3 benefit strategies to prepare for health reform

3 Benefits Strategies To Help Employers

Prepare for Health Reform

Better Manage Health Care Cost Now.

Prepared by:

Tom DalyHartwig Moss Benefits

Toll Free: (800) 410-8140Direct: (504) 827-8930

Cell: (504) 708-4866

To get more valuable information about our agency and the services we provide, please visit www.hm-b.com or check out my blog at www.dalytom.com.

Agenda:

• Health Insurance in U. S. Today and Brief History

– How Did We Get Where We Are?

• What Does Health Reform Mean?

– For Employers?

– For Employees?

• 3 Simple Strategies to Prepare for Health Reform.

– Defined Contribution Approach

– Health Reimbursement Arrangements (HRAs)

– Choice and Education

• Questions and Answers

Health Insurance in U.S. Today

150M

35M

47M

45M

40M

Group Insurance Individual Insurance Medicare Medicaid Uninsured

Brief History of U.S. Health Insurance:

• Pre World War II:– Limited Employer Involvement– Catastrophic Health Coverage– Individual/Family Focused

• Post World War II: – Group and Individual Policies mostly Guarantee Issue– Wage and Price Controls– Employer Healthcare exempted from taxes and price controls– Group Insurance flourished and transformed

• 10% - Access to providers offering discounted fees for services• 50% - Access to pre-paid services• 40% - Insurance against financial devastation from serious illness/injury

– 1970 – 2010 Individual Policies subject to medical underwriting – except NY, NJ, MA, RI, ME

– 2009 Tax parity given to Individual Policies

Health Reform Impact to Employers

• Mandated Benefits for All– No lifetime maximums– Preventative Care with no copays or deductibles– Federal Minimum Benefit – rich in comparison to some of the norms

• >50 Employees – Penalty for not offering “Affordable” Mandated Benefits– $3,000/employee receiving exchange subsidy, $2,000 max on all

employees

• <50 Employees – No Requirements, No Penalty

Health Reform Impact to Employees

• Mandated Benefits for All Policies– No lifetime maximums– Preventative Care with no copays or deductibles– Federal Minimum Benefit – rich in comparison to some of the norm

• Individual Mandate– Penalty paid if coverage is not in place. Up to 2.5% of earnings.

• Individual Premium Subsidy:Persons in family Poverty guideline 133% 150% 200% 250% 300% 400%

1 $10,830 $14,403.90 $16,245.00 $21,660.00 $27,075.00 $32,490.00 $43,320.00

2 14,570 $19,378.10 $21,855.00 $29,140.00 $36,425.00 $43,710.00 $58,280.00

3 18,310 $24,352.30 $27,465.00 $36,620.00 $45,775.00 $54,930.00 $73,240.00

4 22,050 $29,326.50 $33,075.00 $44,100.00 $55,125.00 $66,150.00 $88,200.00

Persons in family Poverty guideline 2% 4% 6.30% 8.05% 9.50% 9.50%

1 $10,830 $288.08 $649.80 $1,364.58 $2,179.54 $3,086.55 $4,115.40

2 14,570 $387.56 $874.20 $1,835.82 $2,932.21 $4,152.45 $5,536.60

3 18,310 $487.05 $1,098.60 $2,307.06 $3,684.89 $5,218.35 $6,957.80

4 22,050 $586.53 $1,323.00 $2,778.30 $4,437.56 $6,284.25 $8,379.00

Defined Contribution Approach

• With the ultimate cost of Federally mandated plans still unknown, employers that can, should define their maximum financial contribution to actual premium cost.

• <50 employee groups and >50 employers with a large population of low-wage employees will move towards funding alone.

• >50 employee groups with high wages will have less funding flexibility and need to know how to evaluate appropriate funding levels.

Health Reimbursement Arrangements

• Employers can fund healthcare expenses (deductibles, coinsurances, copays) rather than simply paying and deducting as and expense their share of health insurance premiums.

• This gives employers the flexibility to take selected and defined healthcare expense risk while giving access to greater information and greater control over cost.

Health Reimbursement Arrangements

RISKInsurance Company Exposure

Reinsurance Company Exposure

Reinsurance Premium

Insurance Company Exposure

Premium

Employee Exposure

$

Insured Employees

Traditional Group Insurance

Health Reimbursement Arrangements

RISKEmployer Exposure

Reinsurance Company Exposure

Reinsurance Premium

Insurance Company Exposure

Premium

Employee Exposure

$

Insured Employees

Alternate Funding Strategy

Choice and Education

Choice and Education

Feature: FSA HRA HSA

Who is eligible? All eligible for health All participants in health HSA plan participants

Access to funds? Annualized Annualized As funded

Eligible expenses?All Medical, Dental, Vision,

Hearing , OTC (IRS 213d)

DeductibleAll Medical, Dental, Vision,

Hearing , OTC (IRS 213d)

Rollover? Not allowed2.5 month extension after plan year.

N/A Yes

Who funds? Employee Employer Employee and/or Employer

Maximum annual? Employer discretion Up to $2,500 in 2013 Stated in summaries IRS maximums

Choice and Education

Coin

sura

nce

HRA

Employee Deductible

PC Visit:

Tier 1:

Specialist Visit:

Tier 2:

Tier 3:

Prescriptions:

ER Visit:

Copays:

HSA

Employee Deductible

HRA

Copay Plan

vs.

HSA eligible Plan

Choice and Education

Questions

Any Questions?