Preparing for the Impact of the Health Care Reform

Preparing for the Impact of
Health Care Reform
May 7, 2013

Today’s Presenters
• William M. Smith, Esq.
Managing Director, CBIZ MHM, LLC
• David S. Rubadue, FSA, MAAA, CLU
SVP, Director Health Care Actuarial Services
CBIZ B fit d I S i ICBIZ Benefits and Insurance Services, Inc.
• Kit Wagar, Affordable Care Act Specialist
Office of the Regional Director
U.S. Department of Health and Human Services
2

Today’s Agenda
• Introductions
• The Path to Health Care Reform Compliancep
• The 2014 Centerpiece of the Affordable Care
Act
• Actuarial Modeling of Health Care Reform’s
Financial Impact on Your Business
• Health Insurance in the New Insurance
Marketplace
• Open Dialogue and Questions
3

PPACA provisions, effective in 2014, will have a significant impact on the
health care market and significantly increase the number of insured individuals
Prohibits health plans from denying
coverage or rating applicants based
on their health status
Levels the playing field
between health plans and
mitigates the impact of
guaranteed issue and pricing
t i t i th h t t
Creates government
regulated Individual and
Small Group health
insurance marketplaces Guaranteed Issue
Institutes penalties
Key ACA
i i
uncertainty in the short term
Institutes penalties for
employers who fail to
insurance marketplaces
Risk
Management
Mechanisms
Guaranteed Issue
(GI) and Rating
Changes
Insurance
Exchanges
Levies taxes and fees against
h lth i d th
Institutes penalties
for failing to
purchase health
insurance
Individual
Mandate
Taxes and
provisions
effective in
2014
p y
offer affordable
comprehensive
coverage
Lowers the cost of
f th l d
Employer
Mandate
Tax Creditshealth insurers and other groups
to fund subsidies and risk
management mechanisms
Taxes and
Fees
coverage for the low and
middle income populations
in the Individual market
Tax Credits
and Subsidies
5
Source: Congressional Budget Office

The 2014 Centerpiece of theThe 2014 Centerpiece of the
Affordable Care Act
6

Shared Responsibility Payment
• Enacted as part of the Affordable Care Act
(“PPACA”) (section 1541(a)) – now Code §
4980H
• Effective starting in 2014
• Components:
– A nondeductible excise tax assessed on large
l h d t id ff d bl demployers who do not provide affordable and
adequate health coverage to at least 95% of their full
time employees.
• IRS issued proposed regulations in January 7

Shared Responsibility Payment
• Note: the Shared Responsibility Payment was not
considered by the Supreme Court in National
Federation of Independent Business v SebeliusFederation of Independent Business v. Sebelius.
– The Supreme Court reviewed the individual mandate
and its treatment as a tax or a penalty.p y
• The Shared Responsibility Payment is an excise
tax. It is contained in Section 4980H, which is in
Subtitle E of the Internal Revenue Code
(“Miscellaneous Excise Taxes”), Chapter 43
(“Q lifi d P i Et Pl ”)(“Qualified Pension, Etc. Plans”)
8

Which Employers Are Affected?
• “Large Employers” – Employers with at least 50
full-time employees or equivalents.
F ll ti l i l d• Full time employees include:
– Employees who is employed on average at least 30 hours
per weekpe ee
– A percentage of employees who are not full time
employees (aggregate number for hours/month worked by
part time employees divided by 120)part time employees divided by 120)
• Leased employees as defined in IRC § 414(n)(2)
are not treated as full time employees.are not treated as full time employees.
9

Which Employers Are Affected?
• Certain groups of companies must be aggregated• Certain groups of companies must be aggregated
together to determine if they are “Large Employers”:
– Controlled group of corporations (IRC § 414(b))
– Partnerships, proprietorships, etc. under common control (IRC §
414(c))
– Affiliated service groups (IRC § 414(m)), and
– Employee leasing arrangements and other arrangements treated
by the IRS as a single employer (IRC § 414(o))
• Exemption: Employers whose workforce exceeds 50• Exemption: Employers whose workforce exceeds 50
full time employees for 120 days or less during the
calendar year, and the employees in excess of 50
employed during that 120-days-or-less period were
“seasonal workers.” IRC § 4980H(c)(2)(B)(i). 10

