By Michael Bertaut, Healthcare Economist and Exchange Coordinator Blue Cross and Blue Shield of Louisiana 8.0 GP

 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 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. 2

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The Marketplace @ Healthcare.gov

New Regulations and Impact on Rates for Individuals New Requirements for Businesses

The Affordable Care Act was NOT designed, nor is there enough money allocated, to replace the Employer-Based Health Insurance System.

Employer Based ~160m Government ~110m Individual ~10m Healthcare.Gov!

  Yes. At least 9 months of 2014.

Exemptions are GROWING!!!!

◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ Low-income individuals in states that did not participate in the Medicaid Expansion Undocumented immigrants; Indian tribal members and their dependents; Members of certain religious sects who do not participate in SS or Medicare.

Individuals who are in prison Victims of Domestic Violence Homeless You have a shut-off notice from a utility company Death of a close family member Have an eviction notice.

Fines: 2014 = 1% or $95 2015 = 2% or $325 2016 = 2.5% or $695 5

    ◦ ◦ WHAT’S THE PLAN?

To create a streamlined, easy to use, consumer friendly, health neutral, gender neutral, FEDERALLY REGULATED market for individual health insurance.

HOW DOES IT WORK?

◦ ◦ Designed specifically to remove the 2 biggest barriers to health insurance: Cost and Health Status, with federal subsidies and no medical questions allowed.

WHEN DOES IT OPEN?

10/1/2013. Closes again on 3/31/2014 Subsequent years open enrollment will be about 8 weeks long (October 15 – December 7 th ) ◦ WHAT CAN I BUY THERE?

Health, Dental, and maybe Vision insurance from many major carriers. Each state will have its own unique exchange and product selection.

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     Loss of Minimum Essential Coverage (except for non payment) Marriage (60 days from marriage date), Birth, or Placement for Adoption (60 day window) Gain citizenship or qualifying immigration status Loss of AFFORDABLE employer sponsored coverage (COBRA?) Carrier violates insurance contract      Change in eligibility for tax credits or cost sharing reductions Move to a different Exchange Area Indians may change plans once per month Undefined “exceptional circumstances” Enrolled in non qualifying employer coverage

Price Impacts: Federal UW Rules Risk Factor

AGE OF INSURED

Pre-2014 And GF

RATE MAY VARY UP TO 10X BETWEEN 19 AND 64 YEAR OLD

Post-2014 Non-GF

RATE MAY VARY ONLY 3X BETWEEN 21 YEAR OLD AND 64 YEAR OLD CUI BONO?

In general, Americans 50 to 64 years old GENDER HEALTH STATUS WOMEN CHARGED MORE DURING CHILDBEARING YEARS. MEN CHARGED MORE POST AGE 55 GENDER MUST BE IGNORED FOR RATE SETTING MEDICAL RECORDS, CLAIMS DATA, PHARMACY RECORDS, ALL USED TO DETERMINE RATE OR OUTRIGHT EXCLUDE APPLICANT FROM COVERAGE HEALTH INFORMATION CANNOT ALTER RATES OR EXCLUDE ANYONE Women age 16 to 45 Men age 55-64 Americans with lots of health conditions

Tax/Fee PCORI Fee Cost $1 or $2 PMPY Transitional Reinsurance Fee Health Insurer Fee Exchange Fee Unearned Income Tax $63 PMPY 2014; Lower afterwards $40M La 2014 $8B Nationally; $70M+ La 2017 $14.3B Nationally 3.5% of Premiums in Exchange (FFE) 3.8% on unearned above $200k single/$250k joint When?

$1 for Plan Years < 10/1/13; $2 After that 2014 and Beyond 2014 and Beyond Who Pays?

Carrier for Fully Insured; Sponsor for Self-Funded Carrier for Fully Insured; Sponsor for Self-Funded Carrier for Fully Insured 2014 and Beyond 2013 and Beyond Carrier for fully insured Individual Tax Payer

   ◦ All Individual and Small Group Plans MUST match the Benchmark Essential Health Benefits Plan in breadth of coverage.

