4. HEALTHCARE REFORM UPDATE
OVERVIEW
• Patient Protection and Affordable Care Act (PPACA) signed in to law on March
23, 2010
• Health Care and Education Reconciliation Act (HCERA) signed in to law on
March 30, 2010
• Legislation gradually (but dramatically) changes health insurance industry over
the next ten years
• Estimates put the cost between $940 billion and $1.2 trillion
• Expected to expand coverage to 32 million Americans that are currently
uninsured
Health Care Reform Update/ Page 4
5. HEALTHCARE REFORM UPDATE
STATUS UPDATE
• March 26 to 28, 2012 - Supreme Court hears oral arguments for and against
PPACA
• Supreme Court expected to rule on case by June 28
• Key issues
̵ Individual mandate - constitutionality
̵ Anti-Injunction Act
̵ Severability
• If any or all of the law is upheld by the Supreme Court, what happens in
November?
Health Care Reform Update/ Page 5
6. HEALTHCARE REFORM UPDATE
CONGRESSIONAL UPDATE
• Presidential race
̵ Current electoral projections - 237 for Obama, 191 for Romney, 110 tossup
̵ Need 270 electoral votes to win
̵ Probable outcome - no change in White House
• Senate race
̵ 51 / 47 / 2 - Democrat / Republican / Independent
̵ 79 seats safe or not up, 21 seats in play
̵ Probable outcome - no change in Senate
• House of Representatives race
̵ 193 / 242 - Democrat / Republican
̵ 386 seats safe or not up, 49 seats in play
̵ Probable outcome - no change in House
Health Care Reform Update/ Page 6
7. HEALTHCARE REFORM UPDATE
WHAT DOES ALL THIS MEAN?
• Supreme Court decision - no change in the law
• Executive Branch - no change in the law
• Legislative Branch - no major changes in the law, however, the law is
constantly evolving
̵ House Bill 436
• Regulators (HHS, DOL, IRS) - no major changes in the
law, however, the law is constantly evolving
̵ Delayed - Reporting Requirements on W-2’s
̵ Delayed - Nondiscrimination rules
̵ Amended - FSA limits (plan year vs. calendar year)
Health Care Reform Update/ Page 7
8. HEALTHCARE REFORM UPDATE
Subsidizes
Requires most Makes it easier to
coverage for
Americans to have buy/retain
low/middle-
health insurance coverage
income enrollees
Mandates reform
Adds employer
of medical
responsibilities -
insurance
must “pay or play”
practices
Health Care Reform Update/ Page 8
10. HEALTHCARE REFORM UPDATE
RECAP - 2010 CHANGES
• Member may designate any in-network doctor as a primary care physician
• Eliminate pre-ex limitation for children under age 19
• Provide for coverage for children until age 26
• Emergency services are all paid “in-network”
• Preventive care must be provided at no cost
• Eliminate annual and lifetime coverage limits on “essential” benefits
Health Care Reform Update/ Page 10
11. HEALTHCARE REFORM UPDATE
ESSENTIAL BENEFITS
• Emergency and Ambulatory Services
• Hospitalization
• Laboratory Services
• Maternity and Newborn Care
• Preventive and Wellness Services
• Rehabilitative Therapies
Health Care Reform Update/ Page 11
12. HEALTHCARE REFORM UPDATE
RECAP - 2011 CHANGES
• Limits on over-the-counter medications
• Employers MAY begin reporting value of health plans on W-2s
• HSA penalties increase from 10% to 20%
• Plans cannot discriminate in favor of highly-compensated individuals -
DELAYED (until final regs are issued)
• Medical Loss Ratios (MLRs) are established
Health Care Reform Update/ Page 12
13. HEALTHCARE REFORM UPDATE
MEDICAL LOSS RATIOS
• Shows percentage of premium dollars spent on medical claims and clinical
services/activities to improve health care quality
• 80% MLR for small groups
• 85% MLR for large groups
• MLR reporting is done on a calendar year
• Premium rebates must be issued if MLR is not met
Health Care Reform Update/ Page 13
14. HEALTHCARE REFORM UPDATE
Healthcare Reform Present
(2012 – 2020)
Health Care Reform Update/ Page 14
15. HEALTHCARE REFORM UPDATE
EFFECTIVE 2012
• Federal research fee of $1 per enrolled employee per month
• Medicare Payroll Tax will be expanded to include unearned income…high
income earners only
• Standardized summary of benefits coverage
• Employers MUST begin reporting value of health plans on W-2s (UPDATED: only
applies to large employers)
Health Care Reform Update/ Page 15
16. HEALTHCARE REFORM UPDATE
EFFECTIVE 2013
• Contributions to a Medical FSA are capped - UPDATED
• Employee Medicare Tax increases…high income earners only
• Employers must provide annual reports to HHS and employees on health plan
benefits that “improve health”
• Federal research fee increases to $2
• Employers MUST begin reporting value of health plans on W-2s (UPDATED: ALL
employers)
Health Care Reform Update/ Page 16
17. HEALTHCARE REFORM UPDATE
EFFECTIVE 2014
• Eliminate annual and lifetime limits on non-essential benefits
• Eliminate pre-existing condition limitations for ALL
• Health Insurance Exchanges begin to operate for small groups
• Individual mandate and applicable penalty for no coverage
Health Care Reform Update/ Page 17
18. INDIVIDUAL MANDATE
All Americans
2%
For
47% Against
51%
Variance
CNN/ORC International Poll, March 2012.
