Health Reform Discussion

Lisa EvansDirector of Healthcare

June 20, 2013

Health Reform Provisions Employer Health Plan Standards Public Health Exchanges Employer Purchase Options Pay or Play Cadillac Tax

Agenda

3

No one can be turned down for coverage for health reasons

Everyone must buy health insurance coverage or pay a tax

2014: Greater of 1% of AGI or $ 95 per person2015: Greater of 2% of AGI or $325 per person2016: Greater of 2.5% of AGI or $696 per personFamily maximum is capped at 300% of individual tax.

Access will be provided through Health Exchanges in each state.

2014 Health Reform Provisions

2011 Cover up to age 26 for dependents

2012 Unlimited dollar coveragePreventative Services at 100%Must report health costs on W-2s

2013 Female Contraceptives covered at 100%

2014 No one can be turned down for coverage

No pre-existing limits are allowedReinsurance Fee (2014-2016)30 hour rule (monitoring starts in

2013)

2018 “Cadillac” tax

Health Reform Provisions

Coverage must be adequate ◦ Plan coverage value of at least 60% or more

Coverage must be affordable◦ Employee-only premium must not exceed

9.5% of employee’s AGI

Offer coverage to at least 95% of full-time employees

Employer Health Plan Standards

Every state will have option by 2014 or federal government will step in and establish.

Minimum coverage is required. Subsidies/credits will be available based on

income. Premiums will vary based on age, people

covered and zip code within set limits (3:1) Standardized options will be available:

Bronze Silver GoldPlatinum 60% 70% 80% 90%

Public Health Exchanges

Cost

Public Health Exchanges

Private Health Exchanges

Time2014

Health Care Employer Purchase Options

Employers

Subsidies only available in Public ExchangesExchange = Marketplace

Pay or Play

Employer Considerations

Fail to offer Minimum essential coverage

95% full-time employees/dependents*

Penalty = $2,000 per each full-time employee (-30) annually

*and one of those employees receives subsidy in Health Exchange.

Pay Option

Offered minimum coverage to at least 95% full-time employees & dependents

but not adequate/affordable*

Penalty - $3,000 per exchange enrolled employee (up to maximum of $2,000 per full time employees)

-No Penalty – offer coverage100% of employees who work >30 hours

ANDAdequate (> 60% value) AND Affordable (single premium cannot exceed 9.5% of employee’s AGI

PLAY Options

How will person get coverage in 2014?

*Using dollar estimates of 2014 Federal Poverty Level (FPL)

Spectrum of Opportunity

Optimal Play Play and Redirect Pay and Redeploy Pay and Exit

Strategies

Pay $2,000 penalty for all FTEs and direct

employees to Exchanges

Discontinue employer plan

Healthcare is core to attract/retain talent

High Margins

Low Turnover

Diverse Margins

Health benefits are a material consideration

Mix of high and low wage earners

Evaluate contingencies for future exit

Meet requirements

Structure contributions to encourage low-wage earner qualification for

subsidies

Meet requirements Discontinue employer plan

Employees will be paying their portion of cost with

after tax dollars.

Employees will be paying their cost with after tax

dollars.

Impact

Allow XXX employees to become eligible for

subsidies in Exchange Will employees move?

low subsidy? Pay $3,000 for those who enroll in

the Exchange. Must offer coverage >95%

group for those work >30 hours

Continue to manage our costs aggressively. If our

cost becomes significantly higher than the exchange, we should consider exiting providing employer coverage. Must offer coverage to 100% of

group >30 hours

Trend in costs will continueIncrease contributions from an average of $X to X annually (>9.5%)

Employer provides a subsidized dollar amount

for each employee in a HRA

If Employer moved current dollars paid to an

HRA? What type of increases would your employees see? Pay

$2,000 per FTE per year

Employer would loose the tax-free spending of the dollars

no longer spent on healthcare. Pay $2,000 per

FTE per year

Employer would discontinue employer plan.

High Turnover

Pay $2,000 penalty for all FTEs and direct employees to

Exchanges

Provide no financial subsidy

Pay $3,000 penalty for those who exit and are

subsidized by the Exchanges

Provide monetized value (e.g. Defined Contribution)

in whole or part

Optimally manage design and deliver of employer

sponsored plan

Employer's Role in Health Reform

Low Margins

Low wage earners Many Medicaid eligible

Employer Profile

PLAY PAYSpectrum of Opportunity

Effective 2018 and will be indexed by CPI+1%.

“40% tax on value of employer sponsored coverage over a given dollar threshold”

$ 10,200 Employee Only$ 27,500 Family

Separate High Risk or Retiree Single coverage rate:$ 11,850 Single Coverage$ 30,950 Family

“Cadillac” Tax

Thank you.

Questions?

To sign up for ELM information contact:Don Betts

betts@gatech.edu912.381.9003