Health Care Reform

Providers and their employees

From an Insurer’s Perspective

ARKANSAS

BLUE CROSS and BLUE SHIELD An Independent Licensee of the Blue Cross and Blue Shield Association

What Small Employers Need to Know

Important Dates

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

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What Small Employers Need to Know

Regulations changing in small group market

   New rating rules New benefits and coverage requirements Medicaid expansion

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What Small Employers Need to Know

New Rating Methodology

Effective 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

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What Small Employers Need to Know

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 4 th minor child (and any additional) is free Children age 21+ must be rated as adults

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What Small Employers Need to Know

Essential Health Benefits

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: 1 2 3 4 5 Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services, including behavioral health treatment 6 7 8 9 Prescription drugs Rehabilitative and “habilitative” services and devices Laboratory services Preventive and wellness services and chronic disease management 10 Pediatric services, including dental and vision care

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What Small Employers Need to Know

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 essential health benefits Must be replaced by true out-of-pocket maximums

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What Small Employers Need to Know

Metallic Coverage Levels

Actuarial Values for Levels of Coverage Provided by Qualified Health Plans 100%

90%

80% 70% 60% 10% BRONZE

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What Small Employers Need to Know

Examples: Small Group Metallic Plans

STANDARD BENEFITS Deductible Coinsurance True Out-of Pocket Max ADDITIONAL OPTIONS PCP Copay Drug Copay Bronze $3,000 60% $6,350 Bronze n/a n/a Silver $2,000 80% $6,350 Silver $30 $10/$40/$60 Gold $1,000 80% $3,000 Gold $20/$40 $10/$30/$50 Platinum $500 90% $1,000 Platinum $20/$40 $10/$30/$50

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How Employers Win

Offering Coverage to Employees

ARKANSAS

BLUE CROSS and BLUE SHIELD An Independent Licensee of the Blue Cross and Blue Shield Association

What Small Employers Need to Know

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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What Small Employers Need to Know  

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

ONLY APPLIES TO

Employers with 51 or more FTEs: 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

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What Small Employers Need to Know

Small Employer Health Options Program

Available For Employers with 2-50 employees in 2014 (2-100 in 2016) Subsidies First-Year Employers 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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What Small Employers Need to Know

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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What Small Employers Need to Know

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

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Small Employers Might Drop Coverage

What would happen to their employees

ARKANSAS

BLUE CROSS and BLUE SHIELD An Independent Licensee of the Blue Cross and Blue Shield Association

What Small Employers Need to Know

2013 Federal Poverty Level (FPL)

PERSONS IN FAMILY Premium Cap 1 2 3 4 5 6 7 8 100% 133% 200% 300% 400% 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 9.5% $45,960 $62,040 $78,120 $94,200 $110,280 $126,360 $142,440 $158,520

Note:

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

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What Small Employers Need to Know

Personal Responsibility

Federal definition of affordability % of FPL 133% 150% 200% 250% 300% 400% Family of 4 INCOME $31,321 $35,325 $47,100 $58,875 $70,650 $94,200 MAXIMUM % of INCOME 3% 4% 6.30% 8.05% 9.50% 9.50%

ARKANSAS

BLUE CROSS and BLUE SHIELD MAXIMUM Monthly Premium Family of 4 $78.30

$117.75

$247.28

$394.95

$559.31

$745.75

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What Small Employers Need to Know

Remember That Group Coverage Remains a Valuable Benefit

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

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What Small Employers Need to Know

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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