11106s0513 Edition 05.20.13 The Employer Basics Affordable Care Act The Basics of Self Funding.
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11106s0513 Edition 05.20.13 The Employer Basics • Affordable Care Act • The Basics of Self Funding
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Transcript of 11106s0513 Edition 05.20.13 The Employer Basics Affordable Care Act The Basics of Self Funding.
11106s0513Edition 05.20.13
The Employer Basics• Affordable Care Act
• The Basics of Self Funding
Allied National
InnovationStabilityService
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• Self funding is the most cost effective way to fund a health plan over the long term.
• If costs are equal, why wouldn’t you choose a plan that gives you a refund during a healthy year?
Why would an employerself fund? Why take the risk?
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• Avoids the high costs & rate shocks of fully insured plans under the ACA.
• No compensation restrictions for agents – not subject to MLR regs.
What does the ACA have to do with self funding?
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• What does it mean for me?
• What does it mean for my business?
• What does it mean for my employee’s health plan?
Affordable Care Act
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For the Individual - Employee
What does ACA mean for an individual?1. Individual Mandate says individual must have health insurance or pay a penalty
• Penalty starts at $95 for 2014 then in 2016 escalates to $695 or 2.5% of taxable income (which ever is greater)
2. Insurance can be employer provided or an individual plan
• Must be qualifying coverage
3.New health insurance exchanges for 2014• Only way for individual to receive premium
subsidy for their coverage
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For Your Business - Employer
What you need to know about ACA for your business . . . …
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Do I have to offer health insurance to my employees?
less than 50 more than 50
Based on full-time equivalent employee counts.Part-timers count!
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What type of coverage must I offer?• Must offer coverage for all full-time
employees and dependents (not spouses)
• Must offer ACA defined minimum essential coverage (MEC) that meets minimum value
• Must be affordable for each employee (“affordable” is defined by their income)
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What is “Minimum Essential Coverage?”
• Must cover a minimum of 60% of expected costs (called a Bronze Plan in the Exchange/Marketplace)
• Fully insured plans must offer all 10 categories of essential benefits
• Self-funded plans must only meet the 60% threshold(“minimum value”)
• Required benefits are determined on a state by state basis and final regulations in each state are still to come
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What are “Minimum Essential Benefits”?
10 defined essential benefits – must be covered
without $$ limits
• Ambulatory patient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance abuse
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Lab services
• Preventive and Wellness
• Pediatric (including dental and vision) 11
What does “affordable” mean?
Affordable…..The employer pays enough of the costs so that the employee’s share of the cost for single coverage is not:•More than 9.5% of the employee’s W-2 income; or•More than 9.5% of employee’s hourly rate of pay * 130 hours; or•More than 9.5% of FPL
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What does “affordable” mean?
ExampleThe affordability test appliesto the employee cost (premium) only.
Employee Income $28,735
Maximum Contribution by Employee is 9.5% $2729 ($227/month)
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What happens to our business if we do NOT offer health insurance to our employees?
< 50 full-time employees •No requirement to offer coverage•No penalties
>50 full-time employees •Penalty if ANY employee goes to exchange and receives a subsidy:
• Failure to provide Minimum Essential Coverage with minimum value
• $2,000 per eligible full-time employee after the first 30
• Failure to make coverage affordable• For each employee who buys coverage on the
exchange and receives a premium subsidy the penalty is $3000
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What happens to our business if
we DO offer health insurance to
our employees?1. It must meet minimum essential benefits standards
2. It must be affordable
3. If it’s affordable and meets minimums –NO PENALTIES
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Are there any new additional taxes or penalties under ACA that our business should be aware of?
YESYES•Transitional Reinsurance Tax – minimum $63/head beginning in 2014; to be adjusted every year through 2016 as required.
•PCORI - Research Tax - $1/person/year in 2013; $2; in 2014; then indexed to national expenditures. 17
YES….butYES….butPlan on paying a consulting fee such as you would your accountant or lawyer. Most agents’ commissions have been greatly reduced or eliminated under
the ACA.
Will we still be able to have a health insurance broker to help us through this process?
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Insurance Agent vs Healthcare Advisor
Skills Health Insurance Agent Pre 2014
Healthcare AdvisorPost 2014
Benefit Plan Design X X
Marketplace Options – Carriers, Networks
X X
Price Modeling X X
ACA Compliance X
Risk Financing (Self Insurance)
X
Risk Management (Wellness) X
Medical Underwriting X
Employer Cost Allocation X
HIPAA Compliance X
ERISA Compliance X
Employment Law X
Long Term Strategic Planning
X
Commissions X
Fees X
Increases CostIncreases Cost
Adverse Impact of Affordable Care Act on Fully Insured
Employers
$Community rating
3:1 age slope rating
Pre-ex included
Minimum essential coverage
Benefit Expansions
Guarantee Issue
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Adverse Impact of Affordable Care Act on Fully Insured Employers?
Allied “On the Air” Topics http://www.alliednational.com/ontheair.htm ________________________________________
Insurance Market ReformsAn explanation of what the reforms are, why they're part of ACA and what the rate impacts will be. Discusses options employers and individuals have to avoid the large fully insured rate increases resulting from the reform.