Employees with Variable Hours – Notice 2012-58
• "Look-back/stability safe harbor method" - an employer determinesLook back/stability safe harbor method an employer determines
each employee's status by looking back at the hours worked by the
employee over a defined period (as chosen by the employer) of 3 to
12 consecutive calendar months (the "measurement period").
• If the employee averaged at least 30 hours/week during
measurement period, the employee is treated as a full time
employee during a subsequent "stability period" so long as he
remains an employee (regardless of actual hours worked).
– stability period must be at least six consecutive calendar months
following the measurement period but no shorter in duration than the
t i dmeasurement period.
• For an employee determined not to be a full time employee during
the measurement period, the employer may treat the employee as
t f ll ti l d i th t bilit i d b t th t bilitnot a full time employee during the stability period, but the stability
period cannot exceed the measurement period.
11

New Employees – Notice 2012-58
An employer may impose a waiting period of no longer than 90 days
before a full-time employee (or dependent) who is otherwise eligible
for the employer's group health plan may enroll in coverage.
12

Shared Responsibility Payment – General Rule
• Large employers that employed an average of at least 50 or more full-
ti l b i d f th di l dtime employees on business days for the preceding calendar year
must make “shared responsibility” tax payments for each month that
the employer:
H t l t f ll ti l tifi d h i ll d i– Has at least one full time employee certified as having enrolled in a
qualified health plan for which a premium tax credit or cost-sharing
reduction is allowed or paid (i.e., the employee goes to the
Marketplace/Exchange and qualifies for assistance);Marketplace/Exchange and qualifies for assistance);
AND either
– Does not offer coverage to its employees OR does not offer
i i ti l (MEC) t t l t 95% f it f ll timinimum essential coverage (MEC) to at least 95% of its full time
employees,
– Offers MEC to at least 95% its full time employees, but it is
ff d blunaffordable, or
– Offers MEC to at least 95% its full time employees through a plan
that does not provide minimum value. 13

Shared Responsibility Payment – Continued
• Minimum value: Must provide at least 60% of
the total allowed cost of benefits for full time
employees.
• Affordable coverage: The cost of coverage to the
l i th 9 5% f themployee is no more than 9.5% of the
employee’s household income
Th f h b• Three safe harbors:
• Box 1 of W-2
• Average wage method or• Average wage method, or
• A federal poverty level method 14

Calculating the Penalty – “No Coverage or No Minimum
Essential Coverage for at Least 95% of Employees”
Employer fails to offer coverage or fails to offer MEC to 95% its full-
time employees (and their dependents in 2015) under an eligible
employer-sponsored plan for the month, and at least one full-timep y p p ,
employee has been certified to the employer as having enrolled for
that month in a qualified health plan (Marketplace/Exchange) and is
receiving assistance.g
• Penalty = the “Applicable Payment Amount” × the number of the
employer's full-time employees during any month, reduced by 30
employees. IRC § 4980H(a) and 4980H(c)(2).employees. IRC § 4980H(a) and 4980H(c)(2).
• Applicable Payment Amount: $166.67 for any month (i.e., 1/12 of
$2,000, which is adjusted for inflation after 2014). IRC §
4980H(c)(1)4980H(c)(1).
15

Calculating the Penalty – No Coverage or No MEC
Offered to At Least 95% of Employees -- Example
• In 2014, Employer fails to offer minimum
essential coverage to at least 95% of its full-time
employees. It has 100 full-time employees, ten
of whom receive a tax credit for the year for
enrolling in a state exchange offered planenrolling in a state exchange-offered plan.
• For each full-time employee over the 30-
employee threshold the employer owes $2 000employee threshold, the employer owes $2,000,
for a total penalty of $140,000 ($2,000 × 70 (100
− 30)). This penalty is assessed on a monthly30)) s pe a y s assessed o a o y
basis. 16

