Health Care Reform - Under 50 Employees

Small Employer Breakout Group
Andy Mike Bertaut Brandon Cindy Amedee
Impastato Lagarde

BancorpSouth Insurance Blue Cross Blue Shield Postlethwaite & Taylor Porter
Services/Wright & Percy Healthcare Economist Netterville, APAC Attorney, Health
Vice President, Exchange Coordinator Associate Tax Director Care Practice Team
Client Compliance

Legal Overview

Cindy M. Amedee
February 26, 2013

Overview of the Law
• The Act
o More than 1,000 pages
• The Supreme Court Ruling:
o A close call but PPACA is constitutional

01 Office: 225.381.0279
Email: cindy.amedee@taylorpoter.com

Overview of the Law
• Far reaching impact
• More than 10,000 pages of rules and regulations
• Issued by numerous federal agencies

02 Office: 225.381.0279

Overview of the Rules & Regs
• May effect employers
• 2013 deadlines
o Mainly financial

03 Office: 225.381.0279

Overview of the Rules & Regs
• 2014 deadlines
o Individual & employer coverage mandate
o Health insurance exchanges
o Medicaid expansion?

04 Office: 225.381.0279

Thank you
Cindy Amedee
Attorney, Taylor Porter
Health Care Practice Team
cindy.amedee@taylorporter.com
Office: 225.381.0279

Healthcare Reform Update

Brandon Lagarde
February 26, 2013

Overview of Ruling: Legal Perspective
• Businesses organized in multiple forms considered as a single employer
• Controlled group
o Parent-subsidiary
o Brother-sister
o Combination
• Affiliated Service Group

01 Office: 225-922-4600
blagarde@pncpa.com

Small Employer Health Insurance Tax Credit

• Allows eligible small employers to claim a 35% credit (25% in the case of tax-exempt
employers) for premiums paid toward health coverage for its employees in tax years
beginning 2010 through 2013. These percents increase to 50% and 35%, respectively,
in 2014.
• An eligible small employer is an employer that has no more than 25 full-time employees
and the average annual compensation of these employees is not greater than $50,000.
• The credit is reduced by 6.6667% for each full-time employee in excess of 10
employees and by 4% for each $1,000 that average annual compensation paid to the
employee exceeds $25,000.
• After 2013, employer must participate in an insurance exchange to be eligible for credit.
• Must pay at least 50% of premium for all employees and the percentage must be
uniform among all employees

02 Office: 225-922-4600
blagarde@pncpa.com

Small Employer Health Insurance Tax Credit
Average Wage
$25,000 and
$30,000 $35,000 $40,000 $45,000 $50,000
Number of FTEs less
10 and fewer 35% 28% 21% 14% 7% 0%
11 33% 26% 19% 12% 5% 0%
12 30% 23% 16% 9% 2% 0%
13 28% 21% 14% 7% 0% 0%
14 26% 19% 12% 5% 0% 0%
15 23% 16% 9% 2% 0% 0%
16 21% 14% 7% 0% 0% 0%
17 19% 12% 5% 0% 0% 0%
18 16% 9% 2% 0% 0% 0%
19 14% 7% 0% 0% 0% 0%
20 12% 5% 0% 0% 0% 0%
21 9% 2% 0% 0% 0% 0%
22 7% 0% 0% 0% 0% 0%
23 5% 0% 0% 0% 0% 0%
24 2% 0% 0% 0% 0% 0%
25 0% 0% 0% 0% 0% 0%

03 Office: 225-922-4600
blagarde@pncpa.com

Expansion of Coverage – Individual Mandate

• Individual Mandate
o With limited exceptions, ALL individuals must maintain “minimum essential coverage”
or pay a penalty.
 Government provided coverage
 Employer sponsored coverage
 Exchange coverage.
• Exemption from mandate
o if required contribution to purchase insurance exceeds 8% of household income.
o Religious objection
o American Indians
o Incarcerated Individuals
o Those with incomes below the tax filing threshold

04 Office: 225-922-4600
blagarde@pncpa.com


• Penalty amount is the lesser of a flat dollar amount of percentage
of income.
o 2014: $95 or 1% of household income
o 2015: $325 or 2% of household income
o 2016 and later: $695 or 2.5% of household income

05 Office: 225-922-4600
blagarde@pncpa.com


• Individual Mandate
o Duty to purchase insurance is mitigated by premium credits and cost-
sharing subsidies available to individuals with income between 100%-
400% of federal poverty limit.
o Premium assistance is not available if individual has access to employer
provided coverage UNLESS:
 Too Skinny: Employer coverage provides less than 60% actuarial
value.
 Too Expensive: Required contribution under employer plan for
self-only coverage exceeds 9.5% of household income.

