Presented by: Jim Gilbert Registered Health Underwriter & Registered Employee Benefits Consultant

Transcription

1 Healthcare Reform Update 18 th Annual Update for Accountants Presented by: Jim Gilbert Registered Health Underwriter & Registered Employee Benefits Consultant Thursday, December 5 th, 2013

2 What is Health Care Reform? The Affordable Care Act (ACA) was enacted in March Biggest overhaul of the United States health care system since Medicare and Medicaid in 1965 Requires most individuals to obtain health care coverage Requires insurance companies and employers to provide consumer protections related to health coverage, like covering pre-existing conditions and not charging more for coverage based on gender

3 Goals of the Affordable Care Act Goals: Increase the quality and affordability of health insurance Lower the uninsured rate Reduce costs of health care Improve health care quality

4 Status of the Affordable Care Act Today Across-the-board changes to health insurance include: Eliminating annual and lifetime limits on essential health benefits Prohibiting insurance companies from canceling coverage Providing free preventive care for most plans Requiring insurance companies to spend no more than 20 percent of premiums on administrative, overhead and marketing costs and requiring companies that exceed that number to issue refunds to their customers

5 Status of the Affordable Care Act Today Requires employers to cover dependents to age 26 Requires employers to redefine their Out-of-Pocket Maximum. Copays now go towards maximum Requires employers to provide information to the government about who is covered and what their benefits offered are and how much they cost Requires employers to notify employees about the Marketplace Requires a new format for communicating benefits to employees and individuals

6 Status of the Affordable Care Act Today Requires all employers to pay additional taxes and fees to help fund new programs Requires all insurers to pay additional taxes and fees to help fund new programs

7 Marketplace Exchanges Public and Private

8 Prior to ACA Insurance Marketplace Small Group 50 Ees Some states medically underwrite Large Group > 50 Ees Numerous mandates Group Health Plans Medicaid Up to 100% of Federal Poverty Level (FPL) Individual Health Plans Medically underwritten Pre-X limitations Fewer mandates than GHP Large rate variations by age, gender, health, etc. Medicare applies to individuals eligible due to age (65), disability or ESRD.

9 Paradigm shifts tend to be most dramatic in sciences that appear to be stable and mature

10 Post ACA The Changing Marketplace New benefit mandates New rating formula (small group) New taxes New carrier products (self-funded) Pay or Play Reporting requirements Guarantee Issue Small Group metal plans Group Health Plans Medicaid Up to 100% of Federal Poverty Level Up to 138% of FPL if State expands Medicaid Created by ACA Individual AHBE Small Group SHOP Metal plans Public Exchange or Marketplace Individual Health Plans Guaranteed issue (no u/w) No Pre-X limits Essential Health Benefits Metal Plans Fair Rating Formula Created to compete with public exchanges Group Private Exchanges Medicare applies to individuals eligible due to age (65), disability or ESRD.

11 ACA & Private Marketplace Public Exchanges are ACA-driven Private Exchanges are NOT part of ACA Original Intent of Public Marketplace Serve as Marketplace Increase Competition Facilitate Subsidy Distribution Private Marketplace are Rooted in Capitalism & Free Markets Some are developed by technology firms (Liazon Bright Choices) Carriers are developing their own Government subsidies not available to use in a Private Marketplace 11

12 MillsonJames, LLC - Confidential 12

13 Choices have been consolidated

14 Marketplace Sample Rates Zip Kent County BCBS Priority Date of Birth Age Bronze Gold HMO PPO 6/1/ $5,950 $1,200 $ $ BCBS Priority Date of Birth Age Bronze Gold HMO PPO 6/1/ $5,950 $1,250 $ $ BCBS Priority Date of Birth Age Bronze Gold HMO PPO 6/1/ $5,950 $1,250 $ $ 1,013.43

