4 th Annual Healthcare Forum Silver State Health Insurance Exchange:

1. THE CHAMBERReno | Sparks | Northern Nevada 4th Annual Healthcare Forum Silver State Health Insurance Exchange: Why Do We Have It and How Does It Work Presented by M. Donald Kowitz President and CEO of Saint Mary’s Health Plans

2. Table of Contents Health Insurance Exchange – ACA (Affordable Care Act) Silver State Health Insurance Exchange What we know about it What must still be determined Navigators and Brokers Insurance Subsidies through the Exchange Mandates Employer Individual 2

3. Health Insurance Exchange - Basics The state health insurance exchange concept is not new. Some states have tried them (CA, MA, UT). Healthcare reform under the ACA is the driving force now. Exchanges are intended to: Create a more organized and competitive health insurance market. Offer individuals and small employers a choice of health plans. Establish common rules for offering and pricing insurance. Provide information to consumers and employers about health insurance options (including government programs). Serve as a conduit for premium and cost sharing. 3

4. Health Insurance Exchange - Basics Exchanges are designed primarily to help individuals and small employers (as defined by state law) to purchase health coverage. Under the Affordable Care Act (ACA): State Exchanges are required; either state-run or federal or some combination of both in partnership. Exchanges will offer a choice of health plans. Exchanges will have common rules for offering and pricing insurance. Exchanges must provide consumers with information to help them better understand their health insurance options. Exchanges must interface / integrate with publicly-subsidized programs for seamless operations. States may choose to allow large groups to purchase coverage through the exchanges in 2017. New individual and group qualified health plans may be offered inside and outside the exchange, but the premiums must be the same. 4

5. Health Insurance Exchange - Plan Options Insurers will offer qualified health plans through the exchange. Must provide four types of coverage options as defined by ACA: Platinum plan – which will pay 90%, on average, of expected claims Gold plan – 80% of expected claims Silver plan – 70% of expected claims Bronze plan – 60% of expected claims The final definition for essential benefits has not been finalized. Guidance is expected from HHS before the end of the year. 5

6. State Legislation The Nevada Legislature recently passed SB 440. SB 440 is the enabling legislation which created the Silver State Health Insurance Exchange(the Exchange) as an independent public entityin Nevada. The Exchange will be governed by a Board of Directors consisting of: Five voting members appointed by the Governor. One voting member appointed by the Senate Majority Leader. One voting member appointed by the Speaker of the Assembly. Three non-voting members representing the Department of Health and Human Services, the Department of Business and Industry and the Department of Administration. No Board members can be associated with the insurance industry. 6

7. Silver State Health Insurance ExchangeBoard of Directors Governor Appointees: Elsie Lavonne LewisChief Operating Officer of the Clark County Urban League Leslie Ann JohnstoneExecutive Director of the Health Services Coalition in ClarkCounty Ronald Kline, MDPhysician with Comprehensive Cancer Centers of Nevada in Clark County Barbara Smith CampbellWashoe County resident and former Chairwoman of the Nevada Tax Commission Marie KerrAttorney at Law with Kerr IP Group, LLC 7

8. Silver State Health Insurance ExchangeBoard of Directors Majority Leader Appointee: Judith Ford, MDPhysician with Canyon Gate Medical Group in Las Vegas Speaker of the House Appointee: Lynn EtkinsDevelopment Director of the Legal Aid Center of Southern Nevada Ex-Officio Board Members (non-voting): Director of Department of Health and Human Services Director of Department of Business & Industry Director of Department of Administration 8

9. The Board will have the mission of creating an Exchange that will be: A central information center regarding health insurance options. A marketplace to purchase individual & small group health insurance. An eligibility hub for publicly subsidized insurance including Medicaid and CHIP. The only means to receive insurance subsidies in Nevada. Silver State Health Insurance ExchangeWhat We Know 9

10. A major decision for the Board is whether the Nevada Exchange will operate under an “Active” or “Passive” operational structure. An Active Exchange is an Exchange where the Board restricts the number of insurers participating, the variety of plans available, the amount of premium to be used to compensate Brokers, and other rules which limit flexibility and choice within the Exchange. (California) A Passive Exchange is an Exchange that continues to allow positive market dynamics to exist including broad competition, maximum flexibility and freedom of choice. (Utah) Silver State Health Insurance ExchangeOpen Items 10