Calculating the Penalty – Coverage Not Affordable or Does
Not Meet Minimum Value
Wh l ff MEC b t th t t t l t f ll tiWhere employer offers MEC, but the cost to at least one full-time
employee is greater than 9.5% of household income OR the plan does
not meet the minimum value standard of 60% (use the Actuarial Value
Calculator to determine minimum value) and he/she has been certified toCalculator to determine minimum value) and he/she has been certified to
the employer as having enrolled in a qualified health plan
(Marketplace/Exchange) and is receiving assistance
• Penalty = Number of full time employees for any month who• Penalty = Number of full-time employees for any month who
access Marketplace/Exchange and receive a credit or assistance x
$250 (i.e., 1/12 of $3,000).
• Limitation: the aggregate amount of tax of an applicable large• Limitation: the aggregate amount of tax of an applicable large
employer for any month cannot exceed the applicable payment
amount × the number of the employer's full-time employees during
that month (reduced by 30 employees)that month (reduced by 30 employees).
17

Calculating the Penalty – Coverage Not Affordable or
Does Not Meet Minimum Value – Example
• In 2014, Employer offers health coverage and has 100 full-
time employees, 20 of whom access the Exchange because
coverage is either not affordable or does not meet minimumcoverage is either not affordable or does not meet minimum
value standard and they receive a premium tax credit
• For each full-time employee receiving a tax credit, the
l $3 000 l bl t femployer owes a $3,000 annual assessable payment, for a
total penalty of $60,000. The maximum penalty for this
employer is limited to the amount of the penalty that it would
h b d f f il t idhave been assessed for a failure to provide coverage, or
$140,000 ($2,000 × 70 (100 − 30)). Since the calculated
penalty of $60,000 is less than the maximum amount,
$Employer pays the $60,000 calculated penalty. This penalty is
assessed on a monthly basis. 18

Summary
• Minimal essential coverage not offered to at least 95% of fullg
time employees and at least one employee goes to Exchange
and receives premium tax credit
$2 000 per year per full-time employee (less first 30)– $2,000 per year per full-time employee (less first 30)
• Either coverage does not meet minimum value standard (i.e.,
does not cover at least 60% of medical costs) OR coverage not
ff d bl (i l ’ i d 9 5% faffordable (i.e., employee’s premium exceeds 9.5% of
household income) and at least one employee goes to
Marketplace/Exchange and receives assistance
– Lesser of
• $3,000 per year for each full-time employee using
Marketplace/Exchange and qualifying for assistance orMarketplace/Exchange and qualifying for assistance, or
• $2,000 per year per full-time employee (less first 30)
19

Procedure
• An employer must make payment upon notice and
demand by the Secretary of the Treasury.
• The payment is assessed and collected in the same• The payment is assessed and collected in the same
manner as other IRS assessable penalties
• Section 6056 requires employers to reportSection 6056 requires employers to report
information on employer-provided health care
coverage provided on or after January 1, 2014
– First Information returns will be filed in 2015
– IRS will use this information to administer the penalties
– IRS intends to issue guidance on Section 6056 reporting– IRS intends to issue guidance on Section 6056 reporting
and has recently closed the request for comments
20

Indexing the Payment
• For years after 2014, the $2,000 and $3,000 amountsy , $ , $ ,
used in determining the assessable payment amount
will be indexed for inflation.
Th i ill l th $2 000 $3 000 t• The increase will equal the $2,000 or $3,000 amount
multiplied by the “premium adjustment” amount for the
calendar year.
• Premium Adjustment Amount
– Secretary of Health and Human Services (HHS)
determines by Oct 1 the percentage (if any) by whichdetermines by Oct. 1 the percentage (if any) by which
the average U.S. per capita premium for health
insurance coverage for the preceding calendar year
d th it i f 2013exceeds the average per capita premium for 2013
21

Indexing the Payment
Assuming 9% inflation in the costs of premiums,
by 2019:
– The $2,000 per year per employee penalty increases
to over $3,000
The $3 000 per qualifying employee penalty– The $3,000 per qualifying employee penalty
increases to over $4,600 per year
22

Actuarial Modeling of Health
C R f ’ Fi i l I tCare Reform’s Financial Impact
on Your Business
23

CBIZ HCR Analyzer Tool
• CBIZ is currently actively engaged in assessing• CBIZ is currently actively engaged in assessing
the financial impact of the PPACA provisions with
employer groupsp y g p
• CBIZ Proprietary model - "The CBIZ HCR
Analyzer“y
• The tool was created with employer Input. Led to
favorable employer feedback
• Used for all employers over 50 lives with initial
studies performed for “High Risk” Employers
24

