1. Benefits Network Health Care Reform and Compliance Seminar
Hosted by Benefits Network, Inc.
May 10, 2010
Copyright 2010 Benefits Network, Inc.

2. Dave Straight Founder, President & CEO of Benefits Network, Inc.
Former VP and Chief Marketing Officer for HealthAmerica and Aetna
Former hospital administrator and consultant

3. Welcome Thank you for trusting Benefits Network with your business
We always do our best for you!
Today’s seminar…
Is loaded with valuable information (perhaps too much information)
Might make you a little uneasy
Should provide some moments of comfort
May raise more questions than there are answers for today

4. Introductions
Mike Pasterick, Director of Marketing Operations & Chief Compliance Officer
John Mueller, VP
Michelle Efremenko, VP
Aleyne Secor, Director of Service
Arlene Pushcar, Director, Individual and Small Group Marketing
Matt Montgomery, Regional Director
Diane McGann, Business Manager
Cheranne Jurena, Director, Producer Services
Martha Bielo, Manager, Producer & Business Services
Kevin Buckley, American Pension Benefits
Jim Monteleone, M&M Insurance

5. Agenda Reform Overview Benefits Network Investments
Specifics of Reform
Q&A
Benefits Network Investments
Real resources to help you through the “tsunami and after shocks”

6. Primary Resources Department of Health and Human Services
Department of Labor
National Association of Health Underwriters
NFP Benefits Partners
Kaiser Family Foundation
HR 3590 and HR 4872 (The Reform Laws)

7. Health Care Reform Passage
On March 21, 2010, The House passed HR 3590, the bill passed by the Senate on December 24, 2009, with a vote
The House and Senate also passed a reconciliation bill, HR 4872, with packages of “fixes,” to the Senate Bill
President Obama has signed both bills into law
Many components of the new laws are yet to be defined
Guidelines are being written for some of the provisions that will take effect soon and regulations will follow

8. We’ve Got Problems! Cost Problems Risk Management/Compliance Problems
Premiums/costs will increase under reform
Reform laws do not address cost controls
Risk Management/Compliance Problems
An onslaught of new regulations
Stiff penalties
17,000 IRS agents to be hired to enforce
Education/Communication Problems
2,400 pages of new law still to be defined

9. “For every page in the health care reform law, we are expecting 60 pages of regulations.”
Janet Trautwein, National Association of Health Underwriters
That’s 144,000 pages of regulations!

10. Brian Latkowski, NFP Benefits Partners
“Expect seven to ten
years of rulemaking.”
Brian Latkowski, NFP Benefits Partners

11. Original Goals of Reform
Provide coverage for uninsured Americans
Reduce costs and make health care more affordable
Improve quality of care

12. Impact of Reform
Reform will benefit millions of Americans in many ways
Painful Reality: Employer costs will increase
Heavy tax burden on insurance carriers and others is expected to ultimately be passed on to employers
New underwriting restrictions will make it difficult for insurers to assess risk which will likely drive up premiums
New insurance reform mandates will increase costs
New administrative burdens and compliance requirements placed on employers will lead to higher costs
Reform laws do little to impact the cost of medical care to curb current medical cost trends from continuing
Employer cost increases will ultimately be shared to some extent with workers

13. This really isn’t funny…

14. Reform Timeline Immediately
If you like your plan you can keep it!
Grandfathered Health Plan Status
Plans can be grandfathered if the only plan changes made are to add or delete new employee/dependents or part of a collective bargaining agreement
Coverage must be in effect on March 23, 2010 to qualify
Grandfathering allows plans to avoid some of the reform requirements such as “no cost preventive care”
Other mandates will be required. These changes will not impact grandfathered status but may increase cost
Guidelines have not been released yet
Requirements are unknown
Key decision for renewal

15. Reform Timeline Immediately
Small Business Tax Credit
Small businesses with less than 25 employees may be eligible for a tax credit on a sliding scale based on number of employees and average payroll
Up to 50% of premiums for up to two years
Employer must contribute at least 50% of the total premium cost
Average salary must be $50,000 or less
Business owner salaries are not included in the calculation
Effective for amounts paid or incurred in 2010
Businesses with no tax liability and non-profits are eligible
Credit is claimed on annual income tax return

