Implementation of the

Patient Protection

and Affordable Care Act (PPACA)Presented By

Marlin McKelvy

Consumer Directed Benefit

Solutions

Health Insurance Health Insurance MarketplacesMarketplaces

How Health Insurance, Getting It and Paying for It will Change on January 1, 2014

An Overview of Health Care An Overview of Health Care ReformReform

The Affordable Care Act The Affordable Care Act of 2010of 2010

• Health Insurance MarketplacesHealth Insurance Marketplaces - - the PPACA the PPACA law requires the creation of health insurance law requires the creation of health insurance marketplaces for each state. If a state does not marketplaces for each state. If a state does not create its own marketplace then the Federal create its own marketplace then the Federal Government will implement one for it.Government will implement one for it.

• For this reason, For this reason, marketplace management will marketplace management will vary from state to statevary from state to state. Tennessee, Mississippi . Tennessee, Mississippi and 32 other states will have totally or largely and 32 other states will have totally or largely Federally managed marketplaces while Federally managed marketplaces while Arkansas will work in a “partnership” Arkansas will work in a “partnership” arrangement with the Federal Government.arrangement with the Federal Government.

Welcome to American Welcome to American Health Insurance’s New Health Insurance’s New

World OrderWorld Order• On January 1, 2014, Phase 2 of On January 1, 2014, Phase 2 of

implementing PPACA goes into effect. implementing PPACA goes into effect. PPACA will significantly change health PPACA will significantly change health insurance benefits, expand access to insurance benefits, expand access to health insurance, impact the cost and health insurance, impact the cost and practice of health care, and raise practice of health care, and raise insurance premiums for the young & insurance premiums for the young & middle aged.middle aged.

• Open enrollment begins October 1, 2013 Open enrollment begins October 1, 2013 and ends on March 31, 2014. and ends on March 31, 2014. Those not Those not enrolled by then must wait until enrolled by then must wait until January 1, 2015 to get coverage.January 1, 2015 to get coverage.

Previews of Coming Previews of Coming AttractionsAttractions

• Experience ratingExperience rating• Age & Gender ratingAge & Gender rating• Industry type ratingIndustry type rating• Pre-Existing Pre-Existing

Condition Exclusions Condition Exclusions or Ridersor Riders

• Being declined Being declined coveragecoverage

• A wide selection of A wide selection of benefit plan designsbenefit plan designs

• Wide range of price Wide range of price pointspoints

• State or Federal Health State or Federal Health Insurance MarketplacesInsurance Marketplaces

• Community RatingCommunity Rating• Guaranteed IssueGuaranteed Issue• Essential Health Essential Health

BenefitsBenefits• Small Business Tax Small Business Tax

CreditsCredits• Premium Subsidies up Premium Subsidies up

to 400% of Federal to 400% of Federal Poverty LevelPoverty Level

• Limited choice in Limited choice in benefit plan designs benefit plan designs (Platinum, Gold, Silver (Platinum, Gold, Silver & Bronze plan designs)& Bronze plan designs)

Out With The Old In With The New

Who Will Be Impacted By Who Will Be Impacted By PPACA?PPACA?

• Persons under 100% or 133% of Federal Persons under 100% or 133% of Federal Poverty Level (depending upon state) -Poverty Level (depending upon state) -MedicaidMedicaid

• Uninsurable Individuals (pre-existing Uninsurable Individuals (pre-existing conditions)conditions)

• Persons with Individual Insurance (22+ Persons with Individual Insurance (22+ million)million)

• Small businesses with less than 50 Small businesses with less than 50 employeesemployees

• Businesses with 50+ FTE Employees Businesses with 50+ FTE Employees ((NOTE - employer mandate delayed NOTE - employer mandate delayed until 1/1/2015until 1/1/2015))

• Essentially, the vast majority of AmericansEssentially, the vast majority of Americans

We’re On Our Way We’re On Our Way To The Promised To The Promised Land. Aren’t We?Land. Aren’t We?

Maybe not as these

research results

released by the House

Committee on

Energy and

Commerce in

March of 2013

indicate.

