What Healthcare Reform Means for Your Practice

How the new law impacts your bottom line

Marcia Dávalos June 18, 2013

What Healthcare Reform Means For Your Practice

Coverage is Good Medicine 2013-2014"

About Small Business Majority

•  Small business advocacy organization – founded and run by small business owners

•  National – offices in Washington, DC, Virginia, Ohio, Colorado, Missouri, New York and California

•  Research and advocacy on issues of top importance to small businesses (<100 employees) and the self-employed, including healthcare, access to credit and clean energy

•  Very focused on outreach to and education of small business owners across the country

Small businesses struggling with costs

" Soaring cost of insurance – especially for small businesses – 25% of small business owners are uninsured (2012 Kaiser study)

" 28% self-employed: not covered

" Small firms pay 18% more than large businesses

Our national study: Small business health costs would more than double by 2018 to $2.4 trillion without reform


Our most recent opinion survey: Small employers who don’t offer coverage say lack of affordability is the biggest reason (70%)

70%

32%

16%

9%

5%

2%

0% 20% 40% 60% 80%

My business cannot afford it

My employees get coverage elsewhere

I do not believe it is the responsibility of my business to provide health insurance

Waiting to see what happens with the federal health care reform law

Too much paperwork and administration

Choosing the right insurance plan is too complicated

Which one or two of the following best describes the reasons you do not provide health benefits?


Small Business Majority opinion poll: 72% of those who do offer say they are struggling to do so

72%

28%

0% 20% 40% 60% 80%

My business is really struggling to afford the cost of health coverage.

(Asked of those who do provide coverage)

Topics for discussion today

•  Consumer Protections

•  Tax credits

•  Cost Containment Provisions

•  Health Benefit Exchanges / Marketplace

•  Covered California

•  Employer Responsibilities

•  Individual Responsibility Requirement

•  Your questions and comments

The Affordable Care Act

•  Builds on existing healthcare system

•  Aims to rein in healthcare costs

•  Upheld by U.S. Supreme Court

•  Implementation primarily the responsibility of the states (small business input essential)

•  Some important benefits went into effect immediately

•  Others implemented from 2010-2014

Immediate consumer protections

•  Insurers will no longer be able to deny coverage for patients with pre-existing conditions

•  Ban on lifetime caps that set lifetime limits on coverage

•  Children are now able to stay on their parents’ plan until 26

Immediate consumer protections

•  Health plans can’t drop coverage when someone gets sick, if mistake on paperwork

•  First-dollar coverage for preventive care for all new plans

•  Increased access to care: community health centers

Key provisions small businesses should know about

•  Immediate tax credits for most small businesses

•  2010-2013- Preexisting Condition Insurance Plan for self-employed; pre-existing conditions no longer a barrier for coverage beginning Jan. 1, 2014

•  Establishes competitive marketplace for small businesses (SHOP) and self-employed (individual)

Small business tax credits

•  Available to businesses with employees

•  Available now (took effect tax year 2010)

•  Which businesses are eligible?

  Fewer than 25 full-time employees

  Average annual wages <$50,000

  Employer pays at least 50% of the premium cost


Our report: 4M small businesses eligible (83.7% of all businesses); 1.2M businesses eligible for max credit


•  2 in 5 business owners who qualify eligible for max

•  19.3M employees work for eligible businesses

•  Total value of the credit for tax year 2011:$15.4B

  An average of $800 in savings per employee


•  Tax credits on a sliding scale:

o Up to 35% 2010–13

o Up to 50% any two years (2014)

•  Premium expenses: comprehensive medical coverage, incl. dental, vision, long-term care

•  Do not cover premium expenses of owners or their families

•  Tax credits can not be claimed by the self-employed

•  Can amend your taxes

Nonprofits also eligible

•  Tax credits on a sliding scale:

o Up to 25% 2010–13

o Up to 35% any two years (2014)

•  Include amount on line 44f of Form 990-T

• Does not have to be publicly reported

•  Refund for tax-exempt employers

Wellness programs

Wellness programs affect plans starting on Jan. 1, 2014

•  Two types of wellness programs:

1. Participatory wellness programs- Do not provide reward OR do not include conditions for obtaining a reward that are based on an individual satisfying a standard related to a health factor.