16. No Limits - No lifetime limits on health plan coverage*
Reform Timeline 2010
No Pre-X for Kids - Requires coverage for pre-existing conditions for children 19 and under*
No Limits - No lifetime limits on health plan coverage* 
Annual limits will be prohibited completely by 2014 and regulations for limited use will be out soon
No Rescinding - Prohibits insurers from rescinding coverage except in cases of fraud and prohibits pre-existing condition exclusions for children*
Coverage to 26 - Raises the age of a dependent for health plan coverage to 26*
Dependents can be married, do not have to be tax dependents, and do not have to be students
Through 2014, grandfathered plans only have to cover those dependents who do not have another source of employer sponsored coverage  
*Within six months of enactment

17. Reform Timeline 2010 (continued)
ER Coverage - Emergency services must be covered in-network*
PCP Designation – Enrollees may designate any in-network doctor as their primary care physician
No Cost Preventive Care - Mandated coverage of specific preventive services with NO cost sharing*
Includes recommended immunizations, preventive care for infants, children, and adolescents, and additional preventive care and screenings for women
Unclear if dental and vision for children will be included in preventive care requirements – could be costly
Does not apply to grandfathered plans
New Coverage Appeal Process
*Within six months of enactment

18. Reform Timeline 2010 (continued)
Early Retiree Reinsurance - Temporary reinsurance program for early retirees over age 55 who are not eligible for Medicare*
MLR Requirement - Health plans will be required to maintain a minimum medical loss ratio (MLR) of 85% for plans in the large group market and 80% for plans in the individual and small group markets
Requirement to report medical loss ratio effective plan year 2010
Requirement to provide rebates effective January 1, 2011
High Risk Pool – A $5 billion high risk pool will be created for individuals who cannot obtain current individual coverage due to preexisting conditions
*Within six months of enactment

19. Reform Timeline 2010 (continued)
Wellness for Small Employers – Federal grant program for small employers providing wellness programs to their employees will take effect October 1, 2010
Information Portals – By July 1, 2010, states and the Secretary of HHS must develop web-based information portal options for state residents to obtain uniform information on sources of affordable coverage
Information must include private health insurance options, Medicaid, CHIP, the new high risk pool coverage and existing state high risk pool options

20. Reform Timeline 2011
No OTC Drugs - Over-the-counter drugs will no longer be reimbursable under FSAs, HSAs, HRAs unless prescribed by a doctor
“Class Act” LTC Program - Creates a new public long-term care program and requires all employers to enroll employees, unless the employee elects to opt out.  This is an employee paid program with no benefit for 5-years
Pharmaceutical Industry Tax - Impose new annual fees on the pharmaceutical manufacturing sector
Health Savings Account Penalty – The tax on distributions from HSAs that are not used for qualified expenses increases from 10% to 20%
“Simple Cafeteria Plans” – Small employers (less than 100) will be allowed to adopt new “simple cafeteria plans”

21. Reform Timeline 2012
W-2 Forms - Employers must start reporting the value of health benefits on W-2 forms
Premium Tax - A new federal premium tax on fully insured and self-funded plan, equal to $2 per enrollee per year (includes covered dependents), takes effect to fund federal comparative effectiveness research
5500 Forms - The Department of Labor will conduct annual mandatory studies on self-funded plans which may require additional reporting on 5500 forms
Reporting - Group plans must report to HHS on whether benefits provided meet criteria to be established by the Secretary on improving health outcomes, reducing medical errors, and wellness and health promotion activities
New SPDs - All plans must provide a new summary of benefits to enrollees at specified times (4 pages)

22. Reform Timeline 2013
Medicare D Subsidy - The employer subsidy under Medicare Part D will be eliminated and for those who have received this subsidy, it may have immediate impact on employers' liability and income statements 
Tax on Wealthy - An additional 0.9% Medicare Hospital Insurance tax and a new 3.8% Medicare contribution tax on certain unearned income will be imposed on those earning $200,000 and above and joint filers earning $250,000 and above
FSA Cap - A $2,500 cap on Medical FSA contributions annually indexed for inflation begins

