Affordable Care Act impact on insurance plans

1

• Affordable Care Act impact on insurance plans

2
Todays topics

• What well cover
• Definitions and employer mandate
• Overview of 2014 changes
• Case examples
• Employer responsibilities
• Tools and resources

3
Definition small and large groups

• Right now, states can define group sizes for
  quoting and rating.
• Small group
• 1 or 2 50 or
• 1 or 2 100employees
• Large group
• 51
• or
• 101
• employees

• Going forward, the state definition of group size
  for quoting or rating will still apply. For the
  purposes of the employer mandate (in 2015), the
  definition of 50 full-time equivalency is used
  for compliance.
• Small group
• 1-99
• full-time equivalency
• Large group
• 100 or more full-time equivalency

4
Employermandate penalty delayed

• Employers have one more year to comply with the
  ACA employer mandate without risk of penalty
  (delayed until 2015).
• Mandate is limited to groups with 50 or more FT
  employees.
• Employers must offer affordable coverage with a
  minimum value (MV) of 60
• Affordable coverage Employees share of premium
  must be less than 9.5 of an employees income.
  
• Minimum essential coverage Plan must pay for at
  least 60 of the cost of all covered services.
• HHS has developed an MV calculator to check if a
  plan provides minimum value.
• If an employer does not meet these standards in
  2014, employees may become eligible for subsidies
  in the Health Insurance Marketplace (until
  employer complies with these standards).

5
Overview of 2014 changes
6
Changes that affect premiums
Guaranteed issue No one can be denied coverage
New taxes and fees Apply to certain plans
Subsidies/credits Help those with low or
moderate incomes pay for coverage
Broader benefits and limits 10 types of
Essential Health Benefits required,
out-of-pocket limits and deductible restrictions
Reinsurance program Insurers / TPAs / self-funded
plans contribute to fund high claims
Change in rating Rates based on age and address
(and tobacco use, in some states), not gender and
health status
New Health Insurance Marketplace (Exchanges)
Offers plans for individuals and small groups
At least 60 actuarial value Plans pay at least
60 of covered services
Not required for large-group and ASO plans
7
How each premiumis affected
Individuals Small groups Large groups
Guaranteed issue
Broader benefits
depending on number of required benefits
included in plan
8
How each premiumis affected
Individuals Small groups Large groups
Change in rating
At least 60 actuarial value
for healthy
for less healthy
for healthy
for less healthy
young men and older women
young women and older men
groups younger than average
groups older than average
young individuals
older individuals
for customers with more cost share than allowed
little change for customers with less cost share
for customers with more cost share than allowed
little change for customers with less cost share
9
How each premiumis affected
Individuals Small groups Large groups
New taxes and fees
Subsidies/ credits
for those who qualify
for those who qualify
10
How each premiumis affected
Individuals Small groups Large groups
Reinsurance program
New Health Insurance Marketplace (Exchanges)
11
Essential health benefits (EHBs)
Plans for individuals and small groups must
cover

• Outpatient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services
  (including behavioral health treatment)

• Prescription drugs
• Rehabilitative and habilitative services/devices
• Laboratory services
• Preventive and wellness and chronic-disease
  management
• Pediatric services(including dental and vision)

Not required for large-group and ASO plans
12
EHBs and annual/ lifetime dollar limits

• When EHBs are covered, annual/lifetime dollar
  limits cannot apply
• Affects both grandfathered and nongrandfathered
  plans
• Applies for in-network and out-of-network
  services
• Visit limits are allowed on EHBs and can replace
  dollar limits
• Non-EHB annual/lifetime dollar limits are allowed
• Rule All covered EHBs must apply to the OOP
  limit.
• Applies to medical, pharmacy and pediatric vision
  and dental benefits that are part of the plan
• Does not apply to
• Pediatric vision and dental benefits that are not
  part of the plan
• Stand-alone benefits, which are excepted under
  HIPAA

NOTE Medical Policy rules still apply to EHBs
13
Out-of-pocket (OOP) maximum

• 2014 OOP limits for all individual, small group
  and large group non-grandfathered plans
• Individual 6,350
• Family 12,700
• The OOP cap applies for medical and specialty
  EHBs
• Cap is equal to the amount established for
  HSA-compatible plans

• HHS sees the complexity of having one OOP for all
  types of EHBs. So it issued a one-year safe
  harbor for plans with multiple EHB service
  providers.
• During this time, the plan will be considered
  compliant as long as the medical OOP does not
  exceed the maximum.
• If a separate pharmacy OOP was already in place,
  it also must not exceed6,350/12,700.

14
Community rating

• Premiums for small groups and individuals are
  not based on gender or health, but on
• Family size
• Age with maximum 31 rating bands
• Where people live
• Tobacco use
• no more than 50 more for users
• exceptions may apply in some states

15
Studies on premium impact

• Center Forward
• Increases likely in the individual and small
  group markets
• Some groups up by 49, others down by 39
• American Action Forum
• Increase in costs for young, healthy people in
  the individual and small group markets
• Costs for older, less healthy would drop about
  22
• Milliman actuarial firm
• 75 to 95 rise in premiums in the individual
  market
• Rates for others would drop
• Jonathan Gruber of MIT
• Premiums in individual market may increase as
  much as 85
• Small group market may increase more than 20

16
Small group Early renewal option

• Small groups with renewal dates in 2014 can
• Renew off-cycle in late 2013.
• Lock in Q4 rates without the new community
  ratings.
• Have a new 12-month rate guaranteed.
• Sync their renewal dates for medical, dental,
  vision, disability and life coverage.
• Not offered in all states. Please contact your
  sales
• representative for details.

