Stefany Martinsen

1. Stefany Martinsen Health Care Reform Information

2. TO SIMPLIFY THINGS: • This is not legal advice • Regulations and guidance is provided by HHS and is incomplete • Anything can change without notice • Consult your tax advisor for compliance with the IRS code • Wellmark is not responsible for penalties or losses due to employer coverage violations • Seek legal advice to determine changes that may impact grandfathered status • Any questions, talk to your Wellmark representative Wellmark is not providing any legal advice with regard to compliance with the requirements of the Affordable Care Act (ACA) or the Mental Health Parity Addiction Equity Act (MHPAEA). Regulations and guidance on specific provisions of the ACA and MHPAEA have been and will continue to be provided by the U.S. Department of Health and Human Services (HHS) and/or other agencies. The information provided reflects Wellmark's understanding of the most current information and is subject to change without further notice. Please note that plan benefits, rates, renewal rate adjustments, and rating impact calculations are subject to change and may be revised during a plan’s rating period based on guidance and regulations issued by HHS or other agencies. Wellmark makes no representation as to the impact of plan changes on a plan's grandfathered status or interpretation or implementation of any other provisions of ACA. Any questions about Wellmark's approach to the ACA of MHPAEA may be referred to your Wellmark account representative. Wellmark will not determine whether coverage is discriminatory or otherwise in violation of Internal Revenue Code Section 105(h). Wellmark also will not provide any testing for compliance with Internal Revenue Code Section 105(h). Wellmark will not be held liable for any penalties or other losses resulting from any employer offering coverage in violation of section 105(h). Wellmark will not determine whether any change in an Employer Administered Funding Arrangement affects a health plan’s grandfathered health plan status under ACA or otherwise complies with ACA.  Wellmark will not be held liable for any penalties or other losses resulting from any Employer Administered Funding Arrangement.  For purposes of this paragraph, an “Employer Administered Funding Arrangement” is an arrangement administered by an employer in which the employer contributes toward the member’s share of benefit costs (such as the member’s deductible, coinsurance, or copayments) in the absence of which the member would be financially responsible.  An Employer Administered Funding Arrangement does not include the employer’s contribution to health insurance premiums or rates. • The Lawyers made me say it. Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

3. Individual Shared Responsibility (Individual Mandate) Guaranteed Issue No Pre-existing Condition Exclusions Three Primary Elements of the Affordable Care Act (ACA) TERMS TO KNOW Individual Shared Responsibility: Provision in the law that requires all Americans to have health coverage or pay a tax. Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

4. Minimum Essential Coverage Requirements • EXCEPTIONS TO MANDATE REQUIREMENT • Financial Hardships • Members of federally recognized Indian tribes • Undocumented Immigrants • Incarcerated Individuals • Religious Objections • No Coverage for up to three consecutive months • Individual grandfathered & non-grandfathered plans • State & federal government plans • Employer group plans EXCEPTED BENEFITS: Plans that are not within scope of most provisions of the Affordable Care Act (ACA), like dental or vision, long-term care and other supplemental coverage offered as a separate insurance policy and do not qualify as minimum essential coverage. Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

5. You must decide: Get minimum essential coverage Pay a tax (the greater of) • 2014 – Pay $95 or 1% household income* • 2015 – Pay $325 or 2% household income* • 2016 – Pay $695 or 2.5% household income* Individual Mandate Impact on You Example: Single person household 2016 taxable household income = $65,000 Tax owed = $1,625 (65,000 x .025) Consult your tax and legal advisor. * The tax will be based on whichever is greater: the flat fee or the percent of household income. Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

6. Grandfathered Plans • Plans active before ACA (3/23/10) • Unaffected by some ACA provisions Non-Grandfathered Plans • Plans sold after 3/23/10 • GF Benefit changes resulted in NGF status • Must move to ACA compliant plan 1st plan year on or after 1/1/14 • Must comply with ACA provisions ACA Compliant Plans • Plans effective 1/1/14 • Plans must comply with ACA provisions Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

7. Standardized Plans: Metallic Tiers Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

8. BENEFIT CATEGORIES • Ambulatory Patient Services • Laboratory Services • Prescriptions • Maternity and Newborn Care • Preventive Care and Chronic Disease Management • Emergency Services • Mental Health and Substance Use Disorder Services and Behavioral Health Treatment • Rehabilitative and Habilitative Services/Devices • Hospitalization • Pediatric Services, Including Oral and Vision Care • Essential Health Benefits (EHB) • A Bundle of Basic Medical Services • Cost-sharing Out-of-Pocket Maximum (OPM) Limits Apply • Required for Non-grandfathered Individual and Small Group (1-50) Plans Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

9. Pediatric Dental and Vision EHB * Benefit limitations Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

10. Cost-Sharing Limits • Required for non-grandfathered Individual and Small Group (1-50) plans • Limit on out-of-pocket maximum (OPM) for Essential Health Benefits to HSA qualified amounts • (2014) $6,350 single/$12,700 family • Essential Health Benefit health and drug out-of-pocket payments include: • Deductibles, coinsurance, and copayments • Small Group deductible limits • (2014) $2,000 single/$4,000 family Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

