10 Most Frequently Asked Questions About ACA. January 15, 2014

Transcription

1 Bottom Line Driven Health Benefits Planning 10 Most Frequently Asked Questions About ACA January 15, 2014 Jeffery A. Schultz Phone: ext Vice President, BeneCo of Wisconsin Innovation. Dedication. Knowledge. Purpose. Integrity. Vision. Talent. Results.

2 BeneCo of Wisconsin, Inc.: A member of The Benefit Companies, a privately held company. Have been providing insurance and employee benefits consulting since A full service benefits firm serving over 1,200 companies and organizations ranging from 10 to 50,000 employees. Headquartered in Brookfield, WI with additional Wisconsin offices in Green Bay, and Plymouth Most Frequently Asked Questions About ACA

3 Jeff Schultz Vice President BeneCo of Wisconsin Justin Andaloro Manager of Marketing & Communications BeneCo of Wisconsin Most Frequently Asked Questions About ACA

4 Ground rules Some questions may fall under Haven't read, Haven't heard, Guidance not released Just don t know Most Frequently Asked Questions About ACA

5 Over riding rules and regs Free rider penalties: The fun starts in 2015 Do not offer health plan Penalty is $2,000 x FTEs (less 30 FTEs), if at least one FTE received premium tax credit. Offered health plan considered not affordable Employee contributions exceed 9.5% of household income Penalty is lesser of $3,000 x FTE who receives premium tax credit, or $2,000 x FTEs (less 30 FTEs) Offered health plan less than 60% actuarial value Penalty is lesser of $3,000 x FTE who receives premium tax credit, or $2,000 x FTEs (less 30 FTEs) Applies Only to Large Employers (>50 FTEs + FTEQs) FTE = employee works an average of at least 30 hrs/wk FTEQ = part-time employee hours for the month divided by Most Frequently Asked Questions About ACA

6 Beware Of All The Moving Pieces ACA introduces a wide variety of moving pieces: Benefit Mandates Adverse selection in health risk pool and number of participants Cost Shifting Industry wide taxes and fees Penalties & Cadillac Plan Excise Tax Additional Administrative Costs Some of the moving pieces interrelate fixing one piece could introduce higher costs for another piece. Is a very complicated mix, where decisions need to be based on facts and quality probability modeling Most Frequently Asked Questions About ACA

7 What is Delayed The employer shared responsibility rule and accompanying penalties, which also delays the requirement to offer coverage to dependent children of full-time employees for plans that had not previously extended that coverage. The employer coverage informational reporting requirements Most Frequently Asked Questions About ACA

8 Today s Key Thought: Frustration is not a strategy Most Frequently Asked Questions About ACA

9 10 Most Frequently Asked Questions About ACA 1. Do the Applicable Large Employer penalties apply to me? 2. Should I keep my plan or terminate coverage and pay the penalty? 3. What do I need to do to keep my plan? 4. Will my employees be eligible for subsidies? 5. Is my plan affordable as defined by the law? 6. Does my plan meet minimum actuarial value? 7. Will my plan headcount increase or decrease and what are the implications? 8. Can I keep a robust wellness program? 9. What is the Cadillac Tax and will I have to pay it? 10. What will these exchanges look like? Most Frequently Asked Questions About ACA

10 #1 How do I determine if the Applicable Large Employer penalties apply to my organization? Most Frequently Asked Questions About ACA

11 Determining Large/Small Employer Status Affordable Care Act (ACA) defines a large employer as: Employs more than 50 full-time/full-time equivalent employees Large employers are subject to Employer Shared Responsibility Payments (penalties & fines) Affordable Care Act defines a small employer as: Employs fewer than 50 full-time/full-time equivalent employees Most Frequently Asked Questions About ACA

12 Determining Large/Small Employer Status Consider Common ownership and controlled group arrangements. Companies that are part of the same controlled group or linked through common ownership must be combined for the purpose of determining whether they collectively employ 50 or more full-time or full-time equivalent employees under ACA. Each individual employer is separately subject to the employer mandate, even if such employer itself does not employ enough employees to meet the threshold Most Frequently Asked Questions About ACA

13 How to determine full-time equivalent employees Step 1: Count all full-time employees in your organization each calendar month FTE (Full-time employee) = 30 hrs/week or more Step 2: Count full-time employee equivalents during each calendar month FTEQ = all part-time employee hours added together and divided by 120 Step 3: Consider other employee categories: Seasonal employees Seasonal employees = employees working less than 4 months/year or 120 days (not consecutive) Temporary employees Collectively bargained groups Most Frequently Asked Questions About ACA

