1. Healthcare Reform—An Overview for
Employers
May 15, 2013
Jeff Rubleski, MBA
Director of Sales Strategy
Certified Healthcare Reform Specialist®
Blue Cross Blue Shield of Michigan
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2. Introductory Questions
• Why consider providing health insurance at the worksite?
• What impact will the Affordable Care Act have on employers that
continue providing group sponsored coverage and those that do not
sponsor coverage?
• How many people do you employ? What is your mix of those that
work over 30 hours per week and those that work fewer than 30
hours per week?
• Is finding and keeping employee talent in your company a key
issue?
• If you employ 50 or more full-time equivalent employees, will it make
sense to pay the Employer Mandate penalty for not offering
employees health insurance coverage?
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3. Today’s Agenda
What You Need to Know
Review 7 Key Topics:
1. Marketplaces (Exchanges) & Subsidies
2. Counting to “50” and how to count “variable hour”
employees
3. Reform Mandates
4. Price Changes (Taxes & Fees)
5. Benefit Changes (Reform Mandates)
6. Wellness Incentive Expansion
7. 5 Strategic Reform Considerations
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4. Marketplaces & Subsidies
Individuals Groups
Marketplace
(Exchange)
Eligibility
“Individual Marketplace”
•Open to all individual purchasers in 2014
•Individuals choose metal compliant
qualified health plans
“SHOP Marketplace”
•Open to all small groups
(Up to 50 FTEs) in 2014
•Employer chooses metal – employees
choose products
•Expands to groups up to 100 FTEs in 2016
and all sizes in 2017
Marketplace
(Exchange)
Subsides &
tax credits,
eligibility
• Sliding scale based on income up to
400% FPL (~$45k single)
• Must purchase on individual
“Marketplace” Exchange
• Medicaid eligibles do not qualify
• Less than 25 full time equivalent
employees and…
• Average payroll less than $50k and
Employer must pay at least 50% of
employee premium
• Must purchase on SHOP
Note: Michigan will be on federally run exchange in 2014
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5. 55
Who Qualifies
For Subsidies?
Beginning Jan. 1, 2014
• Unless:
xCoverage is available through
an employer plan
xEmployer offers a plan of at
least bronze level equivalent
(60% actuarial value) and,
xThe employee’s contribution
to premium would not exceed
9.5% of household income (or
two additional IRS Proposed ―safe
harbor‖ limits--see IRS Proposed
Regulations, December 28, 2012)
Employees qualify if they:
Have income 138-400% FPL*
Purchase through the exchange
and,
US citizen or legal immigrant
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*Assuming Michigan Expands Medicaid
Coverage to 138% of FPL; if not income will be
100% of FPL. Medicaid expansion will add
approximately 450,000 Michigan residents to
Medicaid. As of 5-5-13, expansion has not been
authorized by the Michigan Legislature.
Michigan hospitals provide approximately 1.9
billion each year on uncompensated care!

6. Employers with 50+ full time equivalent employees
must meet a minimum 60% AV standard or pay
penalties for every full-time employee receiving
premium assistance on the individual marketplace.
The penalty provisions are triggered if a large
employer:
•Does not offer coverage to all its FTEs and their
dependents (for 2014 the requirement is full-time
employee coverage only)
•Offers coverage, but the plan fails to pick up at least
60 percent of the overall cost of the benefits being
covered by the plan
•Offers minimum coverage, but the amount the
employee must pay to obtain the coverage makes it
unaffordable
Pay or play mandate rules—Applies to 50+ FTEs Pay or play penalties—Applies to 50+ FTEs
No coverage
• Monthly penalty: $166.67 *
(# full-time employees – 30)
Unaffordable or
low value
coverage
• Monthly penalty: $250 *
(# full-time employees)
• Capped at amount determined if
you had provided no coverage
After 2014
• Penalties will be adjusted for
inflation
Reform Mandates:
Pay or Play
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7. Counting to Play or Pay Rule of “50”
►How to Determine Full-Time Equivalent Employees
► How to Determine Coverage for Variable Hour Employees
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8. ‘Rule of 50’ Test(s)
To Determine FTEs
Test 1| Number Full Time Employees 1
Jan Enter # Employees
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Test 2| Hours worked by non-full-time employees 2
Jan Enter # hours
worked 2 ÷ 120 Result
Feb ÷ 120
Mar ÷ 120
Apr ÷ 120
May ÷ 120
Jun ÷ 120
Jul ÷ 120
Aug ÷ 120
Sep ÷ 120
Oct ÷ 120
Nov ÷ 120
Dec ÷ 120
Sum
#2
Sum #1
Pay or Play?
Calculation:
Total Full-
time
Equivalents =
([Sum 1] +
[Sum 2]) ÷
12
If= 50 or more,
you are a “Large
Employer”
Note 1: Full-time employees are those who work an average of 30 or more hours a week or 130 hours per month.
Note 2: Count no more than 120 hours for each non-full-time employee 8

