health care reform - under 50 employees

Small Employer Breakout Group

BancorpSouth Insurance Services/Wright & Percy

Vice President, Client Compliance

Andy Impastato

Blue Cross Blue ShieldHealthcare Economist Exchange Coordinator

Mike Bertaut

Postlethwaite & Netterville, APAC

Associate Tax Director

Brandon Lagarde

Taylor PorterAttorney, Health

Care Practice Team

Cindy Amedee

February 26, 2013

Cindy M. Amedee

Legal OverviewLegal Overview

0101 Office: 225.381.0279Email: [email protected]

Office: 225.381.0279Email: [email protected]

Overview of the Law

• The Acto More than 1,000 pages

• The Supreme Court Ruling:o A close call but PPACA is constitutional

0202 Office: 225.381.0279Email: [email protected]


Overview of the Law

• Far reaching impact

• More than 10,000 pages of rules and regulations

• Issued by numerous federal agencies



Overview of the Rules & Regs

• May effect employers

• 2013 deadlineso Mainly financial

0303



Overview of the Rules & Regs

• 2014 deadlineso Individual & employer coverage mandateo Health insurance exchangeso Medicaid expansion?

0404

Thank youThank youCindy Amedee

Attorney, Taylor PorterHealth Care Practice Team

[email protected]: 225.381.0279

February 26, 2013

Brandon Lagarde

Healthcare Reform UpdateHealthcare Reform Update

• Businesses organized in multiple forms considered as a single employer

• Controlled groupo Parent-subsidiaryo Brother-sistero Combination

• Affiliated Service Group

0101

Overview of Ruling: Legal Perspective

Office: 225-922-4600 [email protected]: 225-922-4600 [email protected]

0202

Small Employer Health Insurance Tax Credit

• Allows eligible small employers to claim a 35% credit (25% in the case of tax-exempt employers) for premiums paid toward health coverage for its employees in tax years beginning 2010 through 2013. These percents increase to 50% and 35%, respectively, in 2014.

• An eligible small employer is an employer that has no more than 25 full-time employees and the average annual compensation of these employees is not greater than $50,000.

• The credit is reduced by 6.6667% for each full-time employee in excess of 10 employees and by 4% for each $1,000 that average annual compensation paid to the employee exceeds $25,000.

• After 2013, employer must participate in an insurance exchange to be eligible for credit.

• Must pay at least 50% of premium for all employees and the percentage must be uniform among all employees Office: 225-922-4600

[email protected]: 225-922-4600 [email protected]

Small Employer Health Insurance Tax Credit


0303

Average WageNumber of

FTEs$25,000 and less

$30,000 $35,000 $40,000 $45,000 $50,000

10 and fewer 35% 28% 21% 14% 7% 0%11 33% 26% 19% 12% 5% 0%12 30% 23% 16% 9% 2% 0%13 28% 21% 14% 7% 0% 0%14 26% 19% 12% 5% 0% 0%15 23% 16% 9% 2% 0% 0%16 21% 14% 7% 0% 0% 0%17 19% 12% 5% 0% 0% 0%18 16% 9% 2% 0% 0% 0%19 14% 7% 0% 0% 0% 0%20 12% 5% 0% 0% 0% 0%21 9% 2% 0% 0% 0% 0%22 7% 0% 0% 0% 0% 0%23 5% 0% 0% 0% 0% 0%24 2% 0% 0% 0% 0% 0%25 0% 0% 0% 0% 0% 0%

Expansion of Coverage – Individual Mandate

• Individual Mandateo With limited exceptions, ALL individuals must maintain “minimum

essential coverage” or pay a penalty. Government provided coverage Employer sponsored coverage Exchange coverage.

• Exemption from mandateo if required contribution to purchase insurance exceeds 8% of

household income.o Religious objectiono American Indianso Incarcerated Individualso Those with incomes below the tax filing threshold


0404


• Penalty amount is the lesser of a flat dollar amount of percentage of income.o 2014: $95 or 1% of household incomeo 2015: $325 or 2% of household incomeo 2016 and later: $695 or 2.5% of household income


0505


• Individual Mandateo Duty to purchase insurance is mitigated by premium

credits and cost-sharing subsidies available to individuals with income between 100%-400% of federal poverty limit.

o Premium assistance is not available if individual has access to employer provided coverage UNLESS: Too Skinny: Employer coverage provides less than

60% actuarial value. Too Expensive: Required contribution under

employer plan for self-only coverage exceeds 9.5% of household income.