For 2014/15, in Louisiana, the Benchmark will be the coverage offered in BLUE CROSS GROUPCARE PPO on 12/31/2011 This is a very rich plan. Includes pregnancy coverage on all members, mental/nervous/ autism spectrum disorder, and a very wide formulary.

              Moving from 5-6:1 to 3:1 on age rating Guarantee Issue Coverage Gender neutralization Dissolution of High Risk Pools Exchange-COBRA connection in ASO No rate adjustments for health status Health status of uninsured Reduction in Medicaid maternity coverage Expansion of Private maternity coverage Essential health benefit requirements in coverage Taxes/Fees on Carriers Removal of “Dial-a-risk” options Carrier compliance Costs Carrier system build-out costs

AGE & Gender 2013 Blue Max $2500 2014 Blue Max $2500 $160.03 $294.08

% Change In Rates AGE & Gender 2013 Blue Saver $1,900 2014 Blue Saver $1,900 % Chang e in Rates $146.07 $298.04 +104% 30 YR Male 40 YR Male 60 YR Male 30 YR* Female 40 YR* Female 60 YR* Female $222.46 $331.13

$533.88 $703.20

$417.71 $294.08

$493.48 $331.13

$680.64 $703.20

+84% +49% +32% -30% -33% +3% 30 YR Male 40 YR Male 60 YR Male 30 YR* Female 40 YR* Female 60 YR* Female $203.06 $335.60

$487.33 $712.68

$415.64 $298.04

$484.79 $335.60

$655.62 $712.68

+65% +46% -28% -31% +9% * 2013 rates include maternity for females, coverage was actually carried by only 10% of females covered. 2014 rates must include maternity for everyone, including males.

Family Ages

Issuer Metal Level Typical Sample Premium

Adult 1

40 B

Bronze

$10,908

Adult 2

36 B(Benchmark)

Silver

$12,120

Family Income $35,000/year (149% of FPL)

Premium Tax Subsidy $10,734 Family pays: $174 Payment % of Income 0.4% $10,734 $1,386 4.0%

Family Income $88,000/year (375% of FPL)

Premium Tax Subsidy $3,760 Family pays: $7,148 Payment % of Income 8.1% $3,760 $8,360 9.5%

Child 1

6 B

Gold

$13,332 $10,734 $2,598 7.4% $3,760 $9,572 10.9%

Child 2

4 B

Platinum

$15,350 $10,734 $4,616 13.2% $3,760 $11,590 13.2% 13

Plan TYPE Income of Applicant Sample Benchmark Silver Individual 251% of FPL or above 201% to 250% of FPL 151% to 200% of FPL 100 to 150% of FPL Deductible $2,000 $2,000 $500 $0 In Network CO INSURANCE 80% 80% 80% 95% In Network MAX OUT OF POCKET $4,000 $3,000 $1,400 $1,300 Note: Cost Sharing Reductions are ONLY available on Silver Plans, not Bronze, Gold, or Platinum plans.

This is a sample computation, not an actual product.

$350,00 $300,00 $250,00 $200,00 $150,00 $100,00 $50,00 $0,00 Premiums/Month $272,89 $298,04 $298,04 $19,15 $57,45 $120,65 Pre-PPACA Standard Rate $146.07

100% FPL ($11,490) 150% FPL ($17,235) 200% FPL ($22,890) 300% FPL ($34,470) 400% FPL ($45,960) 401% FPL ($46,000 & Up) Assumes purchase of Benchmark Silver Plan (2 nd Cheapest Silver Plan for that customer)

$350,00 $300,00 $250,00 $200,00 $150,00 $100,00 $50,00 $0,00 Premiums/Month $272,89 $298,04 $298,04 $19,15 $57,45 $120,65 Pre-PPACA Standard Rate : W/maternity: $416.54