2. Health-contingent wellness program- Require individuals to meet a specific standard related to their health obtain a reward (namely a specified % of the cost of health coverage)

Medical Loss Ratio: “80/20 rule”

•  80% of premium on medical claims & quality improvement

•  20% on administrative & profits

•  Rebates to customer if exceed

•  Estimated $1.1B given back in 2012; 321 in the small group market

•  Average rebate per enrollee in small group plan: $174

Rate review

•  Insurance companies required to:

o  Publicly disclose and justify rate increases of 10% +

o  Explain increase on HealthCare.gov; each state’s rate review program will give customers a chance to comment

•  State can approve or reject unreasonable or excessive increase if has its own law

•  No state program: federal government will conduct reviews

State health insurance exchanges: coming in 2014

•  Large marketplace to shop for health coverage

•  Private insurance plans will compete

•  RAND study:

Expand coverage to 85.9% of small business employees (60.4% today); an increase of 10.5 million workers

What is a Health Benefit Exchange?

•  One-stop shop web portal with no wrong door

INSURANCE PLANS

EXCHANGE Choice

Comparison Billing

Tax Credits

SMALL BUSINESSES / INDIVIDUALS

•  Large marketplace to buy commercial insurance

•  Compare plans for information about price, quality and service

•  Plans organized by level: bronze, silver, gold, platinum

•  Calculator to compare costs across plan options

•  Streamlined billing process

State exchange decisions

•  States will enter into the federally-facilitated exchange (FFE), state-federal partnership, or set up a state-based exchange

Exchange Decision State

State-based exchange (18)

CA, CO, CT, DC, HI, ID, KY, MA, MD, MN, NM, NV, NY, OR, RI, UT, VT, WA

State-federal partnership (7)

AR, DE, IA, IL, MI, NC, WV

Federally-facilitated exchange or FFE (26)

AK, AL, AZ, FL, GA, IN, KS, LA, ME, MO, MS, MT, ND, NE, NH, NJ, OH, OK, PA, SC, SD, TN, TX, VA, WI, WY

Health Benefit Exchange

•  Two Exchanges: individuals; small businesses •  Opening on January 1, 2014 (pre-enroll begins Oct. 1) •  Voluntary

o Members of Congress and staff required to use Exchange

•  Exchanges designed by states -- or by federal gov’t if a state so chooses o State-based exchanges mean increased flexibility and

more input from small businesses and other stakeholders

•  Not a new concept - Business groups, non-profits and state gov’ts already run similar programs in CA, CT, MA, NY, UT

California Health Benefit Exchange

Our Exchange: “Covered California” •  First in the nation. Enacted in 2010 –

Bipartisan effort

•  Governed by independent public board

•  Holding dozens of public board meetings •  Executive Director is a former business leader;

hiring more staff now •  Received federal $$ for planning; Exchange self-

funding by 2015; no state dollars spent

•  Stakeholder advisory panels providing input from small business owners and business organizations

California’s Key Decisions

•  Active Purchaser: Exchange will negotiate with insurers

o  Standard products will provide Apples-to-apples comparison

•  Employee Choice: Employer selects “tier” of coverage; worker selects insurer; employer receives one bill

•  Brokers can sell Exchange products; will be paid market commission rates by Exchange.

•  HR Services: COBRA administration, HSAs, wellness plans, etc.

•  Public-private partnership: Administrative management of small business Exchange to be done by private-sector vendor

Dental Benefits in California •  AB 82 \ SB 77 - Passed on Saturday June 15, 2013

•  Partially restores funding for Medi-Cal Adult Dental and Nutrition Benefits

•  Starting May 14, 2014 the following Dental benefits for persons 21 and older will be reinstated :

–  Examinations, radiographs/photographic images, prophylaxis, and fluoride treatments.