0606



Poor Middle Income Upper Income

Federal Assistance

Medicaid Subsidies None

Premiums limits 2% of income 3% to 9.5% No limit

Cost sharing limit

94% 70 – 93% No limit

Eligibility < 133% FPL 133 – 400% FPL > 400 FPL

Family of 1 < 14.4 14.4 – 43.3 > 43.3

Family of 2 < 19.4 19.4 – 58.3 > 58.3

Family of 3 < 24.4 24.4 – 73.2 > 73.2

Family of 4 < 23.9 23.9 – 88.2 > 88.2

Family of 5 < 34.3 34.3 – 103.2 >103.2

0707

Expansion of Medicare Taxes (2013)

• Employee portion of Medicare tax increased by 0.9%• Applies to wages or self-employment income in excess of $200,000 ($250,000 in

the case of a joint return, $125,000 in the case of a married taxpayer filing separately).

• The additional Medicare tax increases the employee portion to 2.35% or a total Medicare rate of 3.8%.

• Employer has the obligation to withhold the additional tax on wages (without regard to spouse’s wages) if its employee earns more than $200,000; Employee is liable to the extent not withheld by employer.

• Self-employed are not allowed a deduction for ½ of the additional 0.9% tax.


0808

Expansion of Medicare Taxes (2013)

• Individuals, estates and trusts required to pay 3.8% tax on net investment income such as interest, dividends, annuities, royalties, rents, capital gains and income from passive activities.

• Applies to the income in excess of $250,000 for joint returns, $125,000 for married filing separate and $200,000 for all others


0909

Thank youThank youBrandon Lagarde


[email protected]

Office: 225-922-4600

February 26, 2013

Andy Impastato

Healthcare Reform UpdateHealthcare Reform Update

• Grandfathered Plans

• Carve Out Plans

• Exchange Notice

• Essential Health Benefits

• Questions & Answers

0101

Agenda

• Impermissible changeso Elimination of benefitso Any increase in percentage cost-sharingo Increase in fixed-amount cost-sharing

15% above medical inflation is allowedo Decrease in employer contribution

Five percentage pointso Certain changes to annual limits

• Disclosure requirements

• Recordkeeping requirements

Grandfathered (GF) Plans

0202

• Nondiscrimination in favor of highly compensated individuals (HCI)o Applies to all self-insured planso Applies only to non-GF fully insured plans

Delayed effective date*o Definition of HCIo Eligibility testo Benefits testo Penalties for noncompliance

• Other laws

Carve Out Plans

0303

• Applies to employers subject to the FLSA• Delayed effective date

o Originally effective for March 1, 2013

• Content requirementso Existence, services and contact information of Exchangeo Eligibility of premium tax credit or cost-sharing reductiono Consequences of dropping employer coverage

• Model Notice?

Exchange Notice

0404

• Applies to non-GF, small group plans

• Effective for plan years beginning in 2014

• Requirementso Provide essential health benefitso Limit cost-sharingo Provide either bronze, silver, gold or platinum coverage (or

catastrophic plan for individuals)

Essential Health Benefits

0505

• Essential health benefitso Categories

Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance abuse Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventive and wellness services Pediatric services (includes oral and vision care)


0606

• Cost-sharing limitso Out-of pocket limits

Estimated to be $6,250 / $12,500 Includes deductibles, co-payments and coinsurance

• Deductible limits Will be $2,000 / $4,000 May be increased by maximum reimbursement available to participant

under FSA


0707

• Coverage (metallic) levelso Levels based on actuarial valueso Standard datao Actuarial value calculator tool

• Benchmark plano Designated by individual Stateso Based on largest products sold in State or by HHS in the

absence of State action


0808

Thank youThank youAndy Impastato


[email protected]

Office: (225) 336-3238

February 26, 2013

Mike Bertaut

Time to Implement!Moving Forward with ReformTime to Implement!Moving Forward with Reform

0101

All information in this presentation INCLUDING THE OPINIONS OF THE PRESENTER are solely for illustrative purposes. The information is based on certain assumptions, interpretations, and calculations that are not necessarily accurate with regard to provisions of PPACA, HCERA, HIPAA, COBRA, ERISA, and other rules, regulations, guidance and all other documents issued by relevant state and federal agencies with regard to these laws and any other relevant laws. The information provided should not be considered as legal, financial, accounting, planning, or tax advice. You should consult your attorneys, accountants, and other employees or experts of this type of this type of advice based on their own interpretations, calculations, and determinations of applicable laws, rules, regulations, guidance, and any other documents and information that they determine may be relevant. The authors make no guarantees or other representations as to the accuracy or completeness of the data in this presentation.

