HEALTH CARE REFORM PREPAREDNESS 104:

State of the Exchange

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Recap of Previous Sessions Changes through 2013

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2010 – 2011 • Small employer tax credit rolled out

• Employers can declare their plans grandfathered

• No lifetime maximum on benefits

• Kids covered up to age 26

• Preventative care provided with no cost sharing

• No over-the-counter drugs under HSA/health FSA

2012 • Must report value of health coverage on W2

• New SBC format for easier plan comparisons

• Expanded preventative care including free contraceptives

2013 • Health FSA now limited to $2,500

• New PCORI fee of $1 per employee per year ($2 next 6 yrs)

• New Medicare taxes on those earning over $200,000

Recap of Previous Sessions Changes in 2014 & Beyond

3

Market

Changes

• All policies must be guaranteed issue with no exclusions for

pre-existing health conditions

• All group policies for 2-50 EE’s will be community rated

• New individual and small group exchanges will be available

• New fees on insurance companies will be added to premiums

Pay or Play

Mandate • NO MANDATE ON EMPLOYERS WITH LESS THAN 50 EE’S

• Larger employers must provide coverage or pay penalties

• If no coverage, penalty is $2,000 per EE except first 30

• If coverage not “affordable,” pay $3,000 for each EE w/subsidy

Coverage

Changes • Waiting periods can’t exceed 90 days

• Cost sharing limits: $2,000/$4,000 deductible for small

employers, out of pocket max is limited to HSA limits for all

• Cadillac tax in 2018 on premiums that exceed $850/mo single

Health care today

Employers

161 MILLION

11 MILLION

Individuals

47 MILLION

Uninsured

49 MILLION

Medicaid & CHIP

42 MILLION

Medicare

State Insurance Exchanges

•Exchanges will be online marketplaces for individuals and small businesses to compare and purchase coverage •Exchanges are not a new concept •But the scale is bigger Shop features of plans containing

the same base benefits Compare information regarding

cost and quality Determine eligibility for tax

credits (premium relief) Call or sit down with someone

for help Enroll in a plan

What is the Colorado Health Benefit Exchange (Connect for Health

Colorado)?

Features of the Connect for Health Colorado Marketplace

• Serving individuals, families and small employers with 2-50 employees

• A new/different way to shop for health insurance

• The sole access to new federal financial assistance, based on income

• A separate non-profit, committed to Colorado mission

• Not a replacement for the current market or brokers

• Not engaged with negotiating rates between carriers and providers

• Not part of Medicaid

• Not a new government health care system

• Not a State agency or regulatory body

• Does not pull funding from Colorado General Fund

The Connect for Health Colorado Marketplace Is Not

Why will people use the individual exchanges?

Exchange participation

Any U.S. citizen or legal immigrant is allowed to purchase coverage on the individual exchanges

Exchange subsidies

A sliding scale of subsidies to pay for coverage purchased through the exchanges

Individuals and families with incomes between 100% and 400% of the Federal Poverty Level can receive subsidies

Individual mandate

Requires everyone to have health coverage or pay a tax penalty

Guaranteed issue and rating limits

Anyone who applies for coverage must be accepted Insurers can only adjust premiums based on age,

family size, tobacco use and location

• The Marketplace is for Coloradans who currently buy insurance on their own, who are uninsured, or don’t have access to coverage through their employer

• Online shopping, with assistance, if desired, by phone and in-person

• Health plans will provide a range of coverage levels

• Customers can access new federal financial assistance to lower premiums, co-pays and deductibles

• Several ways to shop: browse health plans, estimate savings, or apply online for federal financial assistance

Individuals and Families

Individual exchanges

Consumer visits state exchange website

Consumer provides income,

citizenship, and location to exchange

Exchange shows plans available in

the consumer’s

location

Consumer chooses the

plan they want

Consumer enrolls in plan with insurance company

• The Marketplace will provide small group plan options to Colorado employers with 2-50 employees

• Employers with up to 100 employees can be served in 2016

• Employers can provide greater choice to their employees with multiple carriers/ plans

• Employees can use benefit allowance to shop for health plans

• Small business tax credits will be available (up to 50% of premium) for employers with 2-25 employees, earning on average $50,000 or less

• Other value-added services will be provided, like payment aggregation, management tools and ability to use brokers

Small Employers

Financial help to reduce the cost of premiums – Individual earning between $15,282 to

$45,960/year – Couple earning between $20,628 to $62,040/year – Family of 4 earning $31,322 to $94,200/year