11. 2014 + = • Increase in Cost for Additional Benefits • Premiums Will Reflect Increasein Cost • Additional Benefits 1.5% Small Group Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

12. AgeCalculations • Premiums Varyby Geographic Region • Premiums Calculated at a MemberLevel Health and Gender No Longer a Factor Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

13. Dependent Cap Premiums are member level rated, but capped at three dependents Based off the three oldest dependents under the age of 21 Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

14. Example: Johnson Bros. Body Shop • Depending on the health risk of the group, rate change of +29% to -36% • Demographics as well as health risk will determine the change in premium Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

15. Medical Loss Ratio (MLR) How much of a premium dollar must be spent on medical care and quality improvement? TERMS TO KNOW Medical loss ratio*: The ratio between how much premium dollar is spent on administrative expense compared to medical care and quality improvements. Quality improvement: Expenses to reduce hospital re-admissions, improve patient safety, reduce medical errors, and health information technology investments. Overhead expenses: Expenses like administration, marketing, profits, salaries, and agent commissions are paid from the remaining 20%. Individual: 80% Small group: 80% Large group: 85% Wellmark already meets this requirement *The calculation is based on a carriers total book of business and is not measured on an individual plan basis. . Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

16. Patient-Centered Outcomes Research Trust Fund • $1 per member1 in 2012 – 2013 • $2 per member1 in 2014 Proposed total annual fees paid by 2019 • $60 billion = Health insurers • $26 billion = Drug manufacturers • $20 billion = Medical device manufacturers Transitional Reinsurance Fee Additional Impacts to Premiums 1 Fees will be included in the premium rates for all fully-insured plans. Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

17. 2014 + = • ReinsuranceFee • Premiums Will Increase to Account for Fees • Annual Health Insurer Fee Fees apply to all GF & NGF Plans Effective 1/1/14 4% Small Group Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

18. TERMS TO KNOW • The Marketplace: • An online Marketplace for individuals and small businesses to shop for and compare health plans • Also known as: • The Public Marketplace • The Amercian Health Benefits Exchange (AHBE) • The Small Business Health Options Program (SHOP) • The Marketplace • Today • Tomorrow Direct Brokers Employers Private Exchange NEW Direct Brokers Employers Private Exchange Public Marketplace Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

19. Online marketplace • Easy to compare • Two types of marketplaces • American Health Benefit Exchange • Small Business Health Options Program (SHOP) • Initial Open Enrollment for individuals isOct. 1, 2013 – March 31, 2014 • Special Enrollment Period for trigger events Something New: The Marketplace Onlineshopping sites TERMS TO KNOW Open Enrollment Period: Specified timeframe, established by the federal government, when individuals can sign up for health coverage or switch plans each year. Special Enrollment Period: The ability for individuals to enroll in or switch plans outside of an open enrollment period. This is only available in limited circumstances when a qualifying life event takes place. Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

20. Marketplace Notification • Notification by October 1, 2013 • By first-class mail or electronically (in accordance with the DOL’s electronic disclosure safe harbor requirements) • New hires within 14 days of start date • “Employers must provide a notice of coverage options to each employee, regardless of plan enrollment (if applicable) or of part-time or full-time status.” • DOL model notices available at www.dol.gov/ebsa Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

21. Definition of a Small Group (1-50) • Open Enrollment • Late enrollees can enroll during this period • Special enrollment (60 days) Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

22. 2016 Group Size 1-50 Group Size 51-100 Employer Reporting Requirements Small group definition 1-100 Excise “Cadillac” Tax Mandatory coverage for clinical trials Pre-existing conditions limitations Mandatory coverage for clinical trials Small Group Definition Employer Shared Responsibility Annual Health Insurer Fee 90-Day Max Waiting Period 90-Day Max Waiting Period Annual Health Insurer Fee TBD No Annual Limits on EHB No Annual Limits on EHB Pre-existing conditions limitations Dependent Age 26 - All Quality of Care Reporting Transitional reinsurance program Dependent Age 26 - All Out –of-pocket cost-sharing limits New Premium Calculation Non-discrimination testing for fully-insured groups Small Business tax credit Guaranteed Issued Small Business Health Options Program goes online (SHOP) Guaranteed Issued Qualified Health Plan Essential Health Benefits Package Applies to Non-grandfathered and Grandfathered plans Applies to Non-grandfathered plans only 2014 2018 2015 Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

23. Individual Shared Responsibility - 2014 Coverage Period 2015: Employer reporting requirements 2015: Employer Shared Responsibility 2016: Small Group definition change of 1-100 Continued Fees Additional Provisions 2015 & Beyond Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

24. Our Pledge to You October 22: Aberdeen October 23: Pierre October 24: Rapid City October 29: Sioux Falls November 5: Sioux Falls Confidential and Proprietary – Wellmark Blue Cross and Blue Shield

25. More information WE KNOW REFORM .COM Confidential and Proprietary – Wellmark Blue Cross and Blue Shield