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Health Insurance Reform 2010 Executive Forum Clinton Presidential Library

Health Insurance Reform 2010 Executive Forum Clinton Presidential Library. Health Care Changes – 2010. 22,000-28,000 pages of regulation Age 26 – 206 pages of regulation. Health Care Changes – 2010. Economic stimulus package for: CPAs Lawyers Employee Benefit Advisors.

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Health Insurance Reform 2010 Executive Forum Clinton Presidential Library

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  1. Health Insurance Reform2010 Executive ForumClinton Presidential Library

  2. Health Care Changes – 2010 • 22,000-28,000 pages of regulation • Age 26 – 206 pages of regulation

  3. Health Care Changes – 2010 • Economic stimulus package for: • CPAs • Lawyers • Employee Benefit Advisors

  4. Sections Of The Law That We Will Not Discuss Today • Health Care Quality Improvement • Rural Protections • Disease Prevention and Wellness • Patient-Centered Outcomes Research • Access to Innovative Medical Therapies • 1099 for Vendors at $600 Level

  5. Diagnostic Category Asthma CAD Cancer Congestive Heart Failure Depression Diabetes Hypertension Lower Back Pain Patients per 1,000 Insured 24 21 83 5 20 55 132 46 Probability of Medical Problems

  6. Why Your Health Insurance Costs Are So High

  7. Implementation Timeline For The Federal Health Care Reform Measure2010 • Establishes federal grant program for small employers providing wellness programs • Employers eligible to receive grants must employ less than 100 employees who work 25 hours or more per week. • The grant program will be conducted for a five-year period and is authorized to allocate $200 million for fiscal years 2011 through 2015.

  8. Health Care Changes – 2010 • To qualify, a wellness program must include: • Health awareness initiatives (such as health education, preventive screenings and health risk assessments. • Efforts to maximize employee development and participation • Initiatives to change unhealthy behaviors and lifestyle choices (such as counseling , seminars and self-help materials) • Workplace policies to encourage healthy lifestyles, healthy eating, increased physical activity and improved mental health. • Eligible employers must submit an application to the HHS, which should contain a proposal for implementing a comprehensive wellness program that meets the above criteria.

  9. Health Care Changes – 2010 • Impose 10% tax on indoor UV tanning (7/1/10) • Prohibits lifetime and annual benefit spending limits (plan years beginning 9/23/10) • Requires plans to cover, at no charge, most preventive care (plan years beginning 9/23/10) Value based benefit designs preferred by HHS

  10. Health Care Changes – 2010 • Allows dependents to stay on parents’ policies until age 26 (plan years beginning 9/23/10) • Marital Status • Dependents

  11. Health Care Changes – 2010 • Provides protections to children with pre-existing conditions (plan years beginning 9/23/10) • Standard Health Plan Documents (4 Pages vs. state regulations) 9/23/10 • Modification Notices – 60 Days before the effective date of the modification (fine $1,000 per employee) 9/23/10 • Internet Portal for coverage information www.healthcare.gov

  12. Massachusetts Exchange

  13. Grandfathered Plans • Plans in place on March 23, 2010 that have not been significantly changed. • Avoid certain of the mandates, and certain of the design features required in 2014 • Regulations issued June 14, 2010 describe changes that will cause loss of grandfathered status: • Elimination of all or substantially all benefits for a particular condition

  14. Grandfathered Plans • Loss of grandfathered status (cont.): • Increasing a member’s coinsurance percentage by any amount • Increasing a plan’s annual deductible by more than medical inflation plus 15% in total from March 23,2010, forward • Increasing copayments to physicians or pharmacies by more than the greater of $5, or medical inflation plus 15% from March 23, 2010, forward • Decreasing an employer contribution by more than 5% from March 23, 2010, forward

  15. Grandfathered Plans • Most significant new requirements if not grandfathered: • Preventive services with no cost sharing • Insured plans will be subject to nondiscrimination testing