W/0 maternity: $209.02

100% FPL ($11,490) 150% FPL ($17,235) 200% FPL ($22,890) 300% FPL ($34,470) 400% FPL ($45,960) 401% FPL ($46,000 & Up) Assumes purchase of Benchmark Silver Plan (2 nd Cheapest Silver Plan for that customer)

Premiums/Month $800,00 $700,00 $600,00 $500,00 $400,00 $300,00 $200,00 $100,00 $0,00 $712,68 $19,15 100% FPL ($11,490) $272,89 $363,85 $57,45 Pre-PPACA Standard Rate $487.33

$120,65 150% FPL ($17,235) 200% FPL ($22,890) 300% FPL ($34,470) 400% FPL ($45,960) 401% FPL ($46,000 & Up) Assumes purchase of Benchmark Silver Plan (2 nd Cheapest Silver Plan for that customer)

$800,00 $700,00 $600,00 $500,00 $400,00 $300,00 $200,00 $100,00 $0,00 Premiums/Month Pre-PPACA Standard Rate : W/maternity: $655.62

W/0 maternity: $449.00

$272,89 $712,68 $363,85 $19,15 100% FPL ($11,490) $57,45 $120,65 150% FPL ($17,235) 200% FPL ($22,890) 300% FPL ($34,470) 400% FPL ($45,960) 401% FPL ($46,000 & Up) Assumes purchase of Benchmark Silver Plan (2 nd Cheapest Silver Plan for that customer)

$1 200,00 $1 000,00 $800,00 $600,00 $400,00 $200,00 $0,00 Premiums/Month Pre-PPACA Standard Rate : W/maternity: $783.81

W/0 maternity: $577.19

$559,31 $748,12 $996,29 $39,25 $123,64 $247,27 100% FPL ($23,550) 150% FPL ($35,325) 200% FPL ($47,100) 300% FPL ($70,650) 400% FPL ($94,500) 401% FPL ($94,600 & Up) Assumes purchase of Benchmark Silver Plan (2 nd Cheapest Silver Plan for that customer)

        Incarcerated.

Income above 400% of FPL.

Offered coverage at work that is affordable and at least 60% AV. Medicaid or CHIP eligible (income <138% fpl in states that have agreed to expand).

Failed to file required tax returns in previous year.

Member of a tax household getting affordable coverage offer from employer Unable to attest to residency in a single state.

In the country unlawfully.

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    The Small Business Health Options Plan (SHOP) exchange will list small group options from a variety of health carriers that can be purchased online. Groups 2-50 in 2014.

ALE’s are not SHOP-eligible.

IRS tax credits for low income small group coverage that began in 2010 will phase out of the general market in 2014 and only be available if you purchase on SHOP.

Several key features of SHOP have been delayed at least one year, possibly longer.

    PPACA required creation of new Forms under Section 6055/6056 All firms would populate forms with detailed data about their employees and health plans offerings, submitted with quarterly tax returns Data would be put into new tool, shared with IRS, DOL, CCIIO, to help regulate business health insurance, test for affordability, coverage, discrimination, etc.

Database is not ready, regulations not released, forms not available, so all pushed back to 1/1/15.

  

How many benefit eligible Employees do I have? Am I an Applicable Large Employer (ALE)?

ALE Yes, or No, What do I do?

    Any employee who averaged 30 hours of service to 12 months.) per week or more in the previous look-back period (3 Any new hire who, after 90 days, is REASONABLY EXPECTED to work more than 30 hours/week If a REASONABLY EXPECTED determination cannot be made after 90 days, then another 90 day period may be used to make the call.

If eligibility determination is made, and then hours change, coverage must continue for the LONGER of the look-back period or 6 months.

 FOR THE ALE COMPUTATION, the common law definition of employee must be used:  “Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done.

