Health Care Reform After The Supreme Court Ruling

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Health Care Reform after the Supreme Court Ruling

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<p>Health Care Reform After the Supreme Court Ruling</p> <p>Health Care Reform After the Supreme Court Ruling- Its Impact on Your Clients and Your Firm</p> <p>August 23, 2012Jim Wisdom, CFPJames L. Wisdom Insurance Services </p> <p>Introduction Summary of Supreme Court RulingImpact of 12 Election on Health Care ReformWhat to expect prior to 1/1/14The Main Event: What to expect after 1/1/14Impact on Employers/Providers/Insurers/BrokersKey Benefits of Health Care Reform Trends / Consequences of Health Care ReformImpact on your firmWhat can you do to assist your clients?Q&amp;A</p> <p>Overview</p> <p>Employed in the Insurance/Financial Services Industry since 1985Insurance Broker/Consultant since 1996Started James L. Wisdom Insurance Services in 2003Goal: To share my perspective/opinions in hopes that we can more effectively serve our clients in the coming years. Note: We do not provide tax or legal advice</p> <p>Introduction- Jim Wisdom, CFP</p> <p>Individual mandate deemed unconstitutional under the Commerce ClauseIndividual mandate (effective 1/1/14) deemed constitutional under taxing powerStates cant be compelled to comply with enhancements to Medicaid effective 1/1/14</p> <p>Summary of Supreme Court Ruling</p> <p>Health Care Reform likely to stay regardless of our next PresidentAny chance of GOP Repeal efforts would require 1) keeping the House; 2) winning the White House; and 3) a filibuster proof (60+) majority in the SenateBudget reconciliation a possibility for certain provisions</p> <p> 2012 Election and Health Care Reform</p> <p>Certain provisions already in effectInsurance carriers will avoid rate increases greater than10% per year (bad P.R.)Carriers will control health care claims costs via reduced benefits, tiered networks and more pre-authorizationNew taxes to pay for PPACA </p> <p>What to Expect Prior to 2014</p> <p>Reduced benefits Increased Out-of-Pocket MaximumsIncreased DeductiblesSeparate buckets for Network and Non-Network Deductibles Separate buckets for Network and Non-Network Out-of-Pocket MaximumsIncreased Coinsurance % paid by insureds</p> <p>What to Expect Prior to 2014</p> <p>Ways that carriers can use tiered networks:Create a subset of their existing HMO networks (most cost-effective providers)Ditto for existing PPO networksThe bottom line: reduction in patient access to providers</p> <p>What to Expect Prior to 2014</p> <p>Employees: +.9% Medicare tax on earnings ($200K for singles; $250K for joint filers)3.8% tax on net investment income (not indexed for inflation)Flex Spending Accounts capped at $2,500/yr. 2.3% excise tax on Medical Device manufacturersItemized deduction threshold for unreimbursed medical expenses rises to 10% of AGI from 7.5% of AGIThis tax postponed for those over 65 until 2017</p> <p>New Taxes/Fees in 2013</p> <p>Its a whole new ball gameState Based Exchanges start upIndividual mandate kicks inGuaranteed Issue applies Employer pay or play provision applies3:1 ratio in pricing between youngest and oldest age bands40% Cadillac Tax effective 1/1/18This tax is not indexed for inflation</p> <p>The Main Event- 1/1/14 and Beyond </p> <p>To be up and running by 1/1/14CA is leading the wayExchanges are state-created marketplaces where insurance products can be easily compared.Available to individuals and small groups Some states are creating exchanges, others are notFed. Govt. can establish a state-based exchange if the state doesnt do so</p> <p>State-Based Exchanges</p> <p>16 states have created exchanges as of August 1, 2012Subsidies in the form of tax credits available to people who earn up to 400% of FPLIn 2012, 400% of FPL= $44,680 (individual) and $92,200 (family of four)</p> <p>State Based Exchanges </p> <p>Some individuals who obtain Exchange coverage eligible for federal subsidiesSubsidies available for Exchanges established by statesIt is unclear if subsidies will be available in federally-run state Exchanges. If no, then no penalty may apply</p> <p>Exchange- Potential Loophole</p> <p>Individuals must prove they purchased minimum essential coverage or face a penaltyPenalty increases from 2014 to the greater of $695/year or 2.5% of income (indexed thereafter)Federal premium subsidies available on a sliding scale for individuals up to 400% of FPL as described earlier (available only through Exchanges)</p> <p>Individual Mandate 1/1/14</p> <p>Health Insurers must take all applicantsNo Pre-Existing ConditionsNo Underwriting</p> <p>Guarantee Issue Applies - 2014</p> <p>Applies to employers with 50+ Full Time Employees (and their Dependents) or 50+Full Time Equivalent Employees (and their Dependents)Employer must offer minimum essential coverage to all Employees and Dependents</p> <p>Employer Pay or Play Kicks In</p> <p>Annual Tax of $2,000 for each F/T Employee (less the first 30), if at least one F/T Employee obtains federally subsidized coverage through an Exchange </p> <p>Employer Pay or Play- No Offer Penalty</p> <p>If one F/T Employee obtains federally subsidized coverage through an Exchange, the employer must pay an annual tax of the lesser