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Health Care Reform Laws and Beyond Presented By: Joseph C. Ablahani, RFC, CLTC Eric Murtha Capital Benefits, LLC / MetLife Solutions Group (973) 808-2626

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What Happened? On March 21, the House passed HR 3590, the bill passed by the Senate on December 24, 2009, with a 219-213 vote. The House and Senate have also passed a reconciliation bill, HR 4872, with a packages of fixes to the Senate bill. President Obama has now signed both bills into law. These Acts are now the law of the land but, that is not the end of the story We have to pass the bill so that you can find out what is in it . Speaker Nancy Pelosi

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Do you understand Health Care Reform?

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Confused Implementation overload!! 5 Waves of Effective Dates (Some become effectively immediately or for plan years starting on/after September 23) Applies to Fully-Insured and Self-Insured Plans Your Plan could be grandfathered with no changes! Employer Mandate The Congressional Research Service estimates that federal agencies will have to issue more than 40 regulations to implement the Acts

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Patient Protection and Affordable Care Act Where we are and were are we going? Effective Plan Years On Or After October 1, 2010 No Pre-ex Exclusion for Child < 19 No Lifetime or Annual Limits 60-Day Prior Notice of Plan Changes No insurance Policy Rescission Access to Providers No Discrimination on Compensation (Insured) Deductibility for Part D subsidies is eliminated in 2013, but this results in an immediate accounting impact. 100% Minimum Preventive Children to Age 26 Revised Appeals Process MEWA Registration (now)

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Patient Protection and Affordable Care Act What Happens 2011? The tax on distributions from a health savings account that are not used for qualified medical expenses increases from 10 to 20%. OTC drugs no longer be reimbursable under HSAs, FSAs, HRAs and Archer MSAs unless prescribed by a doctor. X Creates a new public long-term care program and requires all employers to enroll employees, unless the employee elects to opt out, CLASS Employers are expected to enroll employees unless they opt out Employees will be able to opt out of participation Questions about financial viability Sen. Kent Conrad described as Ponzi scheme of the first order

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Patient Protection and Affordable Care Act What Happens 2013? Effective for Taxable Years Starting January 2013 $2,500 Limit on Health FSAs $500.00 carryover in 2015 Additional 0.9% Medicare Hospital Insurance tax on self-employed individuals and employees with respect to earnings and wages received during the year above $200,000 for individuals and above $250,000 for joint filers (not indexed). Self-employed individuals are not permitted to deduct any portion of the additional tax. New Tax: 3.8% Medicare contribution on certain unearned income from individuals with AGI over $200,000 ($250,000 for joint filers) Two new taxes will raise approximately $200 billion

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Patient Protection and Affordable Care Act What Happens 2014? Effective for Plan Years Beginning On Or After January 2014 (Except as Noted) 90-Day Max. Waiting Period No Pre-Ex Exclusion Non-Discrimination/Wellness Safe Harbor Guaranteed Issue Guaranteed Renewal Rating Restrictions Benefit Mandates clinical trial coverage, essential benefits package, dependent coverage State and Federal Exchanges Insurance Carrier Taxes (2014 Tax Year) No Provider Discrimination Employer Mandate Cadillac Tax (2018)

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Patient Protection and Affordable Care Act What Happens For Fully-Insured 2014? Carrier Impacts Guaranteed Issue & Renewal Health Status Cannot Affect Risk/Premium Rating Modified Community Rating No Rescission of Policy Oversight of Premium Increases Enrollee Rebates Based on Loss Ratio Benefit Impacts No Pre-Ex Exclusions < Age 19 No Pre-Ex Exclusions No Lifetime or Annual Limits FSA -- OTC and $2,500 cap 100% Minimum Preventive Care Wellness Benefits Emergency Room Access Provider Access Rules (ob-gyn, pediatric, etc.) Clinical Trial Coverage Plan Sponsor Impacts Essential Plan & Vouchers Penalties / Costs Eligibility Impacts Full-time Employees Children Covered to Age 26 No Income (hourly vs. salaried) Distinctions Max. 90-Day Waiting Period Administrative Impacts Reporting on Plan Information Four-page Mini Summary Revised Appeals Process MEWA Registration Plan Document Revisions 60-Day Prior Notice of Plan Changes W-2 Reporting of Value Automatic Enrollment (over 200 employees)

