Health Insurance Exchanges This presentation is a high-level summary and for general informational purposes only. The information in this presentation is not comprehensive and does not constitute legal, tax, compliance or other advice or guidance. A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.2 Exchange Overview Topics Definitions, Functions & Models Plans & Benefits Credits and subsidies SHOP Timeline

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Definitions, Functions & Models

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Exchanges Defined The Affordable Care Act authorizes states to create and operate exchanges, also known as health insurance marketplaces, for individuals and for small business employers by A federal exchange will be available if a state does not have its own exchange. Designed to be competitive and centralized online sites for individuals to purchase health insurance plans. Meant to help people meet ACA’s minimum coverage requirement (also called the individual mandate). Intended to provide unbiased, “non-marketing” information to help consumers better understand the options available to them and choose a plan. 4

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. What are Exchanges? Health insurance exchanges are the online sites where individuals and small business owners can shop health care plans offered by various insurance carriers. Think Catalog Shopping Online 5

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Exchange Functions 6 Provide toll-free hotline for assistance & other avenues for customer service Help eligible individuals get federal tax credits & subsidies Inform consumers about individual mandate exemptions Determine eligibility for a QHP, Medicaid, CHIP & enroll if eligible Public Exchanges Perform Risk Adjustment Run websites that allow consumers to shop for qualified health plans Help consumers and employers choose & enroll in coverage

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Consumer Support Public Exchange Consumers Navigators Brokers Direct 7

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Exchange Models 8 A state may choose to establish and operate its exchange, which is called a STATE-BASED model. A state may decide to implement an exchange operated by both the state and Health and Human Services (HHS), also called a STATE PARTNERSHIP model. If a state does not submit an exchange blueprint to HHS, or if HHS finds the state is not exchange-ready, then HHS will operate a FEDERALLY FACILITATED model for that state.

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Plans & Benefits

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Four Benefit Levels of Coverage The key difference between the “metallic” plans is the expected percentage of medical expenses shared between the health plan and the member. Platinum Gold Silver Bronze Expected Percentage of Medical Expenses Covered by the Health Plan Expected Percentage of Medical Expenses Covered by the Member 10

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Qualified Health Plans A Qualified Health Plan (QHP) is a health insurance plan that has been certified to be allowed for purchase on an individual exchange and SHOP. Only certified QHPs are allowed on an individual exchange and SHOP. HHS established the criteria for how to certify a QHP. Several things must happen. The product must: Get certified by the exchange (QHP certification). Provide essential health benefits (EHB) that meet state and federal guidelines. Follow established limits on cost-sharing (such as deductibles and copayments). Meet provider network adequacy rules. 11

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Essential Health Benefits In 2014, individual and small group plans on and off the exchange must include Essential Health Benefits, which are generally services and items in the following 10 benefit categories: 12 Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health, substance abuse disorder services, behavioral health treatment Prescription drugs Habilitative and rehabilitative services and devices Laboratory services Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care 12

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Benchmark Plans EHBs and Benchmark Plans A benchmark plan serves as a state’s reference health plan of essential health benefits (EHB). Each state had to select a health insurance plan currently operating within the state to act as the benchmark plan. Default Benchmark If a state did not select a benchmark, HHS determined that the EHB benchmark defaulted to the largest (by enrollment) small-group plan in the state. 13

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. EHB Benchmark for Illinois* ACA tasked HHS to define EHB details HHS proposed a state-specific benchmark approach Each state was asked to select a benchmark plan States had until Dec. 26, 2012 to submit a plan to represent the state’s version of EHBs for 2014 and 2015 plan years Default choice for states that did not select a plan: The state’s largest small group health plan HHS released a proposed rule on EHBs, Actuarial Value (AV) and Accreditation in late November It was open for comment until Dec HHS released final rule on Feb. 20, 2013 along with FAQs on ACA Implementation about cost-sharing limits related to EHBs. Filling in the 10 EHB Categories Plan TypePlan from largest small group product, Preferred Provider Organization Issuer NameBlue Cross and Blue Shield of Illinois Product NameBlueAdvantage Entrepreneur PPO Plan NameBlueCross BlueShield of Illinois BlueAdvantage Supplemented Categories (Supplementary Plan Type) Pediatric Oral (State CHIP) Pediatric Vision (FEDVIP) HHS final rule: Center for Consumer Information & Insurance Oversight EHB benchmark plans for 50 states *Source: Resources 14

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Credits, Subsidies & Penalties for Individuals

