Independent Insurance Agents & Brokers of Louisiana

1. Independent Insurance Agents & Brokers of Louisiana IIABL PPACA HEALTH CARE SUMMIT By Michael Bertaut, Healthcare Economist and Exchange Coordinator Blue Cross and Blue Shield of Louisiana 7.1 GP

2. Time to Implement!Moving Forward with Reform By Michael Bertaut, Healthcare Economist and Exchange Coordinator Blue Cross and Blue Shield of Louisiana 7.1 GP

3. Disclaimer • 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.

4. What Will We Talk About? • The Marketplace @ Healthcare.gov • New Requirements for Health Insurance Companies • New Requirements for Businesses. • BREAKING NEWS!!!!

5. Breaking News on Same-Sex Married Couples’ health coverage • The Fed published guidance on 9/18 that indicates the EXPECTATION that all ERISA health plans that offers spouse coverage MUST acknowledge same-sex couples married in states where such unions are legal. (non-gov, non-church) • This does not apply to “domestic partnerships” or “civil unions”. • They must be offered the same coverage as opposite-sex spouses. • This is true even in states that have laws against such coverage. • Louisiana, with a Constitutional Definition of Marriage and admonitions AGAINST recognizing same-sex marriage, has not announced any legal challenges.

6. 310 Million seeking Healthcare Employer Based ~160m The Affordable Care Act was NOT designed, nor is their enough money allocated, to replace the Employer-Based Health Insurance System. Government ~100m Individual ~15m Healthcare.Gov!

7. Do I as an Individual HAVE to have Health Care Coverage? • Yes. As of 1/1/14 • Exemptions: • Low-income individuals who cannot afford coverage; • Undocumented immigrants; • Indian tribal members and their dependents; • Individuals with a coverage gap of three or fewer months; • Members of certain religious sects • Individuals who are in prison • Low-income individuals in states that have opted out of the Medicaid expansion • Employees whose employer has transitional relief, during the relief period. • Failure to comply means confiscation of tax refund starting at $95 or 1% for first year and rising to $695 or 2.5% of income by 2017.

8. What’s Healthcare.gov? • 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 7th) • 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.

9. Special Enrollment Triggers (60 day) • 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

10. New Insurance Rating ORDERED By PPACA “Guarantee Issue” means the emptying of high risk pools and the sickest will get health insurance for the same rates as the healthy.

11. PPACA Taxes and Fees

12. What Medical Services Must Be Covered? • 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.

13. Summary of Cost Driver Changes in PPACA • 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

14. Rates 2013 vs 2014 (Non-GF) * 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.

15. Healthcare.gov Application Checklist Social Security Numbers (or document numbers for legal immigrants) • Employer and income information for every member of your household who needs coverage (for example, from pay stubs or W-2 forms—Wage and Tax Statements) • Policy numbers for any current health insurance plans covering members of your household • A completed Employer Coverage Tool (see page 2 of this checklist) for every job-based plan you or someone in your household is eligible for. (You’ll need to fill out this form even for coverage you’re eligible for but don’t enroll in.)

17. How Will Healthcare.gov Work?

18. Cost Sharing Reductions/Variants 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.

19. Who Can’t Get Help? • 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.

20. What about Small Groups? • 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.

21. As an Employer, What 3 Questions Must I Answer? • How many benefit eligible Employees do I have? • Am I an Applicable Large Employer (ALE)? • ALE Yes, or No, What do I do?

22. Who is benefit eligble? • Any employee who averaged 30 hours of service per week or more in the previous look-back period (3 to 12 months.) • 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.

23. What is a Common Law Employee? • 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)

24. Am I an Applicable Large Employer? (ALE) Controlled , Affiliated and Associated Groups Must be COMBINED for this computation!!!

25. Ok, I’m not an ALE, what now? • 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.

26. Ok, I’m an ALE, What Do I do now? • You have many new Federal Obligations that can be condensed into 3 major options: • 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!!!! • 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. • 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.

27. The Price of Failure-2015 and Beyond • 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).

28. What Does “Affordable” Mean?(Proposed Safe Harbors) • 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

29. Notification to EmployeesIssue before 10/1/2013 • Designed specifically to inform employees on several important health insurance related issues. (Different notices for those who choose not to offer coverage) • The existence and availability of Exchanges/Marketplaces • The type of employer coverage and who qualifies • Whether employer coverage complies with federal rules thus blocking the employee from Advanced Tax Credits on the Exchange. • Confusing. May encourage non-eligible employees to shop on the Exchange. • Existing must get within 15 days of hire date

30. Note: Form encourages employees to take a look on the Exchange, even IF YOU OFFER THEM COMPLIANT COVERAGE!!!

31. How to Defend Against Fines listed in section 4980h a) and b)! • 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. SAVE FOR 2015!!!

32. Grandfathering: Current Benefits to Groups • Not subject to Rate Compression or New Federal Underwriting Laws • Not subject to 3:1 age rating • Can keep existing rate/benefit plans • Not required to add new coverage for USPTF Schedule B tests/immunizations at first dollar. • Not required to add new Women’s Wellness coverage at first dollar. “You’re Darn Tootin’ Listen to your Grandfather!!”

33. Other New Requirements • Total spend accumulators on every plan (all like HDHP’s) • Age-rated (non composite) billing • Every non-GF or new plan must fall into metallic levels: • Bronze= 58-62% AV • Silver = 68-72% AV • Gold = 78-82% AV • Platinum = 88-92% • “SMALL” GROUP = 2-50 FOR 2014-15, 2-99 IN 2016!

34. 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

35. Michael R. BertautHealthcare EconomistLINKED-INRecommendations WELCOME!!!Michael.bertaut@bcbsla.com Office: 225-297-2719 Cell: 225-573-2092