06 Office: 225-922-4600
blagarde@pncpa.com

Poor Middle Income Upper Income
Federal Assistance Medicaid Subsidies None
Premiums limits 2% of income 3% to 9.5% No limit
Cost sharing limit 94% 70 – 93% No limit
Eligibility < 133% FPL 133 – 400% FPL > 400 FPL
Family of 1 < 14.4 14.4 – 43.3 > 43.3
Family of 2 < 19.4 19.4 – 58.3 > 58.3
Family of 3 < 24.4 24.4 – 73.2 > 73.2
Family of 4 < 23.9 23.9 – 88.2 > 88.2
Family of 5 < 34.3 34.3 – 103.2 >103.2

07 Office: 225-922-4600
blagarde@pncpa.com

Expansion of Medicare Taxes (2013)

• Employee portion of Medicare tax increased by 0.9%
• Applies to wages or self-employment income in excess of $200,000 ($250,000 in
the case of a joint return, $125,000 in the case of a married taxpayer filing
separately).
• The additional Medicare tax increases the employee portion to 2.35% or a total
Medicare rate of 3.8%.
• Employer has the obligation to withhold the additional tax on wages (without
regard to spouse’s wages) if its employee earns more than $200,000; Employee
is liable to the extent not withheld by employer.
• Self-employed are not allowed a deduction for ½ of the additional 0.9% tax.

08 Office: 225-922-4600
blagarde@pncpa.com

Expansion of Medicare Taxes (2013)

• Individuals, estates and trusts required to pay 3.8% tax on net investment
income such as interest, dividends, annuities, royalties, rents, capital gains
and income from passive activities.
• Applies to the income in excess of $250,000 for joint returns, $125,000 for
married filing separate and $200,000 for all others

09 Office: 225-922-4600
blagarde@pncpa.com

Thank you
Brandon Lagarde
Associate Tax Director

blagarde@pncpa.com

Office: 225-922-4600

Healthcare Reform Update

Andy Impastato
February 26, 2013

Agenda
• Grandfathered Plans
• Carve Out Plans
• Exchange Notice
• Essential Health Benefits
• Questions & Answers

01

Grandfathered (GF) Plans
• Impermissible changes
o Elimination of benefits
o Any increase in percentage cost-sharing
o Increase in fixed-amount cost-sharing
 15% above medical inflation is allowed
o Decrease in employer contribution
 Five percentage points
o Certain changes to annual limits
• Disclosure requirements
• Recordkeeping requirements

02

Carve Out Plans
• Nondiscrimination in favor of highly compensated individuals (HCI)
o Applies to all self-insured plans
o Applies only to non-GF fully insured plans
 Delayed effective date*
o Definition of HCI
o Eligibility test
o Benefits test
o Penalties for noncompliance
• Other laws

03

Exchange Notice
• Applies to employers subject to the FLSA
• Delayed effective date
o Originally effective for March 1, 2013
• Content requirements
o Existence, services and contact information of Exchange
o Eligibility of premium tax credit or cost-sharing reduction
o Consequences of dropping employer coverage
• Model Notice?

04

Essential Health Benefits
• Applies to non-GF, small group plans
• Effective for plan years beginning in 2014
• Requirements
o Provide essential health benefits
o Limit cost-sharing
o Provide either bronze, silver, gold or platinum coverage (or catastrophic plan for
individuals)

05

• Essential health benefits
o Categories
 Ambulatory patient services
 Emergency services
 Hospitalization
 Maternity and newborn care
 Mental health and substance abuse
 Prescription drugs
 Rehabilitative and habilitative services and devices
 Laboratory services
 Preventive and wellness services
 Pediatric services (includes oral and vision care)

06

• Cost-sharing limits
o Out-of pocket limits
 Estimated to be $6,250 / $12,500
 Includes deductibles, co-payments and coinsurance
• Deductible limits
 Will be $2,000 / $4,000
 May be increased by maximum reimbursement available to participant under FSA

07

• Coverage (metallic) levels
o Levels based on actuarial values
o Standard data
o Actuarial value calculator tool
• Benchmark plan
o Designated by individual States
o Based on largest products sold in State or by HHS in the absence of State
action

08

Thank you
Andy Impastato
Vice President, Client Compliance

healthcarereform@bxsi.com

Office: (225) 336-3238

Time to Implement!
Moving Forward with Reform

Mike Bertaut
February 26, 2013

Disclaimer
All information in this presentation INCLUDING THE OPINIONS OF THE PRESENTER are solely for
illustrative purposes. The information is based on certain assumptions, interpretations, and calculations that
are not necessarily accurate with regard to provisions of PPACA, HCERA, HIPAA, COBRA, ERISA, and
other rules, regulations, guidance and all other documents issued by relevant state and federal agencies with
regard to these laws and any other relevant laws. The information provided should not be
considered as legal, financial, accounting, planning, or tax advice. You should consult your
attorneys, accountants, and other employees or experts of this type of this type of advice based on their
own interpretations, calculations, and determinations of applicable laws, rules, regulations, guidance, and
any other documents and information that they determine may be relevant. The authors make no
guarantees or other representations as to the accuracy or completeness of the data in this presentation.

