3. PATIENT PROTECTION AND AFFORDABLE
CARE ACT ( PPACA)-OVERVIEW
Tax Credits
Employers with 10 or fewer workers
Average annual wages of < $25,000
Eligible for credit of up to 35% of premiums costs through 2013
Phases out and disappears if employer has > 25 employees and average annual
income of $50,000 or more
4. PATIENT PROTECTION AND AFFORDABLE
CARE ACT ( PPACA)-OVERVIEW ( CONT’D)
2011- Adult children to 26; No lifetime limits; Restricted Annual
limits; No Pre-Existing Conditions for Children under 19;
Preventive Services with no cost sharing required
Employers must satisfy non-discrimination requirements of
Section 105(h)- subject to $100/day penalty ( non-compliance)
5. PPACA- OVERVIEW ( CONT’D)
Form W-2 Reporting
2013- Broaden Medicare HI (+ .9% increase )
Medicare tax on investment income ( +3.8%)
Applies to income levels greater than $200K ( Individuals) and $250K
( Families)
Unearned income = interest, dividends, capital gains, annuities,
royalties and rents
6. PPACA- OVERVIEW ( CONT’D)
2013 ( cont’d)
Tax of 2.3% on Medical Device Manufacturers
Itemized Deductions on Medical Expenses- Expenses must exceed 10%
of income ( from 7.5% of income now)
7. PPACA- OVERVIEW ( CONT’D)
2014- Employer “pay or play” responsibility for 50 FTE’s or more
( includes part-timers)
If employer offers coverage, but has one employee receiving
subsidized coverage in exchange:
Employer pays lesser of $3,000 X # FTE’s receiving subsidized coverage in
an exchange or $2,000 X # FTE’s
If employer doesn’t offer coverage, employer pays $2,000 X #
FTE’s, if at least one FTE obtains subsidized coverage in an
exchange
8. PPACA- OVERVIEW ( CONT’D)
2014 ( cont’d)
Employer Free Choice Vouchers
Subsidies available for low income employees
The Employee’s household income can’t exceed 400% of FPL
9. PPACA- OVERVIEW ( CONT’D)
2014 ( cont’d)
Wellness Incentives Increase from 20% to 30% of plan costs ( Health
Care Reform “carrot”) for participation in employer sponsored
wellness program
Incentive may increase to 50% of plan costs
10. PPACA- OVERVIEW ( CONT’D)
2014
Employee Health Coverage Reporting- Employers must report on the
following:
If “minimum essential coverage” is offered
Waiting period
Lowest cost option in each enrollment category
Employer share of total allowed costs of benefits
Total number and names of FTE’s receiving coverage
11. PPACA- OVERVIEW ( CONT’D)
2014 ( cont’d)
Insurance market reform ( Exchanges)
guaranteed issue; no underwriting, no pre-existing conditions; limits on rating
bands
12. PPACA- OVERVIEW ( CONT’D)
2018- “Cadillac Tax”
Excise tax on high-cost health plans
40% excise tax
Applies to Individual coverage cost > $10,200
Applies to Family coverage cost > $27,500
Costs are aggregated ( i.e. PPO + H.S.A., etc. )
“Cadillac Tax to affect 60% of our clients”- Towers Watson – Benefit Consultants
13. HIGH PERFORMING COMPANIES VS. LOW
PERFORMING COMPANIES
“There is a bigger price difference between High Performing companies
and Low Performing Companies than ever before.”
Towers Watson- 2010 Health Care Survey
14. KEY CHARACTERISTICS OF HIGH PERFORMING
COMPANIES
Proactive vs. Reactive
Consumer Driven Health Plan Option ( i.e. HSA, HRA)
Company Sponsored Wellness Program
Source: Towers Watson 2010 Health Care Survey
15. CONSUMER DRIVEN HEALTH PLANS
HRA – Health Reimbursement Arrangement
HSA- Health Savings Account
“Health Care IRA”
20% to 30% discount vs. Traditional Plans
“Triple Tax Punch”
Tax- Favored at Deposit, Growth and Withdrawal Phase
Unused $$ rolls over to the next year- tax-favored
Maximum Deposit ( 2012):
Individuals: $3,100
Families: $6,250
16. WELLNESS PROGRAMS
$2.5 Trillion spent on health care annually
Approx. 50% of all health care costs due to lifestyle
“The Big Three”- Diabetes, Obesity, Heart Disease
70% of all health care costs due to:
Diabetes
Asthma
Congestive Heart Failure
Coronary Artery Disease
Depression
17. VALUE BASED PLANS: OVERVIEW
What are Value Based Plans?
