Cal cpa pp 2-13-14

Demystifying Health Care Reform
&
California Exchange
www.EQACA.com
By: Raj Singh

Disclaimer
 There are many parts of this legislation and a majority of the many specifics have yet to be
worked out. Many are awaiting procedural guidelines from various government agencies.
 This document is intended for informational purposes only, and by no means should replace or
substitute other legal documents (governmental or non-governmental) reflecting similar content
or advice, and should not be construed as legal advice. In addition, this new law is expected have
on-going updates. If you have any questions concerning your situation or the information
provided, please consult with an attorney or an HR Professional.
 Guidelines and requirements are being updated on a weekly basis via press releases from HHS
(Health Human Services).
 Effective dates are subject to the rules and regulations process both at the state and federal levels
– which could alter the intended timing of implementation.
 Employers are encouraged to consult with their legal and tax consul before acting on any
information presented in following with this disclaimer.
ExpertQuote Insurance Services, Inc. Raj Singh © 2013 Confidential Duplication & Distribution Prohibited

(PPACA) (ACA) (Obamacare)
 PPACA became law on March 23, 2010
 ACA Act is the largest change to the American Medical landscape
since 1965, when Medicare was implemented
 Secret Code: 137 / 2,801 / 159
1. Headline Noise & Significant Misconceptions
2. Misaligned Exchange Expectations
3. What is the Impact to my Company & What are my Action Items

Headlines Can Cause Headache
 “Time Warner & IBM, Health Plans in Historic Shift”
 “UPS Drops Health Benefits for Spouses”
 “SeaWorld Reduces Part-Time Hours”

 The nation's fourth-largest employer
 "Since the Affordable Care Act requires employers to provide affordable
coverage, we believe your spouse should be covered by their own employer”
 Spouses who don't work or lack employer-provided insurance will still be
covered by the company's health plan, as will workers' children.
 The change won't affect 250,000 Teamsters union workers or employees in
other countries.

 The House has voted 40 times to repeal or revise the health-care law
 Need 60 votes in the Senate and 218 votes in the House to pass a
continuing resolution
 To get 60 votes in the Senate, you need at least 14 Democrats to join
Republicans

…WTF Where They Thinking…Why Now…
 50 Million Uninsured Americans (Affordability or G.I.)
 Bend the Cost Curve ….Premium Inflation
 Address Inefficiencies & Waste

Law of Land?
 At Least for California : Yes!!!! SB 900
 Focus : CoveredCA.com & CA Amended Mandates
 California Exchange Opens October 1, 2013
• $950 Million of Start-Up Funds
• Umbrella Not a Carrier
• Not a Monopoly on Insurance

A Look Into The Future
 6 Years Into This Experiment :2007
 Success or Not
• 8% to 4%
• Employers Spend Extra $500M Double Digit Rate Increases
• Employers Did Not Dump Health Insurance
• Shortage of GP Doctors
 The Friction
• Minimum Wage Operators

Individual Mandate Penalty
 On August 27, the Internal Revenue Service (IRS) issued a final rule
 The penalty is called a shared responsibility payment
 Some exceptions ...if in Prison or… Amish
 And the Misconception …
• I will pay penalty and get insurance
• Buy on way to hospital while in the ambulance

The Shared Responsibility Payment
 2014: Penalty is $95 per adult and $47.50 per child under age 18 up to
$285 per family or 1% of family income, whichever is greater
 2015: Penalty is $325 per adult and $162.50 per child under age 18 up
to $975 per family or 2% of family income, whichever is greater
 2016: Penalty is $695 per adult and $347.50 per child under age 18 up
to $2,085 per family or 2.5% of family income, whichever is greater

Exchange Demystified
 TWO PARTS..Individual & SHOP
 For Some Individuals = Free or Subsidy
 For Some Companies = Tax Credit
CoveredCA.com
the Marketplace

