ESB

This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance. From Health Care Reform

ESB Provide a road map for Health Care Reform Gain an understanding of the key obligations affecting employers in a state sponsored plan Introduce an employer’s long-term options

ESB ,000 pages of legislation drafted and enacted very quickly Rules are still being developed –Federal agency guidance –Role of states

ESB Plan design mandates Health FSA/HRA/HSA provisions Administrative requirements Plan sponsorship provisions

ESB & 2014 PLAN DESIGN MANDATES Some provisions apply to all plans, some only to non-grandfathered plans Implications of grandfathering Apply to major medical ESB

KEY MANDATES INFLUENCING PLAN DESIGN Annual and lifetime limits prohibited Waiting periods limited to 90 days Deductibles limited to $2,000/$4,000 for individual/family coverage Required out-of-pocket maximums ESB

Employee Health FSA contributions will be capped at $2,500 effective 1/1/2013 Employee contributions are subject to the new limit

ESB W-2 reporting of value of health coverage Summary of Benefits & Coverage (SBC) Automatic enrollment Coverage and workforce reporting to IRS and employees Nondiscrimination testing

ESB Cornerstone year of Health Care Reform –State Exchanges –Individual mandate –Federal premium tax credit to purchase Exchange coverage –“Employer responsibility”

ESB Penalty may apply if: –No coverage offered to full-time employees and dependents –Coverage is “unaffordable” or “inadequate” –Employee receives federal premium tax credit for Exchange coverage

ESB Definitions: –Large employer –Full-time employee –Inadequate –Unaffordable

ESB Monthly penalty for no coverage: –1/12 th x $2,000 per month/per employee (after 1 st 30 employees) Penalty for unaffordable/inadequate coverage: –1/12 th x $3,000 per month/per employee with federal premium tax credit

ESB Effective 2018: 40% non-deductible excise tax Imposed on aggregate value of health coverage that exceeds threshold amounts

ESB General thresholds: –$10,200 individual coverage –$27,500 family coverage Indexed for inflation Applies for specified health coverage

ESB

Plan design mandates Health FSA/HRA/HSA provisions Administrative requirements Plan sponsorship issues

ESB WHAT DO YOU DO NOW? 1.Understand your responsibilities 2.Assess whether costs are sustainable 3.Understand your choices 4.Design an implementation strategy 5.Implement your plan

ESB

No one-size-fits-all solution Can offer more than one Two-part strategy Transition period

ESB ACTION PLAN - RECAP 1.Understand your responsibilities 2.Assess whether costs are sustainable 3.Understand your choices 4.Design an implementation strategy 5.Implement your plan

ESB Thank you! This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance. Copyright 2012 American Fidelity Assurance Company