The current state of PPACA & employee health benefits

US Healthcare Reform & The Impact on Employers

Key PPACA provisions affecting Employer-Sponsored Insurance…• Minimum Loss Ratios By Market Of 80% Or 85% (Large Vs.

Small Employers)• Rate Review• Guaranteed Issue• Guarantee Renewability• Policies Cannot Carry Pre-existing Conditions• No Discrimination On Health Status• No Discrimination Of Plan For Highly Compensated

Employees Vs. Non Highly Compensated Employees (Executives Vs. Non Executive)

Key PPACA provisions affecting Employer-Sponsored Insurance…• Additional taxation of certain types of policies by 2018 for

exceptionally rich benefits if not offered to everyone (some employers offer more than one plan and employees may choose)

• No lifetime maximums nor annual limits

• Coverage of preventative care without cost sharing

• Extension of adult dependent coverage to age 26

• No pre-existing condition restriction

• Must provide “essential health” benefit package as outlined by the law

9 Out Of 10 Employers Say Offering Medical Insurance Plays A Key Role In Hiring New Employees.

Future PPACA Provisions Affecting Employers To Be Implemented…

#HealthInsights

JANUARY 2015

Employer Shared Responsibility takes effect.

JANUARY 2018

Excise Tax on Cadillac plans takes effect. “Cadillac Tax”

Comparing Plan Types…Provision Exchange

PlanGrand-

fathered Plan

Employer Sponsore

d plan

Self-Insured

plan

No lifetime or annual limits. ✔ ✔(Annual limits do not apply)

✔ ✔

Dependents under age 26. ✔ ✔ ✔ ✔

Plan administrative costs. ✔ ✔ ✔

Preventive services. ✔ ✔ ✔

Patient protections. ✔ ✔ ✔

Out-of-pocket maximums. ✔ ✔ ✔

Pricing. ✔ Small group only.

Deductibles. Small group only.

Small group only.

Minimum services covered. ✔ Small group only.

Starting in 2018, a 40% excise tax will be imposed on the portion of employer-sponsored health coverage that generally exceeds $10,200 a year for single coverage and $27,500 for families.

Excise Tax on Cadillac Plans…

#HealthInsights

Insurers will group your company with other local employers and set premium rates based on age, location, family size and smoking status.

Beginning in 2014, the PPACA requires a modified community rating for individual & small-group markets…

More than 2/3 of employers currently providing health benefits (69%) have analyzed how the PPACA will affect their health care plan costs.

Are US Employers prepared for the PPACA?

80/20 medical loss ratio

Comprehensive coverage for health benefits package

Essential health benefits requirements

Guaranteed issue and renewability

Prohibition of discrimination based on salary

Annual limitation on deductibles for employer sponsored plans

PPACA mandates contributing to increasing costs…

Medium-size and large employers are experiencing cost increases close to 5% due to the PPACA. A considerable portion of smaller businesses are experiencing cost increases above 15 percent.

0-50 FTEs 51-499 FTEs 500-4,999 FTEs 5,000-9,999 FTEs 10,000 FTEs0%

5%

10%

15%

20%

25%

30% 28%

19%

1%4% 4%

Employers have begun to see cost increases to their employee health plans of as much as 15%.

Providing Insurance to Uninsured

Transitional Reinsurance

Human Resources &

Employee Communication

Administrative Cost

PCORI Fee

28% 35%38%

18%13%

In 2007, 73% of large companies surveyed said they would continue to offer health care benefits for the next 10 years. today only 23% make this prediction. 

How will employers react?

53%

36%28%

29%

Shift High Cost Employees Into Private

Exchanges

Increase Preventative Measures (i.e. Wellness,

Value-based Health, Disease Management)

Reduce Current Levels of Health Benefit Coverage &

Contributions

Shift to High-Deductible Plan

4 out of 5 employers will raise deductibles and copays for employees,

Businesses are seeing as much as a 50% increase on health plan renewals.

Employer contributions have increased 89% in 10 years

Employer Contributions - $6,657Employee Contributions - $2,412

Employer Contributions - $11,786Employee Contributions - $4,565

Avg. Annual Premium $9,068

2003

2013Avg. Annual

Premium $16,351

100 million individuals receive health insurance coverage through a self-funded employer-sponsored plan, making up almost 61% of the commercial health insurance market.