What Healthcare Reform Means For Dealers June 3, 2010

1. – KPA CONFIDENTIAL –
What Healthcare Reform Means For Dealers
June 3, 2010

2. Questions
• If you have questions
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presentation, please
submit them using the
“Questions” feature
• Questions will be
answered at the end of the
webinar

3. HealthCare Reform
• What does Healthcare Reform
really mean?
• 5 things you must do now
• Thinking ahead to 2012 and
beyond
• Tax breaks for small businesses
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4. What does Healthcare Reform Mean
Health Care Reform refers to the Patient Protection and Affordable
Care Act of 2010, the bill as the Senate, 60-39 on Dec.
24, 2009, and by the House, 219-212 on March 21, 2010 . It was
signed into law by President Obama on March 23.
Congressional Budge Office estimated that the legislation would have a relatively small effect on
premiums for employer-based healthcare insurance. For employers with more than 50
employees, premiums could be as much as 3 percent lower under the legislation than they would be
under current law in 2016, according to the CBO’s projections.
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Good News
Possible lower cost
Tax Breaks
Bad News
More Complex
Less Choice for
Employers

5. Five Things You Must Do Now
 Set up appointments with your tax advisor, attorney and
insurance broker by end of June to update your benefit plans
and understand tax implications
 If you have a calendar year benefit plan you will need to
redesign your healthcare plan to extend coverage to adult
children up to age 26, eliminate lifetime dollar limits and
remove pre-existing condition exclusions, if any, for children
up to age 19. The deadline for compliance is
January 1, 2011. There will be additional regulations related
to this provision so make sure your broker or agent is
keeping you up to date
 If you provide an FSA (Flexible Spending Account) you will
have to narrow allowed spending from flexible spending
accounts to bar reimbursement for nonprescription, over-
the-counter drugs, an FSA feature that the Internal Revenue
Service sanctioned in 2003. If you don’t have an
FSA, consider adding this to your benefit program.
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6. Five Things You Must Do Now
 If you provide health care plans covering retirees age 55 to
64, you have to determine how to assemble claims
information to take advantage of a one-time, soon-to-start $5
billion federal reinsurance program set up by the legislation
that will reimburse employers for 80 percent of each claim
between $15,000 and $90,000
 If you provide prescription drug coverage that is at least
equal to Medicare Part D to Medicare-eligible retirees. be
aware that that you are about to lose the associated tax
break, effective in 2013. While the government-provided
subsidies, which can run more than $500 per retiree, will
continue to be tax-free, employers collecting the cash no
longer will be able to take a tax deduction for retiree
prescription drug costs equal to the subsidy. Talk to your
accountant as these changes must be reported immediately
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7. Employer Responsibilities 2010 →
• Make sure your plan does not have a ban on lifetime limits.
Effective six months from enactment, the law prohibits
insurers from imposing lifetime limits on benefits
• No bans on discrimination based on pay. Beginning six
months after enactment, the law prohibits new group health
plans from establishing any eligibility rules for healthcare
coverage that have the effect of discriminating in favor of
higher wage employees
• Breaks for Breastfeeding- The legislation will amend the Fair
Labor Standards Act to require that employers provide
unpaid breaks for employees to express breast milk. The
legislation will also require that employers provide a private
location for employees to have these breaks.
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8. Employer Responsibilities 2010 →
• Ban on Lifetime Limits. Effective six months from
enactment, the law prohibits insurers from imposing lifetime
limits on benefits
• Ban on Discrimination Based on Pay. Beginning six months
after enactment, the law prohibits new group health plans
from establishing any eligibility rules for healthcare coverage
that have the effect of discriminating in favor of higher wage
employees.
• Breaks for Breastfeeding. The legislation will amend the Fair
Labor Standards Act to require that employers provide
unpaid breaks for employees to express breast milk. The
legislation will also require that employers provide a private
location for employees to have these breaks.
8– KPA CONFIDENTIAL –

9. Employer Responsibilities 2012 →
• There is a new requirement mandating employers to report
on W-2 income statements distributed in 2012 the cost of
employer-provided health care coverage
• FSA (Flexible Spending Accounts) are capped at $2500
effective 2013
• The Medicare wage tax increases 0.9 percent and a new 3.8
percent tax for those earning over $200,000 ($250,000 for
married couples filing jointly on passive business income)
effective 2013
• Beginning in 2014, the legislation will require an employer
with more than 50 full-time employees to pay $2,000 per
employee if the employer fails to offer health coverage and
has at least one full-time employee receiving a premium
assistance tax credit or cost-sharing reduction created by
the legislation. The first 30 employees of the employer will be
excluded from the calculation of the penalty
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10. Employer Responsibilities 2010 →
• Ban on Lifetime Limits. Effective six months from
enactment, the law prohibits insurers from imposing lifetime
limits on benefits
• Ban on Discrimination Based on Pay. Beginning six months
after enactment, the law prohibits new group health plans
from establishing any eligibility rules for healthcare coverage
that have the effect of discriminating in favor of higher wage
employees.
• Breaks for Breastfeeding. The legislation will amend the Fair
Labor Standards Act to require that employers provide
unpaid breaks for employees to express breast milk. The
legislation will also require that employers provide a private
location for employees to have these breaks.
10– KPA CONFIDENTIAL –