14 How to determine full-time equivalent employees Example: How to calculate number of FTEs Month # of Full Time Employees (30 hrs/ Week or more) *Part Time Hours (Don't Count More than 120 hours for any employee) # of Part Time Employees Total Counted Employees (Full-Time + PTE) January February March April May June July August September October November December Total for the Year # of Employees Most Frequently Asked Questions About ACA

15 #2 Should I keep my plan or terminate coverage and pay the penalty? Most Frequently Asked Questions About ACA

16 The big tests Do not offer health plan Penalty is $2,000 x FTEs (less 30 FTEs), if at least one FTE received premium tax credit. Offered health plan considered not affordable Employee contributions exceed 9.5% of income Penalty is lesser of $3,000 x FTE who receives premium tax credit, or $2,000 x FTEs (less 30 FTEs) Offered health plan less than 60% actuarial value Penalty is lesser of $3,000 x FTE who receives premium tax credit, or $2,000 x FTEs (less 30 FTEs) Most Frequently Asked Questions About ACA

17 Pay or Play: Do Not Offer a Health Plan Not just about dropping coverage to all together. If an employer with greater than 50 full-time equivalent employees fails to offer at least 95% of its employees working more than 30 hours per week (and their dependents) the opportunity to enroll in minimum essential coverage AND any full-time employee is certified as having received a subsidy when purchasing individual health insurance through a public exchange The employer will liable for a $2000 per year non-deductible penalty, times the total number of full-time employees Get a pass on the first 30. I.e.: Employer with 100 employees: 70 x $2000= $140, Most Frequently Asked Questions About ACA

18 Pay or Play: Do Not Offer a Health Plan What is the true cost to drop coverage and pay the penalty? $2000 penalty will be indexed by some form of medical trend Penalty is not tax deductible Loss of employee premium payroll deduction Some employers might consider a pay increase to offset employee cost and make up for the lost benefit. HR Issues: Employees still need to purchase coverage and with after tax dollars Most Frequently Asked Questions About ACA

19 Pay or play What do the numbers say? 2013 Employer Cost 2014 Plan Termination With No Pay Increase ER Pays $2,000 Penalty (Less first 30) 2014 Plan Termination With No Pay Increase ER Pays $2,000 Penalty Tax Adjusted 2014 Plan Termination With Pay Increase $3,000 Stipend ER Pays $5, Plan Termination: With Pay Increase $3,000 Stipend Tax Adjusted Est Cost/EE $7,543 $2,000 $3,441 $5,000 $6,670 Cost $2,979,545 $1,642,000 $2,828,129 $4,195,000 $5,576,433 Difference $0 $1,337,545 $151,416 ($1,215,455) ($2,596,888) % Difference 0% 45% 5% -41% -87% Most Frequently Asked Questions About ACA

20 #3 What do I need to do to keep my plan? Most Frequently Asked Questions About ACA

21 What do I need to do to keep my plan? Offer coverage to all full time employees. Exchange Notification Requirement Provide Summary of Benefits and Coverage explanation completed W-2 reporting infrastructure for groups filing 250 or more w-2s Audit preventive care coverage limits (non grandfathered plans) and Annual /lifetime maximums Include all taxes and fees in budgets Determine plan eligibility Complete a play or pay analysis Conduct the affordability test Conduct the actuarial/minimum value test Eligibility is no more than 90 days Out of pocket maximums no higher than $6350 for a single All plan costs must track towards an out of pocket maximum Comply with minimum essential coverage requirements Most Frequently Asked Questions About ACA

22 Full time eligibility Why is FT status important? ACA mandates coverage for all FT employee Penalty imposed for non compliance (4980H) It has significant implications for many It has a new definition (for some) 30 hours per week Most Frequently Asked Questions About ACA

23 Determining full time employee eligibility: The new frontier IRS notice & Proposed Treasury Regulations Key issues: Eligibility is 30 hours per week in 2015 Employer selects measurement (look back) period in 2014 Employer selects beginning and ending points of periods FT status during Stability period NOT required Current FT status does not determine coverage eligibility Employee types: current, new, variable hour and limited duration Different measurement and stability periods can apply to Union and non union; Hourly and salaried Other entities; Other states Most Frequently Asked Questions About ACA