High Risk Employers
• High percentage of potentially full time low pay• High percentage of potentially full time, low pay
workforce
• Provide no medical benefits to a large employee baseg p y
working 30 + hours per week
• Have a significant number of “temporary” or “seasonal”
workersworkers
• Cost of health benefits to employees is “very high”
• Manage enrollment using “long” waiting periods (moreManage enrollment using long waiting periods (more
than 90 days before employee is eligible)
Industries Include: Retail (Restaurants, Hotels, Convenience Stores,( , , ,
Gas Stations, etc.), Construction, Transportation, Cleaning, Staffing
Firms, Other 25

CBIZ’s Tool Utilizes 3 Steps to Determine a
Company’s PPACA Risk Profile:
1. Data Diagnosis
Detailed checklist of data needed & questions to
ask in order to prepare a custom HCR Financial
I t St d f i tiImpact Study for an organization
26

2. Comprehensive Analysis
We utilize data to carefully evaluate benchmarks
and provide options to consider when
establishing your long tem benefit programestablishing your long-tem benefit program
strategy
27

3. Report and Optimize
We provide you with a report that shows the cost
to your organization under multiple scenarios,
enabling us to work with your organization toenabling us to work with your organization to
Optimize your health care package
28

The “Levers”
• Once data is “entered” the Employer or his/her Advisor
can change the following variables (levers) and the
“financial” results will change:financial results will change:
– Migration Assumptions: To the Exchange or the Employer’s
Plan
– Employer Contributions (Example: Raise Employee
Contributions and Lower Dependent Contributions, etc.)
– Plan Value (Lower “value” of Plan). Must exceed actuarial value
f 60%of 60%.
– Medical Trend
– Pay Increases
– Family Size
– Household Income 29

HCR Analyzer Inputs
Plan
Summaries
Minimum
Plan
Values
Alternative
Contributions
Medicaid
Current &
Trended
Premiums
Employer
Contributions
Threshold
Payroll Tax
Rates
Migration to
ER Plan,
Medicaid &
Exchange
Corporate
30
Corporate
Fed &
State Tax
Rates

Example # 1: XYZ IncExample # 1: XYZ Inc
31

XYZ Inc’s Expected Results
2013 2014
A (Baseline) B C D E F G H
Not Eligible Group
Made Eligible
Under Current
Plan;
No Other
Not Eligible Group
Made Eligible
No Plan Changes,
Migration to
Exchange and
Scenario C
but Offering
Lean Plan as
the Base Plan
Scenario C
(No Plan
Changes)
with 30% of
Not Eligible
Scenario D
(Lean Plan)
with 30% of
Not Eligible
Terminate
Plan all Not
Eligible
Employees
Terminate
Plan after
making
Current
Current
(Baseline)
No Other
Implications of HCR
Are Considered
Exchange and
Contribution
Changes
the Base Plan
(employees can
buy up)
Not Eligible
is Made
Eligible
Not Eligible
Is Made
Eligible
Employees
are Made
Eligible
making
30% of Not
Eligible
Eligible Group(s)
Removed 30 Lives from
Eligible Grp
Total 17 17 17 17 17 17 17 17 17
Enrolled 13 13 13 14 14 14 14 0 0
Mo'ly Px: $7,290 $8,886 $8,886 $10,752 $6,817 $10,752 $6,817 $0 $0
Er Monthly Cost $3,217 $3,922 $3,922 $3,500 $2,556 $3,500 $2,556 -$3,333 -$3,333
Ee Monthly Cost $4,073 $4,964 $4,964 $7,252 $4,260 $7,252 $4,260 $0 $0
Not Eligible Group(s)
Total 155 155 155 155 155 45 45 155 45
Enrolled 0 0 49 26 80 6 21 0 0
M 'l P $0 $0 $30 723 $17 978 $35 483 $4 424 $9 767 $0 $0
32
Mo'ly Px: $0 $0 $30,723 $17,978 $35,483 $4,424 $9,767 $0 $0
Er Monthly Cost $0 $0 $11,574 $6,500 $14,607 $1,500 $3,834 $39,744 $11,538
Ee Monthly Cost $0 $0 $19,149 $11,478 $20,876 $2,924 $5,933 $0 $0

