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Health Care Reform

Brian Wright, Brian Durkin, Ken Kunsman


Why Health Care Reform?

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SOURCE: Centers for Medicare and Medicaid Services, Office of the Actuary, National

Health Statistics Group; and U.S. Department of Commerce, Bureau of Economic

Analysis and U.S. Bureau of the Census.

National Health Expenditures as % of GDP

% of GDP

COST COVERAGE

47 Millionwithout coverage


US Health Care Reform: Significant Changes

• Signed into law on March 23, 2010

Patient Protection & Affordable Care Act (PPACA)

• Signed into law on March 30, 2010

Health Care & Education

Reconciliation Act (H.R.

4872)

2,900 pages will be

followed by thousands of

pages of regulations,

and expanding

requirements

“Affordability and Accessibility” 3/1/2009 President Obama

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Changes to the Health Care Industry

Exchanges

Federal Subsidies

Insurance Reform

Employer Responsibility

Individual Mandate

Delivery Reform


Employer Health Plan Mandates

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Prohibit lifetime and annual limits

Require coverage of

adult children

Ban pre-existing

condition exclusions

Prohibit rescissions of

coverage

Mandate automatic enrollment

with opt-out

Limit waiting periods before

eligibility


Grandfathered Plans: What Changes Are OK?

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Compared to their policies on March 23, grandfathered plans cannot:

Significantly cut or reduce benefits (e.g.,

no longer cover diabetes)

Raise co-insurance

percentages by any amount

Raise co-payments greater than

medical inflation plus 15% —cumulative!

Raise deductibles greater than

medical inflation plus 15% —cumulative!

Lower employer

contributions by more than 5%

(e.g., increase workers’ share of premium from 15% to 25%)

(e.g., plan can raise deductible 23%-25% between 2010 and 2012)

(e.g., increase co-payment from $30 to $50 over the next

two years)


Timeline

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2011 2013 2014 2018


Timeline

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2011 2013 2014 2018

2011• Medical Loss Ratio Rebate Program begins

• Dependents eligible until age 26

• Lifetime limits & pre-existing conditions prohibited

• Businesses with fewer than 25 employees may be eligible for tax credits covering up to 35% of their health care premiums on their 2010 return

• Additional documentation requirements for OTC reimbursement in FSA/HSA/HRA accounts

• Health plan employer W-2 reporting requirements


Timeline

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2011 2013 2014 2018

2013• Standardized insurance company paperwork

• Contributions to FSA limited to $2,500


Timeline

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2011 2013 2014 2018

2014• States create health insurance

exchanges

• Penalties for employers who do not offer health insurance coverage

• Penalties for citizens who do not have acceptable coverage

• Income based tax credits for consumers


Timeline

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2011 2013 2014 2018

2018• Excise tax on “Cadillac” plans


The Impact of Health Care Reform

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GovernmentRegulation and taxation

• Create exchanges that meet Federal Law

• Administer exchanges

• Operate within budget guidelines

• Audit to compliance requirements

• Lower cost of health care (healthy citizens)

Insurance IndustryCompetition based on volume and innovation

• Revenue: individual member retention

• Control administrative costs: efficiency (claims, premium billing, taxes)

• Medical loss ratio

• Compliance

IndividualsIncreased responsibility with the power of knowledge

• Individual mandates

• Education

• Understanding accessibility

• Cost vs. lifestyle

EmployersRefine and redefine commitments with narrower focus

• Understand costs (compliance, taxes, benefit plans)

• Understand plan design (penalties)

• Lower costs (healthy employees)


Survey Says…

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Where do you stand?


Employer Views on PPACA—May 2010

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Goal is absolutely essential/high priority to organization

Importance and Impact of Health Reform Goals

Reforms are expected to have a positive impact on goal

%


Employer Views on PPACA—May 2010

14

Likely Actions If Reform Increases Organization’s Health Care Benefit Costs (multiple responses allowed)

%


Your Involvement in Health Care

15

Building a healthy workplace

Paying for health care benefits

Delivering health care benefits

Encouraging health

2010

2017

High

Low High

Low


What Steps Can You Take to Minimize Cost of Reform?

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Quick Hits Mid-Term

On average, an employer saves $3000 dollars annually for every ineligible dependent that is removed. Ceridian offers this service

on a contingency fee basis. Audits should be performed every 2 years

Dependent Eligibility Audits:

Significant increase in Gov’tRegs will create additional administrative burden, increasing costs and compliance risks. Outsourcing to an established provider will mitigate risk of non-compliance and reduce administrative costs

Consider Outsourcing HR Payroll, Tax and Benefit

Administration

Longer Term

Evaluate your Healthcare Benefit Options

Exit: Eliminate health coverage for some or all groups. Pay $2000 penalty per employee plus additional wagesStatus Quo: Continue to sponsor and subsidize employer group health planDefined Contribution:Shift subsidy to a defined contribution and mirror state exchange plan designs (bronze, silver, gold).


Employee Education: Fight Confusion with Communication

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Condition/Plan Notify

Assess Org Readiness Important Notifications

Educate

Build Education Mindset

Much misinformation, misunderstanding and opposition to PPACA; Let employees know healthcare reform is on your radar.

Prepare for open enrollment and to implement requirements that take effect in your next plan year; Open enrollment is a communications opportunity!

Notify employee-parents of under age-19 children whose pre-existing conditions were previously excluded from coverage that PEC now eligible.

Notify employee-parents of under age-26 adult children previously ineligible that they may now be eligible for coverage—and extend the tax exclusion for health benefits!

Notify those who were subject to previous lifetime limits that they may now be eligible to enroll in coverage—see Interim Final Rule June 22, 2010.

Caution: Healthcare reform is a “hot” issue (political and polarizing, stay objective)

Urgent need for employee education; what do new laws mean to me and my family and our health care coverage? Change is to be expected.

Be proactive. Be honest.Be as specific as possible.


Resources

www.ceridian.com/healthcarereform

www.ceridian.com/connection

www.healthcare.gov

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http://www.ceridian.com/connection

http://www.healthcare.gov/index.html


About Ceridian

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Health & Productivity Solutions

EAP & Work-Life Services

Health Management Programs

Productivity Management

Benefits Administration

Health & Welfare

Dependent Verification Services

Reimbursement Services (FSA/HSA/HRA)

Benefits Continuation Services (COBRA/HIPAA)

Talent Acquisition & Management

Human Capital Management

Rewards & Recognition

Employment Screening

Recruiting Automation

Introducing a whole new concept for

business: Thinking inside

the box.

HR/Payroll Management

HR, Payroll and Self-Service

Time & Labor Management

Tax Services & Payment Solutions

HR Compliance

From payment solutions to HR, benefits and health and productivity services, you can count on Ceridian KnowHow to take the guesswork out of choosing proven solutions that assure your company will thrive, and enable you to make smart decisions for your bottom line.

We help organizations control costs, save time, optimize their workforce and mitigate risk.


Summary

Health care reform affects your benefit plans. Ceridian is taking steps to ensure our clients have the information and support they need to prepare for the changes ahead.

If you have any further questions…

Brian Durkin, District Vice President

212.887.1049

[email protected]

www.ceridian.com/healthcarereform

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mailto:[email protected]

http://www.ceridian.com/healthcarereform

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