24 Plan sponsor strategic ACA Action Items Review eligibility Let s get specific 30 hours means average 30 hours per week What about: Those working between 30 hours per week and the current eligibility Good fill ins 25 hours scheduled but working 32 hours in reality Interns working FT for more than 90 days Seasonal employees FMLA, other leaves How to measure and calculate average hours? Most Frequently Asked Questions About ACA

25 Measurement periods and Full time status over time Measurement Period and FT Status Over Time IMP/SMP 12/ FT Status Y N Y Y SP Employment Status Y Y Y Y Coverage Y Y N Y Most Frequently Asked Questions About ACA

26 Safe harbor for measuring employee hours Most Frequently Asked Questions About ACA

27 Safe harbor for measuring employee hours Most Frequently Asked Questions About ACA

28 ACA fees and taxes and fees overview PCORI Research Fee Description Helps fund the Patient-Centered Outcomes Research Institute that evaluates and compares health outcomes, clinical effectiveness, risks and benefits of medical treatments and services. The research will help patients, health care professionals and policymakers make better informed decisions about treatment options. Effective Date 10/1/12 Timing / Duration Begins 2012 Phases out 2019 Paymen t Cycle July 31 (calendar year following end of plan year) Segment Impact FI and ASO (ASO paid and remitted by customer) Groups and Individuals Basis of Assessment $1 pmpy in Year 1 $2 pmpy in Year 2 Insurer Fee Transitional Reinsurance Fee Excise Tax on High Cost Coverage (Cadillac Tax) Annual fee on health insurance sector, allocated by market share, to fund Health Benefit Exchange subsidies. Fees assessed on net written health insurance premiums, with certain exclusions. No federal guidance received to date. Transitional fees to stabilize individual market; assessed on a per capita basis for both fully insured and ASO members. Fee funds reinsurance for high claimants in nongrandfathered individual market plans, on and off Exchange. Final Rule from CCIIO; awaiting federal and state notices of payment rules (Fall 2012). Imposes an excise tax on insurers and employers who offer rich benefit coverage. No federal guidance to date. 1/1/14 Permanent 1/1/14 3 Years ( ) No later than Septemb er 30 of calendar year FI: State determin ed; ASO: Federal, Quarterly basis beginnin g 1/1/14 1/1/18 Permanent TBD FI Only Groups and Individuals FI and ASO (ASO funded by customer, TPA remit on behalf of ASO groups) Groups and Individuals FI and ASO Groups Industry-wide targets $8B 2014 $11.3B 2015 $11.3B 2016 $13.9B 2017 $14.3B 2018 ~ of premium Industry-wide federal targets to which states may add: $12B 2014 $8B 2015 $5B 2016 ~ $5.25 pmpm 40% of value of employer-sponsored coverage exceeding $10,200 individual/$27,500 family; indexed by cost of living in subsequent years Most Frequently Asked Questions About ACA

29 #4 Will my Employees be Eligible for Subsidies? Most Frequently Asked Questions About ACA

30 Who is subsidy eligible? In Wisconsin employees between 100% of FPL and 400% of FPL IF the employer either doesn t offer a plan or doesn t offer a plan that meets Minimum Value or the single rate exceeds 9.5% of the employee s household income. Other states 138%-400% FPL. FPL guidelines for 2013 Household Size 100% 133% 150% 200% 300% 400% 1 $11,490 $15,282 $17,235 $22,980 $34,470 $45, ,510 20,628 23,265 31,020 46,530 62, ,530 25,975 29,295 39,060 58,590 78, ,550 31,322 35,325 47,100 70,650 94, Most Frequently Asked Questions About ACA

31 Premium Limits for Consumers Based on Income Up to 133% FPL % FPL % FPL % FPL % FPL % FPL 2% of income 3-4% of income 4-6.3% of income % of income % of income 9.5% of income Most Frequently Asked Questions About ACA

32 Premium as a % of Household Income Who is subsidy eligible? 14% 12% Eligible for Medicaid Employees by FPL and Premium Contribution Eligible for Subsidy Not Eligible for Subsidy 10% 8% Not Eligible for Subsidy 6% 4% 2% 0% 0% 100% 200% 300% 400% 500% 600% Employee Household Income in Relation to the Federal Poverty Level (FPL) Most Frequently Asked Questions About ACA

33 Sample Cases from Kaiser Family Foundation Subsidy Estimator Age 28 Income $25, Most Frequently Asked Questions About ACA