2013
2014
Current
Scenario A
XYZ Inc’s Expected Results
Current (Baseline) B C D E F G H
Shared Responsibility Penalties
Waivers 4 4 110 132 78 42 27 172 62
Waivers Trigger Penalty 0 0 0 83 18 26 6 0 0
Medicaid 0 0 0 42 42 12 12 0 0Medicaid 0 0 0 42 42 12 12 0 0
Others 4 4 110 7 18 4 9 172 62
Penalty $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $2,000 $2,000
Tax Rate 35% 35% 35% 35% 35% 35% 35% 35% 35%
Additional Cost $0 $0 $0 $31,923 $6,923 $10,000 $2,308 $0 $0
AGE FACTOR 361.80 81% 84% 85% 97% 89%
Average Age 41.3 32.2 35.5 34.6 41.0 37.3
Grand Total
Total Employees 172 172 172 172 172 62 62 172 62
Enrolled 13 13 62 40 94 20 35 0 0
Total Mo'ly Cost: $7,290 $8,886 $39,609 $60,654 $49,222 $25,176 $18,891 $0 $0
Er Monthly Cost $3,217 $3,922 $15,495 $41,923 $24,086 $15,000 $8,698 $36,410 $8,205
33
Ee Monthly Cost
$4,073 $4,964 $24,113 $18,731 $25,136 $10,176 $10,193 $0 $0
ER Monthly Cost
Increase (Decrease) NA $0 $11,574 $38,001 $20,164 $11,078 $4,776 $32,488 $4,283

XYZ Inc.’s Pay Adjustment
Pay Adjustment Illustration for Scenario G
Estimated Monthly Savings Under Scenario G: NA
No Estimated
Savings
Number of EEs Above 400% of the FPL: NA
(EEs that fall below 400% of the FPL will receive subsidies,
while EEs above 400% will pay retail at the Exchange.)
Employer Allocation to Employees via Additional Pay
ER Payroll Tax: NA
Net Pay to Breakeven: NA
Employee Allocation
Pay Increase Per EE Per Month: NA
EE Payroll Taxes: NAy
Net Take Home Per EE Per Month: NA
Illustrative Pricing - 80% Plan
E ES EC F
Under 30 $325 $650 $585 $975
34
Under 30 $325 $650 $585 $975
30 - 40 $423 $845 $761 $1,268
40 - 50 $570 $1,141 $1,027 $1,711
50 - 60 $770 $1,540 $1,386 $2,310
60 - 65 $975 $1,950 $1,755 $2,925

Example # 2: ABC IncExample # 2: ABC Inc
35

ABC Inc’s Expected Results
2013 2014
A (Baseline) B C D E F G H
Not Eligible Group
Made Eligible
Under Current
Plan;
No Other
Not Eligible Group
Made Eligible
No Plan Changes,
Migration to
Exchange and
Scenario C
but Offering
Lean Plan as
the Base Plan
Scenario C
(No Plan
Changes)
with 30% of
Not Eligible
Scenario D
(Lean Plan)
with 30% of
Not Eligible
Terminate
Plan all Not
Eligible
Employees
Terminate
Plan after
making
Current
Current
(Baseline)
No Other
Implications of HCR
Are Considered
Exchange and
Contribution
Changes
the Base Plan
(employees can
buy up)
Not Eligible
is Made
Eligible
Not Eligible
Is Made
Eligible
Employees
are Made
Eligible
making
30% of Not
Eligible
Eligible Group(s)
Removed 30 Lives from
Eligible Grp
Total 334 334 334 334 334 334 334 334 334
Enrolled 265 265 265 283 283 283 283 0 0
Mo'ly Px: $160,272 $197,472 $197,472 $200,455 $151,900 $200,455 $151,900 $0 $0
Er Monthly Cost $124,022 $152,807 $152,807 $158,204 $134,911 $158,204 $134,911 $77,949 $77,949
Ee Monthly Cost $36,251 $44,664 $44,664 $42,251 $16,989 $42,251 $16,989 $0 $0
Not Eligible Group(s)
Total 9 9 9 9 9 3 3 9 3
Enrolled 0 0 8 9 9 3 3 0 0
M 'l P $0 $0 $3 511 $4 177 $3 549 $1 109 $942 $0 $0
36
Mo'ly Px: $0 $0 $3,511 $4,177 $3,549 $1,109 $942 $0 $0
Er Monthly Cost $0 $0 $3,015 $3,611 $3,068 $933 $792 $2,308 $769
Ee Monthly Cost $0 $0 $497 $566 $481 $176 $150 $0 $0