11. Other unanswered questions include: How to finance the Exchange long-term. Technical infrastructure and operational processes. How the Exchange will function as a successful marketplace and information portal for consumers and employers alike. The role of Navigators and Brokers, the overlap between the two, and how Brokers and Navigators will be compensated. Silver State Health Insurance ExchangeOpen Items 11

12. To assist with development of the Silver State Health Insurance Exchange, the State of Nevada contracted with Public Consulting Group, Inc. (PCG). PCG has conducted numerous focus groups throughout the year enabling interested parties – consumers, industry professionals, and other stakeholders to provide comments. PCG will provide recommendations dealing with technical infrastructure, the eligibility engine, and other critical exchange components. PCG is currently working with several States to ensure that Exchange processes and procedures allow seamless operation between health plans offered through the Exchange and publicly-subsidized programs like Medicaid. Silver State Health Insurance Exchange 12

13. Navigators Under ACA (Affordable Care Act), Navigators: Conduct public education activities to raise awareness of the availability of qualified health plans. Distribute fair and impartial information concerning enrollment in qualified health plans, and the availability of premium tax credits. Facilitate enrollment into qualified health plans. Provide referrals to any applicable office of health insurance, consumer assistance or health insurance ombudsman. Provide information in a manner which is culturally and linguistically appropriate to the needs of the population being served by the Exchange. 13

14. Agent or Brokers Under ACA, an Agent or Broker: May enroll individuals and employers in any qualified health plan in the individual or small group market segment of the Exchange. May assist individuals in applying for premium tax credits and cost sharing reductions for qualified plans sold through the Exchange. The Exchange Board in Nevada must: Determine the role of Agents and Brokers in the Exchange. Establish how they will be compensated. Address any overlap of responsibility between Navigators and Brokers. 14

15. Subsidies The Affordable Care Act (ACA) established federally funded insurance premium credits and cost-sharing subsidies for individuals with incomes from 133 percent to 400 percent of the Federal Poverty Level (FPL) to purchase qualified health plans in the Exchange. Insurance Premium Credits assist individuals with the purchase of insurance in the Exchange. These credits will cover the premium cost for a Silver plan in excess of a defined percentage of an individuals income ranging from 2 percent of income for an individual earning 133 percent of FPL to 9.5 percent of income for an individual earning 400 percent of FPL. Cost Sharing Subsidiesare similar to premium credits by ensuring that individuals do not pay more than a specified percentage of income for the actual cost of care under their plan (out-of-pocket cost). 15

16. Employer Mandate ACA also included employer and individual mandates. Individual mandate is currently being challenged in Federal Court. Starting January 1, 2014, large employers with more than 50 full-time employees (and part-time employees on a full-time equivalent basis) must provide minimum essential coverage to employees or they will be subject to a penalty. Employer penalty = $2,000 for each full-time employee ($167/per month) Penalty is non-deductible and will not offset the employee coverage cost. First 30 employees are disregarded when calculating the penalty. An employer with 50 employees or less that does not offer health insurance will not be penalized but the individual mandate, if affirmed by the Supreme Court, will still apply. 16

17. Employers Offering “Unaffordable Coverage” If an employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage, and One or more full-time employees enroll for coverage in the Exchange and qualify for a premium tax credit or cost sharing reduction because: The employee’s share of the premium exceed 9.5% of income, or The actuarial value of the coverage was less than 60%, then Employer penalty = $3,000 for each full-time employee who receives a tax credit or cost-sharing reduction ($250/per month). Penalty is lesser of $3000 per subsidized employee or $2000 per employee. 17

18. Individual Mandate Most US residents will be required to obtain minimum essential coverage or face a financial penalty for being uninsured under the individual mandate - a key provision of the ACA that starts in 2014. The penalty is applied in stages and reaches full implementation in 2016. The penalty is indexed by inflation in following years: The penalty for not being insured in 2014 is $95 per person, per year, capped at $285 per family, or 1 percent of household income. The penalty for not being insured in 2015 is $325 per person, per year, capped at $975 per family, or 2 percent of household income. The penalty for not being insured in 2016 is $695 per person, per year, capped at $2085 per family, or 2.5 percent of household income. Lawsuits are challenging the constitutionality of the individual mandate. The final verdict will be rendered by the Supreme Court which should hear the case sometime over the next 12 months. 18

19. Presentation Wrap-Up Questions Questions? 19