34 Sample Cases from Kaiser Family Foundation Subsidy Estimator Age 60 Income $30, Most Frequently Asked Questions About ACA

35 Age 40 Income $40,000 Family of Most Frequently Asked Questions About ACA

36 #5 Is my Plan Affordable as Defined by the Law? Most Frequently Asked Questions About ACA

37 Underlying concepts: Shared responsibility, Assessments (4980h Free rider penalties) The fun starts in 2014 Do not offer health plan Penalty is $2,000 x FTEs (less 30 FTEs), if at least one FTE received premium tax credit. Offered health plan considered not affordable Employee contributions exceed 9.5% of income Penalty is lesser of $3,000 x FTE who receives premium tax credit, or $2,000 x FTEs (less 30 FTEs) Offered health plan less than 60% actuarial value Penalty is lesser of $3,000 x FTE who receives premium tax credit, or $2,000 x FTEs (less 30 FTEs) Most Frequently Asked Questions About ACA

38 Affordability Government deems what's affordable New standard 9.5% of income for SINGLE coverage Each employee must be tested Cannot average incomes Has to be affordable for employees at 30+ hours per week. Lower wage/higher contribution likely issues Don t pass test, plan pays penalty. Notified at year end Most Frequently Asked Questions About ACA

39 Annual Wages Hourly Wages At 30 Hours Max Annual Premium Allowed Max Monthly Premium Allowed Current Monthly Single Premium $10,000 $6.41 $950 $79.17 $ $15,000 $9.62 $1,425 $ $ $20,000 $12.82 $1,900 $ $ $25,000 $16.03 $2,375 $ $ $30,000 $19.23 $2,850 $ $ $35,000 $22.44 $3,325 $ $ $40,000 $25.64 $3,800 $ $ $45,000 $28.85 $4,275 $ $ $50,000 $32.05 $4,750 $ $ $55,000 $35.26 $5,225 $ $ $60,000 $38.46 $5,700 $ $ $65,000 $41.67 $6,175 $ $ $70,000 $44.87 $6,650 $ $ $75,000 $48.08 $7,125 $ $ $80,000 $51.28 $7,600 $ $ $85,000 $54.49 $8,075 $ $ $90,000 $57.69 $8,550 $ $ $95,000 $60.90 $9,025 $ $ $100,000 $64.10 $9,500 $ $ Annual Wages Hourly Wages At 30 Hours Max Annual Premium Allowed Max Monthly Premium Allowed Current Monthly Single Premium Breakeven $23,914 $15.33 $2,272 $ $ Most Frequently Asked Questions About ACA

40 Affordability The safe harbors W-2 earnings (Box 1) Rate of pay FPL Most Frequently Asked Questions About ACA

41 Affordability The safe harbors W-2 earnings Uses the employee s W-2 income (box1) from the employer for the current year. Does not include pre-tax contributions for 401(k) or cafeteria plans. Calculated on an individual employee basis Employer will not know the exact amount until after the end of the year. Employers may need to define the employee contribution as 9.5% of W-2 wages. Many holes in the application. Anticipating more guidance Most Frequently Asked Questions About ACA

42 Affordability The safe harbors Rate of pay Hourly Employee: Use employee's hourly rate as of the first day of the plan year. Multiply x 130 hours per month (per government) Multiply x 12 Divide into contribution Salaried Employee: Use annual wages and divide by 12. Disadvantage: Can only use 130 hours per month even if employees use more. Strategy: Set premium at 9.5% of lowest paid employee Most Frequently Asked Questions About ACA

43 Affordability The safe harbors Federal Poverty level (FPL) Uses 100% of FPL Assume all employees earn 100% of poverty level Calculate contribution against the $11,490 FPL $90.96 Per Month or $ Annually Most Frequently Asked Questions About ACA

44 ABC Company Affordability Safe Harbor Application Current Single Premium $ Current Lowest Hourly Rate $9.96 Current Lowest Monthly Salary $2,000 Rate of Pay Safe Harbor Federal Poverty Line Safe Harbor Monthly Wages Contribution as a % of Pass/Fail Wages Hourly $1, % Fail Salaried $2, % Pass Monthly Wages FPL Monthly Premium Pass/Fail 2013 FPL $11,490 $90.96 Fail W-2 Wages Safe Harbor To Be Determined Most Frequently Asked Questions About ACA