15 With Medicaid Expansion 2013 Poverty Guidelines All States (except Alaska, Hawaii) and D.C Annual Guidelines Family Percent of Poverty Guidelines Size 100% 120% 133% 138% 139% 150% 200% 250% 300% 400% 1 $ 11,490 $ 13,788 $ 15,282 $ 15,856 $ 15,971 $ 17,235 $ 22,980 $ 28,725 $ 34,470 $ 45,960 2 $ 15,510 $ 18,612 $ 20,628 $ 21,404 $ 21,559 $ 23,265 $ 31,020 $ 38,775 $ 46,530 $ 62,040 3 $ 19,530 $ 23,436 $ 25,975 $ 26,951 $ 27,147 $ 29,295 $ 39,060 $ 48,825 $ 58,590 $ 78,120 4 $ 23,550 $ 28,260 $ 31,322 $ 32,499 $ 32,735 $ 35,325 $ 47,100 $ 58,875 $ 70,650 $ 94,200 5 $ 27,570 $ 33,084 $ 36,668 $ 38,047 $ 38,322 $ 41,355 $ 55,140 $ 68,925 $ 82,710 $ 110,280 6 $ 31,590 $ 37,908 $ 42,015 $ 43,594 $ 43,910 $ 47,385 $ 63,180 $ 78,975 $ 94,770 $ 126,360 7 $ 35,610 $ 42,732 $ 47,361 $ 49,142 $ 49,498 $ 53,415 $ 71,220 $ 89,025 $ 106,830 $ 142,440 8 $ 39,630 $ 47,556 $ 52,708 $ 54,689 $ 55,086 $ 59,445 $ 79,260 $ 99,075 $ 118,890 $ 158,520 Estimated Percent Contribution on the Exchange Family Percent of Poverty Guidelines Size 100% 120% 133% 138% 139% 150% 200% 250% 300% 400% 1 Medicaid 0% Medicaid 0% Medicaid 0% Medicaid 0% 3% 4% 6.3% 8.05% 9.50% 9.50% 2 Medicaid 0% Medicaid 0% Medicaid 0% Medicaid 0% 3% 4% 6.3% 8.05% 9.50% 9.50% 3 Medicaid 0% Medicaid 0% Medicaid 0% Medicaid 0% 3% 4% 6.3% 8.05% 9.50% 9.50% 4 Medicaid 0% Medicaid 0% Medicaid 0% Medicaid 0% 3% 4% 6.3% 8.05% 9.50% 9.50% 5 Medicaid 0% Medicaid 0% Medicaid 0% Medicaid 0% 3% 4% 6.3% 8.05% 9.50% 9.50% 6 Medicaid 0% Medicaid 0% Medicaid 0% Medicaid 0% 3% 4% 6.3% 8.05% 9.50% 9.50% 7 Medicaid 0% Medicaid 0% Medicaid 0% Medicaid 0% 3% 4% 6.3% 8.05% 9.50% 9.50% 8 Medicaid 0% Medicaid 0% Medicaid 0% Medicaid 0% 3% 4% 6.3% 8.05% 9.50% 9.50% Estimated Monthly Amount of Individual Contribution on the Exchange (Silver Plan) Family Percent of Poverty Guidelines Size 100% 120% 133% 138% 139% 150% 200% 250% 300% 400% 1 $0 $0 $0 $0 $ $ $ $ $ $ $0 $0 $0 $0 $ $ $ $ $ $ $0 $0 $0 $0 $ $ $ $ $ $ $0 $0 $0 $0 $ $ $ $ $ $ $0 $0 $0 $0 $ $ $ $ $ $ $0 $0 $0 $0 $ $ $ $ $ $ 1, $0 $0 $0 $0 $ $ $ $ $ $ 1, $0 $0 $0 $0 $ $ $ $ $ $ 1, Percentages above vary depending on FPL. For example, between 150% and 200% will be an amount between 4 and 6.3%. Individuals with incomes over 400% are not eligible for a subsidy. Individuals who work for employers who provide coverage that is minimum value and affordabilty by definition of ACA are ineligilbe to receive subsidies.

16 Pay or Play Fees, Taxes, Fines

17 Employer Fines & Penalties Pay or Play (Delayed until 2015) $2,000 per employee per year for no providing benefits Considered Large (over 50 FTE) Total is figured total employees - 30 $3,000 per employee per year if an employer provides coverage that s deemed to be unaffordable or offers coverage that is not minimum value and the employee goes to the public marketplace and gets a subsidy 1 gets a subsidy = $3000 penalty 2 gets a subsidy = $3000 penalty

18 Individual Mandate Beginning in 2014, all citizens and legal residents required to purchase qualifying health insurance coverage If decide not to purchase, then subject to a federal tax equal to greater of the flat dollar penalty OR the percentage penalty: Flat dollar penalty is $95 for 2014, $325 for 2015, $695 for 2016, and indexed thereafter (per individual, but reduced 50% if under age 18 and not to exceed 300% of flat dollar amount for a family) Percentage penalty is 1% for 2014, 2% for 2015, and 2.5% for 2016 of the individual s household income in excess of the tax filing threshold Certain exemptions apply: Non-citizens, members of Indian Tribes, prisoners, religious objectors, etc.

19 Summary of Taxes and Fees Affordable Care Act Selffunded Small Group Large Group Individual Medicare Advantage Medicaid Medigap Transitional Reinsurance Program $5.25 per member per month beginning in The fee is subject to change if not enough is collected nationally. N/A N/A N/A N/A Risk Adjustment N/A $1 PMPY N/A $1 PMPY N/A N/A N/A Risk Adjustment Fee does not apply to Grandfathered Plans Patient Centered Outcomes Research Institute Fee $1 PMPY $2 PMPY $2 PMPY Plus Medical Inflation N/A N/A N/A Annual Fee on Health Insurance Carriers N/A 2.5%- 4% of premium for PPO/0.75%-1.5% of premium for HMO/POS N/A 0.75% - 1.5% of premium Final regulations have not been released on this fee. Exchange User Fee N/A +3.5% N/A +3.5% N/A N/A N/A Estimated Total Cost (PMPM) $6 $22-$27 PPO $9-$13 HMO $19-$24 PPO $11-$15 HMO $12-$17 PPO $5-$13 HMO $6-$7 N/A $2-$5 Totals estimated on Priority Health s book of business. Will vary depending on employer premium and the number or members in group.

