refund) is mandated January 2013

2012 Standardization DE developed Essential Benefits (effective January 1, 2014) DE implemented Mini Cobra Federal Partnership for Exchanges January 2013

Ambulatory Patient Services Emergency Services Hospitalization Maternity and Newborn Care Mental Health and Substance Use Disorder Services, including behavioral health treatment Prescription Drugs Rehabilitative Services and Devices Laboratory Services Preventive and Wellness Services and Chronic Disease Management Pediatric Services, including oral and vision care January 2013 Essential Benefits

2013 Health Insurers file new rates HHS Secretary and states approve (or disapprove) premium rate increase requests Open enrollment begins 10/1/2013 (extends to 3/31/2014) January 2013

2014 Exchanges (Public & Private)are open for business Plans outside the Exchanges are modified Guaranteed issue New rating rules (Age, Wellness, Smoking, Territory, Industry) Individual and employer mandates No Pre-existing conditions Multi state qualified health plans Maximum deductible $2,000 individual/$4,000 family Employee waiting period, maximum is 90 days Full time employees, work 30 hours/week January 2013

Questions January 2013 Before moving on to the Individual Mandate section, are there any questions?

January 2013 Healthcare Reform Individual Mandate

Effective January 1 st, 2014, every individual is required to have Health Insurance. Individual Mandate January 2013

Religious reasons Below income tax filing threshold Undocumented immigrants Member of an Indian Tribe Whose premium contributions for the calendar year exceed 8% of household income Exceptions to Individual Mandate January 2013

2014 Penalty is $95 per adult and $47.50 per child (up to $285 for a family) or 1.0% of family income, whichever is greater. Individual Penalty 2015 Penalty is $325 per adult and $ per child (up to $975 for a family) or 2.0% of family income, whichever is greater Penalty is $695 per adult and $ per child (up to $2,085 for a family) or 2.5% of family income, whichever is greater. January 2013

You have had qualified* health insurance for the whole year. *Qualified health plan is defined as ….. No Penalties If….. January 2013

Questions January 2013 Before moving on to the How to Get Health Insurance section, are there any questions?

January 2013 Health Care Reform How To Get Health Insurance

How Do You Get Health Coverage Keep your current plan. January 2013

How Do You Get Health Coverage From an Employer January 2013

How Do You Get Health Coverage From MEDICAID, if the family income is less than 133% of poverty the level - REGARDLESS if employer offers coverage. From Medicare *Poverty level in 2011 was $10,890 for a single individual, $22,350 for a family of 4 January 2013

How Do You Get Health Coverage From the Public or Private Exchanges. *Poverty level in 2011 was $10,890 for a single individual, $22,350 for a family of 4 January 2013 If a family income is equal to or less the 4 times the poverty level*, they will qualify for subsidies.

How Do You Get Health Coverage From the general insurance marketplace. January 2013

How Do You Get Health Coverage Individuals and Small Businesses can get coverage through the Exchanges. January 2013

Exchanges January 2013

Exchanges, the purpose January 2013 Transparency Ease of comparing coverage and price Orbitz/Priceline/eShopping experience Federal partnership Includes Platinum, Gold, Silver, Bronze Plans Provide information on quality of plans Determine eligibility for Medicaid, Medicare and subsidies. Includes Essential Benefits

January 2013

Credits/Subsidies Only Available in the Public Exchange  Credits are available on a sliding scale to subsidize individuals and families with incomes up to 400% of the federal poverty level  Only available for the Bronze plan. January 2013

Questions January 2013 Before moving on to the Penalty-Tax section, are there any questions?

Employer Penalty/Tax January 2013

For Employers with less than 50 employees Note: If the employer has 25 or fewer employees and average wages up to $50,000, they may be eligible for a tax credit. There is no direct penalty for the small employer. January 2013

For Employers with 50+ employees. Who offer a group plan with at least 60% coverage and the employee does not pay more than 9.5% of their income – No Penalty January 2013

The penalty is $3,000 annual for each full-time employee receiving a tax credit, up to a maximum of $2,000 times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums. For Employers with 50+ employees. Who offers a group plan with at least 60% coverage and the employee DOES PAY MORE than 9.5% of their income – Penalty will apply January 2013 Example: A firm with 75 full time employees, with 10 employees receiving a tax credit. The penalty is $30,000 (10 employees, receiving a tax credit x $3,000 each=$30,000) The penalty would be $90,000 Maximum

The penalty is $2,000 annually times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums. For Employers with 50+ employees. Who does NOT offer a group plan and who has at least one employee receiving a subsidy in an exchange – A Penalty will apply. January 2013 Example: A firm with 75 full time employees. The penalty would be $90,000 (75 employees, less 30 times $2,000 each)

The penalty is $3,000 annually for each full-time employee receiving a tax credit, up to a maximum of $2,000 times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums. For Employers with 50+ employees. Who offer a group plan with less than 60% coverage – A Penalty will apply. January 2013 Example: A firm with 75 full time employees, with 35 employees receiving a tax credit. Penalty would be $105,000 (but maximum is $90,000) Mini Med Plan, costing $120,000 (75 employees, average annual premium $1,600) Total Mini Med Premium and Penalty cost would be $210,000 - or - A Bronze plan, inside the exchange, with an estimated annual premium of $3,500 times 75 employees would have an annual cost of $262,500 before any employee contribution.

January 2013

New Taxes Increases Medicare payroll tax by.9% on wealthy individuals and families. Imposes new Medicare payroll tax of 3.8% on non earned income for wealthy individuals and families. New taxes on insurance providers, drug makers, medical device manufactures, clinical labs and tanning beds. [some as early as 2011].  “Cadillac Tax”: In 2018 a 40% excise tax imposed on high comprehensive health plans. January 2013

New Taxes Medical Device Tax – New 2.3% excise tax on gross sales. Flexible Spending Accts – Cap of $2,500 will apply Investment Income – New 3.8% point surtax for households of $250,000 or more. Medicare Payroll Tax – Increase from 2.9% to 3.8% for wages exceeding $250,000 for couples. Medical Itemized Deductions – Increase of current 7.5% to 10% of AGI to qualify for deduction. January 2013

Retention Attract new talent Pre-taxing benefits Unknowns associated with Employees and business owners with regard to the public exchanges Stability of care for your staff Comprehensiveness of plan design Overall tax deduction Why would a small employer continue to offer health insurance coverage? January 2013

Network Providers Overall Concerns…… Plan Design Subsidy Levels Rates Viability of the exchanges Federally Managed Exchanges Healthcare cost containment January 2013

Some Helpful Resources Kaiser Family Foundation Illustrating How Healthcare Reform will work The Government’s Website Benefits Connection Website Allen Insurance Group’s Website HR360 – Online Human Resource Website (logon is DANA-DE and password is alleninsurance) January 2013

Today, we briefly discussed: January 2013 History of Healthcare Reform Individual Mandates How To Get Insurance Penalties and Taxes What do you do next

Thank You for your attention to this very important matter, your questions may be sent to us at the address below. January 2013 John & Brad Allen