45 #6 Does my Plan Meet Minimum Actuarial Value? Most Frequently Asked Questions About ACA

46 Underlying concepts: Shared responsibility, Assessments (4980h Free rider penalties) The fun starts in 2014 Do not offer health plan Penalty is $2,000 x FTEs (less 30 FTEs), if at least one FTE received premium tax credit. Offered health plan considered not affordable Employee contributions exceed 9.5% of income Penalty is lesser of $3,000 x FTE who receives premium tax credit, or $2,000 x FTEs (less 30 FTEs) Offered health plan less than 60% actuarial value Penalty is lesser of $3,000 x FTE who receives premium tax credit, or $2,000 x FTEs (less 30 FTEs) Most Frequently Asked Questions About ACA

47 What is my plan s actuarial/ minimum value? $16,000,000 Possible Future Health Plan Options 2014 Expected Cost $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Current Plan Options Current Lowest Cost Option Avoid Cadillac Plan Excise Tax HDHP Option Bronze Plan Option Most Frequently Asked Questions About ACA

48 Actuarial Value What is my plan s actuarial/ minimum value? 100% Sample Employer Plans Actuarial Values 90% Platinum 80% 70% 60% Gold (80%) Silver (70%) Bronze (60%) 50% 40% Copay HDHP Employers must offer a plan with at least 60% actuarial value to avoid penalties Most Frequently Asked Questions About ACA

49 What is my plan s actuarial/ minimum value? Plan Design Safe Harbors Safe Deductible Cost-Sharing Out-of-Pocket Maximum Harbors Plan #1 Plan #2 Plan #3 $3,500 integrated medical and drug deductible $4,500 integrated medical and drug deductible $3,500 medical deductible & $0 drug deductible 80% $6,000 maximum OOP 70% 60% for medical & 75% for drug expenses; drug co-pays of $10/$20/$50 for the first, second & third Rx drug tiers, and 75% coinsurance for specialty drugs $6,400 maximum OOP & $500 ER contribution to an H.S.A. $6,400 maximum OOP Most Frequently Asked Questions About ACA

50 What is my plan s actuarial/ minimum value? ABC Company Minimum Actuarial Value Plan Plan Name Deductible Coinsurance Out of Pocket Actuarial Value Pass/Fail Plan Design #1 PPO $500 90% $2, % Pass Plan Design #2 HSA $2,000 90% $4, % Pass Most Frequently Asked Questions About ACA

51 #7 Will my Plan Head Count Increase or Decrease and what are the Implications? Most Frequently Asked Questions About ACA

52 Individual Mandate and Other Market Factors Eligibility Calculation Current Employer Spend $538,960 Current Average Cost Per Employee On Plan: ($538,960 / 83) $6,493 Currently Eligible 180 Currently on Plan 83 Current Participation 46% Potential Additions Most Frequently Asked Questions About ACA

53 Eligibility and Migration Cost Impact to the Plan Potential Additions Enrolling in Coverage Additional Enrollees Additional ER Cost Total Enrollees Adjusted Participation Total Cost % Cost Increase 100% 97 $629, % $1,168, % 75% 73 $474, % $1,012, % 50% 49 $318, % $857, % 25% 25 $162, % $701, % 10% 10 $64, % $603, % 5% 5 $32, % $571, % Current 0 $ % $538, % Most Frequently Asked Questions About ACA

54 Eligibility and Migration Adjustments to Pay or Play Calculation Because the possibility exists that as many as 97 employees may join the plan with an average cost per employee of $6493, the bottom chart illustrates the cost difference to pay or play with adjusted eligibility. Additional Enrollees Total Cost Est. Tax Adjusted Penalty to Drop Coverage Additional Cost or Savings to Retain Plan Increase or Decrease % to Employer Outlay 97 $1,168,829 $526,699 $642, % 73 $1,012,985 $526,699 $486, % 49 $857,141 $526,699 $330, % 25 $701,297 $526,699 $174, % 10 $603,895 $526,699 $77, % 5 $571,427 $526,699 $44, % Current $538,960 $526,699 $12, % Most Frequently Asked Questions About ACA

