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Health Care Reform: 2014 Overview and Implications. In this presentation, we’ll cover:. Health Care Reform at a glance Impacts to individuals Impacts to employers Exchange overview Market impacts and implications. Health Care Reform at a glance. - PowerPoint PPT Presentation
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Health Care Reform:2014 Overview and Implications
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In this presentation, we’ll cover:
Health Care Reform at a glance
Impacts to individuals
Impacts to employers
Exchange overview
Market impacts and implications
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Health Care Reform at a glance
Focuses on coverage expansion and insurance market reform
Largely maintains the employer-based system
Changes purchasing model for individuals and small groups
Financial implications for individuals, employers, providers and insurers
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2010-2012: What has been implemented?
Mandated Benefit Changes
Women’s Preventive
Grandfathering
Small Group tax credit began in 2010
Summary of Benefit Coverage (SBCs)
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Benefit and Coverage Changes for 2013 and 2014
2013
W-2 reporting requirements for groups filing >250 W2s
FSA contribution limited to $2,500 as of 1/1/13
Employers required to notify employees of Exchanges
2014
No exclusions for pre-existing conditions
Remove dollar annual and lifetime limits
No waiting periods greater than 90 days
Maintaining coverage for clinical trials
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2014 Impacts to Individuals
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Individuals must buy coverage or pay penalty
Individuals must purchase qualified coverage or pay a penalty
Coverage options: Medicare Medicaid, Child Health Plus, Family Health Plus Health care exchanges Employer based coverage
Penalty: greater of flat dollar amount or percentage of income Starts at $95 maximum in 2014; scales up to $695 in 2016
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Individuals can receive subsidized coverage
Income-based tax credits for purchasing coverage from a health care exchange
Cost sharing subsidies available on a sliding scale between 100% and 400% of federal poverty level (FPL)
Medicaid expansion*
100% FPL
133% FPL
200% FPL
300% FPL
400% FPL
500+%FPL
Subsidized private coverage through exchangesUnsubsidized
private coverage
400% FPL = $92,200 for a family of 4 Tax Credit*Tax credit in 100-133% FPL range only available to non- Medicaid eligible legal aliens
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2014 Impacts to Employers
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Small Group SHOP Opens in 2013
Small employer groups (<50 employees) able to purchase coverage from SHOP exchange 10/1/2013 for 1/1/14 effective date
If coverage obtained from SHOP exchange, eligible for a tax credit up to 50% of the premiums paid for their employees
Must meet specified requirements including <25 employees, average salary of <$50,000, at least 50% employer contribution to premium
Tax credit sunsets in 2016
Penalties do not apply to groups with <50 employees
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Small Group Benefit Changes for 2014
Small groups must meet Essential Health Benefits on and off exchange NYS announced that the Oxford Small Group EPO will be
used as the model Small group packages will need to be modified to meet
the new standards
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Large Group Requirements in 2014
All full time employees must have affordable coverage
Full time = 30 hours a week or more
Equivalency formula will be available to determine how many part-time and seasonal workers equal full time
Essential Health Benefits do not apply to large/self-funded groups
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Large Group Affordability and Coverage Requirements
Must offer coverage that meets affordability and coverage requirements or pay penalty
Coverage requirement is at least one plan offered to all employees at minimum 60% actuarial value
Employee premium contribution at <9.5% of employee income
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Large employers begin paying penalties
Penalty paid if at least 1 employee purchases subsidized coverage on the exchange in lieu of employer coverage
Extensive reporting requirements to the IRS
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Health Care Exchanges
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Health care exchanges are effective January 1, 2014
Online health care marketplaces – think Expedia
Individuals and small groups can purchase coverage
Individuals can purchase subsidized coverage if they meet criteria
State administered
Health plans that meet qualifying requirements may offer products on the exchange
RFI process beginning in January 2013
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Exchanges have four primary roles
Establish web portal for purchasing and enrollment
Manage subsidies and eligibility
Approve health plans for participation
Assist in outreach and education
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Exchange products must meet specific requirements
