Welcome

1
Welcome Housekeeping

• Thank you for joining us today!
• Important Notes
• This presentation will be available on
  www.momentousins.com by Monday, July 16th.
• There will be a QA session following the
  presentation. Please feel free to send your
  question(s) at any time, using the chat feature,
  or email szenter_at_mmibi.com or jjacoby_at_mmibi.com
  for personalized assistance.

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Wednesday, July 11, 2012
Presented by Sherrie Zenter, Senior Vice
President Momentous Insurance Brokerage Jill
Jacoby, Vice President Momentous Insurance
Brokerage Mark Morgan, Vice President General
Manager Anthem Blue Cross Small Group
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Agenda

• Supreme Court Upholds Health Care Reform Law
• What It Means for Individuals
• What It Means for Employers
• The Big Year 2014 with Mark Morgan
• Questions Answers

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Health Care Reform What is It?

• Patient Protection and Affordable Care Act
  (PPACA) signed on March 23, 2010
• The health care reform law makes sweeping changes
  to our nations health care system to provide
  health coverage to ALL Americans effective 2014.

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Challenges to the Individual Mandate

• On June 28, 2012, the U.S. Supreme Court upheld
  the entire Affordable Care Act (ACA) as
  constitutional.
• The main issue in the case was whether Congress
  had the authority under the U.S. Constitution to
  enact ACAs individual mandate that beginning in
  2014 individuals will need to obtain health care
  coverage or pay a penalty.
• Opponents of the law argued that Congress
  exceeded its constitutional authority by enacting
  the individual mandate.
• Since the mandate is intertwined with the rest of
  ACAs reforms, the laws opponents also argued
  that the entire law should be struck down.

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Challenges to the Individual Mandate Future
Implications

• Because the individual mandate was upheld, all
  aspects of the health care reform law will remain
  in effect.
• Additionally, the remaining provisions of the
  health care reform law that are not currently in
  effect will continue to be implemented as
  planned.
• Many of the health care reform laws provisions
  require agency guidance to be implemented. The
  Departments of Labor (DOL), Health and Human
  Services (HHS) and Treasury have been regularly
  issuing guidance to implement the health care
  reforms. These agencies will continue to
  promulgate regulations relating to the health
  care reform law.

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Challenges to the Individual Mandate Future
Implications

• Employers and health plans will be required to
  comply with these to the same extent that they
  are required to comply with the various
  provisions of the health care reform law.
• Although the Supreme Court held that the
  individual mandate is constitutional, opponents
  of the health care reform law may challenge other
  provisions using various legal arguments. If any
  further challenges arise, courts will address
  these accordingly.
• National Election in November can tilt the scales.

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Viewpoint - 6/28/12

• The Affordable Care Act (ACA) was largely upheld.
• Penalty is now called a tax.
• States can opt out to expand Medicaid Programs.
• What if it had been struck down? Back to square
  one with 50 million uninsured and a healthcare
  system that continues to increase.
• Difficult to obtain insurance in the current
  individual marketplace and the reason for so many
  uninsured (e.g., underwriting approval, rated or
  declined). New York individual rates averaging
  1,400 per month for individual and 4,272 per
  month for family.

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Viewpoint - 6/28/12

• ACA Affects on Individual Medical Insurance
  Market. What will 2014 Look Like?
• No Medical Underwriting, Waiting Periods or
  Ratings.
• Tax Penalties for individuals failing to Buy
  Coverage.
• People wont get coverage until they need it.
  Can an individual apply and get coverage before
  going to a doctor or hospital?
• Need to work on Modifying the Individual Market.
• As passed, Legislation began at 2700 Pages. By
  2018 the final Legislation will expand to 250,000
  Pages.