• Tax credit applied up-front by IRS • Tax credit is higher for Coloradans ages 55-64

Financial help to reduce out of pocket costs (co-pays and deductibles)

• Individuals earning $15,282 to $28,725/year • Family of 4 earning $31,322 to $58,875/year

Cost Reductions for Individuals and Families

Maximum Premiums by Family Size

Federal law will require health plans sold to individuals and small businesses inside and outside of the Marketplace to provide, at a minimum, the following categories of services (essential health benefits):

• Ambulatory patient services • Emergency Services • Hospitalization • Maternity/newborn care • Mental health/substance abuse • Prescription drugs • Rehab/habilitative services and devices • Laboratory services • Preventive and wellness care/chronic disease management • Pediatric services, including oral and vision care

Comprehensive Coverage

• The intent is to make comparing and purchasing health coverage convenient and competitive

• Increase choice

• Helps consumers make an informed decision by creating transparency about options

• Only place to check eligibility and register for tax credits and other benefits

• In addition to insurance brokers, the Marketplace will offer a statewide network of trained professionals to assist consumers

Benefits for Consumers

Actuarial Value

ACTUARIAL VALUE: The percentage of total average costs for covered benefits that a plan will cover. (source: www.healthcare.gov)

Source: www.healthcare.gov and www.kff.org

Qualified Health Plans (QHP)-Metal Tiers

•To offer coverage through the exchanges, carriers must have their plans certified by the state as Qualified Health Plans (QHPs). QHPs must:

– Cover Essential Health Benefits

– Meet coverage, quality and transparency standards

– Fit into at least the Silver and Gold tiers of exchange coverage

– Cannot be more than +/- 2% of AV

• Available to those up to age 30 or to those who are exempt from the mandate to purchase coverage

Catastrophic

• Pays for 60% of the costs of the plan Bronze

• Pays for 70% of the costs of the plan Silver

• Pays for 80% of the costs of the plan Gold

• Pays for 90% of the costs of the plan Platinum

• Varies from state to state- carriers in Colorado must file rates and plan designs by the end of April

• We should know by May 2nd which carriers will be participating in both Marketplaces

• By the June session we should have a better idea of how the plans stack up inside and outside the exchange

Deadlines

• The Individual Marketplace opens for business on October 1, 2013 for January 1, 2014 effective dates – The first open enrollment period goes through March

with the latest effective date of 4/1/14. Future open enrollment period will be 10/15-12/7 with an effective date of 1/1

• All plans are guarantee issue • Individuals must enroll during the “open enrollment”

period or will be subject to penalties • Cannot obtain coverage outside of open enrollment

without a “qualifying event” • Qualified individuals can only obtain subsidies through

the Individual Marketplace

Individual Enrollment

Penalties for individuals

2014

• $95 per adult and $47.50 per child (up to $285 for a family) or 1% of taxable income, whichever is greater

2015 • $325 per adult and $162.50 per child (up to $975 for a

family) or 2% of taxable income, whichever is greater

2016 • $695 or per adult and $347.50 per child (up to $2,085 for

a family) or 2.5% of taxable income, whichever is greater

2017 • And beyond – annual adjustments

• Small groups can enroll in the SHOP any month (no specific open enrollment period)

• Employers that decide to drop their group plans do not need to do so until their renewal – We believe this creates a qualifying event for those

employees to obtain coverage outside of open enrollment

• Small groups are not subject to penalties for not offering health coverage and do not have to comply with the rules of offering coverage – Can currently discriminate (contributions, management

carve outs by class, salary, etc), but this is expected to change for all non-grandfathered plans, but likely won’t implement until group renewal following ruling

SHOP (Small Business Health Options Program) Marketplace

• Pre-tax small group plans will be available in and out of the Marketplace

• If employer decides to drop coverage and gross up salaries to encourage employees to obtain coverage through the Marketplace, employer must pay payroll tax on gross up and employee pays income tax and loses tax advantage on premium contribution

Tax Treatment of Group vs Individual Coverage

A Summary of Your Choices

Advantages: Advantages: Advantages:

EE's may get subsidies Choose multiple carriers No new process

Simplifies compliance Aggregate Billing May be more plan choice

No cost to employer Small Biz Tax Credit Broker can assist group & EE's

Broker can help EE's enroll Broker can assist group & EE's

IndividualExchange

SHOPExchange

Small GroupMarket

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Thank You!

Questions?

Eden Ripingill (303) 306-2561 Eden.M.Ripingill@kp.org

Kristen Russell (303) 369-3200 kristen@fallriverbenefits.com