All plans must cover essential health benefits
Core service categories established by federal Department of Health and Human Services
Plans may offer up to four coverage tiers
Platinum, gold, silver and bronze
NYS requiring all metal levels for exchange participation
Optional catastrophic policy for certain individuals
• Young adults (under 30)
• Anyone for whom employer-based coverage does not meet affordability requirements
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How Exchanges Work
American Health Benefit Exchange
Small BusinessHealth Options Program
(SHOP) Exchange
Platinum Gold Silver BronzeCatas-trophic Platinum Gold Silver Bronze
Carrier A Carrier B Carrier C Carrier D
ProductLevels
Carriers
Purchaser
Carrier A Carrier B Carrier E Carrier F
Member Selects Employer Selects
Member Selects Member Selects
Tax Credit/Subsidy
Members below 400% FPL Employers below 25 EEs
Individuals Small groups
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The following considerations apply to the three-month grace period:– Individuals must have paid at least one month’s premium– The issuer is only obligated to pay claims during the first month of
the grace period
• The rule says that during the grace period, the issuer:– May pend claims during the second and third months of the grace
period– Must notify IRS/HHS of non-payment of premium– Must notify providers of the possibility for denied claims during the
second and third months Must notify members when their payment is late Must notify members if their coverage is terminated
If an individual enrolled in an Exchange product receives a premium tax credit, the issuer must allow a three-month premium grace period.
Exchange Individual Grace Period: Background
- 21 -
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Individual Grace Period Requirements and Design: How The Grace Period Works
- 22 -
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Exchange Regulatory Status
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Legislative Updates – Health Care Reform
Supreme Court decision that individual mandate is constitutional under “tax” law
Multiple attempts at repeal with no success
New York state updates
Executive order passed in April establishing NYS Exchange
Multiple studies underway to determine exchange structure and operations
Current Medicaid vendor (CSC) announced as Exchange vendor
Regional advisory committees and CEO meetings underway
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Market Impacts and Implications
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Estimated Market Shifts (National)
Individual
Medicaid
Medicare
Self-funded
Large group
Small group
Uninsured
Individual market growth
Medicaid growth based on increase in eligibility
Medicare growth due to population increase
Relatively stable large group market
Small groups most likely to drop coverage
Uninsured movement into exchanges
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Shift to retail market will occur
Employers
Possible reduced incentive to offer – but, must weigh costs and benefits
Perceived justifiable alternative for employees
Individuals
Influx of previously/newly uninsured buying direct
Affordability increased through subsidies
Directly making cost and coverage decisions
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Resulting changes in the market landscape
Diminished barriers to entry
Emerging individual market
Population with unique and diverse segments
Widely available products with price as focal point
Shift from traditional sales channels to retail
Adverse selection threat/difficulty managing risk
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Stakeholder Implications
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Implications for Individuals
Coverage vs. penalty decisions
Will need to assume greater control over their health care spending and decisions
Will need to navigate exchanges vs. private insurance
Will need to understand subsidy impacts and processes
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Implications for Employers
Large employers must make “play or pay” decisions
Small employers must decide if and where to purchase coverage
Must understand qualified coverage requirements and whether they meet them
Must collect and report data and information that they may not currently have
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Implications For Physicians and Hospitals
New health plans and/or increased price sensitivity may bring new risk to reimbursement
Credit and collection challenges with high cost share
Capacity to meet increased demand
Care delivery models are evolving (e.g., Accountable Care Organizations)
Reimbursement arrangements moving to pay for quality vs. pay for service
Possible reimbursement cuts looming from Medicaid and Medicare
Need to also make decisions as employer group offering coverage to employees
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Implications for Insurers
Emerging consumer segments
Changes in group purchasing dynamics
Reduced predictability in competitive landscape
Limited product and benefit differentiation
Challenges in managing risk
Direct-to-consumer focus
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Thank You