9. NOTE:
For new seasonal or “variable employment” workers, the standard measurement period and administrative period must be the same as for existing employees
Example
A
Example
B
≤ 90 days3 to 12 months 6 to 12 months
≤ 13 months
• Standard Measurement Period: Gives employer “reasonable, but not unlimited” time to determine who is
eligible for benefits (Must be 3-12 months)
• Administration Period (e.g., waiting period): interval allotted for communication and enrollment of eligible
employees (Cannot exceed 90 days)
• Stability Period: period in which employees have ongoing coverage after become benefit-eligible and enrolling
(Must be at least 6 months)
Illustrative Employer
requires employees to
work at least 30 hours
a week in order to
become benefit-
eligible
Benefit Eligible
Variable Hour
Coverage Rules
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10. Calculating Employee Income Safe Harbors for Employers
Employers With 50 or More FTEs Have 3 Safe Harbors*:
1. W-2 Wages—this allows employers to compare W-2 wages earned
to insurance premium paid by the employee at the self-only rate of
coverage. If under 9.5% of W-2 wages, coverage is affordable.
2. Rate of Pay—two guidelines—for salaried employees, it is the
employee’s monthly salary; for hourly employees is the hourly rate
of pay multiplied by 130.
3. Federal Poverty Line (FPL)—base affordability on the FPL for a
single individual. If the employee’s cost for insurance premium
does not exceed 9.5% of FPL, the coverage is deemed affordable.
(100% of FPL for one person is $11,490 in 2013.)
*(From IRS Proposed Regulations, December 28, 2012) 10

11. Price Changes
Factors That Will Impact Health Insurance Pricing
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12. Tax/Fee Description Calculation
Method
Remittance Responsibility
1 Comparative
Effectiveness Fee
An annual fee that funds research on the effectiveness,
risks and benefits of various medical treatments
through the Patience-Centered Outcomes Research
Institute (PCORI), a nonprofit created through ACA.
PMPY Calculation Health Insurance Issuer for fully
insured business.
Plan sponsor for self-insured .
2 Federal Insurance
Premium Tax
A yearly tax due assessed on fully insured premiums
intended to fund premium subsidies and Medicaid
expansion.
% of fully insured
premium
Health Insurance to Issuer
3 Reinsurance Fee
Quarterly fee that will support the transitional
reinsurance program with the goal of stabilizing
premiums coverage for the individual market both on
and off the exchange.
PMPM Calculation Health insurance issuer for fully
insured business.
Third-party administrators for self-
insured programs.
4 High Cost Health
Plan
Tax on the value of employer-sponsored health
benefits.
% based on
thresholds
Health insurance issuer for fully
insured business. Sponsors and TPAs
for self-funded.
5 Exchange Fees
Established to ensure the exchange can be self-
sustaining by Jan 1, 2015.
3.5% premium Health insurance issuer participating
and offering health plans on the state
or federal exchange.
6 Risk Adjustment Fee
Establishes a risk adjustment fee to pay for
administrative expense of running the federal risk
adjustment program.
PMPY Calculation Health Insurance Issuer
Price Changes:
Taxes and Fees
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13. Price Changes:
Taxes and Fees
When
How
Much
Individual
Group
Medicare Medicaid
Insured ASC
1 Comparative
Effectiveness
July
2013
$1 - $2
PMPY
2
Federal
insurance
premium1
2014
% of
premium
Stop loss
3 Reinsurance
Fee2,3
2014 -
2016
$5.25
PMPM
4 High cost
health plan4 2018+ Variable
Group
5 Exchange
fees5 2014+ 3.5%
6 Risk
adjustment fee6 2014+ $1 PMPY
SG
  
    
  
  

1 Federal Insurance Premium Tax levels are 50% lower for HMOs
2 Reinsurance fees based on 2014 levels, then phase out completely by 2017
3 Individual market is charged a reinsurance fee but then receives net proceeds of collected fees through reinsurance payments (which will be reflected in lower premiums)
4 HCHP Excise Tax based on 40% of the amount beyond specified cost thresholds
5 HHS anticipates collecting user fees by deducting the user fee from Exchange-related program payments
6 Newly established fee to pay for administrative expense of running the federal risk adjustment program. 13