Health Care Reform Update/ Page 18
19. INDIVIDUAL MANDATE
Men Women
42% For For
47%
58% Against 53% Against
CNN/ORC International Poll, March 2012.
Health Care Reform Update/ Page 19
20. INDIVIDUAL MANDATE
Democrats Republican
29% 53%
For For
Against Against
71% 47%
CNN/ORC International Poll, March 2012.
Health Care Reform Update/ Page 20
21. HEALTHCARE REFORM UPDATE
EFFECTIVE 2014 (CONT.)
• Employers with 50 or more employees are required to “pay or play”
• Employers that provide coverage must ensure it is affordable, or a penalty could
be assessed
• Auto-enrollment required for groups with more than 200 FTE’s
• Waiting periods cannot exceed 90 days
Health Care Reform Update/ Page 21
22. HEALTHCARE REFORM UPDATE
PAY OR PLAY FACTOR
• A survey by Towers Watson1 indicates that majority of employers will continue
to offer group health plans to employees.
Definitely will offer
3%
9% Likely to offer
46%
42% Likely NOT to
offer
Undecided
1. From www.towerswatson.com, May 2010.
Health Care Reform Update/ Page 22
23. HEALTHCARE REFORM UPDATE
EFFECTIVE 2015
• Individual mandate penalty increases to $325 per uninsured adult ($975 per
family), or 2% of household income, whichever is greater
1. From www.towerswatson.com, May 2010.
Health Care Reform Update/ Page 23
24. HEALTHCARE REFORM UPDATE
EFFECTIVE 2016
• Health Insurance Exchanges begin to operate for groups with up to 100
employees
• Individual mandate penalty increases to $695 per uninsured adult ($2,085 per
family), or 2.5% of household income, whichever is greater
Health Care Reform Update/ Page 24
25. HEALTHCARE REFORM UPDATE
BEYOND 2016
• 2017 - Health Insurance Exchanges begin to operate for ALL
• 2018 - 40% excise tax on “Cadillac” health plans
• 2020 - Federal research fee of $2 per enrolled employee per month is phased out
Health Care Reform Update/ Page 25
28. HEALTHCARE REFORM UPDATE
HEALTH INSURANCE EXCHANGES - BENEFITS
• Insurers will
compete on
cost, quality and 60%
network
Bronze
Plan Level
• Requires 4 basic Silver 70%
plan designs
• Plans are based Gold 80%
on actuarial value
of benefits
Platinum 90%
0 20 40 60 80 100
Health Care Reform Update/ Page 28
29. HEALTHCARE REFORM UPDATE
HEALTH INSURANCE EXCHANGES - INTENT
• Designed to provide “easy” comparison shopping
• Clear communications of plan descriptions/rates
• Choice
• Better pricing/quality coverage through competition
• Expand coverage to uninsured Americans
Health Care Reform Update/ Page 29
31. HEALTHCARE REFORM UPDATE
OUTLOOK
Status
Planning Grant Only
Level 1
Grant
(incl
Hawaii)
Level 2
Grant
Did not
apply
(only
Alaska)
Health Care Reform Update/ Page 31
32. HEALTHCARE REFORM UPDATE
OUTLOOK
• Maryland State Exchange
• District of Columbia Exchange
• Virginia State Exchange
Health Care Reform Update/ Page 32
33. HEALTHCARE REFORM UPDATE
OUTLOOK
• The law is here to stay
• As the law matures, regulators may continue to modify various
aspects of the law due to unintended consequences, ease of
administration, etc.
• We will be here to help you meet the obligations under the law
and help you navigate the evolution of the law
Health Care Reform Update/ Page 33