  16. Health Care Changes – 2010 • Small Business Tax Credit [2010-2015] • Who would receive the small business tax credit? • Employers with 25 or fewer employees and average annual wages of less than $50,000 that provide group health coverage • For tax years 2010-2013, employer would receive tax credit of up to 35% of contribution toward health insurance premium if employer contributes at least 50% of total premium cost or 50% of a benchmark premium (Employee: $4,329; Family: $9,677) • Employers with 10 or fewer employees and average annual wages of less than $25,000 would be eligible for the full tax credit • Tax Credit – ends 2015

  17. Small Business Health Care Tax Credit ScenariosExamples of Employers Receiving the Credit • Example 1: Auto Repair Shop with 10 Employees gets $24,000 Credit for 2010 • Main Street Mechanic: • Employees: 10 • Wages: $250,000 total, or $25,000 per worker • Employee Health Care Costs: $70,000 2010 Tax Credit: $24,500 (35% credit) 2014 Tax Credit: $35,000 (50% credit) in exchange

  18. Small Business Health Care Tax Credit ScenariosExamples of Employers Receiving the Credit • Example 2: Restaurant with 40 part-time Employees Gets $28,000 Credit for 2010 • Downtown Diner: • Employees: 40 half-time employees (the equivalent of 20 full-time workers) • Wages: $500,000 total, or $25,000 per full-time equivalent worker • Employee Health Care Costs: $240,000 2010 Tax Credit: $28,000 (35% credit with phase-out) 2014 Tax Credit: $40,000 (50% credit with phase-out) in exchange

  19. Small Business Health Care Tax Credit ScenariosExamples of Employers Receiving the Credit • Example 3: Foster Care Non-Profit with 9 Employees Gets $18,000 Credit for 2010 • First Street Family Services .org: • Employees: 9 • Wages: $198,000 total, or $22,000 worker • Employee Health Care Costs: $72,000 2010 Payroll Tax Credit: $18,000 (25% credit) 2014 Payroll Tax Credit: $40,000 (35% credit) in exchange

  20. Health Care Changes – 2011 • Simple Cafeteria Plans • Under 100 Lives • Discriminatory Benefits for highly compensated and key employees • Impose new annual tax (based on annual sales) on brand name pharmaceutical companies – sales to government entities only • Penalties for non-qualified HSA and Archer MSA distributions double (to 20%) • Health plans required to spend a minimum of 80%/85% of premiums on medical claims (Medical Loss Ratio)

  21. Community Living Assistance Services and Support (CLASS) - 2011 • Automatic enrollment by an employer • Alternative enrollment by an employee • Pay premiums for at least 5 years • Benefits cannot be less than $50 per day • No underwriting – except for age • Five-year vesting period • HHS and actuaries will set actuarially sound benefit plans by October 1, 2012

  22. Health Care Changes – 2011 • Employers required to report value of health benefits on W-2 • Additional funding for community health centers (5 years) - $34B • New tax ($2 per enrollee) on all private health insurance policies (including self-insured plans) to pay for comparative effectiveness research (plan years beginning FY12) • No longer allowed to use FSA, HSA, HRA, Archer MSA distributions for over-the-counter medicines

  23. Health Care Changes – 2012 • Nothing • Time out for elections?

  24. Health Care Changes – 2013 • A new tax applies to a single employee with compensation greater than $200,000, or an employee who is married and files jointly where the family income is greater than $250,000 (employee and employee spouse) • Employers will need to adjust their payroll systems to include the new 0.9% Medicare tax on employees (in addition to the current 1.45% tax on each)

  25. Health Care Changes – 2013 • Impose $2,500 annual cap on FSA contributions (indexed to CPI) • Generally increases (7.5% to 10%) threshold at which medical expenses, as a % of adjusted gross income, can be deductible • Impose 2.3% excise tax on medical devices • CO-OP Program: Secretary awards loans and grants for establishing nonprofit health insurers

  26. Health Care Changes – 2014 • Individual Mandate [2014-2016] • Those without health insurance coverage would be required to a pay penalty tax of the greater of $695 per year, up to a maximum of three times that amount per family ($2,085), or 2.5% of household income • The penalty would be phased in accordingly: • $95 in 2014, or 1.0% of taxable income • $325 in 2015, or 2.0% of taxable income • $695 in 2016, or 2.5% of taxable income

