Health Care Reform:

Counseling The Corporate Client

Eleanor D. Thompson

October 19, 2010

HEALTH CARE REFORMHEALTH CARE REFORMFROM THE EMPLOYER’S FROM THE EMPLOYER’S

PERSPECTIVEPERSPECTIVE:

Counseling The Corporate ClientCounseling The Corporate Client

PBI Presentation

October 19, 2010

Eleanor D. Thompson

INTRODUCTIONINTRODUCTIONNew RulesNew Rules

Why the health care system needs new rules… Unsustainable health costs Poor quality of care Unaffordable health insurance

INTRODUCTIONINTRODUCTION

How Employers see it… Lack of capital available to invest in business Reduced profits Reduction in workforce Increased expenses dominated by health care costs

Employers’ Goals: Stabilize expenses Save jobs Salvage solvency in recessionary economy

Three Key OptionsThree Key OptionsFor Employers to Meet GoalsFor Employers to Meet Goals:

1. Whether to provide health care coverage to employees?

2. Whether to maintain grandfather status?

3. Whether to initiate or enhance cost controls in the form of Plan design, cost-sharing and/or implementing Wellness Programs?

Analysis of Employer Options Requires:Analysis of Employer Options Requires:

Legal Analysis:Legal Analysis:• The Patient Protection and

Affordable Care Act• The Health Care and

Reconciliation Act of 2010• Accompanying Regulations• Technical Releases from HHS,

DOL and Treasury• FAQs posted by HHS-DOL-

Treasury on Healthcare.gov• Other federal statutes• Other state statutes

Non-Legal Analysis:Non-Legal Analysis:• Financial analysis of impact

of choice on corporate assets• Corporate analysis of the

impact of choice on business management, operations, employee relations and corporate reputation

1. Whether to Provide Health Care 1. Whether to Provide Health Care CoverageCoverage

Costs

For Providing

Coverage

Penalties for

NOT Providing

Coverage

vs.

A. In short term

B. In long term

C. Rules, methodologies, calculations

vs.

2. Whether to Retain Grandfather Status2. Whether to Retain Grandfather Status

Keep the Plan

you have

Change the Plan

you have

Control costs

by eliminating some,

but not all, PPACA

requirements

Control costs

by changing plan

design or

cost-sharing

vs.

3. Whether, and how, to Control Costs3. Whether, and how, to Control Costs

Using Plan Design• Provide less comprehensive health benefits• Cover only employee, not spouse or dependents• Offer and encourage Consumer Direct Health Plans

Using Cost-Sharing Methods• Increase employee portion of premium• Increase deductible• Increase co-payment• Increase coinsurance

3. Whether, and how, to Control Costs3. Whether, and how, to Control Costs

Prevention and Wellness• Redirection From Illness to Health• Goal: to encourage healthier lifestyles for employees and lower

healthcare costs for employers

Prevention• Insurers required to cover preventive care with no cost-sharing by

consumer §2713• Incentive to consumer to choose healthy lifestyle• Cost increasing to Employer currently• Screening, laboratory tests and other types of preventive care• To be supplemented by the U.S. Preventive Services Task Force

3. Whether, and how, to Control Costs3. Whether, and how, to Control CostsWellness Programs

4 Wellness Program Provisions

PPACA §1001 PPACA §1201*

PPACA §4303 amended by §10404

§ 10408

Reporting requirements to be developed by Secretary of HHS regarding wellness and health promotion activities

Non-discrimination rules that affect employer wellness programs

CDC will provide employers with technical assistance, consultation, tools and other resources in evaluating employer-based wellness programs

Awarding Grants to eligible employers to provide their employees with access to comprehensive wellness programs

3. Whether, and how, to Control Costs3. Whether, and how, to Control CostsWellness Programs to Save Lives and Save Money

PPACA §1201 • The wellness provisions of the PPACA essentially

codify the wellness regulations that were established by HHS, DOL and Treasury under HIPAA in 1996

• PPACA broadens wellness provision applicable to group health plans to include health insurance issuers; and increases incentive limit from 20% to 30%, with option to go to 50%

3. Whether, and how, to Control Costs3. Whether, and how, to Control CostsWellness Programs

• Employers may use incentives in Wellness Programs, such as, discounts, rebates, or other rewards for participation without running afoul of non-discrimination rules based on health-status related factors

• Provided, The reward does not require the participant to satisfy a

certain health standard; The reward is available to all similarly situated

individuals

3. Whether, and how, to Control Costs3. Whether, and how, to Control Costs

Wellness Programs

If the reward is based on a certain health standard, it will be permitted, but only if… The reward is not greater than 30% of total coverage The program is designed to promote health or prevent

disease Individuals given an opportunity to qualify at least once

each year The reward is available to all similarly situated

individuals The availability of reasonable alternatives is disclosed in

plan materials

3. Whether, and how, to Control Costs3. Whether, and how, to Control Costs

Wellness Programs

Legal Analysis Required for Wellness PlansLegal Analysis Required for Wellness Plans

PPACA – Patient Protection and Affordable Care Act

HIPAA – Health Insurance Portability and Accountability Act

ADA – Americans with Disabilities Act

GINA – Genetic Information Non-discrimination Act

ADEA – Age Discrimination in Employment Act

Title VII of the Civil Rights Act of 1964

State Laws

Federal Tax Laws