20 Estimated Total ACA Fees Self-funded Small Group Large Group Estimated Tax/Fee $6 $22 PPO $19 PPO Employees Est. Members Estimated Monthly Fees $1,800 $2,970 $5,700 Estimated Annual Fees $21,600 $35,640 $68,400 Estimates only headcounts and fees will vary by plan, status, etc. Also, does not included added plan design mandates.

21 Employer s Response

22 Employer s Response Hobby Lobby Because of birth control mandate the company may stop offering employer provided healthcare because it s against owner s beliefs. The U.S. Department of Health and Human Services (HHS) has asked the Supreme Court to hear the recently appealed Hobby Lobby health care case. UPS moving to a policy that if spouses have coverage elsewhere the spouse cannot be on the UPS healthcare plan. Trader Joes cut healthcare coverage for workers working under 30 hours per week In general, we think we will see: Higher part-time employment numbers Increased costs charged to employees Decreased coverage to employees

23 Employers Affected the Most Retail Car Dealers Grocery Store Chains Nursing Homes YMCA s Restaurants Staffing Agencies Any business with high part time population, seasonal

24 Individual s Response We will see Marketplace (online) system has major glitches. Some say poor architecture Affordability will be the question Cost Coverage At tax time penalties will be levied, charge backs applied

25 Michigan Insurer Changes

26 Marketplace Michigan (FFM) Individual Market Alliance Health and Life Insurance Company Blue Care Network of Michigan BCBS of Michigan Consumers Mutual Insurance of Michigan (CO-OP) Health Alliance Plan Humana Medical Plan of Michigan McLaren Health Plan Meridian Health Plan of Michigan Molina Healthcare of Michigan Physicians Health Plan Priority Health Insurance Company Total Health Care USA Small Group Alliance Health and Life Insurance Company Blue Care Network of Michigan BCBS of Michigan Consumers Mutual Insurance of Michigan (CO-OP) Health Alliance Plan McLaren Health Plan Physicians Health Plan Priority Health Insurance Company Total Health Care USA United Healthcare Life Insurance Company Multi-State Plan BCBS of Michigan

27 Marketplace Michigan Response Adjustment to metal tiers Priority Health went from over 1500 different plans to 75 total Canned plans (Insurer is responsible for actuarial value) Can t pick and choose copays, drug plans etc HRA plan design will be mandated by insurer BCBS s rule for small (under 50) and insured is the PBM cannot be carved out

28 Marketplace Michigan Response One Insurers Change in Underwriting Results 40% of customers will receive under 10% increase (plus taxes and fees) 30% of customers will receive over 30% increase (plus taxes and fees) Taxes and fees will be imbedded in the rates With all the changes their high was 100% increase and their low was a 50% decrease

29 Marketplace Michigan Response Rating Criteria Allowed Age (Spread from 21 to 64+ cannot be greater than 3:1) Currently 5 year age brackets Geography (Michigan 16 rating regions) Tobacco Use (50% surcharge allowed) Most Group plans will not use tobacco surcharge Per Member Rating Rate for each age For Children to 21 there will be one rate per member for that age group (max 3)

30 Sample Illustration of Per Member Rating 20 and Under $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Family of 7 Parent 47 $ Parent 42 $ Child 22 $ Child 17 $ Child 15 $ Child 13 $ Child 10 $ $ 1, Child 20 and under Limit 3 $ $ 1,336.42

31 Generally, Rates Will: Rates will go up if: Positive SIC (Industry) Young Employees Carved out RX High Deductibles (Real High) Rates will go down if: Negative SIC (Industry) Older Employees A lot of children under 21 covered

32 Marketplace Reasons Why ACA May Work Public Policy Technology Current Costs Reasons Why ACA May Not Work Confusion Complicated Divisiveness Budget Tax Law

33 Observations Younger healthier groups will subsidize older sicker groups Insurers are taking a somewhat conservative approach in the marketplace Generally, less options in the Marketplace and more options in the traditional If the same plan is offered in the Public Marketplace or Private Marketplace the cost will be the same Individuals are only eligible for subsidies in the Public Marketplace AND if the employer does not offer MV and affordable coverage Private Marketplace will offer more choice, more technology that will help reduce administrative burden of per member pricing Keeps advantage of Employer Funded Coverage Tax Deductions, Savings in matching FICA, EE s pay pre-tax

34 Questions?