What are the Purposes and What are the Purposes and Functions of a Health Functions of a Health

Insurance Marketplace?Insurance Marketplace?• To provide an online health insurance To provide an online health insurance

supermarketsupermarket• To offer consumers a choice of health plans To offer consumers a choice of health plans

that all cover certain “Minimum Essential that all cover certain “Minimum Essential Benefits”Benefits”

• To focus competition on price & qualityTo focus competition on price & quality• To provide objective information to To provide objective information to

consumersconsumers• To create an administrative mechanism for To create an administrative mechanism for

enrollment and premium paymentenrollment and premium payment• To speed the movement towards portable To speed the movement towards portable

coveragecoverage

Behold – The Health Behold – The Health Marketplace!Marketplace!

What Will My Insurance What Will My Insurance Carrier Options Be In Carrier Options Be In

Tennessee’s Exchange?Tennessee’s Exchange?• Blue Cross/Blue ShieldBlue Cross/Blue Shield – Yes, Individual & Small – Yes, Individual & Small

GroupGroup• CoventryCoventry – Yes, Individual, – Yes, Individual, NO - on small groupNO - on small group • AETNAAETNA – No – No • HumanaHumana – Yes, Individual, – Yes, Individual, NO - on small groupNO - on small group• CIGNACIGNA – Yes, individual – Yes, individual, , NO - on small groupNO - on small group• Tennessee Health Co-Op – Tennessee Health Co-Op – Yes, Individual & Small Yes, Individual & Small

Group (concept product created under health reform Group (concept product created under health reform law)law)

• United HealthCareUnited HealthCare – No – No• Assurant HealthAssurant Health – No – No• StarMark/TrustMarkStarMark/TrustMark – No – No• IHCIHC – No – No

Your Choices and Where Your Choices and Where You LiveYou Live

Tennessee has been divided into 8 marketplace service areas. Insurance carriers can choose

which of these service areas they will sell their Marketplace based plans in. So, in some areas of Tennessee, on one side of the county line you may

have multiple marketplace carrier choices but someone on the other side of the county line may have only Blue Cross/Blue Shield for their choice.

Meet The Metallic PlansMeet The Metallic PlansWhile certain variations will be allowed, essentially all fully insured health insurance plans will be built around one of four benefit levels each with a metal name associated with it. These plans will be;PLATINUM – covers approximately 88% to 92% of costs

GOLD – covers approximately 78% to 82% of costs

SILVER – covers approximately 68% to 72% of costs

BRONZE – covers approximately 58% to 62% of costs

CATASTROPHIC - lower cost, high deductible plan available only to those age 30 and under. Unclear whether this option will be offered in Tennessee at this time.

Meet a Bronze PlanMeet a Bronze Plan

• Deductible = $3500Deductible = $3500• Out of Pocket Max = Out of Pocket Max =

$7000$7000• Co-Insurance = 100% Co-Insurance = 100%

in-network & 50% in-network & 50% non-networknon-network

• Office Visits & Office Visits & Prescription Drugs = Prescription Drugs = covered after $3500 covered after $3500 deductible metdeductible met

• Preventive care Preventive care covered at 100%covered at 100%

• 0 to 20 yrs = $107.33*0 to 20 yrs = $107.33*• 25 year old = $169.70*25 year old = $169.70*• 30 year old = $191.84*30 year old = $191.84*• 35 year old = $206.54*35 year old = $206.54*• 40 year old = $216.01*40 year old = $216.01*• 45 year old = $244.07*45 year old = $244.07*• 50 year old = $301.87*50 year old = $301.87*

Monthly Individual Rates by Age

* = add 15% if tobacco user

Meet a Silver PlanMeet a Silver Plan

• Deductible = $5500Deductible = $5500• Out of Pocket Max = Out of Pocket Max =

$6350$6350• Co-Insurance = 80% in-Co-Insurance = 80% in-

network & 50% non-network & 50% non-networknetwork

• Office Visits - $10 or Office Visits - $10 or $40$40

• Rx = $3/$50/$100/$200Rx = $3/$50/$100/$200• Preventive Care = Preventive Care =

