Presented by: Karen R. Harned, Esq. National Federation of Independent Business March 25,

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Year Cost of Health Insur. Rank Locate Qualified Empl. Rank Obtain Short-Term Loans Rank #1 1 # # Source: NFIB Research Foundation, Problems and Priorities

#NFIBLive Source: Kaiser Family Foundation. Percent

#NFIBLive Millions Source: EBRI estimates from CPS

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Employee -Only Family Employee -Only Family Employee -Only Family Employee- Only Family SC $ 4,899$11,780$ 5,036$11,780$ 5,244$12,243$ 5,351$12,473 10

#NFIBLive 79 percent of small business owners purchase their employer sponsored health insurance through an agent or broker 11

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13 Source: NFIB Research Foundation Longitudinal Survey 2013 NFIB.com/ACAgraph

#NFIBLive “Aggregation rules” may impact as many as 150,000 small businesses Employees requested small employers to begin offering employee health insurance in 4 percent of non-offering firms in the last 12 months 14

#NFIBLive 84% of small business owners have health insurance; 15% don’t 35% -- business’ plan 30% -- individual plan 19% -- spouses’ plan 15

#NFIBLive 1-2% fewer small businesses offered insurance in 2013 as compared to 2012 Statistic conceals larger firm by firm churn 9% offering in 2012 dropped coverage 5% not offering added coverage 16

#NFIBLive Small employers often pay the entire health insurance premium for their employees 40% for individual coverage 27% for family coverage 21% for plus-one coverage The more employers pay (on a percentage basis), the more likely employees are to participate 17

#NFIBLive 13% plan to cut the hours of part- time employees in However, no more than half of these planned cuts are associated with the Affordable Care Act. 18

#NFIBLive Small Businesses are very uncertain about how ACA will impact their business This is the first report in a planned series of three annual reports based on a longitudinal survey of more than 921 small employers 19

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#NFIBLive Visible to Small Business Owner The 50 Full-Time Employee Count What is an Employee? – The Hours Count What is an Employer? – Aggregation Rules The Temporary Tax Credit – Much Ado About Little Loss of Existing Policies Added Paperwork Not Visible to Small Business Owner Full Range of Offering Arrangements Operation of SHOP Exchanges (with Exceptions) Back-End (e.g., Change and Reduction in Networks)

#NFIBLive Most, but not all, in the fully-insured market will face substantial increases, particularly in 2014 Community Rating Minimum Benefit Package HIT Tax Supply and Demand Issues Medical Inflation (Technology, Etc.) Forced to Change Plans to Obtain a “Qualified Plan” Unknown Number

#NFIBLive Purchase -- Old-Fashioned Way Purchase -- New-Fangled Way (SHOP Exchanges) Self-Insure Move to a Defined-Contribution* Type Plan Eliminate (Have No) Coverage *taxable income

#NFIBLive Small Group (<50 Employees) Purchasing Mart Transparency More Competition Theory, State-Based; Practice, Feds Run 36 Promised Operation by 2015; Delayed One Year SHOPs Must Offer “Qualified Plans” State SHOP Choices Employer-Sponsored Plans (like now) Employer Chooses Plan Level; Employee Chooses Plan Within the Level Employer Contributes Flat Amount; Employee Chooses Plan Groups Up to 100 Employees Melded into SHOP by 2016

#NFIBLive Benefits – (Can Be) Much Cheaper Not Subject to ACA Minimum Benefits, Comm. Rating, or HIT Not for Everyone Small Groups Difficult to Individually Underwrite Poor Cash Flow Unhealthy, Older Employee Population Low Risk Tolerance Status About 4-6 Percent of Small Employers Now Self-Insure Increased Interest; 4 Percent “Highly Likely” to Switch; 7 Percent “Somewhat Likely” Fear – Too Many Good Risks Will Self-Insure Reinsurance Attachment Points – Feds vs. States

#NFIBLive Relevant Influences Continuing Unsustainable Prices Increases Limits on Deductibles Competition for Employees Individual Mandate; Individual Exchange; and Roll- Out of HealthCare.gov Escape a Time-Consuming HR Function Currently Infrequent; About 14 Percent Most Likely to Occur in Low-Paying Firms Reasons – 1. Individual Subsidies, 2. Tax Exclusion *taxable income

#NFIBLive Out of ExchangeIn ExchangeBeneficiary Low Income Employee #1 Plan Cost Employer’s Share Employee’s Share Government’s Share $1,000 Mo $1,000 Mo $175/Emp./Mo. +$125/Mo. -$300/Emp./Mo. Low Income Employee #2 Plan Cost Employer’s Share Employee’s Share Government’s Share $500 Mo $500 Mo $100/Emp./Mo. +$50/Mo.* -$150/Emp./Mo. High Income Employee Plan Cost Employer’s Share Employee’s Share Government’s Share $1,500 Mo. 1, $1,500 Mo. 1, *New Take-Home No Change *taxable income

#NFIBLive Downsizing SHOP Options to One Plan Postponement of Employer Mandate Weakening of Individual Mandate Elimination of Penalties for Failure to Notify Postponement of SHOP Tax Credit Only for Those Who Use SHOP – Revisited Request for Comments on Attachment Points for Reinsurance

#NFIBLive 29 House continues to vote on piecemeal repeal or relief efforts - March votes included a delay of the individual mandate and changing the definition of full-time employee (for the employer mandate) from 30 hours per week to 40 hours per week Senate - Harry Reid says he will allow votes on Democratic ideas. Administration continues to delay, provide "transition relief," and extend extensions on requirements

#NFIBLive Repeal the Affordable Care Act Eliminate Health Insurance Tax Eliminate Employer Mandate Change 30 hour work week to traditional 40 hour work week 30

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#NFIBLive NFIB Healthcare Reform Resource Center - resources/healthcarehttp:// resources/healthcare 32

#NFIBLive Karen Harned Executive Director, Small Business Legal Center National Federation of Independent Business (NFIB) (202)