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Viewpoint - 6/28/12

• Many tweaks needed for individual mandate to run
  smoothly
• Via open enrollment periods when someone can
  apply for coverage
• Carrier Flexibility in Offerings
• Make it tougher to apply if late or miss open
  enrollment window

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Employers must continue to comply with ACAs
reforms

• ACA changes that have already been implemented
  will remain in effect, such as the requirement to
  cover adult children until age 26 and the
  requirement for non-grandfathered plans to cover
  certain preventive care services without
  cost-sharing.
• ACAs provisions that are not currently in effect
  will continue to be implemented as planned. For
  example, effective for 2013 plan years,
  participants pre-tax contributions to health
  flexible spending accounts (FSAs) will be limited
  to 2,500 per year.

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Employers must continue to comply with ACAs
reforms

• While it is possible that changes will be made to
  ACA through future legislation or court rulings,
  ACA is the health care reform law currently in
  effect.
• Thus, employers should continue to prepare for
  ACA changes that become effective in 2012 and
  2013.
• Employers should also keep in mind the ACA
  reforms that will take place in 2014.

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ACA Reforms - 2012 and 2013

• Form W-2 Reporting Requirements
• Beginning with the 2012 tax year, large employers
  that are required to issue 250 or more W-2 Forms
  must report the aggregate cost of
  employer-sponsored group health coverage on
  employees W-2 Forms. The cost must be reported
  beginning with the 2012 W-2 Forms, which are due
  in January 2013.
• This requirement is optional for smaller
  employers for the 2012 tax year and until further
  guidance is issued. This reporting is for
  informational purposes only it does not affect
  the taxability of benefits.

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ACA Reforms - 2012 and 2013

• Womens Preventive Care Services
• Effective for plan years starting on or after
  Aug. 1, 2012, non-grandfathered plans must cover
  specific preventive health services for women
  without cost-sharing, such as deductibles,
  co-payments and coinsurance. These services
  include well-woman visits, breastfeeding support,
  domestic violence screening, STD screening and
  contraceptives. Exceptions to the contraceptive
  coverage requirement apply to certain exempt
  religious employers.

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ACA Reforms - 2012 and 2013

• Medical Loss Ratio Rebates
• Fully insured plans may receive rebates in August
  2012 if they qualify for a rebate from their
  health insurance issuers due to the medical loss
  ratio (MLR) rules. The MLR rules require
  insurance companies to spend a certain percentage
  of premium dollars on medical care and health
  care quality improvement, rather than
  administrative costs.
• Employers may receive rebates from issuers in the
  form of a premium credit, lump-sum payment or
  premium holiday, if permissible under state law.
  Any portion of a rebate that is a plan asset must
  be used for the exclusive benefit of the plans
  participants and beneficiaries. This may include,
  for example, reducing participants premium
  payments.

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ACA Reforms - 2012 and 2013

• Summary of Benefits and Coverage
• Plans and insurance issuers must provide a
  summary of benefits and coverage (SBC) to
  participants and beneficiaries. The SBC is
  intended to provide simple and consistent
  information about health plan benefits and
  coverage in plain language.
• Plans and issuers must provide the SBC to
  participants and beneficiaries who enroll or
  re-enroll during an open enrollment period
  beginning with the first day of the first open
  enrollment period that begins on or after Sept.
  23, 2012.

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ACA Reforms - 2012 and 2013

• FSA 2,500 Contribution Limit
• Effective for plan years beginning on or after
  Jan. 1, 2013, an employees salary reduction
  contributions to a health FSA offered under a
  cafeteria plan are limited to 2,500.

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ACA Reforms - 2012 and 2013

• Elimination of Retiree Drug Subsidy Deduction
• Employers that receive the Medicare Part D
  retiree drug subsidy have been able to take a tax
  deduction for their prescription drug costs,
  including costs attributable to the subsidy.
  Also, these employers do not have to pay tax on
  the drug subsidy amount. Effective for 2013, the
  deduction for the retiree drug subsidy will be
  eliminated.