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Patient Protection and Affordable Care Act What Happens Self-Insured 2014? Benefit Impacts No Pre-Ex Exclusions < Age 19 No Pre-Ex Exclusions No Lifetime or Annual Limits FSA -- OTC and $2,500 cap 100% Minimum Preventive Care Wellness Benefits Emergency Room Access Provider Access Rules (ob-gyn, pediatric, etc.) Clinical Trial Coverage Plan Sponsor Impacts Essential Plan & Vouchers Penalties / Costs Eligibility Impacts Full-Time Employees Children Covered to Age 26 [Current law Code Section 105(h) non- discrimination rules] Max. 90-Day Waiting Period Administrative Impacts Reporting on Plan Information Four-page Mini Summary Revised Appeals Process MEWA Registration Plan Document Revisions 60-Day Prior Notice of Plan Changes W-2 Reporting of Value

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Patient Protection and Affordable Care Act What Happens 2014 Employer Mandate? Full-time employees are defined as those working 30 or more hours per week. The number of full-time employees excludes those full-time seasonal employees who work for less than 120 days during the year The hours worked by part-time employees are included in the calculation of a large employer, on a monthly basis. This is done by taking their total number of monthly hours worked divided by 120 If an employer does not provide coverage and one employee receives a tax credit through the exchange, the employer will pay a penalty for all full-time employees

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Whos going to pay for health reforms taxes? Artificial-sun worshippers Who pays: The 28 million people who visit tanning booths and beds each year most of them women under 30, according to the Journal of the American Academy of Dermatology. How much: A 10 percent tax on the price of tanning. Expected to raise $1.5 billion over 10 years. The lowdown: Tanning salons were singled out because of wide agreement among medical experts that baking under ultraviolet lights increases the risk of skin cancer. When: Took effect in 2010.

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1094 C and 1095 C Filings Employers with 50 or more Full-Time employees (including full-time equivalent employees) need to file. Information needed for Tax year 2015 1095 C forms to be distributed to all full-time employees by January 31 st 2016 1094 C form to be filed out by the employer. File by February 28 th 2016

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The Cadillac Tax is an excise tax scheduled to take effect in 2018 to reduce health care usage and costs by encouraging employers to offer plans that are cost-effective and engage employees in sharing in the cost of care. It is a 40% tax on employers that provide high-cost health benefits to their employees. Final regulations have not been issued, and we expect further guidance before the tax is assessed.

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What is it/fee duration Permanent annual tax beginning in 2018 on employers that provide high-cost benefits through an employer- sponsored group health plan. Purpose To generate $80 billion over the next 10 years to help finance the expansion of health coverage.

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Amount The tax is 40% of the cost of plans that exceed predetermined threshold amounts. Cost includes the total premiums paid by both employers and employees, but not cost-sharing amounts such as deductibles and copays when care is received. For planning purposes, the thresholds for high-cost plans are $10,200 for individual coverage,and $27,500 for family coverage.

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The set thresholds will be updated for 2018 when final regulations are issued and indexed for inflation in future years. The thresholds will also be adjusted for: High-risk professions such as law enforcement, Fire, Paramedics and construction. Group demographics including age and gender. For pre-65 retirees and individuals in high-risk professions, the threshold amounts are $11,850 for individual coverage and $30,950 for family coverage. Who calculates and pays : Employers calculate and insurers pay Self-funded: Employers calculate and pay

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How a plans cost is determined The tax is based on the total cost of each employees coverage above the threshold amount. The cost includes premiums paid by employers and employees plus: Employer and employee contributions to HealthCare Flexible Spending Accounts, Health Reimbursement Accounts and Health Savings Accounts.

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The cost of Employee Assistance Plans with counseling benefits, onsite medical clinics and wellness programs. How the tax will be paid: Forms and instructions for paying the tax are not yet available. Tax implications: Not tax deductible. Who is affected? Insured and self-funded group health plans.

