arkansas blue cross and blue shield an independent licensee of the blue cross and blue shield...

ARKANSAS BLUE CROSS and BLUE SHIELDAn Independent Licensee of the Blue Cross and Blue Shield Association

Health Care Reform

From an Insurer’s Perspective

Providers and their employees

ARKANSAS BLUE CROSS and BLUE SHIELD

What Small Employers Need to Know

2

October 1 – Health Insurance Marketplaces (Exchanges) open across the country

December 15-must be enrolled by this date for coverage to be effective January 1, 2014

January 1 – Much of the regulation impacting employers starts becoming effective

March 31-last day for individuals to enroll for coverage during 2014 unless you have a qualifying event

Important Dates



3

Regulations changing in small group market

New rating rules New benefits and

coverage requirements Medicaid expansion



4

New Rating MethodologyEffective for non-grandfathered groups with 2-50 employees at the first renewal on or after January 1, 2014

Gender rating removed Industry rating removed Common geographic rating established by regulators Tobacco load nationally 50% (Arkansas 20%) Health status and pre-existing conditions no longer considered Age rating reduced from 6:1 ratio oldest to youngest to 3:1



5

Premium Rate Calculation Unique rate calculation for every member Member-level, rather than employee-level, census

required to comply Every member on an employee contract has a

unique rate

Rates developed for up to 3 minor children 4th minor child (and any additional) is free Children age 21+ must be rated as adults



6

Essential Health Benefits

Prescription drugs

Rehabilitative and “habilitative” services and devices

Laboratory services

Preventive and wellness services and chronic disease management

Pediatric services, including dental and vision care

Non-grandfathered small group health plans – offered on or off the Small Employer Health Options Program (SHOP), must provide these government-mandated essential health benefits

Essential health benefits include services in the following 10 categories:

Ambulatory patient services

Emergency services

Hospitalization

Maternity and newborn care

Mental health and substanceuse disorder services, including behavioral health treatment

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2

3

4

5

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9

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Additional Benefit and Coverage Requirements

Deductibles

Annual Limits

Coinsurance Maximums

No greater than $2,000/$4,000 (adjusted annually) unless required by “reasonable” product design

No annual or lifetime dollar limits on essentialhealth benefits

Must be replaced by true out-of-pocket maximums



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Metallic Coverage LevelsActuarial Values for Levels of Coverage Provided by Qualified Health Plans

Actu

aria

l Val

ue fo

r Lev

els

of C

over

age

BRONZE SILVER GOLD PLATINUM10%

100%

60%70%

80%90%



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Examples: Small Group Metallic Plans

$3,000

60%

$6,350

$2,000

80%

$6,350

$1,000

80%

$3,000

$500

90%

$1,000

STANDARD BENEFITS Bronze Silver Gold Platinum

Deductible

Coinsurance

True Out-of-Pocket Max

ADDITIONAL OPTIONS

PCP Copay

Drug Copay

n/a

n/a

$30

$10/$40/$60

$20/$40

$10/$30/$50

$20/$40

$10/$30/$50

Bronze Silver Gold Platinum


Offering Coverage to Employees

How Employers Win



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Arkansas’ Medicaid “Private Option”

Arkansas Health Care Independence Program

Adults between 17% and 138% of FPL now are eligible to participate in the Medicaid program

In Arkansas, these newly eligible participants will shop for coverage on the Health Insurance Marketplace and purchase Medicaid-approved benefit plans offered by private carriers

Very desirable benefits at no premium cost

Employees may be eligible for Medicaid-no penalty or cost to the employer



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Employer-shared Responsibility Provisions: “Play or Pay” Penalties

Offer minimum essential coverage (group health plan) or pay $2,000 per employee (after the first 30)

Coverage must meet minimum value requirements (60%) and affordability requirements (employee contribution of 9.5% of W-2 income or less) or pay $3,000 for every employee receiving subsidized coverage except those on Medicaid

Enforcement postponed until 2015

ONLY APPLIES TO Employers with 51 or more FTEs:



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Small Employer Health Options Program

Available For

SubsidiesFirst-Year

Employers

Employers with 2-50 employees in 2014 (2-100 in 2016)

No subsidies are available for employees; employer contribution takes its place

Will choose plan from one carrier on behalf of all employees

Subsequent Years

May be employee choice



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Small Employer Tax Credit Must buy through the SHOP to qualify Available for 2014 and 2015 only Available to employers who:

Have fewer than 25 FTEs (excluding owner and family members)

Have average annual wages below $50,000 Contribute uniform amount of at least 50% of employee-

only premium



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Small Employer Tax Credit Maximum tax credit 50% of employer

contribution

Tax credit decreases with average wage and firm size increases

Reduction to the 50% maximum credit when employee count exceeds 10 and/or the average annual wage exceeds $25,000

Lose grandfathered status


What would happen to their employees

Small Employers Might Drop Coverage



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2013 Federal Poverty Level (FPL)

Medicaid

$11,490

$15,510

$19,530

$23,550

$27,570

$31,590

$35,610

$39,630

Medicaid

$15,282

$20,628

$25,975

$31,322

$36,668

$42,015

$47,361

$52,708

6.3%

$22,980

$31,020

$39,060

$47,100

$55,140

$63,180

$71,220

$79,260

9.5%

$34,470

$46,530

$58,590

$70,650

$82,710

$94,770

$106,830

$118,890

Note: Federal minimum wage employee working 50 weeks per year, 40 hours per week would earn $14,500.

PERSONSIN FAMILY 100% 133% 200% 300%

Premium Cap

1

2

3

4

5

6

7

8

400%

9.5%

$45,960

$62,040

$78,120

$94,200

$110,280

$126,360

$142,440

$158,520



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Personal Responsibility

$31,321

$35,325

$47,100

$58,875

$70,650

$94,200

3%

4%

6.30%

8.05%

9.50%

9.50%

$78.30

$117.75

$247.28

$394.95

$559.31

$745.75

% of FPL

Family of 4INCOME

MAXIMUM %of INCOME

MAXIMUMMonthly Premium

Family of 4

133%

150%

200%

250%

300%

400%

Federal definition of affordability



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Remember That Group Coverage Remains a Valuable Benefit

People at 300% or more of the FPL are often key employees or family members in small businesses

Little or no subsidy will be available for them and comprehensive coverage in the reformed individual marketplace will be more expensive than existing coverage

Cancelling group coverage is likely to present the greatest burden on those most critical to your business



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Group Coverage: Considerations When groups cancel coverage, they are withdrawing a

form of compensation

To avoid employee dissatisfaction, groups may consider replacing some or all of the contribution amount made to the group health plan with additional income to the employee

By doing so, the group will have replaced a form of compensation that is tax deductible for both employer and employee with a form of compensation that is taxable for both

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