2013
2014
Current
Scenario A
ABC Inc’s Expected Results
Current (Baseline) B C D E F G H
Shared Responsibility Penalties
Waivers 69 69 70 51 51 51 51 343 337
Waivers Trigger Penalty 0 0 0 0 0 0 0 0 0
Medicaid 0 0 0 8 8 8 8 0 0Medicaid 0 0 0 8 8 8 8 0 0
Others 69 69 70 43 43 43 43 343 337
Penalty $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $2,000 $2,000
Tax Rate 35% 35% 35% 35% 35% 35% 35% 35% 35%
Additional Cost $0 $0 $0 $0 $0 $0 $0 $0 $0
AGE FACTOR 438.68 99% 97% 97% 98% 98%
Average Age 47.0 46.5 45.9 45.9 46.3 46.3
Grand Total
Total Employees 343 343 343 343 343 337 337 343 337Total Employees 343 343 343 343 343 337 337 343 337
Enrolled 265 265 273 292 292 286 286 0 0
Total Mo'ly Cost: $160,272 $197,472 $200,983 $204,632 $155,449 $201,564 $152,842 $0 $0
Er Monthly Cost $124,022 $152,807 $155,822 $161,815 $137,979 $159,137 $135,703 $80,256 $78,718
Ee Monthly Cost
$36 251 $44 664 $45 161 $42 817 $17 470 $42 427 $17 139 $0 $0
37
y
$36,251 $44,664 $45,161 $42,817 $17,470 $42,427 $17,139 $0 $0
ER Monthly Cost
Increase (Decrease) NA $0 $3,015 $9,008 ($14,828) $6,330 ($17,104) ($72,551) ($74,089)

ABC Inc.’s Pay Adjustment
Pay Adjustment Illustration for Scenario G
Estimated Monthly Savings Under Scenario G: $72,551
Number of EEs Above 400% of the FPL: 43
(EEs that fall below 400% of the FPL will receive subsidies,
while EEs above 400% will pay retail at the Exchange.)
Employer Allocation to Employees via Additional Pay
ER Payroll Tax: 12%
Net Pay to Breakeven: $64,777
Employee Allocation
Pay Increase Per EE Per Month: $1,506
EE Payroll Taxes: 37%
Net Take Home Per EE Per Month: $949Net Take Home Per EE Per Month: $949
Illustrative Pricing - 80% Plan
E ES EC F
Under 30 $325 $650 $585 $975
30 40 $423 $845 $761 $1 268
38
30 - 40 $423 $845 $761 $1,268
40 - 50 $570 $1,141 $1,027 $1,711
50 - 60 $770 $1,540 $1,386 $2,310
60 - 65 $975 $1,950 $1,755 $2,925

Non – High Risk Companies Generally
will Have Two Areas of Concernwill Have Two Areas of Concern
• Employee Classification and Measurement of Hours
• Plan Value & Plan Value Limits

Employee Classification
• The measurement period and stability period must be the same for all
i di id l i ti l l ifi ti f lindividuals in a particular classification of employees.
• The rules only allow four types of classifications of employee;
1 Collectively bargained employees and non collectively bargained1. Collectively bargained employees and non-collectively bargained
employees;
2. Each group of collectively bargained employees covered by a
separate collective bargaining agreement;p g g g ;
3. Salaried employees and hourly employees; and
4. Employees whose primary places of employment are in different
States.

Employee Classification
Example – New Variable Hour
Employee
2014 2015 2016 2017
10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
Standard Measurement Period Admin Stability Period
John's Initial Measurement Period Admin Stability Period
If over 30, subject to penalty
For this period XYZ is not subject to penalty If under 30, not subject to penalty
Overlap Rules
Standard Measurement Period Admin Stability Period
Retest John If over 30, subject to penalty
If under 30 not subject to penaltyIf under 30, not subject to penalty