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Who is affected? Insured and self-funded group health plans. Who is excluded Stand-alone dental Stand-alone vision Accident coverage Disability benefits Long-term care insurance U.S.-issued expatriate plans for most categories of expatriates

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How it works: Examples based on current threshold amounts Self-only coverage A $12,000 individual plan would pay an excise tax of $720 per covered employee: $12,000 - $10,200 = $1,800 above the $10,200 threshold $1,800 x 40% = $720 Family coverage A $32,000 family plan would pay an excise tax of $1,800 per covered employee: $32,000 - $27,500 = $4,500 above the $27,500 threshold $4,500 x 40% = $1,800

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These charts show how the tax increases as the plans cost increases. Self-only coverage: Plan Cost - $11,000 $12,000 $13,000 $14,000 $15,000 Tax - $320 $720 $1,120 $1,520 $1,920 Family coverage: Plan Cost $28,000 $30,000 $32,000 $34,000 $36,000 Tax $200 $1,000 $1,800 $2,600 $3,400

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Who calculates and pays Insured: Employers calculate and insurers pay Self-funded: Employers calculate and pay

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Do we Agree? The ACT is Complex! Regulations are forthcoming on a regular basis

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So, where are we going?

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What could you do? #1: Know what the Act says and use it to benefit not only your Municipality but, the Members also. #2: Be prepared and be creative while offering an Equal to or Better plan. #3: Control costs. Lets share some strategies!

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Chapter 78 Member Contribution HEALTH BENEFITS CONTRIBUTION FOR SINGLE COVERAGE Current Plans as of 10/1/2014 Proposed Plans (PERCENTAGE OF PREMIUM)* Amerihealth Aetna Online Contribution Calculators Available PPO $15/$25/$35$5/$15/$25$10/$10/$10$15/$25/$35$5/$15/$25$10/$10/$10 Salary RangeYear 1Year 2Year 3Year 4 $ 1,096.92 $ 1,125.00 $ 1,153.01 $ 969.84 $ 998.48 $ 1,027.08 less than 20,0001.13%2.25%3.38%4.50% $ 49.36 $ 50.63 $ 51.89 $ 43.64 $ 44.93 $ 46.22 20,000-24,999.991.38%2.75%4.13%5.50% $ 60.33 $ 61.88 $ 63.42 $ 53.34 $ 54.92 $ 56.49 25,000-29,999.991.88%3.75%5.63%7.50% $ 82.27 $ 84.38 $ 86.48 $ 72.74 $ 74.89 $ 77.03 30,000-34,999.992.50%5.00%7.50%10.00% $ 109.69 $ 112.50 $ 115.30 $ 96.98 $ 99.85 $ 102.71 35,000-39,999.992.75%5.50%8.25%11.00% $ 120.66 $ 123.75 $ 126.83 $ 106.68 $ 109.83 $ 112.98 40,000-44,999.993.00%6.00%9.00%12.00% $ 131.63 $ 135.00 $ 138.36 $ 116.38 $ 119.82 $ 123.25 45,000-49,999.993.50%7.00%10.50%14.00% $ 153.57 $ 157.50 $ 161.42 $ 135.78 $ 139.79 $ 143.79 50,000-54,999.995.00%10.00%15.00%20.00% $ 219.38 $ 225.00 $ 230.60 $ 193.97 $ 199.70 $ 205.42 55,000-59,999.995.75%11.50%17.25%23.00% $ 252.29 $ 258.75 $ 265.19 $ 223.06 $ 229.65 $ 236.23 60,000-64,999.996.75%13.50%20.25%27.00% $ 296.17 $ 303.75 $ 311.31 $ 261.86 $ 269.59 $ 277.31 65,000-69,999.997.25%14.50%21.75%29.00% $ 318.11 $ 326.25 $ 334.37 $ 281.25 $ 289.56 $ 297.85 70,000-74,999.998.00%16.00%24.00%32.00% $ 351.01 $ 360.00 $ 368.96 $ 310.35 $ 319.51 $ 328.67 75,000-79,999.998.25%16.50%24.75%33.00% $ 361.98 $ 371.25 $ 380.49 $ 320.05 $ 329.50 $ 338.94 80,000-94,999.998.50%17.00%25.50%34.00% $ 372.95 $ 382.50 $ 392.02 $ 329.75 $ 339.48 $ 349.21 95,000 and over8.75%17.50%26.25%35.00% $ 383.92 $ 393.75 $ 403.55 $ 339.44 $ 349.47 $ 359.48 *Member contribution is a minimum of 1.5% of base salary towards Health Benefits

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Thank You Joseph C. Ablahani, RFC, CLTC Eric Murtha Capital Benefits, LLC / MetLife Solutions Group (973) 808-2626