Affordable Care Act: The BasicsErin Hart, Director of Health Benefit Services

History of Social Legislation 1913: Establishment of IRS

1935: Social Security Administration

1948: Health Insurance as an Employee Benefit

1965: Medicare & Medicaid

1973: HMO Act

1974: ERISA

1985: PPOs

1994: Managed Care Initiatives

1996: HIPAA

1996: Community Health Centers

2010: Patient Protection and Affordable Care Act

Cost Containment Health Care Professionals

System based on their advice and referrals

Wellness as Cost Containment

83% •Don’t have a good diet

65% •Are over weight or obese

67% •Don’t get enough exercise to get the health benefits

~70% •Of all causes of death are lifestyle related and preventable

Entities Affected by Reform• Employers

• Individuals

• Medicare

• Medicaid

• Uninsured

• Foreign nationals

• State governments

• Federal government

• Doctors

• Hospitals

• Insurance companies

• Pharmaceutical companies

• Other health care professionals

The Good & The Bad

WHAT IS GOOD?

Shrink costs by 33%

Universal Coverage

Mandatory Coverage

Move more people paying into the pool.

WHAT IS BAD? Providers will come under intense pressure

Cost is unknown

Cost to administer will increase

Mandatory coverage

Current Health Care ReformThe facts:

• Majority of doctors like reform• Healthcare system needed to be

reformed• Cost unknown• Utility • Access to health care system• Creation of state-based exchanges for

individuals and small businesses

Tax Consequences

10% excise tax on indoor tanning –

6/30/2010

0.9% Medicare tax on wages – 2013

3.8% Medicare tax on unearned

income

Single – over $200,000

Couples – over $250,000

Increase from 7.5% to 10% medical

deductions floor – 2013

40% tax on high-cost health

plans - 2018

Individuals - $10,200

Families - $27,500

Medical Device Companies – 2012

2.3% tax

Pharmaceutical Companies

Annual Fees

Insurance Companies

Annual Fees

Long Term Care

Tax Consequences

Health Insurance Exchanges• Aimed at the now uninsured,

underinsured and those who buy

insurance on their own

• Employers

• State run or will be run by Feds

• More organized and competitive

market

• Choice of Plan

• Establish common rates

regarding the offering

• Understanding options

• Common pricing methods

• Way to achieve universal

coverage

• No national government plan

• Available to all individuals and

small businesses of 100

employees or less

• Could be lowered to 50

employees or less

Health Insurance Exchanges• Only US citizens and legal immigrants

• At least 2 multi state insurers in each exchange

• At least 1 non profit

• 4 benefit tiers – bronze, silver, gold, platinum

• Catastrophic – up to age 30

• Require guarantee issue and renewability

• Rating variation on age, geography, tobacco use

The Business Case for “Wellness”

Although we spend more dollars on

health care than any other

industrialized nation, we are not the

healthiest.

• Over 70% of illnesses today are

attributable to preventable causes.

• Obesity alone is estimated to cost an

employer at least $460 per employee per

year.

• The workplace is the ideal setting to

address an employee’s health & well-

being.

• Wellness programs should aim to reduce

health benefits costs through SUSTAINED

improvements in workforce health.

• It is a long-term strategy that may not

produce significant ROI in the short-term.

Wellness and Healthy Lifestyles

Up to 30% of total premium

discounts can be offered as

incentives for employees

maintaining a health standard.

This can go to 50%.

Typical wellness initiatives

• Blood testing

• Body mass index (BMI)

• Strength/flexibility

• Education on Lifestyle/habits

• Tobacco Cessation

• Excessive Alcohol/Drugs

• Weight control

• Lack of Exercise

What to Expect

10 or less employeesIf average wage $25K or less, tax credit will be 35% of premium

Do not have to provide health insurance benefits

What to Expect

24 or less employees

Small Business Health Care Tax Credit is available if average wage $50K or less – up to 35% of wages

Do not have to provide health insurance

What to Expect

49 employees or less

Do not have to provide health insurance

What to Expect

50 or more employeesIf health insurance is not covered, will be assessed a fee of $2K per FTE. The first 30 FTE are excluded from assessment.

If health care is offered, but someone collects the premium tax credit, the employer is charged a fee of $3K/employee who accesses the credit or $2K for all employees.

What to Expect

201 and more

Employees must be automatically enrolled in the plan with an opt out option

Employees must be informed of the Health Insurance Exchange

Employer Mandates Free Choice Vouchers – if an employee opts out and their share of the premium is greater than 8%, but less than 9% and they buy through a Health Insurance Exchange

Inform employees of Health Insurance Exchange

Inform employees if they are eligible for premium assistance tax credits and cost-sharing reductions. Employer pays less than 60% of the cost of coverage.

A minimum package of benefits to be designed and defined by Feds. Only four types of plans to be allowed. The Health Care Exchange will only offer those qualified health benefit plans.

Employers• Value of health benefit reportable on W-2’s – 2011

• Elimination of Part D prescription drug deduction – 2013

• Health Savings Accounts – double to 20% penalty for non qualified distributions – 2011

• Unaffordable Coverage – if an employee opts out of plan because premium is greater than 9.5% of family income the employer pays a $3K penalty for each FTE who receives a government subsidy and buys through an exchange

Employers

• Actuarial values – at least 60% of base

plan

• Cadillac plans – in 2018 a 40% excise

tax on insurance companies and

employers

• FSA limits - $2.5K limit with no OTC,

w/out a prescription

• HSA – 20% penalty on non-medical

distributions

• W-2 – include value of employer health

benefits

• Long term care enrollment – optional

program

• Nursing mothers – must allow time,

space and privacy to mothers who are

expressing milk.

Employers

Small Business Tax Credit – Effective

1/1/2010

• Receive both State and Federal Tax Credits

• Non Profits – 25% credit – up to 35% in

2014

• Dental & Vision Coverage eligible for credit

• Credit – 35% of premiums – up to 50% in

2014

Example

ABC, Inc. 10 FTE w/average wage: $24K

ABC’s contribution to health insurance: $100K ($10K/FTE)

State Small Business Health Care Tax Credit: $40K

Federal Tax Credit: $35K

Strategic Planning Considerations

• Senior management should make final decisions

• Determine total annual budget for health plan

• CFO – involved in analysis & plan selection

• 3 Brokers/agents competing for your business

• Assess employee’s health care needs

• Review claims data annually

• Wellness – assessment & incentives

Strategic Planning Considerations Benefit Structure

• Determine if existing benefit plan is aligned with prevention and wellness goals & objectives

• Identify screens & tests not covered

• Evaluate the potential costs and benefits of preventive services

Analyze employee attitudes

• Interest in participating in specific programs

• Barriers to participation in prevention programs

Perform a Health Risk Assessment

• Health risks and habits of employees and other beneficiaries

• Readiness to change unhealthy lifestyle habits

Strategic Planning Considerations Medical claims analysis

• Identify “top ten” costliest conditions

• Are conditions preventable or related to lifestyle choices?

• Understand services being under- and over-used by workforce population

Health plan

• Understand existing health plans’ current and potential capabilities

• Ability to incorporate coverage changes

• Ability to track preventive service utilization by employer or by plan

• Efforts to educate primary care physicians about appropriate preventive care benefit

administration

• Ability to support efforts to educate employees about preventive services

• Identify possible gaps between prevention program goals and the capabilities

of health plans

• HIPAA Wellness Incentives

Thank you!Erin HartAmerican HealthCare Group

Phone: (412)563-7807

Cell: (412)657-3028

ehart@American-HealthCare.net