  27. Health Care Changes – 2014 • Health Insurance Exchanges • State-based American Health Benefit Exchanges and Small Business Health Options Programs (“SHOP”) Exchanges will be created • Would allow individuals and small employers with up to 100 employees to purchase qualified coverage • Employers with more than 100 employees would be able to purchase coverage in the SHOP Exchange in 2017

  28. Levels of Coverage • Insurance plans must include government-defined “essential benefits” and coverage levels • Bronze – the level of coverage must provide benefits that are actuarially equivalent to 60% of the full actuarial value of the benefits provided under the plan. • Silver – increases to 70% • Gold – increases to 80% • Platinum – increases to 90%

  29. Health Care Changes – 2014 • Employer Mandate: Play or Pay (50+) • Employers who offer coverage must either: • Provide coverage that is “qualifying coverage” , affordable (at 8%/9.5% of income) and pay at least 60% of the cost, or • Pay the lesser of $3,000 for each employee receiving a premium credit, or $2,000 for each full-time employee, if one person qualifies (4X FPL) • Employers who don’t offer coverage must pay $2,000 for each full-time employee, excluding the first 30 employees

  30. Health Care Changes – 2014 • Insurers cannot impose any coverage restrictions on pre-existing conditions (guaranteed issue/renewability) • Modified community rating: individual or family coverage; geography; 3:1 ratio for age; 1.5 :1 for smoking • Insurers must offer coverage to anyone wanting a policy and every policy has to be renewed • OPM must offer at least two multi-state plans in every state (Public Option) • Employers must provide notice to employees about the availability of coverage through the State sponsored health insurance exchanges • Group Health Insurance waiting periods may not exceed 90 days (1st of month or date of hire – premium?)

  31. Health Care Changes – 2014 • Employers must report annually to HHS information about whether essential minimum health coverage has been offered to its employees • The employer must also provide a notice to each individual whose name is included in the annual notice to HHS • Impose tax on private health insurance plans ($8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, $14.3 billion in 2018, and indexed to medical cost growth thereafter); based upon firm’s market share starting in 2013

  32. Health Care Changes – 2014 • Free Choice Voucher • Employers that offer group health coverage would be required to provide: • vouchers to employees making less than 400% of the Federal Poverty Level • whose share of the total premium exceeds 8% but less than 9.8% of their income • who choose to enroll in a plan offered in a state insurance exchange

  33. Health Care Changes – 2014 • Free Choice Voucher • Voucher amount must equal what the employer would have otherwise paid to provide coverage under the employer’s plan • Voucher can be used by the employee to offset the cost of premiums in insurance exchanges • Employers who provide free choice vouchers would not be subject to play or pay penalties for employees who enroll in the insurance exchange • Employee can keep excess employer premium

  34. Premium Assistance Credit • The premium assistance credit operates on a sliding scale that begins at 2% of income for taxpayers at 100% of the FPL and phases out at 9.5% of income for those at 300-400% of the FPL. • Taxpayers who purchase silver-level coverage may also qualify for cost-sharing subsidies to help pay for deductibles, co-payments, etc.

  35. Health Care Changes 2016 • States can form interstate insurance compacts coverage with HHS approval 2017 • Physician pay-for-quality program begins for all physicians • States may allow large employers and multi-employer health plans to purchase coverage in the Exchange 2018 • Impose “Cadillac tax on “high cost” plans, 40% tax on the benefit value above a certain threshold: ($10,200 individual coverage, $27,500 family or self-only union multiemployer coverage)

  36. Health Reform Cost & Revenue Estimates $69 Billion in new revenue in fines from uninsured individuals & employers $107 Billion in new taxes on Insurance Carriers, Drug Mfg, & Medical Device Mfg $32 Billion in new revenue from tax on high cost plans $930 Billion Cost over 10 Years $455 Billionreduction in Medicare spending by reducing fees to providers, payments to Medicare Advantage Plans & reduced fraud / waste $210 Billion new revenue from increased Medicare payroll taxes & a new Medicare tax on investments. Both apply to those earning $200k (Ind) or $250k (Families) $57 Billion of new tax revenue from FSA limit of $2,500 & a 10% new tax on tanning

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