Presented by Jennifer Kluge Michigan Business and Professional Association

 The Purpose of the Act is to: ◦ Establish American Health benefit exchange to facilitate the purchase and sale of qualified health plans for both individual and small group markets ◦ Intent is to reduce the number of uninsured, provide transparency, consumer education, assist individuals with access to coverage ◦ Goal for cost is premium assistance tax credits and cost sharing reductions

 A state may choose to participate in either the Federal Exchange or may create their own.  State Exchanges have richer goals such as increasing competition, reduce health care costs, portability and simplicity of products  The State of Michigan is planning on creating its own exchange; one for individuals and one for small groups

 Work group discussions held in March and April on the formation of the exchanges by experts, health industry, consumers and business groups  MBPA served on these workgroups and provided critical data to assist in the discussions of a State Exchange.

 The workgroups made suggestions to the State through a facilitation company. A summary of those suggestions are being compiled to be presented to key state departments:  OFIR  Department of Community Health  Budget and Finance  Governor’s office

 Exchange is expected to be up and running by 2014  Until then rates will continue to rise as carriers comply with provisions and requirements of the law  Plan designs will be overhauled to be compliant with the law. HHS has not yet released the minimum requirements of plans inside the exchange

 Insurance carriers are making changes now to predict these changes required by HHS  Plans inside the Exchange may or may not be more affordable to small business compared to the non exchange market.  The type of Exchange implemented is critical to determine the market changes

 Individuals/families can receive premium credits in the exchange  Employers can receive tax credits  Employers will most likely have penalties  These in combination create incentive for individuals and employers to purchase insurance through an exchange.

 Individuals are ineligible for premium credits who are enrolled in the exchange through an employer that contributed toward that coverage. (small group exchange products)  No individual or family will pay more than 9.5% of their income for a health insurance plan with an actuarial value of 70% (silver plan design)  PPACA will extend Medicaid coverage to 133% of poverty, which will permit individuals to enroll with relatively little or no premiums and cost sharing

 Families with incomes 400% of poverty and above ($80K) will be ineligible for premium subsidy support and their premiums will be the same as they would have faced before PPACA

 Employers who provide coverage through an exchange will be provided a tax credit for up to 50% of their premium contribution for the first two years of coverage. The full 50% credit is provided to employers with ten or fewer employees and phases down by firm size.

 Assume the second-lowest-cost silver plan in an area charged a premium of $12,000 for family coverage and that premium credits were currently available. A family of four at 100% Federal Poverty Level (FPL) ($22,050) in that plan would be required to pay no more than $441 per year toward the $12,000 premium and would therefore receive a credit of $11,559.

A family of four just below 400% Federal Poverty Level ($88,200) would be required to pay $8,379 toward their premium and would therefore receive a credit of approximately $3,621 (i.e., $12,000-$8,379).

 Employers with at least 50 full time equivalent employees will most likely face penalties beginning in 2014  Equivalent to 50 full time employees can be comprised of hours of part-time employees, For example 35 full time employees and 20 part time employees will most likely pay penalties

 Those with 50 full time employees must pay penalties only if at least one of its full-time employees obtains coverage through an exchange and receives a premium credit. (which is likely for many employers)

 In 2014, a penalty of $3000 per year paid monthly for each full time employee that receives a premium credit.  The total penalty cap would be limited to the total number of full time employees minus 30 multiplied by $2,000 per employee.

 For those firms with more than 200 full-time employees that offer coverage, they must automatically enroll new full-time employees in a plan and continue enrollment of current employees. (this provision might start before 2014 with a legislative change.)

 The Company does not offer coverage, but no full-time employees receive credits for exchange coverage-No penalty (highly unlikely)  They do not offer coverage and one or more full-time employees receive credits for exchange coverage. The penalty is the number of full time employees minus 30 times $2,000. (50-20 x$2k= $40,000)

 They offer coverage and no full-time employees receive credits for exchange coverage. No penalty would be assessed.

 The employer offers coverage but one or more full-time employees receive credits for exchange coverage. The number of employees receiving the credit IS used in the penalty calculation for an employer that offers coverage

 The penalty is the lesser of: ◦ multiply by 2K $40,000 or ◦ The number of full-time employees who receive credits for exchange coverage multiplied by $3,000 For 10 employees on credits $30,000 For 30 employees on credits it calculates to $90,000 which exceed $40,000 cap. So it would be $40,000.

 There are no penalties for employers with less than 50 employees

 Active Purchaser: Exchange purchases insurance and negotiates price on behalf of members (like a large employer)  Market Organizer: Marketing portal of products; impartial source of information (Utah)  Selective Contracting Agent; Controls the vendors, products offered, cost, quality (Mass.)

 Multi-state, Regional, State Exchange options  Multiple Exchanges within one State (individual and group)  Monitor their own risk, selection and actuarial functions  Determine their own governing structure

 Through the state legislature a bill must be made into law to establish an exchange  The governor must sign this bill into law  The Department of Community Health will be leading the development of this law  OFIR will be regulating the Exchange once it is implemented  If a law is not implemented by Jan 2013, Michigan will be forced to the Federal Exchange

 The State of Michigan led by the Department of Community Health is determining how to implement the Michigan Exchange  No legislation has been presented  Governor is not focused on issue until the Fall of 2011

 Individual and Small Group Exchanges Must be operational by January 2014  By January 2013 states must demonstrate sufficient progress towards implementation or the Federal government will oversee the exchange.  Exchanges must be self-sufficient by 2015

 By 2016, small group expansion to coverage to 100 employees from 50 employees  After 2017, states have the option of expanding the exchange to employer with more than 100 employees

 Long term financial viability of exchanges  The ability to choose coverage that is right for your employees/company  The risk pools within the exchange could be adversely selected against which could cause problems with rising costs

 Product benefits within the exchange have not been released by Health and Human Services  Deadlines are closing fast and the amount of work necessary to comply with these dates is unrealistic  Companies tax penalties essentially fund the credits for poverty level, but is it enough?

 The costs involved in setting up the exchanges  Poverty levels include $80K household income  Tax Penalties on Employers