Health Care Reform

Market Overview

$4,247

$9,860

$3,515$1,543

1999 2009

Employer Contribution

Worker Contribution

131% Premium Increase

128% Worker Contribution

Increase

$13,375

Note: The average worker contribution and the average employer contribution may not add to the average total premium due to rounding.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009.

$5,791

Average Health Insurance Premiums 1999-2009

What is Driving the Costs?

Cost Population

80% 10%

90%20%

What is Driving the Costs?

Cost Population

2%30%

50% 8%

90%20%

Health Risks

• According to the CDC, chronic diseases are the most common and costly of all health problems, but they are also the most preventable. – Four common, health-damaging, but modifiable behaviors -

tobacco use, insufficient physical activity, poor eating habits, and excessive alcohol use - are responsible for much of the illness, disability, and premature death related to chronic diseases.

• We are doing it to ourselves

Changes Effective in 2010

• Increase dependent age to 26• Elimination of annual and lifetime limits • Prohibit insurers from rescinding coverage

except in cases of fraud • Eliminate pre-existing condition exclusions for

children.

Changes Effective in 2010 (cont.)

• Require qualified health plans to provide at a minimum coverage without cost-sharing for preventative services – Recommended immunizations, preventative care

for infants, children, and adolescents, and additional preventative care and screenings for women.

Changes Effective in 2010 (cont.)

• Provide tax credits to small employers with no more than 25 employees and average annual wages of less than $50,000 that purchase health insurance for employees

Changes Effective in 2010 (cont.)

• Require health plans to report the proportion of premium dollars spent on clinical services, quality and other costs and provide rebates to consumers for the amount of premium spent on clinical services and quality that is less than 85% for plans in the large group market and 80% for plans in the individual and small group markets. (Requirement to report medical loss ratio effective plan year 2010; requirement to provide rebates effective 1/1/11)

Changes Effective in 2010 (cont.)

• Establish a process for reviewing increases in health plan premiums and require plans to justify increases. Require states to report on trends in premium increases and recommend whether certain plans should be excluded from Ex-change based on unjustified premium increases.

Changes Effective in 2011

• Exclude the costs for over-the-counter drugs not prescribed by a doctor from being reimbursed through an HRA or health FSA and from being reimbursed on a tax-free basis through an HSA or Archer Medical Savings Account.

• Increase the tax on distributions from an HSA or Archer MSA that are not used for qualified medical expenses to 20%.

• Employers will be required to report the value of employee’s health benefits on their W-2s.

Changes Effective in 2013

• Limit the amount of contributions to a flexible spending account for medical expenses to $2,500 per year increased annually by the cost of living adjustment.

Changes Effective in 2014

• Require US Citizens and legal residents to have qualifying health coverage (phase-in tax penalty for those without coverage).

• Assess employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment.

Changes Effective in 2014 (cont.)

• Create state-based American Health Benefits Exchanges and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization, through which individuals and small businesses with up to 100 employees can purchase qualified coverage.

QUESTIONS & ANSWERS

Lyons Companies

• One of the largest independent brokers in the region• Full Service Consulting/Insurance Brokerage for

Property & Casualty and Employee Benefits• Traditional / Alternative Funding / Captive Programs• Partner in Assurex Global

– Represented by 20,000 professionals in over 500 offices around the globe

• Committed to bringing innovative & strategic solutions to the marketplace.

Health Care Reform

Thank You!For more information visitwww.lyonsinsurance.com

Roger D. KirtleyRisk Management Advisor

(302) 472-2955rkirtley@lyonsinsurance.com