PLAN VALUE & PLAN VALUE LIMITES
• Non-grandfathered plans must comply with the annual limitation
on Out of Pocket (OOP) maximums.
• OOP maximum is applicable to all coverage under the plan (Co-pp g p (
pays, Coinsurance, Etc. )
• Plans currently using multiple claim payers (separate medical
TPA and a separate pharmacy benefit manager) will effectivelyp p y g ) y
have until the 2015 plan year to design a single OOP maximum
and coordinate vendor arrangements under a special transition
rule described below.
• The level of the new OOP maximums will be the same OOP
dollar maximums that apply to HSA-qualifying high-deductible
health plans in 2014. Those amounts are $6,350/single and
$$12,700/family

Health Insurance in the NewHealth Insurance in the New
Insurance Marketplace
44

Places To Go To Access Health Insurance in 2014
(With Anticipated Growth/Decline)(With Anticipated Growth/Decline)
Employer Employer Individual Individual
MedicaidMedicaid
p y
(Marginal/to
High Decline)
p y
(Marginal/to
High Decline)
Market &
COBRA
(Heavy
Decline)
Market &
COBRA
(Heavy
Decline)
Medicaid
(Enhanced
Growth)
Medicaid
(Enhanced
Growth)
Decline)Decline)
M diM di PublicMedicare
(Heavy
Growth)
Medicare
(Heavy
Growth)
Other
(Tri Care)
Other
(Tri Care)
Public
Exchange
(Heavy
Growth)(Tri‐Care)(Tri‐Care) Growth)
45

Health Care Reform Creates a Platform
(Launch Pad) for Access Change(Launch Pad) for Access Change
• KEY Health Insurance Access Points for most
i di id l b i i i 2014 & B dindividuals beginning in 2014 & Beyond
– Employer’s Plan
Medicaid– Medicaid
– Medicare
– The Federal Public ExchangeThe Federal Public Exchange
46

Let’s explore the
l t h b i i ithplaces to shop beginning with
The Public Exchangeg
47

Things to know before you go shopping @
The Public Exchange
• Products Value (Richness of Benefits) are designed using Olympic Medals:• Products Value (Richness of Benefits) are designed using Olympic Medals:
– Platinum Plan (Actuarial Value of 90%)
– Gold Plan (Actuarial Value of 80%)
Silver Plan (Actuarial Value of 70%)– Silver Plan (Actuarial Value of 70%)
– Bronze Plan (Actuarial Value of 60%)
• Actuarial Value
Ex: Platinum Plan on average covers 90% of all essential benefit expenses– Ex: Platinum Plan on average covers 90% of all essential benefit expenses,
Gold 80%, etc.
• Premium Rates vary by: Plan, Area, Family Size and AGE (NOT GENDER and
NOT HEALTH STATUS!) Note: Only health factor is tobacco use (1.5:1 limit)) y ( )
• Premium Rates for the Old cannot be more than 3X’s that of the Young. If
Young Rate is $100 Max Old Rate $300
• Premium Subsidies: If an individual’s household income is below 400% and
above 100% of the Federal Poverty Level (FPL) they may be eligible for premium
subsidies
• No Pre-Existing Conditions

2012 Federal Poverty Level Chart
Federal Poverty Level Chart for 2012 (Excludes HI and AK)
Household size 100% 138% 150% 200% 300% 400%
1 11,170$ 15,415$ 16,755$ 22,340$ 33,510$ 44,680$,$ ,$ ,$ ,$ ,$ ,$
2 15,130$ 20,879$ 22,695$ 30,260$ 45,390$ 60,520$
3 19,090$ 26,344$ 28,635$ 38,180$ 57,270$ 76,360$3 19,090$ 26,344$ 28,635$ 38,180$ 57,270$ 76,360$
4 23,050$ 31,809$ 34,575$ 46,100$ 69,150$ 92,200$
5 27 010$ 37 274$ 40 515$ 54 020$ 81 030$ 108 040$5 27,010$ 37,274$ 40,515$ 54,020$ 81,030$ 108,040$
6 30,970$ 42,739$ 46,455$ 61,940$ 92,910$ 123,880$
7 34 930$ 48 203$ 52 395$ 69 860$ 104 790$ 139 720$
49
7 34,930$ 48,203$ 52,395$ 69,860$ 104,790$ 139,720$
8 38,890$ 53,668$ 58,335$ 77,780$ 116,670$ 155,560$