–  Amalgam and composite restorations.

–  Stainless steel, resin, and resin window crowns.

–  Anterior root canal therapy.

–  Complete dentures, adjustments, repairs, and relines, including immediate dentures.

Dental Benefits in California •  Proposed Bill AB 18

–  Establish a Dental Loss Ratio (DLR) – this would require a minimum percentage of a dental plan’s gross premium collections to be spent on actual treatment and care and limits the amount of premium collections that can be applied to the plan’s administration of the benefit.

–  If the plan fails to do so, the plan must reimburse each policyholder.

–  The proposed DLR percentage is still being determined.

Shared responsibility

•  No business mandated to offer coverage

o  large firms may pay fee for not offering

•  Businesses with fewer than 50 FTEs

o  96% of all businesses exempt from any fees

Size of American businesses

•  Kaiser Family Foundation:

o  4.8M businesses with fewer than 50 employees (35.7%) offer health insurance

o  1.7M businesses with 50 or more employees (95.7%) offer health insurance.

Small Business Majority and Kaiser Permanente poll: After learning about features in the exchange, percentage of California small business owners who said they’d be likely to offer insurance jumped from 32% offering to 42%

For larger employers

•  Am I above or below 50 full-time employees?

–  At least 50 full-time employees or combination of full-time/part-time employees equivalent to 50 full-time employees

–  Full-time employees: at least 30 hours per week

–  Part-time employees: at least 15 hours a week

–  Seasonal employees (≤120 days per year)

•  Size determined annually

•  Amount owed determined monthly

Fees for Larger Employers ( >50 FTEs, 4% )

•  Fail to offer coverage- $2,000 per year for each FTE Excluding the first 30 full-time employees

o  Firms only pay fee if at least one worker qualifies for federal financial assistance in Exchange.

•  Failing to offer “affordable” coverage- $3,000 per year for each FTE receiving federal financial assistance in exchange

o What is “Affordable”?

o Employee’s required contribution must not exceed 9.5% of income

o Plan covers less than 60% (average) of healthcare expenses

Additional Responsibilities

•  Summary of health plan – Insurers provide employers a summary of benefits; employers must share info with workers (Sept. 2012)

•  W2 reporting – informational only

o Allows workers to see how much employer is spending on health benefits

o Firms with fewer than 200 workers exempt until further notice

• Beginning in 2014, most individuals required to; obtain insurance or pay penalty

• May qualify for tax credits based on income for 100% - 400% of fed poverty level (family of 4 = $23,000 to $92,000)

• Not eligible for tax credits in Exchange if employer offers affordable insurance

•  Acceptable coverage: Employer, individual, Medicare, Medi-Cal, Covered CA, etc.

Individual Responsibility Requirement (incl. Self-Employed)

• Exemptions for certain religions and very low-income individuals (≤ $9,500 per yr)

• Penalty: $95 or 1% (2014) $325 or 1.5%

(2015) $695 or 2.5% (2016)

• Aims to reduce “hidden tax” of $1,000 per year

• About 1-2% of population expected to pay fee

Individual Responsibility Requirement (incl. Self-Employed)

" "CONNECT WITH US ONLINE"" """ "FACEBOOK.COM/DOCTORSFORAMERICA"" """ "@DRSFORAMERICA"

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Coverage is Good Medicine"

For more information

•  National HHS website: www.healthcare.gov

•  Our Website: SmallBusinessMajority.org

•  Healthcare Coverage Guide: HealthCoverageGuide.org

•  Health Law Guide for Business: HealthLawGuideForBusiness.org

•  Covered California: CoveredCA.com

Emma Hollister, Network Coordinator

[email protected]

(202) 828-8357

Connect with us!

@SmlBizMajority

Small Business Majority

Marcia Dávalos, So Cal Outreach Manager

[email protected]

(818) 804-8229

What Healthcare Reform Means for Your Practice

Education

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