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Understanding FPL Those with household incomes of % of FPL may be eligible to receive tax credits and subsidies. A family of 4 with a household income of $94,200 or less may be eligible to receive premium tax credits poverty guidelines for 48 contiguous states and the District of Columbia Federal Poverty Levels Size of Family Unit 100% FPL150% FPL200% FPL250% FPL300% FPL400% FPL 1 $11,490$17,235$22,980$28,725$34,470$45,960 2 $15,510$23,265$31,020$38,775$46,530$62,040 3 $19,530$29,295$39,060$48,825$58,590$78,120 4 $23,550$35,325$47,100$58,875$70,650$94,200 SOURCE: 2013 HHS Poverty Guidelines published by the U.S. Department of Health and Human Services at 16

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Tax Credits & Subsidies for Individuals Premium Tax Credits A tax credit is available based on a household income of % of the federal poverty level (FPL). The tax credit can be applied to a plan at any metallic level. It is advanceable. Note that premium tax credits are on a sliding scale. Out-of-Pocket Maximum Subsidy An out-of-pocket maximum subsidy is available to those who select a silver plan and have an income of % of the FPL. Cost-Sharing Subsidy A cost-sharing subsidy is available to those who select a silver plan and have an income of % of the FPL. 17

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Penalties for the Uninsured Beginning in 2014, citizens and legal residents must have and maintain a minimum level of health coverage or pay a federal tax. Taxes are assessed according to percentage of income or flat fee, whichever is greater, and will be applied on federal income tax returns. YearPercent of Income orFlat Fee % of taxable income or$ % of taxable income or$ % of taxable income or$695 after 2016 the tax will increase annually by the cost-of-living adjustment Some individuals may qualify for an exemption from the requirement to carry insurance coverage. 18

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. SHOP

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. States will have the flexibility to determine who selects the coverage Employer may be permitted to select one or more specific plan on behalf of employees, or self Employee can select any plan offered, as long as it meets SHOP benefit plan design requirements Employee Choice* Employer can select metallic level and then employee can select any plan (from any carrier) within that level Hybrid Choice Employer Choice SHOP is an online exchange where small employers (1-50 employees in 2014, beginning 2016) can obtain health coverage for their employees, and possibly take advantage of tax credits. Small Business Health Options Program (SHOP) Small Business Health Options Program 20

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Tax Credits for Small Businesses The Affordable Care Act also establishes a Small Business Tax Credit that will help make offering health coverage more affordable for qualified small businesses. 21 Available to employers with fewer than 25 full time employees, with average annual wages less than $50,000 Employers must contribute a uniform percentage of at least 50% toward their employee's insurance Worth up to 35% of employer contributions to employees' health insurance plan (25% for nonprofit organizations. Now Available to qualified employers that provide coverage to their employees on SHOP Credits increase to up to 50% of the employer's contributions (35% for non- profit organizations) Beginning 2014

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Individual and SHOP Comparison Differences between individual exchanges and SHOP: Individual ExchangeSHOP Benefit Package Plans include those with cost-sharing values of 60/40, 70/30, 80/20 and 90/10 (insurer/insured). Catastrophic plans also available. Same as Individual, but no catastrophic. Premium Tax Credits Premium tax credits are available based on household income from % of the FPL. Tax credits can be used at any metallic benefit level. Not applicable. Employer Tax Credit Not applicable. Small groups eligible if buying coverage via SHOP. Cost-sharing Subsidy Cost-sharing subsidies may be available for eligible individuals with income from % of the FPL Not applicable. Out-of-pocket Maximum Subsidy Out-of-pocket maximum reductions may be available for eligible individuals with income from % of the FPL Not applicable. 22

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Timeline

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Expected Timeline DeadlineMilestone January 1, 2013 was the deadline for HHS to assess each state’s blueprint for a state-based model and to either fully or conditionally certify the individual exchange/SHOP or assume operational responsibility. The following states are conditionally approved to operate state-based models: California, Colorado, Connecticut, District of Columbia, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont and Washington February 15, 2013 was the deadline for states to tell federal regulators if they plan to implement a state-partnership exchange model. The following states are conditionally approved to operate state-partnership models: Arkansas, Delaware, Illinois, Iowa, Michigan, New Hampshire and West Virginia Exchanges must be fully operational and enrollment begins on October 1, Initial open enrollment lasts until March 31, (In subsequent years, open enrollment will begin on October 1 and end on December 7.) Coverage begins for plans purchased on exchanges (effective date). 24

PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION. Questions?