55 Potential Out-Migration Single Premium: $ COBRA Rates: $ Employee Make up Employees 1536 Eligible Employees 1248 On the Plan 784 Unaffordable & Eligible 204 Likely to Leave Plan and Receive Subsidy 140 Eligible Between 28 and 32 Hours 72 Eligibles Under age Penalty Exposure Eligible Employees Under 400% FPL Unaffordable & Eligible Employees Likely to Leave Plan and Receive a Subsidy Number of Employees $3,000 Penalty $3,324,000 $612,000 $420,000 Tax Adjusted Penalty $5,540,000 $1,020,000 $700,000 Max Penalty Exposure $2,496,000 Tax Adjusted Max Exposure $4,160, Most Frequently Asked Questions About ACA

56 #8 Can I Keep a Robust Wellness Program? Most Frequently Asked Questions About ACA

57 How will ACA potentially change my risk? New options for coverage that never existed now exist. Plan sponsors will have to think like never before: Go on the offense to retain attractive risk. Possibly allow poor risk to leave Most Frequently Asked Questions About ACA

58 Types of Wellness Programs On June 3, 2013, the Departments of the Treasury, Labor, and Health and Human Services jointly issued final rules relating to wellness programs. Defined wellness programs into two types: Participatory Health Contingent Activity Based Outcome Based Participatory wellness programs either do not provide a reward or do not include any conditions for obtaining a reward that are based on an individual satisfying a standard related to a health factor. Examples include programs that reimburse employees for all of part of the cost of fitness center and diagnostic testing programs that provide a reward for participation and do not base any part of the reward on outcomes, or programs that provide incentives for employees to complete an HRA or Biometric Screen Most Frequently Asked Questions About ACA

59 Types of Wellness Programs Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward. Activity-only wellness programs These require an individual to perform or complete an activity related to a health factor in order to obtain a reward but do not require an individual to attain or maintain a specific health outcome. Examples include: walking, diet or exercise programs, Outcome-based wellness programs These require an individual to attain a specific health outcome (such as not smoking or attaining certain results on biometric screenings) in order to obtain a reward. Examples include programs that test individuals for specified medical conditions or risk factors (such as high cholesterol, high blood pressure, abnormal BMI or high glucose level) and provide a reward to employees identified as within a normal or healthy range, while requiring employees who are identified as outside the normal or healthy range (or at risk) to take additional steps (such as meeting with a health coach or complying with a health care provider s plan of care) to obtain the same reward Most Frequently Asked Questions About ACA

60 Examine risk pool preservation, enhancement and wellness strategies. Expansion of Wellness Incentives: ACA codifies 30% differential based on outcomes. Differential is total cost not premium cost. Tobacco surcharge increases differential to 50% Most Frequently Asked Questions About ACA

61 Examine wellness and risk pool preservation and enhancement strategies Carriers can t underwrite but plans can Lower headcount and lower cost per employee is possible. Leveraging these concepts can put you in a position to win Most Frequently Asked Questions About ACA

62 How to Leverage Health Care Reform to Benefit Your Wellness Program: What is my plan s response? Common Wellness Strategies Premium differentials based on participation. Loss of employer funding for non-participants. Incentives to improve scores Most Frequently Asked Questions About ACA

63 Pay or Play? How to Leverage Health Care Reform to Benefit Your Wellness Program- Employer Incentives Today: 80 % offer an incentive for completing a health risk questionnaire. 10 % of employers provide a reward for improving on results of the questionnaire. 60 % provide an incentive for completing the screening. Less than 10 % provide anything when an individual takes action on the results. Aon Hewitt Health Care Study Most Frequently Asked Questions About ACA

64 Wellness Levers in ACA Expansion of Wellness Incentives: ACA allows 30% differential based on outcomes. Allows up to 50% based on tobacco use. Differential is total cost not premium cost. Impacts the affordability calculation. Recent guidance suggests even participation based programs impact affordability calculation. Recent guidance also suggests a plan must offer a solution to earn back to base premium Most Frequently Asked Questions About ACA

65 ACA 30% Wellness Surcharge COBRA Rates 25% 30% Total Premium Total Premium Annual Contribution Surcharge Achiever Non-Achiever Difference Single $300 $75 $90 $75 $165 $1,080 Family $1,200 $300 $360 $300 $660 $4, Most Frequently Asked Questions About ACA

66 ACA 50% Wellness Surcharge for tobacco users COBRA Rates 25% 50% Total Premium Total Premium Annual Contribution Surcharge Achiever Non-Achiever Difference Single $300 $75 $150 $75 $225 $1,800 Family $1,200 $300 $600 $300 $900 $7, Most Frequently Asked Questions About ACA