23. Reform Timeline 2013 Continued
FSA Cap - A $2,500 cap on Medical FSA contributions annually indexed for inflation begins
Medical Devise Tax - Impose an excise tax of 2.3% on the sale of any taxable medical device
Itemized Medical Deductions – Increases threshold on unreimbursed medical expense deductions from 7.5% to 10% of AGI
The increase would be waived for individuals age 65 and older for tax years 2013 through 2016
Notice of Exchanges – All employers must provide notice to employees of the existence of state-based Exchanges by March 2013

24. Reform Timeline 2014
Tax on Health Insurers - Imposes significant (multi-billion dollar) annual taxes on private health insurers based on net premiums. Insurers will pass this cost on to customers
$8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, $14.3 billion in 2018
This tax will not apply to self-insured plans
Guaranteed Issue Coverage - Requires all health plans to issue coverage regardless of health status, and would eliminate the use of pre-existing conditions exclusions and be guaranteed renewable
Opens door to eligibility to all American citizens
Redefines small groups as employees

25. Reform Timeline 2014 Continued
Community Rating – All individual health insurance policies and all fully insured group policies 100 lives and under (and larger groups purchasing coverage through the Exchanges) must abide by strict modified community rating standards
Premium variations only allowed for age (3:1), tobacco use (1.5”1), family composition and geography
Geographic regions to be defined by states
Experience rating would be prohibited
Wellness discounts are allowed for group plans under specific circumstances
No Annual Limits - Annual limits will be prohibited completely

26. Reform Timeline 2014 Continued
Individual Mandate - An individual mandate takes effect requiring all American citizens to purchase qualified health insurance coverage (with some exceptions) or be fined for non-compliance
Because the fine for most is less than the premium cost, the mandate may not achieve the desired results, thereby increasing risk and costs to insurers that will be passed on to customers
Formation of Exchanges - Requires each state to create an Exchange to facilitate the sale of qualified benefits plans for individual and small group coverage
Includes new federally administered multi-state plans and non-profit cooperative plans
States may allow large groups (over 100) to purchase coverage through the Exchanges in 2017
Creates sliding-scale tax credits for non-Medicaid individuals with incomes up to 400% of FPL to buy coverage exclusively through the Exchange

27. Reform Timeline 2014 Continued
Auto-Enrollment - Requires employers of 200 or more employees to auto-enroll all new employees into any available employer sponsored health insurance plan. Employees may opt out if they have another source of coverage
Waiting Period Limits - Waiting periods in excess of 90 days are prohibited
Tax Credit for Low Income Individuals – Sliding-scale premium assistance tax credits will be implemented for individuals with incomes up to 400% of the FPL to buy through the Exchange
Medicaid Expansion – Medicaid eligibility is increased to 133% of the FPL
Wellness Provisions – Improves upon HIPAA bona fide wellness program rules and increases the value of workplace wellness incentives to 30% of premiums with HHS ability to raise it to 50%

28. Reform Timeline 2014 Continued
Essential Benefits Packages Defined
The Federal government will define its essential benefits packages for plans purchased through the Exchanges
Based on actuarial equivalents
Defines cost-sharing, mandates, and minimum covered benefits
Multiple levels
Self-funded plans may not be subject to all requirements, but may not meet employer mandate requirements if they don’t comply
Allows catastrophic-only policies for those 30 and younger

29. Reform Timeline 2014 Continued
Employer Mandate
For companies that employ more than 50 full time employees (FTEs)
Coverage must meet the “essential benefits” requirements to be compliant with the mandate
If an employer does not provide qualified coverage and just one employee receives a tax credit through the exchange, the employer will pay a penalty for ALL full-time employees
The fine for noncompliance is $2,000 per employee annually, but the first 30 employees are not counted

30. Reform Timeline 2014 Continued
Employer Mandate (continued)
If an employer does offer coverage but has at least one FTE receiving a tax credit in the exchange, the employer will pay the lesser of $3,000 for each of those employees receiving a tax credit or $2,000 for each of their full-time employees
An individual who has employer sponsored coverage available and has family income up to 400% of federal poverty level (FPL) is eligible for a tax credit through the Exchange instead of employer coverage
If the actuarial value of the employer’s coverage is less than the minimum standard (actuarial value of 60%) or the employer requires the employee to contribute more than 9.5% of the employee’s family income toward the cost of coverage