This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.” (www.irs.gov)

Month JAN 2014 FEB 2014 MAR 2014 APR 2014 MAY 2014 JUNE 2014 JULY 2014 AUG 2014 SEPT 2014 OCT 2014 NOV 2014 DEC 2014 Benefit Eligible 22 23 23 23 24 22 23 24 25 26 27 30 Controlled , Affiliated and Associated Groups Must be COMBINED for this computation!!!

Common Law Hours 3300 2800 3250 3450 3105 3271 3655 3705 3000 3800 3950 4250 /120 FTE 27.5

23.3

27.1

28.8

25.9

27.3

30.5

30.9

25.0

31.7

32.9

35.4

Total FTE 49.5

46.3

50.1

51.8

49.9

49.3

53.5

54.9

50.0

57.7

59.9

65.4

AVERAGE 53

     No obligations to provide affordable coverage No obligations to provide valuable coverage No obligations to offer coverage No danger of fines under 4980H You must still be able to demonstrate your Non ALE status.

 You have many new Federal Obligations that can be condensed into 3 major options: 1. AVOID FINES--Must offer “affordable”, “minimum value” health coverage to 95% of all benefit eligible employees. Must offer coverage to children under age 26 (but not spouse and subsidy not required). MUST BE OFFERED AT LEAST ONCE PER PLAN YEAR!!!!

2. RISK SOME FINES—Offer coverage that fails one of the tests in #1 above. Employer is fined $250 per month per employee who “leaks” to the Exchange. Max fine is total fine computed under “3” below.

3. PAY THE FINES –Fail to offer minimum essential coverage to at least 95% of your benefit eligible employees, employer must pay $2,000 per year per uncovered employee minus first 30 lives.

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  ◦ ◦ ◦ 4980h a) Fine “ALPHA” Requires that all ALE’s offer minimum essential coverage to AT LEAST 95% of their benefit eligible employees.

If no compliance, only ONE benefit eligible employee has to draw an advanced tax credit from an Exchange to trigger the fine.

Fine is ENTIRE BENEFIT ELIGIBLE WORKFORCE COUNT minus 30 x $166.67/month without coverage.

◦ ◦ 4980h b) Fine “BRAVO” Requires that the offer in a) be “affordable” and “at least 60% actuarial value”.

If no compliance, each benefit eligible employee drawing an ATC from Exchange will trigger a $250/month fine, up to a max of the fine computed in a).

   Federal Poverty Line: ◦ Use 100% of FPL x 9.5% = affordable premium for all employees.

◦ In 2012, would be $11,170 x 9.5% = $1,061.15

Rate of Pay: ◦ Use hourly rate times 130/month to determine wages x 9.5% to compare to premium.

◦ At $10/hour, $1,300/month x 12 x 9.5% = $1,482.00

9.5% of Employee Box 1 W-2 income in premiums for employee-only coverage. ◦ Determined at end of calendar year, and on an employee-by employee basis.

◦ ◦ Partial-year adjustments allowed for new employees who work part of a year.

At $20,800/year ($10/hr, 40 hrs/week) = $1,976.00

   Prove you are NOT AN ALE Prove the employee in question was never benefit eligible when he worked for your firm Prove the employee in question was offered an insurance plan that met the federal definitions of affordability, and offered at least 60% AV.

“You’re Darn Tootin’ Listen to your Grandfather!!” •

Not subject to Rate Compression or New Federal Underwriting Laws

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Not subject to 3:1 age rating Can keep existing rate/benefit plans

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Not required to add new coverage for USPTF Schedule B tests/immunizations at first dollar.

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Not required to add new Women’s Wellness coverage at first dollar.

      Civic Organization designed to provide unbiased information on PPACA Healthcare and Wellness Information Focused on explaining drivers of healthcare costs, the critical importance of personal wellness, and the need for access to quality healthcare for all Louisiana’s citizens.

Solely an educational resource, not seeking to create public policy Over 100 member organizations, including LDOI!

JOIN THE EFFORT @ www.lhec.net

Office: 225-297-2719 Cell: 225-573-2092 34