Cost & Plan Subsidy Provisions For Illustration
Maximum Cost to Employee is based on Silver Plan:Maximum Cost to Employee is based on Silver Plan:
- Up to 133% FPL: 2.0% of income
- 133-150% FPL: 3 0% - 4 0% of income133 150% FPL: 3.0% 4.0% of income
- 150-200% FPL: 4.0% - 6.3% of income
- 200-250% FPL: 6.3% - 8.05% of income
- 250-300% FPL: 8.05% - 9.5% of income
- 300-400% FPL: Capped to 9.5% of income
O t f P k t C t M b R d dOut of Pocket Costs May be Reduced
- 94% AV for between 100%-150% FPL
50

Contribution Strategies in 2014: Maximizing Employer/Employee Value
Whensettingcontribution rates, it is important that the Employer consider premiumand plansubsidies available to eligible employees at the State
P bli E h If th E l f hi i l ff d bilit i it lf it ld lt i di i i hi E l d
A CURRENT EMPLOYER CONTRIBUTION FORMULA
Public Exchange. If the Employerfocuses on achieving plan affordability in among itself, it could result in diminishing Employee and
Employerplan value. The CBIZAnalyzerassesses the costs to Employees and the Employer under various contributionalternatives - the CBIZ
Analyzer assists the Employer in derivinga structure that maximums Employer and the Employee value. What follows is anillustration:
A. CURRENT EMPLOYER CONTRIBUTION FORMULA
Example: Family of 4 (E, Sp, 2C) with an Income of $46,100 (200% of the Federal Poverty Level). Age of Employee and Spouse is
35 (Non-Smoker). ILLUSTRATION - Note: Tax ramifications not incorporated in this simple illustration
Exchange Annual Px
MaximumPx as
a % HHI
Max Cost to
Family Subsidy Plan Value
Plan Subsidy
Value
Single Coverage $7,500 6.30% $2,904 $4,596 70% 73%
F il C $22 500 6 30% $2 904 $19 596 70% 73%
Affordability
Test
NA
NAFamily Coverage $22,500 6.30% $2,904 $19,596 70% 73%
Employer Plan
Annual Px Employer Cost Employee
Cost Plan Value
Plan Subsidy
Value
Affordability
Test
NA
51
Single Coverage: $6,000 $4,500 $1,500 73% NA
Family Coverage $18,000 $9,000 $9,000 73% NA
Affordable

MEDICAID Alternative
• Consider State Expansion (for adults) to 138%
of Household Income
– Quite a few States “fighting” this expansion
– Arizona = 102%: Alabama = 24%: DC = 206%
If d d ill b t ti ll i b f– If expanded, will substantially increase number of
eligible‘s
• Very Rich Benefits (Rich Plan and Very Low• Very Rich Benefits (Rich Plan and Very Low
Premiums)
• If employee qualifies & enrolls in MedicaidIf employee qualifies & enrolls in Medicaid
– No Employer Penalties Apply 52

MEDICARE Alternative
• Plans are being enhanced as the doughnut hole
shrinks
• Becoming more attractive plans to consider with
the enhancement of drug coverage and the
li i ti f th d t h lelimination of the donut hole
53

Don’t Forget “Hiring Incentives”
• Tax Credits for Federal and State Returns for
hiring employees that meet certain criteria.  g p y
These include:
• Work Opportunity Tax Credit (WOTC)Work Opportunity Tax Credit (WOTC)
• Veteran Hiring Credits
S B d Hi i C di• State Based  Hiring Credits
• WOTC was recently renewed for  2012/2013
54

The Program Overview
• To qualify for the program the employer must• To qualify for the program, the employer must
have employees “screened” for qualification.
S i MUST i hi fi 28 d f• Screening MUST occur within first 28 days of
hire.
• CBIZ handles the screening and certification of
employees through phone, internet or survey
• CBIZ coordinates the process and assists
reporting in the taxpayer’s tax returnp g p y
55

The Business Opportunity
• National Average: 1 in 6 employees qualify for a• National Average: 1 in 6 employees qualify for a
credit
• Average WOTC Credit is $1 500 per qualifiedAverage WOTC Credit is $1,500 per qualified
employee
• Other credits are identified after receiving WOTCOther credits are identified after receiving WOTC
data
• 80% success from certification to actual credit
• Highest Opportunity industries are typically
coextensive with high risk for Shared Responsibility
Excise Tax
56

Health Care Reform
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Preparing for the Impact of the Health Care Reform

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