What makes them unique?
What is the long term outlook for Value Based Plans?
18. WHAT ARE VALUE BASED PLANS?
Like typical health plans, when a member is injured or sick, Value
Based Plans will pay their claims
Unlike typical health plans, Value Based Plans go further by rewarding
employees to take action to improve or manage their health.
The difference: Health Insurance vs. Healthy Insurance
19. POTENTIAL BENEFITS - VALUE BASED HEALTH PLANS
Provide financial incentives to employees to complete “Health Actions”
and monitor health and lifestyle
Lower Health Claims Costs, lower health premiums over the short and
long-term
Lower, more stable health premiums over the short and long-term
A healthier, more educated workforce
Lower presenteeism
Lower absenteeism
Higher employee morale and productivity
A more profitable employer
20. POTENTIAL FUTURE BENEFITS – VALUE BASED PLANS
Value Based Plans have offered rate increases averaging 1.5% per year
for the last two years ( far below industry norms)
For groups of 51+ employees, some vendors are offering two year rate
guarantees
Value Based Plans may be attracting a healthier risk pool
If this happens, Value Based Plans may continue to offer lower annual
rate increases
The above phenomenon would adversely affect the annual rate
increases with traditional health plans ( HMO, PPO) – adverse risk
pool = higher than normal rate increases
21. WHERE ARE YOU TODAY?
Level I I Level
III
Multi Plans Yes Yes
Pre-Tax Premiums Yes
Yes
Rollover Unused $ No Yes
Pay Claims Pre-Tax Yes Yes
HC Financial Option No
Yes
Price/Quality Tools No
Yes
Inv. Options ( tax-adv.) No
Yes
Health Risk Tools Yes
Yes
Health Risk Prev. Tools No
No
Wellness Program No No
22. WHERE ARE YOU TODAY?
Level IV Planning
Multi Plans Yes
Pre-Tax Premiums Yes
Rollover unused $ Yes
Pay Claims Pre-Tax Yes
HC Financial Option Yes
Price/Quality Tools Yes
Inv. Options (tax adv) Yes
Health Risk Tools Yes
H R Prev. Tools Yes
Wellness Program Yes
23. WHY JAMES L. WISDOM INSURANCE SERVICES
24 years of experience in Insurance and Financial
Services
Specialize in privately held employer groups
Certified Financial Planner Designation
Health Care Consulting
Comprehensive Fee Based Financial Planning –
Owners and Key Execs
Health Care Reform Specialists
Property & Casualty / Worker’s Comp. Expertise
Through Associate Firms
24. WHY JAMES L. WISDOM
INSURANCE SERVICES
How we approach your business:
Each company is unique and different
Fully understand your company, culture, industry
and business objectives
Identify your 2-5 year Strategic Business Plan
Help create a 2-5 year Insurance/Risk Management
Plan
Consult, counsel and adapt during this time frame
Follow-through ( measuring and reporting)
25. JAMES L. WISDOM INSURANCE SERVICES- ADD’L
SERVICES
I. Insurance/Risk Management Planning
II. Retirement Planning
III. Estate Planning
IV. Business Succession Planning
26. CONTACT INFORMATION
James L. Wisdom Insurance Services
4607 Lakeview Canyon Road- Suite 482
Westlake Village, CA 91361
Work: 805-497-9264
Cell: 818-469-6640
Fax: 805-435-3636
CA License # 0699524
Web Site: www.wisdomhealthplans.com
E-Mail: jim@wisdomhealthplans.com
Health Care Reform Blog: www.jimwisdom.wordpress.com
