1

Agenda   ACA Timeline •  Willis Health Care Reform Survey Results

  Guidance on Health Care Reform

  Strategies for Consideration

  Leveraging your ALFA Membership •  Opportunities for Group Leveraging and Purchasing •  Benefit Administration •  Record Keeping

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Entire Law Upheld

ACA: Timeline •  SBC Coverage Summary •  W-2 Cost Reporting •  PCORI Fee •  MLR Payouts •  Women’s Preventive

Services •  Internal and External

Review

•  FSA $2,500 Limit •  2.3% Medical Device Tax •  .9% FICA – Med Surtax on High Earners •  Itemize Medical at 10@ AGI (up from 7.5%) •  PCORI fee Increase •  Notice of State Exchanges and Subsidies •  Elimination of Medicare Part D Tax Deduction

•  Individual Mandate •  Employer Mandate – Essential, Affordable •  State Exchanges – Taxpayer – paid Credits •  Annual Dollar Limit on EHB Lift •  90 Day Wait Maximum •  Adult Child Grandfather Ends •  Cafeteria Plans Permitted for Exchange Coverage •  Pre-ex Ends For All •  Medicaid Expansion •  New Tax on Health Insurers •  Reinsurance Fee •  Enhanced Wellness Financial Incentives •  OOPM Limit = HSA Limit

•  Delayed Provisions •  Auto Enrollment (> 200) •  Insured Non Discrimination

Testing

•  State Exchanges – Potential Expansion to Large Employers

•  “Cadillac Excise Tax”

•  All State Exchanges Open to <100

•  Part D “Donut Hole” Phase Out Complete

2

Willis National Health Care Reform Survey – What We Have Learned   Employers will continue many existing strategies •  Expansion of Wellness Offering •  Redesign of benefit options and eligibility provisions

  Most employers plan to “play” under the “play or pay” mandate •  Continuation of the “compliance as we go” approach as opposed

to adopting a Total Rewards strategy   Employers are concerned with cost, but underestimate the cost of

compliance •  60% of employers say that avoiding cost increases is the most

important consideration for their businesses •  Over half of surveyed employers have not determined the cost of

Health Care Reform compliance

3

  Federal exchange for 32 states o  Initial open enrollment to start

10/1/13   19 states/DC establish

exchanges   7 partnership exchanges   25 states default to federal

exchange   Question about tax credits and

penalties for coverage on federal exchange

Federal Healthcare Reform Public Exchanges

4

Guidance on Health Reform

  Pay or Play” rules - Large employers must offer affordable health coverage (meeting MEC rules) to substantially all FTEs

  Case study •  Happy Village – 1000 employees (930 salaried; 70 hourly) •  Health coverage offered only to salaried employees

  Issue 1 – Offering coverage to substantially all FTEs •  Regulations provide a 5% allowance for offering coverage •  Happy Village fails the 95% test •  Penalty is $2,000 for each FTE (less 30) prorated monthly •  Happy Village penalty is $1,940,000 annually

5

6

Guidance on Health Reform

  Issue 2 - Determining FTEs •  Ongoing Employees vs. New Hires ‒  Standard Measurement Period ‒  Stability Period ‒  Administrative Period

•  Nuanced rules for ‒  Different categories of employees ‒  Seasonal employees ‒  Mid year employment status changes ‒  Rehires

7

Guidance on Health Reform

SMP “Lookback Period” 6 months AP 2014

Stability Period = Calendar Year

Case Study for Ongoing FTE Calculation

10/1/13 4/1/13

1/1/2014 1/1/2015

Managing the Variable Hourly EE Eligibility Requirements

SMP “Lookback Period” 12 months AP 2015 Stability Period

10/1/14

SMP “Look Back” Period 12 Months

Transition Year

SMP – Standard Measurement Period AP – Administration Period SP – Stability Period

8

Guidance on Health Reform

2015 Stability Period = Calendar Year

1/1/2015 1/1/2016

Managing the Variable Hour EE Eligibility Requirements – New Hires

SMP “Lookback Period” 12 months AP

2016 Stability Period

10/1/14

SMP “Look Back” Period 12 Months

New Hire “Initial Lookback Period” 12 months

1/1/2014

6/1/14 6/1/15

10/1/14 9/30/15

Initial Stability Period

10/1/15

2016 Stability Period

Federal Healthcare Reform Public Exchanges

9

10

Guidance on Health Reform

  Pay or Play” rules - Large employers must offer affordable health coverage (meeting MEC rules) to substantially all FTEs

  Issue 3 - Affordable health coverage – cost of single coverage is not more than 9.5% of household income

•  Safe harbor rule – single coverage cost not more than 9.5% of

employee pay (Box 1 of W-2)

•  Penalty - $3,000 for each employee who obtains coverage and premium assistance through a state exchange (prorated monthly)

  Meet all PPACA requirements

  Continue employer sponsored healthcare model

  Plan remains affordable for all employees

  Tweak/Adjust existing coverage, contributions, reporting, etc.