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ACA Reforms - 2012 and 2013

• Additional Medicare Tax Withholding
• Effective Jan. 1, 2013, an additional 0.9
  Medicare tax will apply to high-income
  individuals.
• Employers are required to withhold the additional
  Medicare tax on an employees wages in excess of
  200,000 (250,000 for married couples filing
  jointly).

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ACA Reforms - 2012 and 2013

• Health Insurance Exchanges Notice of
  Availability
• Employers must provide all new hires and current
  employees with a written notice about ACAs
  health insurance Exchanges and the consequences
  if an employee decides to forgo
  employer-sponsored coverage and purchase a
  qualified health plan through an Exchange.
• This notice requirement generally becomes
  effective as of March 1, 2013. The Department of
  Health and Human Services (HHS) has indicated
  that it intends to issue model Exchange notices.
  More agency guidance is also expected on this
  notice requirement.

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ACA REFORMS - 2012 AND 2013 Nondiscrimination
Rules for Fully Insured Plans

• Effective date delayed for regulations.
  Important to review each renewal date.
• Fully-insured plans must follow rules regarding
  nondiscrimination in favor of highly-compensated
  employees
• Cannot discriminate with respect to eligibility
  or benefits (e.g., Doesnt allow for Class
  Carve-Outs. Must be consistent on contributions
  toward cost of insurance paid by Employer, etc.)
• Highly Compensated Employees (Testing Applies)
• 5 highest paid officers, more than 10
  shareholder, or highest paid 25 of all
  employees

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ACA Reforms 2014

• Additional ACA coverage mandates and reforms
  become effective in 2014.
• For example, group health plans may not
• Impose pre-existing condition exclusions on any
  covered individual, regardless of the
  individuals age
• Have a waiting period for coverage that exceeds
  90 days or
• Apply any annual limits on essential health
  benefits.

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ACA Reforms 2014

• ACAs state-based insurance Exchanges are
  scheduled to be operational.
• Also in 2014, the individual mandate will become
  effective, as will ACAs pay or play penalties
  for employers. Under the pay or play rules,
  certain employers with at least 50 full-time
  equivalent employees will face penalties if one
  or more of their full-time employees obtains a
  premium credit through an Exchange. An individual
  may be eligible for a premium credit either
  because the employer does not offer health care
  coverage or the employer offers coverage that is
  either not affordable or does not provide
  minimum value.

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Health Care Reform What Does it Mean for You?

• How health care reform legislation affects you
  varies greatly depending on your age, who you
  work for and many other factors.
• So what does it mean for you? The following is a
  list of how health care reform affects a number
  of common categories.

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Health Care Reform What Does it Mean for You?

• The 65 now receive
• Free preventive services under Medicare
• Once those with Medicare prescription drug
  coverage enter the doughnut hole coverage gap,
  they will be entitled to 50 percent off certain
  brand-name medications.
• Medicare beneficiaries earning 85,000 or more
  will pay higher Part B premiums until 2019.
• Those with Medicare Advantage plans may lose some
  benefits or experience an increase in
  co-payments.

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Health Care Reform What Does it Mean for You?

• Employees of a large company
• Employers with 50 or more employees will be
  required to provide coverage or pay a penalty
  starting in 2014. Existing coverage packages will
  be grandfathered in, but new plans have to meet
  minimum requirements.

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Health Care Reform What Does it Mean for You?

• Low-income employees
• Even without children or a disability, those
  among the lowest-income workers will be eligible
  for Medicaid as of 2014.
• Those who earn less than 400 percent of the
  federal poverty level (about 88,000 for a family
  of four) will be eligible for subsidies to help
  buy coverage.
• The expansion of funding for community health
  centers, designed to offer free and reduced-cost
  care, will also provide relief.

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Health Care Reform What Does it Mean for You?

• Children with a pre-existing condition
• Group health plans and health insurance issuers
  may not impose exclusions on coverage for
  children with a pre-existing condition. Provision
  applies to all employer plans and new plans in
  the individual market.

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Health Care Reform What Does it Mean for You?