17
Case examples
18
The big picture for small groups

• Health coverage options for groups with 50 or
  fewer employees

• 2013 Option
• Early renewal for groups with effective renewal
  dates in 2014

• 2014 Options
• A fully insured plan through
• The SHOP in the Health Insurance Marketplace
• Other channels outside the Marketplace
• An ASO plan, if allowed by state law
• No coverage let employees buy through the
  individual market

19
Case example Early renewal

• Mikes Accounting Firm, with 31 employees, chose
  early renewal in 2013.
• The reasons
• Can lock in 12-month rate before the higher
  community ratings kick in
• Happy with current coverage
• Not sure yet how reform will affect coverage
  need more time to understand the changes
• Can roll up coverage into one easy renewal date
• How it works
• Mike renews off-cycle in late 2013 for a 12/1
  renewal date
• Mike locks in Q4 prices before community rating
• When renewal comes next year, 12/1/14, reform
  changes will apply and Mike can choose what
  options are right for the business
• Mike might want to help his employees with
  funding, but he should be cautious and seek
  legal and tax advice.

20
Case example No coverage

• Billys Bike Rentals, a small business with 35
  employees, chose to stop offering coverage to
  their employees.
• His reasons
• Costs are too high
• Save on administrative expenses
• Focus on growing business
• How it works
• He drops coverage and provides employees
  information on obtaining coverage through the
  Marketplace
• His employees shop for coverage through
  traditional selling channels
• Some may qualify for subsidies through the
  Health Insurance Marketplace only

21
Case examples Individuals

• Health coverage options for individuals
• People not already on a government plan
• Employer-sponsored coverage
• Individual coverage through Health Insurance
  Marketplace (the Exchange) or a plan outside
  the Marketplace
• No coverage pay the penalty

22
Case exampleShop in the Marketplace

• Melanies employer has decided to quit offering
  coverage. Melanie needs coverage for her family
  and herself, so shes going to shop in the
  Marketplace.
• Her reasons
• She can compare plans side by side from
  different insurers.
• She wants to explore the new Marketplace to find
  coverage that meets her needs.
• She can work with her producer to find out if
  she qualifies for a subsidy or tax credit when
  she buys a plan in the Marketplace.

23
Case exampleNo coverage

• Mandy is 27 and recently aged off her parents
  plan. She has opted not to buy any coverage.
• Her reasons
• She thinks the cost is too high.
• She can always go to the ER if she needs to.
• Mandy may save money on premiums, but shell pay
  a penalty for not having insurance. The penalty
  goes up each year

2014
2015
2016
Penalty is 95or 1 of taxable earnings
Penalty is 325 or 2 of taxable earnings
Penalty is 695 or 2.5 of taxable earnings
whichever is larger
Mandy should work with her producer to see if she
qualifies for a subsidy or a tax credit before
deciding to go without insurance.
24
Employer responsibility
25
Notice of options for coverage

• All employers whether they offer health plans
  or not are required to tell employees

• Coverage is available through the new Health
  Insurance Marketplace.
• Employees may be able to get a tax credit or
  subsidy through the Marketplace.
• Employees may lose employercontribution if they
  buy a plan through the Marketplace, and this may
  have a tax impact to employees.

Employers must provide the notice to employees by
October 1, 2013
26
Tools to help you
27
HCR website and tools

• Redesigned site for producers and employers
  www.makinghealthcarereformwork.com
• With a new suite of tools and resources such as
• Interactive decision support
• Educates on the basics of ACA impact
• Provides recommendations
• ACA financial calculator
• Online interview gathers plan and employee
  information
• Provides a customized report showing the
  financial impact of ACA on employer plans

28
Legal

• Anthem Blue Cross and Blue Shield is the trade
  name of In Colorado Rocky Mountain Hospital and
  Medical Service, Inc. HMO products underwritten
  by HMO Colorado, Inc. In Connecticut Anthem
  Health Plans, Inc. In Indiana Anthem Insurance
  Companies, Inc. In Kentucky Anthem Health Plans
  of Kentucky, Inc. In Maine Anthem Health Plans
  of Maine, Inc. In Missouri (excluding 30 counties
  in the Kansas City area) RightCHOICE Managed
  Care, Inc. (RIT), Healthy Alliance Life
  Insurance Company (HALIC), and HMO Missouri, Inc.
  RIT and certain affiliates administer non-HMO
  benefits underwritten by HALIC and HMO benefits
  underwritten by HMO Missouri, Inc. RIT and
  certain affiliates only provide administrative
  services for self-funded plans and do not
  underwrite benefits. In Nevada Rocky Mountain
  Hospital and Medical Service, Inc. HMO products
  underwritten by HMO Colorado, Inc., dba HMO
  Nevada. In New Hampshire Anthem Health Plans of
  New Hampshire, Inc. HMO plans are administered by
  Anthem Health Plans of New Hampshire, Inc. and
  underwritten by Matthew Thornton Health Plan,
  Inc. In Ohio Community Insurance Company. In
  Virginia Anthem Health Plans of Virginia, Inc.
  trades as Anthem Blue Cross and Blue Shield in
  Virginia, and its service area is all of Virginia
  except for the City of Fairfax, the Town of
  Vienna, and the area east of State Route 123. In
  Wisconsin Blue Cross Blue Shield of Wisconsin
  (BCBSWi), which underwrites or administers the
  PPO and indemnity policies Compcare Health
  Services Insurance Corporation (Compcare), which
  underwrites or administers the HMO policies and
  Compcare and BCBSWi collectively, which
  underwrite or administer the POS policies.
  Independent licensees of the Blue Cross and Blue
  Shield Association. ANTHEM is a registered
  trademark of Anthem Insurance Companies, Inc. The
  Blue Cross and Blue Shield names and symbols are
  registered marks of the Blue Cross and Blue
  Shield Association.