14. Reform-Mandated Benefit Changes
►Reform Will Require Changes to Health Benefits
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15. Benefit Changes:
Overview
Effective date for Compliance
Key ACA Provisions Impacting products and
pricing
(On and Off ―Marketplaces‖)
Individual
Small
Group
(Reform)
Small
Group
(Non-
Reform)
100+EE
Groups
Plans to meet Essential Health Benefits
(EHB)
2014 2014 2016 2017*
Plans to integrate all cost-sharing for EHBs
to single OOP Max
2014 2014 2014 2014
Maximum deductible limit of $2,000/$4,000
(Can only exceed to hit metals)
N/A 2014 2016 2017*
Maximum OOP limits $6,400/$12,800 2014 2014 2014 2014
Qualified Health Plans must hit ―metal
levels‖
2014 2014 2016 2017*
Wellness plans cannot solely incent based
on health factors
2014 2014 2014 2014
*If state chooses to allow large groups on its exchanges in 2017 then provisions apply to on exchange large group coverage , but not to large group off exchange
**If state chooses to allow large groups on its exchange in 2017 then modified community rating rules apply to all large group coverage on and off exchange
Benefitdisruptors
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16. The ACA ensures that all individual and small group “qualified health plans” include 10 essential
health benefits for which all cost sharing accumulates to a single out-of-pocket maximum
Benefit Changes:
EHBs
Essential health benefits must be equal in scope to benefits
offered by a “typical employer plan”, and thus states must
select a base-benchmark plan from among the following
options
Source: CCIIO Essential Health Benefits Bulletin
Note: CMS defines portal plan as the discrete pairing of a package of benefits with a particular cost-sharing option (not including premium rates or premium rate quotes)
1 Ambulatory patient services
2 Emergency services
3 Hospitalization
4 Maternity and newborn care
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Mental health and substance use disorder services, including
behavioral health treatment
6 Prescription drugs (must be packaged for SG plans)
7 Rehabilitative and habilitative services and devices
8 Laboratory services
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Preventive and wellness services and chronic disease
management
10 Pediatric services, including oral and vision care
3 largest
small group
portal plans
by
enrollment
3 largest
state
employee
benefit plans
by enrollment
3 largest
national
Federal
Employees
Health
Benefits
Program
plans by
enrollment
Largest
insured
commercial
HMO in the
state
Priority HMO chosen as the MI benchmark – gives BCBSM
more flexibility to create more cost effective plans
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17. Wellness Incentives Will Expand
HIPAA Expansion of Wellness Program Incentives
►Health-Contingent Wellness Programs
►Participatory Wellness Programs
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18. General incentives
• Increases the maximum permissible reward under a health-contingent
wellness program from 20% to 30% of the cost of health coverage
• Tobacco cessation programs increases maximum reward to 50%!
• Two types of wellness programs identified:
• Participatory wellness programs are separate from
health-contingent wellness programs, and have no
limit for the potential reward employees can
receive
• Participatory programs are generally available to all
employees independent of their health status.
Examples include:
– Reimbursement for gym membership
– Awards to employees who attend health-related
seminars
• Provide a reward and condition the reward on
satisfying a standard that is related to a health
factor. Examples:
– A program that imposes a premium surcharge
based on tobacco use
– Programs to help employees maintain a specific
cholesterol level or reduce their current level
• Rewards can come in multiple forms, including a
discount of premium, the absence of a surcharge,
or other financial or nonfinancial incentives
(See Proposed Regulations Dated November 26,
2012 for specific wellness program guidance)
Health-contingent wellness programs Participatory wellness programs
20 - 50%
Benefit Changes:
Wellness Incentive Expansion
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19. 5 Strategic Reform Considerations
1. How will your organization prepare for Reform?
--Consider forming a Reform Action Team to assess key Reform Issues
--Work with your accountant, your legal counsel, benefits advisor
and key members of your organization to make actionable decisions on benefits
2. How important are health benefits to the success of your
organization? Recruiting, retaining and motivating employees?
3. Will the Public Health Exchange provide an acceptable experience
and affordable coverage for your employees and their families?
4. Will you leverage wellness pricing incentives linked to benefit plan
design to motivate behavior and increase productivity?
5. What strategies will you embrace to engage employees on improving
their overall health and wellbeing?
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20. Questions?
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