BCBSLA expressly disclaims any liability for information obtained from use of this presentation by any
BCBSLA employee or by any other person. No warranty of any kind is given with regard to the contents of
the presentation.

01 Office: 225-297-2719
michael.bertaut@bcbsla.com

Grandfathered Status
• Benchmarked for all groups on 3/23/2010
• Requires benefit offer stay essentially the same going forward
o Must not change coverage or co-insurance shares, very small adjustments to
cost sharing and premium shares to employee allowed.
• Allows Group to forego several new types of mandatory
coverage, avoid new costs, and bypass compliance with some
expensive new regulations
• Grandfathered pools of groups, in general, have lower healthcare
costs and premiums

02 Office: 225-297-2719

Benefits of Grandfathering
• No added cost for new first dollar Women’s coverage.
• No added cost for new first dollar USPTF schedule B testing and immunizations.
• Continued rating segregation from non-grandfathered groups and new richer
plans.
• No higher ER reimbursements required.
• In most cases group can keep existing benefit combinations when new rules take
effect in 2014.
• No requirements to cover experimental treatments.

***Does not protect from the ALE requirements***

03 Office: 225-297-2719

New Product Requirements for 2014 and Beyond

• All individual and small group • All essential health benefits
(2-50) products MUST meet must be covered.
Actuarial standard Tests and • GF groups can keep existing
cover all essential health plans, otherwise:
benefits. • Actuarial Value Standards:
• Deductibles over $2,000 o Bronze = 58-62%
generally prohibited o Silver = 68-72%
• Max out of pocket costs o Gold = 78-82%
o Platinum = 88-92%
limited to H.S.A. levels.
Groupcare PPO is minimum coverage. 70% of existing products will go away.

04 Office: 225-297-2719

Rate Compression Looms
• PPACA puts very strict rules on the Underwriting of Individual and Small Group
Products
• Since current SGUR in Louisiana allow for 50% spread of rates above and below the
mean (new selling rate) in the 2-35(50) pool, taking away rating based on medical claims
and only allowing a 3:1 age spread will severely compress rates in this pool
• We have identified thousands of groups who will be required to absorb rate
increases in excess of 40%.
• Act requires all QHP’s to be underwritten based on three criteria ONLY:
o Age Banded no more than 3:1
o Geographic Allowance 1.5:1
o Tobacco Use 1.5:1
o (Family status will affect rates per household)

05 Office: 225-297-2719

The Carrier Tax
• PPACA requires insurance carriers
and fully insured groups to make TAX ($B)
BCBSLA
BASE RATE
TAX
($M)
“contributions” to support subsidies INCREASE

on the Exchange. 2014 $8.0 $36.3 2.5%

2015 $11.3 $51.2 3.5%
• All carriers with fully insured
2016 $11.3 $55.8 3.5%
premiums are assessed as part of the
2017 $13.9 $68.6 4.3%
“Bucket Tax” on health insurance
2018 $14.3 $71.7 4.5%
carriers (technically a “fee”) $14.3+
Plus Premium Plus Premium
2019 Premium
• Note that the effect of this new “fee” Inflation
Inflation Inflation

is enhanced in rates because it is not
a deductible business expense.

06 Office: 225-297-2719

Could you be an ALE?
FULL TIME PT HOURS /120 FTE TOTAL FTE AVERAGE
Jan 2013 22 3300 27.5 49.5
Feb 2013 23 2800 23.3 46.3
Mar 2013 23 3250 27.1 50.1
Apr 2013 23 3450 28.8 51.8
May 2013 24 3105 25.9 49.9
June 2013 22 3271 27.3 49.3
July 2013 23 3655 30.5 53.5
Aug 2013 24 3705 30.9 54.9
Sept 2013 25 3000 25.0 50.0
Oct 2013 26 3800 31.7 57.7
Nov 2013 27 3950 32.9 59.9
Dec 2013 30 4250 35.4 65.4 53

07 Office: 225-297-2719

Thank you
Michael R. Bertaut
Healthcare Economist

LINKED-IN
Recommendations WELCOME!!!
Michael.bertaut@bcbsla.com
Office: 225-297-2719
Cell: 225-573-2092

Health Care Reform - Under 50 Employees

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