67 #9 What is the Cadillac Tax and Will I Have to Pay it? Most Frequently Asked Questions About ACA

68 Cadillac Tax High-cost group plans will be subject to a 40% excise tax beginning in The tax applies to annual premiums in excess of $10,200 for individual coverage and $27,500 for family coverage. These amounts will be indexed for inflation. Employer HSA contributions will likely be included. Jury still out on HRA Most Frequently Asked Questions About ACA

69 Cadillac Tax Projected 8% Trend 2013 H S A PPO Current Single $ $ Family $1, $2, Single $5,469 $10,368 Family $16,200 $27, Single $5,907 $11,197 Family $17,496 $29, Single $6,379 $12,093 Family $18,896 $31, Single $6,890 $13,061 Family $20,407 $34, Single $7,441 $14,106 Family $22,040 $37, Single $8,036 $15,234 Family $23,803 $39, Single $8,679 $16,453 Family $25,707 $43, Single $9,373 $17,769 Family $27,764 $46, Most Frequently Asked Questions About ACA

70 Cadillac Tax Estimated Excise Tax in 2018 Per Employee Plan Participant Excise Tax H S A PPO Employee 0 $1,562 Employee + Spouse 0 $284 Employee + Child(ren) 0 $284 Family Coverage 0 $3,811 Current Enrollment in Each Category H S A PPO Employee 40 3 Employee + Spouse 10 1 Employee + Child(ren) 12 1 Family Coverage 10 6 Projected Cadillac Tax Based on Current Enrollment H S A PPO Employee $0 $4,687 Employee + Spouse $0 $284 Employee + Child(ren) $0 $284 Family Coverage $0 $22,865 Total Projected Excise Tax in 2018: $28, Most Frequently Asked Questions About ACA

71 #10 What will these Exchanges Look Like? Most Frequently Asked Questions About ACA

72 Most Frequently Asked Questions About ACA

73 What is an Exchange? Basics: Expedia, Hotwire, Travelocity, Kayak for health insurance. Clearinghouse for state, federal plan/subsidy eligibility, private and public plan enrollment and premium collection. Private insurers take risk, states do not. Insurers must agree to participate. Available in 2014 to groups with 50 employees or less. Available in 2017 to groups of over 100 employees+. UT and MA only current models. Multistate employer complexity Most Frequently Asked Questions About ACA

74 How Will They Operate? Exchanges: Functionality Requirements Shopping and Decision Support Enrollment and Eligibility (e.g., Effective Dates) Carrier Connectivity Consolidated Employer Billing Reporting to Employers and Government Ongoing Administration (e.g. Life Events) Additional Nice to Have Payroll/HRIS Connectivity Complete Benefit Suite Dental, Life, Disability, etc Most Frequently Asked Questions About ACA

75 What are the rates in Wiscsonsin? Platinum Individual Individual Family Single Parent Couple Child Age 27 Age 50 90% Actuarial Value 30 with 2 Children 30 with 2 Children 2@ 40 Per Child Low $302 $515 $1,021 $694 $737 $183 High $548 $934 $1,852 $1,258 $1,337 $332 Average $423 $721 $1,430 $971 $1,032 $256 Gold 80% Actuarial Value Low $241 $410 $813 $552 $587 $146 High $488 $831 $1,647 $1,119 $1,189 $295 Average $345 $589 $1,167 $793 $842 $209 Silver 70% Actuarial Value Low $197 $336 $667 $453 $481 $120 High $428 $730 $1,447 $983 $1,045 $260 Average $274 $467 $925 $628 $668 $166 Bronze 60% Actuarial Value Low $147 $250 $495 $337 $358 $89 High $359 $612 $1,213 $824 $876 $218 Average $229 $391 $775 $526 $559 $139 Catastrophic <60% Actuarial Value Low $109 $186 $369 $251 $267 $66 High $297 $505 $1,002 $681 $723 $180 Average $184 $313 $621 $422 $448 $ Most Frequently Asked Questions About ACA

76 Impact to Plan In/Out Migration What is plan turnover? In how many states do employees reside? Which ones? What is each state s exchange position? What percentage of employees Have home internet access? Have bank accounts? Speak different languages? Live outside the state of corporate domicile? Earn between 100% and 400% of FPL? Would be considered good health care consumers? Need significant health insurance decision support Most Frequently Asked Questions About ACA