BCBSLA expressly disclaims any liability for information obtained from use of this presentation by any BCBSLA employee or by any other person. No warranty of any kind is given with regard to the contents of the presentation.

Disclaimer

Office: 225-297-2719 [email protected]


0202

Grandfathered Status

• Benchmarked for all groups on 3/23/2010

• Requires benefit offer stay essentially the same going forwardo Must not change coverage or co-insurance shares, very small

adjustments to cost sharing and premium shares to employee allowed.

• Allows Group to forego several new types of mandatory coverage, avoid new costs, and bypass compliance with some expensive new regulations

• Grandfathered pools of groups, in general, have lower healthcare costs and premiums



0303

Benefits of Grandfathering

• No added cost for new first dollar Women’s coverage.

• No added cost for new first dollar USPTF schedule B testing and immunizations.

• Continued rating segregation from non-grandfathered groups and new richer plans.

• No higher ER reimbursements required.

• In most cases group can keep existing benefit combinations when new rules take effect in 2014.

• No requirements to cover experimental treatments.

***Does not protect from the ALE requirements***



0404

New Product Requirements for 2014 and Beyond

• All individual and small group (2-50) products MUST meet Actuarial standard Tests and cover all essential health benefits.

• Deductibles over $2,000 generally prohibited

• Max out of pocket costs limited to H.S.A. levels.

• All essential health benefits must be covered.

• GF groups can keep existing plans, otherwise:

• Actuarial Value Standards:o Bronze = 58-62%o Silver = 68-72%o Gold = 78-82%o Platinum = 88-92%

Groupcare PPO is minimum coverage.

70% of existing products will go away.



0505

Rate Compression Looms

• PPACA puts very strict rules on the Underwriting of Individual and Small Group Products

• Since current SGUR in Louisiana allow for 50% spread of rates above and below the mean (new selling rate) in the 2-35(50) pool, taking away rating based on medical claims and only allowing a 3:1 age spread will severely compress rates in this pool

• We have identified thousands of groups who will be required to absorb rate increases in excess of 40%.

• Act requires all QHP’s to be underwritten based on three criteria ONLY:o Age Banded no more than 3:1o Geographic Allowance 1.5:1o Tobacco Use 1.5:1o (Family status will affect rates per household)



• PPACA requires insurance carriers and fully insured groups to make “contributions” to support subsidies on the Exchange.

• All carriers with fully insured premiums are assessed as part of the “Bucket Tax” on health insurance carriers (technically a “fee”)

• Note that the effect of this new “fee” is enhanced in rates because it is not a deductible business expense.

0606

The Carrier Tax

TAX ($B)

BCBSLA ($M)

BASE RATE TAX

INCREASE

2014 $8.0 $36.3 2.5%

2015 $11.3 $51.2 3.5%

2016 $11.3 $55.8 3.5%

2017 $13.9 $68.6 4.3%

2018 $14.3 $71.7 4.5%

2019$14.3+

Premium Inflation

Plus Premium Inflation

Plus Premium Inflation



0707

Could you be an ALE?FULL TIME PT HOURS /120 FTE TOTAL FTE AVERAGE

Jan 2013 22 3300 27.5 49.5

Feb 2013 23 2800 23.3 46.3

Mar 2013 23 3250 27.1 50.1

Apr 2013 23 3450 28.8 51.8

May 2013 24 3105 25.9 49.9

June 2013 22 3271 27.3 49.3

July 2013 23 3655 30.5 53.5

Aug 2013 24 3705 30.9 54.9

Sept 2013 25 3000 25.0 50.0

Oct 2013 26 3800 31.7 57.7

Nov 2013 27 3950 32.9 59.9

Dec 2013 30 4250 35.4 65.4 53



Thank youThank youMichael R. Bertaut

Healthcare Economist

LINKED-IN Recommendations WELCOME!!!

[email protected]

Office: 225-297-2719Cell: 225-573-2092

BancorpSouth Insurance Services/Wright & Percy


Andy Impastato

Small Employer Breakout Group

Blue Cross Blue ShieldHealthcare Economist Exchange Coordinator

Mike Bertaut

Taylor PorterAttorney, Health

Care Practice Team

Cindy Amedee

Postlethwaite & Netterville, APAC


Brandon Lagarde

health care reform - under 50 employees

Business

health coverage

employerprovided coverage

employer plan

constitutional01 office

o premium assistance

additional tax

tax years

additional medicare