Donna Losch Senior Employee Benefits Consultant October 18, 2012

Health Care Reform  How it all started  Where we are now  What lies ahead?

It began with…  Patient Protection and Affordable Care Act  March 23, 2010  Health Care Education Reconciliation Act March 30, 2010

 Already should be in your plan now… Prohibitions on: Lifetime and annual limits Pre-existing condition exclusions Rescissions of coverage Excessive waiting periods Requires coverage of children to age 26 First dollar coverage for Preventive care Limits on preauthorization requirements Limits on out-of-pocket expenses and cost sharing Guaranteed issue and renewal

 Will it really happen? Many people for and against it… Many took a wait and see approach… Brought to the U. S. Supreme Court To decide - A ll, Part or None Biggest issue seen as the Individual Mandate

 June 2012 SCOTUS in a 5 to 4 decision Votes the law is Constitutional (except) Calls Individual Mandate a Tax Government cannot hold committed Medicaid funds hostage Implementation full speed ahead

 Past compliance activities not a waste of time!  Policies still need to be issued: Department of Labor Internal Revenue Service Health and Human Services  Change has and will continue to happen: Discrimination testing for highly compensated - delayed Long Term Care – found to be undoable - dead

 Health Care Reform (a.k.a.) Insurance Reform  Many details remain unknown  Costs are guesstimates both pro and con  Individuals will be responsible for purchasing coverage  Employers (50+) will be responsible for providing coverage  Individuals and small employers will be able to purchase coverage through state exchanges  New reporting and compliance duties for employers

 Additional Requirements on the Horizon Contraceptives covered as preventive (non-Grandfathered) August 1, 2012 Summary of Benefits and Coverage must meet unified guidelines September 23, W-2’s must show Health Benefit Costs – (250+) Medical FSA capped at $2,500 January 1, 2013 March 1, 2013 notice of exchange availability in 2014 Employers interact with State Exchanges on eligibility information and data in 2013

 Additional Requirements on the Horizon Waiting period for newly eligible 90 day maximum Cost-sharing limits for non-Grandfathered plans must be in line with the deductible and out of pocket maximums 2014 Employers with 50+ FTE’s required to offer of minimal essential coverage or pay penalty State Exchanges open for business January 1, 2014

 Premium Tax - Comparative clinical effectiveness $1 for each covered life effective at renewal October 2012 $2 for October 2013 to October 2019 when it sunsets  Medicare Hospital Insurance Payroll Tax % increase for income earners in excess of $200K and subject to 3.8% tax on net investment income  Cap on Itemized Deductions for Medical Expenses Change in threshold from current 7.5% to 10% in 2013  Temporary Reinsurance Program Designed to shift some of the risk from the individual market Collected by carriers and TPA’s

 Small Employer Tax Credit Began in or fewer FTE’s Annual wages average $50K or less for employees 35% of premium tax credit until % from 2014  Medical Loss Ratios Designed to control the cost of administrative fees and carrier margins 15% cap for large groups % cap for small groups 50- Rebates issued on excess begins 2012  Wellness To encourage better life choices/lower medical costs employers can provide an incentive/penalty for participation Current max 20% % limit with possible increase to 50%

 Employers with 50+ employees must offer health coverage Those that don’t will be charged a $2K per employee penalty for all FTE’s (first 30 waived) Employee costs greater than 9.5% of employee’s wages – Employer subject to penalty of $3K Employer subject to penalty only if plan offered does not meet standards for care and affordability – Minimum essential coverage

 Look at your options and plan now! Pay or Play – what does each look like for your company Review your current and planned offerings - do they meet the minimum and affordable standards Plan for implementation for what is already known Prepare for more details to come Automatic Enrollment – 30 hours for eligibility Discrimination Testing for high-income earners

Both WA and OR have received funding for exchanges Individuals and small employers (under 50) can purchase coverage through the exchange In 2017, states can allow employers of any size to purchase coverage through exchange Employers that purchase coverage through the exchange can let employees pay pretax through cafeteria plan

Questions?

THANK YOU!