31. Reform Timeline 2014 Continued
Employee “Free Choice” Vouchers
Employers will be required to provide a voucher to use in the Exchange instead of participating in the employer-provided plan in limited circumstances
For this to occur, employees must be ineligible for subsidies and affordability testing is required
Employee is required to contribute between 8% and 9.8% of the employee’s household income toward the cost of coverage
The employee’s household income is less than 400% of the FPL
Voucher value is adjusted for age and the employee can keep amounts of the voucher in excess of the cost of coverage
The amount of the voucher must be equal to the amount the employer would have provided toward coverage
Employee can keep amounts of the voucher in excess of the cost of coverage

32. Reform Timeline 2018
Cadillac Tax - An excise tax is imposed on insurers of employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage
40% of the value of the plan that exceeds the threshold amounts
Tax is imposed on the insurer of the health insurance policy, which in the case of a self-funded plan is the plan administrator, or in some cases, the employer
The value of the plan includes reimbursements under FSAs, HRAs, employer contributions to HSAs and coverage for supplementary health insurance coverage (excluding dental and vision)

33. Public Opinion and Challenges
Public opinion remains against the new health care reform laws
Despite this, repeal is highly unlikely
Even with projected Republican gains in the House and Senate
Many states are challenging the constitutionality of the individual mandate
A growing number of states are refusing funding for the high risk pool
May 3, 2010 Rasmussen Poll of American Voters

34. Next Challenges
The barrage of regulations tied to each provision and the “devil in the details”
Technical changes to legislation
Need better specificity on what encompasses/composes a “grandfather plan”
Makeup of essential benefits package
Composition of medical loss ratio
Legal challenges
Impact of mid-term elections
Years of implementation

35. Questions
Thank You!

36. Don’t panic…
Benefits Network can help!

37. Director of Marketing Operations & Chief Compliance Officer
Mike Pasterick
Director of Marketing Operations & Chief Compliance Officer

38. Federal Compliance Before Reform
Plan Documents
Summary Plan Description (SPD)
Summary of Material Modification (SMM)
Summary of Material Reduction in Covered Services or Benefits
Form 5500
Schedule A, Form 5500
Schedule B, Form 5500
Schedule C, Form 5500
Schedule D, Form 5500
Schedule E, Form 5500
Schedule G, Form 5500
Schedule H, Form 5500
Schedule I, Form 5500
Schedule R, Form 5500
Schedule SSA, Form 5500
Accountant’s Report, Form 5500
Summary Annual Report (SAR)
Initial COBRA Notice (also known as “COBRA General Notice”)
COBRA Election Notice
Notice of Unavailability of Continuation Coverage
Notice of Early Termination of COBRA Coverage
Uniformed Services Employment and Reemployment Rights Act (USERRA)
Certificate of Creditable Coverage
Notice of Special Enrollment Rights
General Notice of Pre-existing Condition Exclusion
Individual Notice of Period of Preexisting Condition Exclusion
Health Insurance Portability and Accountability Act (HIPAA) Privacy Policies and Practices
Notice of Privacy Practices
HIPAA Security Policies and Practices
Business Associate Agreement
Women’s Health and Cancer Rights Act (WHCRA)
Newborns’ and Mothers’ Health Protection Act
Qualified Medical Child Support Order (QMCSO)
Qualified Domestic Relations Order (QDRO)
404(c) Compliance
404(c) Disclosure Notice
Individual Benefit Statements
Medicare Part D Disclosure Notice to CMS
Medicare Part D Disclosure Notice to Eligible Individuals
Taxation of Group Term Life Insurance
Taxation of Same-Sex Benefits
Discrimination Rules and Testing
Family and Medical Leave Act (FMLA)
Notice to Employees Regarding Employer Contributions to HAS
PA Mini-COBRA General Notice
PA Mini-COBRA Election Notice
COBRA/PA Mini-COBRA Subsidization Processes
PA Act 4 – Adult Children Insurance Coverage
CHIP/CHIPRA Notification
Is Your Business Compliant with All These Regulations?