• Adults with a pre-existing condition
• Starting 2014, adults with pre-existing
  conditions will be able to obtain individual
  coverage through an insurance exchange.
• Insurers cannot place annual or lifetime limits
  on coverage, nor can they deny coverage or charge
  higher premiums due to a pre-existing condition.

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Health Care Reform What Does it Mean for You?

• Unemployed and uninsured
• Most individuals who are unemployed and uninsured
  likely qualify for Medicaid under the coverage
  expansion that began in 2010.
• The expansion of funding for community health
  centers, designed to offer free and reduced-cost
  care, will also provide relief.
• Certain uninsured individuals with pre-existing
  conditions can obtain coverage through the
  temporary high-risk pool as well (e.g., PCIP).

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Health Care Reform What Does it Mean for You?

• Small-business owners
• Organizations with 25 or fewer workers may be
  eligible for a tax credit to help provide
  coverage for employees (e.g., average annual
  wages of less than 50,000 per FTE).
• Those with 50 or more employees must provide
  benefits or incur a penalty tax starting in
  2014.

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Health Care Reform What Does it Mean for You?

• Young adults
• Children may stay on their parents policies
  until age 26.

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2014 Exchange Responsibilities

• Only Available in Exchanges
• Subsidies for individuals from 133-400 of FPL
• Small employer tax credits

Exchange Functions
Operate a toll-free telephone hotline to help users
Enroll applicants in their chosen plan
Maintain a website to sell plans
Work with federal and state agencies regarding subsidies and tax credits
Enroll eligible individuals into Medicaid
Set annual Open Enrollment Period and special Enrollment Periods
Certify and rate plans
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2014 Product Framing
Plus catastrophic plan offering for individuals
younger than 30/financial hardship The benefit
requirements listed above for exchange plans will
also apply to Individual and small group fully
insured plans sold outside of the exchanges
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2014 Questions Remain

• What will the Exchange look like?
• Will the Individual Exchange work?
• Will employers drop coverage and move employees
  into the Exchange?
• Small Group 2 100 Lives - 2016
• Will the SHOP (Small Employer) Exchange work?
• Will Anthem Blue Cross be in the Exchange?

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Individual Responsibility

• Jan. 1, 2014 Individuals must enroll in coverage
  or pay a tax penalty
• Penalty amount
• Greater of amount or a of income
• 2014 95 or 1
• 2015 325 or 2
• 2016 695 or 2.5
• Family penalty capped at 300 of the adult flat
  dollar penalty or bronze level premium

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Family Responsibility

• Penalty amount
• Greater of amount or a of income
• 2014 285 or 1
• 2015 975 or 2
• 2016 2,085 or 2.5
• Family penalty capped at 300 of the adult flat
  dollar penalty or bronze level premium

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Health Care Reform Resources

• Momentous Provides Continued Updated Resources
  www.momentousins.com
• The U.S. Department of Health and Human Services
  maintains a website www.HealthCare.gov
• The White House Website - http//www.whitehouse.go
  v/healthreform
• California PCIP is available at
  www.pcip.ca.gov/Home/default.aspx
• California Health Benefit Exchange is available
  at www.healthexchange.ca.gov/Pages/Default.aspx

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Additional Resources Posted on www.momentousins.co
m By Monday, July 16th

• Todays PowerPoint Presentation
• Health Care Reform Timeline 2010 2018
• Medical Loss Ratio Rules
• Health Care Reform General QA for Employers
• State of Employment Laws California Health Care
  Reform
• Health Care Reform Who, What, When
• IRS Provides Guidance on 2,500 Health FSA Limit
  effective January 1, 2013
• Health Care Reform Common Acronyms

www.momentousins.com
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Questions? Please feel free to ask now and/or
contact Momentous directly at Sherrie Zenter
szenter_at_mmibi.com P 818-933-2739 Jill Jacoby
jjacoby_at_mmibi.com P 818-933-2778