77 What Do I Do Now? Most Frequently Asked Questions About ACA

78 What needs to be done? Be Tactical and Strategic Tactical Be accurate and timely with compliance Know the tasking and timelines Enlist the appropriate resources Strategic Know your group Know your risk Model probable scenarios Create risk enhancement /preservation incentives Understand the $$ involved in pay or play Leverage ACA to your advantage Most Frequently Asked Questions About ACA

79 What do I do Now? Audit, Assess, Analyze, communicate and Decide Develop Budget Estimates Including: Adult dependent children; non-gf plan. Comparative clinical effectiveness (PCORI) Reinsurance and risk adjustment fees. Insurance industry tax. Others taxes and surcharges. Model Multi-Year Strategies to Offset Trend and Additional ACA Costs: Employee plan design changes. Employee contribution changes. Wellness incentive assessment and integration Most Frequently Asked Questions About ACA

80 What do I do Now? Audit, Assess, Analyze, Communicate and Decide Conduct Analyses: Maximum plan changes allowed under grandfather provision. Maximum employee contribution changes allowed under grandfather provision. Net cost of remaining grandfathered vs. eliminating grandfathered plan. Eligibility requirement cost impact. Subsidy eligibility analysis. Medicaid eligibility analysis. Probable subsidy and Medicaid eligible IN/OUT migration. Affect on risk pool due to subsidy eligible migration Cadillac tax projection Most Frequently Asked Questions About ACA

81 What needs to be done? Be Strategic; Audit, Assess, Analyze, Communicate and Decide Decide On a 2-5 year strategy based on Your test answers Affordability Culture Moving the ACA levers to your advantage Most Frequently Asked Questions About ACA

82 Pulling it all together creating a long term plan ABC Co Health Insurance Pro forma March Plan Design Ded 1000/ / / / / /6000 Coins 90/70 90/70 90/70 90/70 90/70 90/70 OOP 2000/ / / / / /12000 Estimated Actuarial Value 84% 80% 80% 80% 80% 75% Employee Contributions 15% 15% 20% 23% 25% 25% Wellness Incentives 5% 10% 10% 10% 10% 10% Cost Total cost $3,080,250 $3,385,760 $3,588,906 $3,876,019 $4,186,100 $4,437,266 Employer Cost $3,080,250 $3,047,184 $3,230,015 $3,294,616 $3,558,185 $3,549,813 % Change -1.1% 6.0% 2.0% 8.0% -0.2% Employee Cost $0 $338,576 $358,891 $581,403 $627,915 $887,453 % Change 6.0% 62.0% 8.0% 41.3% Number of covered employees Cost per employee per year $6,845 $7,491 $7,940 $8,575 $9,261 $9,817 % Change 9.4% 6.0% 8.0% 8.0% 6.0% COBRA Rates Monthly 8%/6% Single $401 $425 $451 $487 $526 $557 Family $1,040 $1,102 $1,169 $1,262 $1,363 $1,445 Annualized Single $4,812 $5,101 $5,407 $5,839 $6,306 $6,685 Family $12,480 $13,229 $14,023 $15,144 $16,356 $17,337 Cadillac Tax Threshold Single $10,200 Family $27,500 Excise tax $0 $0 $0 $0 $0 $ Most Frequently Asked Questions About ACA

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84 ACA Learning Series: Course Level Date Time Understanding & Implementing an Air Tight Eligibility Policy Under ACA Wellness Based Incentives: Creating Culturally Sensitive Outcome Based Premium Differentials 310 1/22/ :00-11: /12/ :00-11:00 What You Need to Know to Pass a DOL Audit 300 February TBD Exchanges and Potential Risk Migration: Understanding Alternative Coverage Options and its Impact on Plan Risk and Costs Cadillac Tax: Creating a Glide Path to Minimize the 2018 Excise Tax Impact 313 3/19/ :00-11: /23/ :00-11:00 To Register: Most Frequently Asked Questions About ACA

85 Ask us about Haiti The work: Orphan care and sponsorship, tent city refugee relocation and community development, microenterprise other ministry opportunities To get more info or engaged in some way drop us a , or for a glimpse of the work go to or Upcoming trips: December 2013 or 2014: April June and October Most Frequently Asked Questions About ACA

86 Post-Seminar Questions or to get the links for upcoming webinars: Jeff Schultz Vice President BeneCo of Wisconsin, Inc x Most Frequently Asked Questions About ACA

87 Most Frequently Asked Questions About ACA

88 Thank you Most Frequently Asked Questions About ACA