About the SHOP
 Small Business Health Options Program
 The SHOP will initially be limited to employers with fewer than 50
employees
 Employers and employees will have a choice of 3 or 4 carriers
depending in which of the 19 Pricing Regions
 SHOP premiums are generally comparable to 2013 small-group
 The main thrust of SHOP is Tax Credits

Employer Tax Credits in SHOP
 Annual average wages below $50,000
 Pay at least 50% of the employee premium
 Must have fewer than 25 full-time equivalent employees
 Any shareholder with 2% or any owners of more than 5% not counted
 Current tax credit is 35% of business employees’ premiums (2010-2013)
 In 2014, tax credit increases to 50%
 Not for Profit: 25% tax credit

To Exchange or Not Exchange
 “I am going to send my employees to the Exchange”
 “The Exchange has Tax Credits”
 “There will be betters deals and options in the Exchange”

I Thought Rates Where Coming Down!
 Individual market – Rates will Pop 50%+
• Guarantee Issue
• Expectation of High Utilization
 Mandated Benefit Enhancements
• No Annual Limits, Well Visits Complimentary
• BRCA Testing, Autism, etc..
 Fees & Taxes: up to $65 PMPY
 10,000 Americans turn 65 every day
 Lifestyle & Health Issues

Direct Impact Small Group
 Plan change will be across the board
 Waiting Period Not to Exceed 60 Days
 Risk Adjustment Factors (RAF) will not be taken into account
 Variation of premiums :
• Age Bands: 0-20 age-band, 21-64 age band, 65+ age-band
• Family Size
• Geographic Area (California has 19 rating regions)

Direct Impact Large Group
 Plan change will be across the board
 Waiting Period Not to Exceed 60 Days
 Employers with 200+ full-time employees will be required to auto- enroll
their full-time employees (those working 30 hours or more); employees can
opt out - year 2015

What’s Been Delayed
 Reporting & Penalties Delayed Until 2015 for firms with 50+
Employees
• Legal Repercussion
• Possible Amendment to Calculation
• Is the Law To Complex
 In 2015 Employers Must …
• Offer minimum essential coverage to 95 percent of full-time employees
• Offer minimum value (60 percent) coverage to full-time employees
• Offer affordable coverage to full-time employees (less than 9.5 percent
of income)
• Employer must offer dependents opportunity to enroll in employer-
sponsored plan
• Consider employees who average 30 or more hours per week full-time

Summary Of Benefits Coverage
• SBC Employers to provide employees with a document provided by the
carrier in a specific, standardized, government-approved format that further
explains their plans in a simple manner
• Definitions of medical and health coverage
• Description of coverage, cost sharing, deductibles, co-insurance
information
 Must be provided to each participant and beneficiary for each benefit plan
 Must be furnished within 90 days for newly-covered participants
 Provided at time of enrollment and/or if plan is amended
 Can be distributed electronically, SBC Penalty: $1,000 each person

Notice of Exchanges to Employees
All employers, regardless of size, are required to distribute a Notice of
Exchanges and Subsidies to each employee (regardless of part-time,
full-time, or health plan enrollment status) by October 1, 2013.
Additionally, beginning on October 1, 2013, this notice must be provided
to each new employee within 14 days of the employee’s commencement
of employment

 MLR requires insurance companies to spend premium dollars on medical
care
 80 percent (for individuals and small groups)
 85 percent (for large groups).
 Rebates must be paid by August 1 following the end of the MLR reporting
year
 Rebate can be distributed to participants under a reasonable, fair and
objective allocation method
 You may decide to limit rebates to current participants.
 The rebate’s tax consequences largely depend on whether employees paid
their premiums on a pre-tax or after-tax basis.
 Employers may find the premium reduction (or premium holiday)
approach to be administratively easier than sending out checks and
calculating the additional taxes.
Medical Loss Ratio Rebate Checks

Pay or Play
 Approximately 370 Subscribers Minus 30 = 340
 Penalty is not tax deductible
 Some will qualify for subsidy others will not

Raj Singh Raj@ExpertQuote.com
www.EQObamaCare.com

Cal cpa pp 2-13-14

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Cal cpa pp 2-13-14