100%100%• USES NETWORK “E” A USES NETWORK “E” A

SMALLER NETWORKSMALLER NETWORK

• 0 to 20 yrs = $118.10*0 to 20 yrs = $118.10*• 25 year old = $186.72*25 year old = $186.72*• 30 year old = $211.08*30 year old = $211.08*• 35 year old = $227.27*35 year old = $227.27*• 40 year old = $237.68*40 year old = $237.68*• 45 year old = $268.55*45 year old = $268.55*• 50 year old = $332.16*50 year old = $332.16*

Monthly Individual Rates by Age

* = add 15% if tobacco user

The Health Insurance The Health Insurance World After January 1, 2014World After January 1, 2014• There will be 2 health insurance worlds. One in There will be 2 health insurance worlds. One in

the marketplaces and one outside of them. This the marketplaces and one outside of them. This will require close inspection by the consumer.will require close inspection by the consumer.

• All fully insured health insurance issued after All fully insured health insurance issued after 1/1/2014 can not have pre-existing condition 1/1/2014 can not have pre-existing condition exclusions and must cover all health issues exclusions and must cover all health issues immediately.immediately.

• The main advantage of the government The main advantage of the government marketplaces for individuals will be premium marketplaces for individuals will be premium subsidies for those under 400% of the Federal subsidies for those under 400% of the Federal Poverty LevelPoverty Level

The Health Insurance The Health Insurance World After January 1, 2014World After January 1, 2014• Where are the Gold & Platinum plans? Where are the Gold & Platinum plans?

Some have been filed but rates will be Some have been filed but rates will be much higher. As subsidies are based on much higher. As subsidies are based on the 2the 2ndnd least expensive Silver plan’s rates least expensive Silver plan’s rates the carriers may offer mostly Bronze, Silver the carriers may offer mostly Bronze, Silver and possibly a Gold plan in the and possibly a Gold plan in the marketplaces to appeal to the subsidized marketplaces to appeal to the subsidized buyers.buyers.

• Individuals who qualify for little or no Individuals who qualify for little or no subsidy will often find more choices outside subsidy will often find more choices outside the government marketplaces.the government marketplaces.

• EXPECT LESS CHOICE IN PROVIDERSEXPECT LESS CHOICE IN PROVIDERS

The New Intersection of The New Intersection of Insurance, Accounting and Insurance, Accounting and

the Tax Manthe Tax ManNever before has an American’s tax status, Never before has an American’s tax status,

income level and health insurance status been income level and health insurance status been so intertwined;so intertwined;

1.1. Business Tax PenaltiesBusiness Tax Penalties

2.2. Business Tax CreditsBusiness Tax Credits

3.3. Individual Tax Penalties (mandate)Individual Tax Penalties (mandate)

4.4. Individual Advanced Premium Tax CreditsIndividual Advanced Premium Tax Credits

These are just a few areas where businesses and These are just a few areas where businesses and individuals will be looking for information and individuals will be looking for information and practical guidance in for 2014 and beyond.practical guidance in for 2014 and beyond.

PPACA Tax Penalties for PPACA Tax Penalties for IndividualsIndividuals

• Smokers can be penalized 50% more on their Smokers can be penalized 50% more on their insuranceinsurance (Tennessee opted for a 15% penalty) (Tennessee opted for a 15% penalty)

• The Individual MandateThe Individual Mandate – – PPACA mandates that PPACA mandates that an individual buy health insurance.an individual buy health insurance.

• In 2014 the penalty for not having health In 2014 the penalty for not having health insurance will be insurance will be $95 per adult and $47.50 per $95 per adult and $47.50 per childchild up to a maximum of $285 or 1% of family up to a maximum of $285 or 1% of family income (whichever is greater)income (whichever is greater)

• In 2015 the penalty for not having health In 2015 the penalty for not having health insurance will be insurance will be $325 per adult and $162.50$325 per adult and $162.50 per child up to a maximum of $975 or 2% of per child up to a maximum of $975 or 2% of family income (whichever is greater)family income (whichever is greater)

• In 2016 and beyond the penalty for not having In 2016 and beyond the penalty for not having health insurance will be health insurance will be $695 per adult and $695 per adult and $347.50 per child$347.50 per child up to a maximum of $2085 or up to a maximum of $2085 or 2.5% of family income (whichever is greater)2.5% of family income (whichever is greater)

• The catch is, you have to be paying income The catch is, you have to be paying income taxes for the IRS to withhold this penalty!taxes for the IRS to withhold this penalty!