  Meet some PPACA requirements

  Allow low wage workers to qualify for government subsidies/ Medicaid

  Pay $3,000 penalty for those ee’s who leave plan and receive subsidy

  Increase cost sharing for dependents, and/or eliminating spouses coverage

Option 1

Maintain Status Quo

Option 2

Mostly Play

Option 3

Compliant Creative Strategy

  Meet all PPACA requirements

  Offer minimum possible coverage that would avoid penalties

  60% plan design with no coverage for spouses

  Contributions set at 9.5% of wages for self-only coverage, and 100% cost for child coverage

Strategies for Consideration

11

12

Strategies for Consideration: Example of a “Redesign”   Offer a multi plan offering to meet minimum compliance guidelines while

offering affordable options to all employees

Plan A

Current Medical

Option(s)

Estimate: $850 PEPM

Plan B

“Bronze Option” for

ACA Compliance

Estimate: $400 PEPM

Plan C

Fixed Indemnity, Hospital

Confinement, Critical Illness,

and Accident

Estimate: $250 PEPM

Cost may vary based on plan designs offered

Tradition Plan(s)

Minimum Compliance

Plan

Alternative Reimbursement

Plans

13

Strategies for Consideration: “Defined Contribution”   Provide all employees

equal amount to spend on healthcare and ancillary benefits with a wide range of choices and allow employees to select coverage based on their risk preferences

TECHNOLOGY & SERVICES CONSULTING & DESIGN

Integrated Benefit Administrator and ACA Compliance Technology

Plan Design Management (Design) •  Health & Welfare Plan Design •  Financial Budgeting/Underwriting •  Employee Communication

Vendor Management (Deploy) •  Contract Management/Renewal •  Performance Standards and Audits •  Implementation

Account Management (Define) •  Strategic Planning •  Compliance Management •  Program Implementation

Benefit Exchanges (Design) •  Total Benefit Marketplace •  Supports Legacy Plans •  Supports Defined Contribution

Traditional Administration (Define) •  Highly Flexible Implementation •  Employee Benefit Portal •  Call Center

Regulatory Compliance (Deploy) •  Compliance Testing Process •  Integration with HRIS •  Record Keeping

14

ACA Total Solution Delivery

- Solution Spectrum +

Benefit Administration

Only

Maintain Existing “Core Benefits”

and offer Alternative

Reimbursement Plans

Maintain Existing “Medical Benefits” and offer

Ancillary Plans

Adopt Full ALFA Group

Purchasing Strategy

Defined Contribution Marketplace

•  Employee Benefit Portal

•  Online Enrollment •  Call Center •  Improved Employee

Communication •  Eligibility

Management •  ACA Record Keeping •  Reduce HR Team

workload

•  Benefit Administration

•  Continue current Medical, Dental, Life and Disability carriers

•  Offer Alternative Reimbursement Plans

o  Fixed Indemnity

o  Hospital Confinement

o  Critical Illness o  Accident

•  Benefit Administration

•  Continue current Medical and Dental carriers

•  Offer Ancillary Plans o  Life o  Disability o  Fixed

Indemnity o  Hospital

Confinement o  Critical Illness o  Accident

•  Benefit Administration

•  Offer Choice of Plans o  Medical o  Dental o  Life o  Disability o  Fixed

Indemnity o  Hospital

Confinement o  Critical Illness o  Accident

•  Benefit Administration

•  Provide all employees equal amount to spend on healthcare and ancillary benefits with a wide range of choices and allow employees to select coverage based on their risk preferences

+ Cost of Benefit Administration -

ALFA Solution - Group Leveraging Strategy Preferred Pricing from Carriers

15

ALFA Solution – Preferred Pricing Carriers

16

Medical

Dental

Vision

Life and Disability

Voluntary

Stop Loss (Self Insured Medical)

17

Questions?