39. Ouch: The Cost of Non-Compliance
Penalty up to $110 per day
Endangerment of the plan’s favorable tax treatment
Up to 10 years in prison
Up to $100,000 fine
$1 to $1,100 per day
Legal action may be brought by participant
Employer may be held liable for any medical costs incurred by participant
Legal action may be brought by the DOL
Internal Revenue Service (IRS) may assess a $100 per day penalty
The Department of Health and Human Services (HHS) may impose a penalty of $100 per failure to comply up to a maximum of $25,000 per year
Legal action may be brought by alternate recipient or state authority
Plan fiduciaries could be held liable for losses associated with participants exercising individual control over assets
Loss of government subsidization
Penalty of 35% excise tax for the employer on all calendar year employer contributions

40. Help! Which regulations apply to my company? Where do we go for help?
When are we supposed to have this completed?
What do we do if we get audited?
To whom do we report that we’ve completed this?
How much could non-compliance cost us?
Questions every employer has
Which penalties would apply to our situation?
How will we handle this administrative burden?

41. Don’t Go It Alone “Your Compliance Express” is your turnkey partner
We will rescue you from the health care reform tsunami and after shocks
We can minimize the confusion, anxiety and risk for you and your business by:
Keeping you informed about the new laws, implementation and compliance requirements during every phase, and the impact on you and your business
Providing you with meaningful tools to guarantee your compliance with health care reform and all other Federal compliance laws
Offering you expert guidance at key decision points along the way

42. Components Health Care Reform Website Health Care Reform Blasts
Health Care Reform Resource Binder
Seminars and Webinars
Consulting
Compliance Dashboard
This is
Special!

43. Reform Website
This proprietary custom health care reform website will provide you with access to:
Recorded webinars explaining compliance issues in detail
Compliance checklists
White papers, trends and studies
Health care reform timetable, updates and information
Exclusive online-library of compliance and health care reform resources and materials
Links to important resources
Portal to Benefits Network’s Compliance Dashboard

44. Reform Blasts
With Your Compliance Express, you will never miss important and time sensitive information
Our Health Care Reform Blasts will be sent to you whenever there is meaningful information to communicate
If you get a Blast, consider it important
We will not waste your time with fluff

45. Reform Resource Binder
You will also receive a Your Compliance Express Health Care Reform Resource Binder for use as master compliance guide
Contains all applicable deadlines, explanations, laws and forms needed to stay compliant
Format is modular, and updates to content provided as soon as changes or additions to legislation are made
As components of the laws are implemented, we will send you additional information to keep your binder current at all times.
It’s an encyclopedia of health care reform knowledge.

46. Seminars & Webinars
Much of the information that will be disseminated by the government in the coming years is complex and confusing
When it makes sense, we will host seminars and conduct webinars to share information in an interactive environment
We will tap notable experts to bring you the most accurate and timely information.

47. Consulting
Under health care reform law, there will be times when you have critical decisions to make on behalf of your business and employees
You can trust us to give you the guidance and direct to help you make the right call
Our team of experts is available by phone, , and face-to-face to consult with you as needed
You can count on us and the vast resources we have assembled to give you expert advise
NFP Benefits Partners Compliance Department
ERISA Attorneys
Actuarial Expertise

48. Compliance Dashboard
Leading web-based solution for helping employers comply with the federal laws that govern health & welfare plans
Including Health Care Reform Laws
You no longer have to worry about whether you are meeting your compliance obligations
Gives you the information you need, when you need it
Compliance Dashboard will tell you what you have to do and when you have to do it

49. Compliance Dashboard
Establishes a reliable and verifiable compliance process
Saves staff time
Sends a notification when it is time to perform a compliance task
Provides all of the relevant information and materials needed to complete the compliance task
Automatically tracks completion dates and sends reminders when a task has not been performed
Full documentation of compliance efforts

50. Demonstration

51. Conclusion Reform is here and it’s real!
We have to deal with it
Benefits Network has made a significant investment in order to lead!
We can be your advocate
We can get you through this
Your Benefits Network representative will be in touch with you to discuss “Your Compliance Express” and “Compliance Dashboard”

52. Questions
Thank You!