11. Employer Responsibilities 2012 →
• There will be a ban on annual limits. In 2014, the
use of annual limits will be banned for new plans
in the individual market and all employer plans.
Before that ban goes into effect, there will be
restrictions on annual limits for new plans in the
individual market and all employer plans
• In 2014, waiting periods exceeding 90 days for
coverage will be barred, pre-existing condition
exclusions no longer will be allowed for any
employee Employers will face a $3,000 penalty for
every employee whose premium contribution
exceeds 9.5 percent of family income and the
employee opts for coverage in state insurance
exchanges that will begin operating that year
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12. Employer Responsibilities 2012 →
• Tax on “Cadillac” Plans. Beginning in 2018, there
would be an excise tax on any “excess benefit” of
employer-sponsored coverage. The legislation
defines “excess benefit” as one that exceeds
$10,200 for individual coverage and $27,500 for
family coverage. The thresholds would be indexed
to inflation
• Health insurance premiums in 2018 exceeding
$10,200 for individual coverage and $27,500 for
family coverage will face a 40 percent excise
tax, with the cost threshold triggering the tax
slightly higher for plans covering retirees and
employees in certain high-risk industries.
12– KPA CONFIDENTIAL –

13. Special Provisions for Small Businesses
Effective 2014
• States must set up health insurance pools called SHOP exchanges (Small Business
Health Options Programs). These allow small business to o group together to buy
health insurance.
If you offer your employees health insurance:
• You must cover no less than 72.5% of the cheapest health plan you offer for
individuals, and no less than 65% for families.
•
You must automatically enroll every employee in a health plan with the lowest
employee premium, unless they opt out.
If you choose not to provide health coverage:
• You must pay the Health Choices Commissioner (the person in charge of the SHOP
exchange fund) 8% of the average wages paid during a predefined period of enrollment.
They charge you a lower percentage if your annual payroll is less than $400,000.
You will face fines if you:
• You don’t cover your employees and don’t pay your SHOP fee. You’re fined $100 per
violation day.
•
You try to entice a high-risk (sick) employee away from company-provided insurance
and towards the SHOP to try to save yourself money.
Don’t forget:
• If you operate as a partnerships, each partner counts as an employee.
• Small businesses designation varies by state
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14. Tax Credits For Small Business
• Who gets the most tax credits? Very small companies(10 or
fewer employees) with low-wage workers
• Companies with more than 50 employees won’t get any tax
credits specific to healthcare reform (but other credits are
available)
• Employers can get a 35% tax credit if they have 10 or fewer
employees, and they earn less than $25,000 on average
• Employers could receive a 50% tax credit if you’re a
company with 10 or fewer employees who earn less than
$25,000 on average
• Employers qualify for a smaller tax credit if they have 25 or
fewer employees with an average wage $50,000 or less
• Employers don’t get a tax credit if they have more than 25
employees. Also, any employee who earns more than
$80,000/year will be excluded from the credit
14– KPA CONFIDENTIAL –

15. Don’t Forget To…
• Set up a benefit plan review with your attorney and insurance
broker by the end of June.
• Update your plans to cover dependents, narrow FSA allowed
spending (and retiree coverage if applicable
• Take advantage of tax credits to offset costs
• Start planning for the future:
– You will be penalized $750 per full-time employee if you’re a company with 50 or more
employees, and you don’t provide health insurance. Employers are not charge for the first 30
workers you don’t cover. (Effective 2014)
– You will not be penalized if you have fewer than 50 employees.
– You face additional fines if you don’t cover 60% of overall employee health costs, as well
government-defined set of services.
If you pay more than $10,200 per year for your individual employee’s health insurance
coverage, or more than $27,500 for family health coverage, the government will charge your
insurer a 40% excise tax on the portion you pay that exceeds the amounts above. That means
higher premiums for you–or your employees. Dental and vision isn’t included in the tax.
• Stayed tuned, the legislation and compliance requirements
continue to evolve
15– KPA CONFIDENTIAL –

16. Questions and Answers
16– KPA CONFIDENTIAL –
QUESTIONS?

17. Contact Information
17– KPA CONFIDENTIAL –
The recorded webinar and presentation slides will be emailed to
you today including your local representative’s contact information.
www.kpaonline.com
kcarlson@kpaonline.com
866-288-8765