The New Health Care Law

1
The New Health Care Law

• What Does it Mean for Me My Authority?
• Robert E. Hagan, Jr., CPA
• American HealthCare Group
• Pittsburgh, PA

2
Background Information

• Health Care Professionals
• Financial Background

3
History of Health Care Reform
4
History of Health Care Reform

• Goals
• Uninsured access to high quality, affordable
  health care
• Reduction of cost of health care coverage
• Promote wellness change lifestyles
• Consequences
• Many changes will come as implementation proceeds
  and states digest costs

5
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

6
Cost Containment

• Health Care Professionals
• System based on their advice, referrals

7
Cost Containment

• Wellness
• Use expertise to encourage prevention
• Stats about Americans (WELCOA)
• 83 dont have a good diet
• 65 are over weight or obese
• 67 dont get enough exercise to get the health
  benefits
• Up to 70 of all causes of death are lifestyle
  related and preventable

8
Entities Affected by Reform
9
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

10
By the Numbers

• 40,000,000 uninsured
• 180,000,000 now insured
• 45,000,000 Medicare
• 45,000,000 Medicaid
• 310,000,000 people

11
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

12
Current Health Care Reform

• The 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

13
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

14
Tax Consequences

• 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

15
Public Programs

• CHIP
• Continue current law through 2019
• Increased federal subsidies
• Medicare
• Added coverage for annual physical exams and
  other preventive services
• Eventual elimination of doughnut hole affecting
  14
• 2010 doughnut hole participants receive 250
  rebate
• 2011 discounts and subsidies will decrease
  doughnut hole to 25 in 2010 from 100 today
• Medicaid
• Varies State by State
• Expand Medicaid to 133 of the federal poverty
  level.

16
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
• Cut out agents/brokers from commissions
• Available to all individuals and small businesses
  of 100 employees or less
• Could be lowered to 50 employees or less

17
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

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Affects on Employers
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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
  employees 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.

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Wellness and Healthy Lifestyles

• Up to 30 of total premium discounts can be
  offered as incentives for employees maintaining a
  health standard. 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

21
What to Expect

• 10 or less employees
• If average wage 25K or less, tax credit will be
  35 of premium
• Do not have to provide health insurance benefits

22
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 premium
• Do not have to provide health insurance

23
What to Expect

• 49 employees or less
• Do not have to provide health insurance

24
What to Expect

• 50 or more
• If 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.

25
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

26
Employers

• No adequate coverage - 2014
• 50 employees - 2,000 per worker, not counting
  the first 30 workers

27
Employer Mandates

• Free Choice Vouchers if an employee opts out
  and their share of the premium is greater than
  8, but less than 9.8 of the employees household
  income 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 Insurance Exchange will only
  offer those qualified health benefit plans.
• Effective 2014

28
Employers

• Value of health benefit reportable on W-2s
  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

29
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.

30
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
• ABCs contribution to health insurance 100K
  (10K/FTE)
• State Small Business Health Care Tax Credit 40K
• Federal Tax Credit 35K

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Affects on Residents/Individuals
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Individuals

• Individual tax - 95 or 1 of income 2014
• Individual tax - 695 or 2.5 of income 2016
• Some exemptions financial, short term loss of
  coverage (3 months)
• Premium subsidy for individuals 133 400 of
  federal poverty level - 2014
• Singles up to 44,000
• Families up to 88,000

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Individuals

• Waiting period cannot exceed 90 days
• Health insurance contract cannot be canceled
  other than fraud or intentional misrepresentation
• No copayments or deductibles for preventive care
  and medical screenings
• Group plans must
• Prohibit lifetime limits
• Prohibit rescissions
• Restrict annual limits
• Include limitation on excessive waiting periods
• Include coverage for non-dependent children under
  age 27
• Prohibit pre-ex condition exclusions and prohibit
  annual limits

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Individuals/Residents

• Wellness Service Coordinator/Nurse Coordinator

35
Strategic Planning/Summary
36
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 employees health care needs
• Review claims data annually
• Wellness assessment incentives

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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

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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

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Questions Answers
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Contact Information
Bob Hagan American HealthCare Group www.PathwaysTo
SmartCare.com 1910 Cochran Road Manor Oak One,
Suite 405 Pittsburgh, PA 15220 Phone
[phone] Fax [phone] BHagan_at_American-
HealthCare.Net