of (1) $3,000 per subsidized F/T Employee; or (2) $2,000 for each F/T Employee (less the first 30 F/T Employees)</p> <p>Employee Pay or Play- Unaffordable Coverage Penalty</p> <p>Employer pays $2,000 X the number of F/T employees, if at least one F/T employee obtains subsidized health coverage in an Exchange Employer can subtract the first 30 employees from this calculationAnnual Penalty = (51 Employees 30 Employees) X $2,000= $42,000 1/12 of penalty assessed monthly</p> <p>Pay or Play Example- 51 F/T Employees No Offer Penalty Example </p> <p>Employer offers minimum essential coverageThree employees purchase subsidized health coverage through the ExchangeEmployer pays the lesser of (1) $3,000 X number of F/T employees who received subsidized coverage through the exchange OR (2) $2,000 X the number of F/T employees. Employer can subtract the first 30 employees from this calculation</p> <p>Pay or Play Example- 51F/T Employees- Unaffordable Coverage Penalty Example</p> <p>Employer pays the lesser of:</p> <p>$3,000 X 3 Employees= $9,000 $2,000 X (51Employees 30 Employees) = $42,000</p> <p>Employer pays $9,000 per year1/12 of penalty assessed monthly</p> <p>Unaffordable Coverage Penalty Example- 51 F/T Employees</p> <p>Young adults not only have to buy coverage, but their premiums may double or triple.Example: 2012 Age Rating (6:1 Ratio)62 yr. old - $600/month28 yr. old- $100/month</p> <p>2014 Example (3:1 Ratio)62 yr. old- $600/month28 yr. old- $200/month</p> <p>3:1 Ratio In Pricing Starts in 2014</p> <p>For industries that havent offered Health Insurance- premiums likely to increase significantly.Industries that have offered Health InsuranceUnknown: The rates/benefits of the CA ExchangeEmployers offering H.S.A. plans may be forced to offer lower deductible plans (increased premiums)Guarantee Issue Underwriting is likely to drive up premiums</p> <p>Impact on Employers- Less than 50 Employees </p> <p>For industries that havent offered Health Insurance - Costs likely to increase significantly For industries that have offered Health Insurance- Incentive to reduce # of F/T Employees below 50 to avoid penaltiesGuarantee Issue should raise premiumsUnknown: The rates/benefits of the CA Exchange </p> <p>Impact on Employers: 50-100 Employees</p> <p>35 Million More InsuredsSupply of providers fairly constantDemand for services likely to increase substantiallyExpect longer wait timesExamples: Canada, MassachusettsMore doctors may forgo insurance and practice concierge medicine</p> <p>Impact on Providers</p> <p>More customers= more premiumsHowever, profits regulated due to Medical Loss Ratio (Medical Loss Ratio) requirementsAfter 2014 (Guaranteed Issue), maintaining profitability may prove to be difficult</p> <p>Impact on Health Insurers </p> <p>Ranks of Agents specializing in individual health insurance is decliningCommissions likely to be reducedAgents/Brokers are diversifying their books of business prior to 1/1/4Unclear of whether Agents/Brokers will have a role in the Exchanges</p> <p>Impact on Agents/Brokers</p> <p>You may be able to buy insurance you cannot now afford If you have a pre-existing condition, you will be able to buy insurance for the same premium as that paid by people in good healthIf you have a very expensive, ongoing health problem, there will be no annual limitation for your health coverageNo charge for routine preventive care35 Million more Americans will be insuredStrong incentives for employers to adopt a company sponsored wellness program</p> <p>Key Benefits of Health Care Reform</p> <p>Value Based Plans will gain popularityDitto for Company Sponsored Wellness Programs Enrollment in Health Savings Accounts will decline somewhat Costs may escalate due to many factors: more insureds, guarantee issue, watered down penaltyYoung adults will be forced to buy coverage at a high rate to subsidize the older folksThe Exchanges are an unknown at this pointCertain industries will shrink and/or raise prices substantiallySome employers may drop health coverage and pay the penaltyIPAB could prove to be controversial</p> <p>Trends / Consequences</p> <p>You will probably start getting more questions on this topic (if not already)A lot of confusion about this comprehensive, complex lawThis law will be fully implemented in 2018A number of new taxes- however, they wont apply to many AmericansThere will be administrative requirementsExample: Employee notice of benefit summary</p> <p>How Will Health Care Reform Impact Your Firm?</p> <p>Pay particular attention to employers who may be subject to a penalty (50+ employees)Your clients will have questions-we can assistDevelop a business relationship with a broker/agent that is knowledgeable about this lawKeep your broker/agent informed of what CPAs are being told regarding Health Care ReformThe regulations are still being written </p> <p>How Can You Assist Your Clients?</p> <p>Jim Wisdom, CFPJames L. Wisdom Insurance Services4607 Lakeview Canyon Road - Suite 482Westlake Village, CA 91361Work: (805)497-9264Cell: (818)469-6640E-Mail: jim@wisdomhealthplans.comWeb Site: www.wisdomhealthplans.comBlog: www.jimwisdom.wordpress.comAlso on Linked In, Twitter and Facebook</p> <p>Thank You for Attending!</p>

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