Part 1: Affordable Care Act basics: 4 min. 49 sec.Part 2: Affordable Care Act impacts: 13 min. 30 sec.Part 3: Employer Options: 6 min 17 sec.Part 4: Individual Options: 2 min 39 sec.
How can we control the cost of our health insurance as a business?
Self InsureSelf InsureLong term, self insuring /self
funding is the most cost effective way
for an employer to fund their employee health plan –
even for smaller employers.
Why Would a Small Business Want to be Self
Funded?
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Projected Self Funding Costs
Why Self Funding
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Who is self funded now….
Traditional Self Funding65%
>10072.8M FTEs
Small Group Self Fundingand Fully Insured
24%>10 and <100
26.8M FTEs
Fully Insured11%<10
12.3M FTEs
100%111.9M FTEs 11136s0413
What is Self Funding?
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Stop Loss InsuranceEmployer’s risk is contained
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How Funding Advantage Works
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Self Funded Claim PaymentSample $60,000 Claim
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Employers Specific Stop Loss
Employers Claims Fund
Employers AggregateStop LossEmployers Specific Stop Loss Limit
$2,000Paid by employee
$25,000Paid from employers claim fund
$33,000Paid by Stop Loss Carrier
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Sample Small Employer Self Funded Program – 55 lives
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Sample Funding Advantage PlanNo Refund
A new solution for smaller employers!
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• Self Funding “on training wheels”• 10 or more lives• Self funding made “SIMPLE”• Prepackaged plan docs, integrated specific
and aggregate stop loss policy• Level monthly payment plan• Terminal liability coverage included• No hidden fees• No complex contracts
What is Funding Advantage?
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• Experiencing adverse premium impact from ACA
• Desires lower costs and predictable cash flow
• Being forced to provide health insurance by ACA
• Healthy groups• Desires greater control and flexibility• Needs better claims reporting• Promotes health and wellness with
employees
Who is the ideal candidate
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Self Funded Group Health Plans
are subject to “ERISA” regulation.
What is ERISA?
Employee Retirement IncomeSecurity Act 1974
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ERISA enables self funding
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Role of Allied as the Self Funded Plan Administrator
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• Assist with plan design• Manage Stop Loss claims• Assist with plan communications• Provide network access• Claims payment• Large claims management• Manage claim cost containment vendors• Reporting and compliance services
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Allied National’sUnique Underwriting Philosophy
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Traditional Underwriting
TODAY
Allied National Underwriting
Price based on past health history, experience, industry trends, and industry loads
Price based on future health care costs
Past history
Future costs
Self Funding Sample Case Study
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85 Employees$6.5M Sales - pretax profit
12%Renewal Premium $612,000
Self Funded Program $610,000
Employer’s Loss Fund $366,000
Projected Refund 20% ($73,200)
Net Cost $536,800Refund = 9.3% of profit
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Why Would a Small Business Want to be Self
Funded?
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Projected Self Funding Costs
11149s0513
This sample chart illustration is provided for educational purposes only. Actual results may vary and are not indicative of future performance.Allied National, Inc. l 4551 W. 107th St. Suite 100 l Overland Park, KS 66207 l 888-767-7133 l [email protected] l
www.alliednational.com l twitter.com/alliednational
Why Would a Small Business Want to be Self Funded?
$600
$500
$400
$300
“Em
plo
yee O
nly
”
Rate
2014
2015
2016
2017
2018
2013 Year
“Employee Only” Rate Illustration
$700
Self Funded2014-2015 ObamaCareRate Shocks
Potential Refunds
Fully Insured
Funding Advantage vs Fully Insured 55 lives (for illustrative purposes only)
Year Funding Advantage
ACA Compliant
Fully InsuredACA Compliant
Difference
2013 $305,412 $305,412 $0
2014 $335,953 $427,577 ($91,624)
2015 $369,549 $534,471 ($164,922)
2016 $406,503 $598,608 ($192,104)
2017 $447,154 $670,440 ($223,287)
Total $1,864,571 $2,536,508 ($671,937)
Claim Refunds (15%)
($279,686) $0 ($279,686)
Net Cost $1,584,885 $2,536,508 $951,623
Increased Cost
60.04% 42
Next Steps
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1. Agent contacts Allied
2. Current census
3. Plan design & benefits
4. Current and renewal billing
10991s0812
Life Cycle of a Funding Advantage Clientstart
Allied National, Inc. l 4551 W. 107th St. Suite 100 l Overland Park, KS l 888-767-7133 l [email protected] l www.alliednational.com l twitter.com/alliednational
WARNING!
Projected market capacity bottleneck.
4th Quarter 2014
DON’T WAIT!45
In the works withAllied National!
Unique small group self funded product for the low
wage employee
3rd Quarter 201346
Thank you!For more information:
Allied Sales Support888-767-7133
[email protected]/alliednational
Fax: 913-945-4396
Allied National, Inc.4551 W. 107th St. #100
Overland Park, KS 66207
This is an invitation to inquire about the Allied Funding Advantage plan. This is a limited description of the plans. See plan brochure and plan documents for complete details.
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