Yes, People Are ConfusedYes, People Are Confused

Marketplaces – Ready?Marketplaces – Ready?

Marketplaces – Set?Marketplaces – Set?

Marketplaces – Go?Marketplaces – Go?

Public Marketplaces Will Have Public Marketplaces Will Have The Advantage of Being The Advantage of Being

Administered by the Federal or Administered by the Federal or State Governments!State Governments!

Must I Use A Government Must I Use A Government Marketplace For Health Marketplace For Health

Insurance?Insurance?• NONO! The traditional marketplace for both ! The traditional marketplace for both

small group and individual insurance will small group and individual insurance will continue.continue.

• At this time, the main advantages the At this time, the main advantages the government marketplaces offer are the government marketplaces offer are the advanced premium tax credit for advanced premium tax credit for individuals and the small business tax individuals and the small business tax credit.credit.

• Businesses and organizations are already Businesses and organizations are already moving to private health insurance moving to private health insurance marketplaces tied into the government marketplaces tied into the government marketplace to provide one stop shopping marketplace to provide one stop shopping for employees of all economic strata.for employees of all economic strata.

What Will PPACA’s Impact What Will PPACA’s Impact Be On Small Business (less Be On Small Business (less

the 50 EE’s)?the 50 EE’s)?• In Tennessee an estimated In Tennessee an estimated 15% to 50% 15% to 50%

rate increaserate increase due to PPACA requirements due to PPACA requirements discussed.discussed.

• The maximum employee deductible The maximum employee deductible allowed will be $2000allowed will be $2000. Many small . Many small businesses have passed this and if they businesses have passed this and if they keep coverage they will have to lower keep coverage they will have to lower deductibles & pay even higher premiums.deductibles & pay even higher premiums.

• There is no tax penalty to small There is no tax penalty to small businesses who do not offer health businesses who do not offer health insurance. What choice will many insurance. What choice will many make?make?

Take Aways for Individuals Take Aways for Individuals and Small Businessesand Small Businesses

• Health insurance is going up a lot in 2014Health insurance is going up a lot in 2014• Young to middle aged to be especially hard hitYoung to middle aged to be especially hard hit• 50 to 64 year olds may see rates level or decline50 to 64 year olds may see rates level or decline• Advanced premium tax subsidies may make Advanced premium tax subsidies may make

government marketplace individual health government marketplace individual health insurance attractive for some income levels, insurance attractive for some income levels, group insurance may no longer be the answer group insurance may no longer be the answer for companies with low wage workforcesfor companies with low wage workforces

• Young, healthy groups may be get better rates Young, healthy groups may be get better rates and benefits outside the government and benefits outside the government marketplacesmarketplaces

What’s A Small Business What’s A Small Business To Do?To Do?

• Have an audit of your plan conducted to determine Have an audit of your plan conducted to determine which provisions apply to your companywhich provisions apply to your company

• Go self-funded to avoid much of PPACAGo self-funded to avoid much of PPACA• Go with a carrier offering a longer contract periodGo with a carrier offering a longer contract period• Request an off-anniversary renewal from your Request an off-anniversary renewal from your

carriercarrier• Implement your own, or join, a private health Implement your own, or join, a private health

insurance marketplace (defined contribution plan)insurance marketplace (defined contribution plan)• Terminate your group plan and let employees buy Terminate your group plan and let employees buy

their own individual coveragetheir own individual coverage• Purchase group coverage under PPACA guidelines Purchase group coverage under PPACA guidelines

either on or off the government marketplaces.either on or off the government marketplaces.

Consumer Directed Benefit SolutionsConsumer Directed Benefit SolutionsSo, get prepared, we’re in for an interesting

ride in 2014.