1. People helping people…it’s what
we do best.
Health Insurance Exchange
and
Defined Contributions
Health Planswww.kapnick.com

2. Solutions for a Superior Workplace | Disclaimer
The information in this document is based on preliminary review
of the national health care reform legislation and is not intended
to impart legal advice. The federal government continues to issue
guidance on how the provisions of national health reforms on
individuals should be interpreted and applied. The impact of these
reforms on individual situations may vary. The overview is
intended as an educational tool only and does not replace a more
rigorous review of the law’s applicability to individual
circumstances and attendant legal counsel and should no be
relied upon as legal or compliance advice. As required by US
Treasury Regulations, we also inform you that any tax
information contained in this communication is not intended to be
used and cannot be used by any taxpayer to avoid penalties under
the Internal Revenue Code.
2

3. Solutions for a Superior Workplace | Agenda
 Individual Mandate
 What is an Exchange? Public vs. Private?
 When will the Exchange be available?
 How will Exchanges differ?
 What is the estimated cost of coverage on the
Exchange?
 Employer Responsibility
 Defined Contributions Health Plans
 Q&A3

4. Solutions for a Superior Workplace | Individual Mandate
 Supreme Court issued its decision on June 28, 2012

5:4 ruling

The individual mandate is constitutional
 Jan. 1, 2014: Individuals must enroll in coverage or pay
a penalty
 Penalty amount: Greater of $ amount or a % of income

2014 = $95 or 1%

2015 = $325 or 2%

2016 = $695 or 2.5%

5. Solutions for a Superior Workplace | Health Insurance Marketplace
Exchange  Marketplace

6. Solutions for a Superior Workplace | Public vs. Private Marketplaces
Difference between
two types of
Marketplaces:

Public

Private

7. Solutions for a Superior Workplace | Public Marketplaces
 Two Types of Public Marketplaces:
 The public Health Insurance Marketplace is a state- or
federal- run platform where individuals can obtain health
insurance coverage. They will also be able to compare
and choose health plans offered by private companies
and find out if they are eligible for financial assistance

The Marketplaces will also operate a Small Business
Health Options Program (SHOP). There, small
employers can purchase a variety of plans, and then
may choose to allow its employees to choose from
plans it selects or one plan. HHS delayed multi-plan
availability until 2015

8. Solutions for a Superior Workplace | Marketplace Availability
First Open Enrollment:
October 1, 2013 - March 31, 2014
Coverage starts: January 1, 2014 for plan
selections made by December 15, 2013
Annual Open Enrollment (after first year):
October 15th
- December 7th
Coverage begins January 1 of the next year

9. Solutions for a Superior Workplace | Public Marketplace
Each State can choose to:

Create and run its own Marketplace – State-Based
Marketplace

Partner with the federal government to run some
Marketplace functions – Partnership Marketplace

Have a Marketplace that’s operated by the federal
government - Federally-facilitated Marketplace
Market Saturation
• 52 million uninsured Americans
• About half will explore the new Marketplace
• About 19 million will be eligible for a premium subsidy

10. Solutions for a Superior Workplace | States Marketplace Decisions
Partnership Marketplace (7 states)State-based Marketplace (16 states and DC)
Federally-facilitated Marketplace (27 states)
WA
OR
WY
UT*
TX
SD
OK
ND
NM
NV
NE
MT
LA
KS
ID
HI
CO
CA
ARAZ
AK
WI
WV VA
TN
SC
OH
NC
MO
MS
MN
MI
KY
IA
INIL
GA
FL
AL
VT
PA
NY
NJ
NH
MA
ME
CT
DE
RI
MD
DC
* In Utah, the federal government will run the marketplace for individuals while the state will run the small
business, or SHOP, marketplace.
As of May 10, 2013

11. Solutions for a Superior Workplace | Public Marketplaces – Online Application

12. Solutions for a Superior Workplace | Public Marketplaces – Paper Application

13. Solutions for a Superior Workplace | Marketplace Reform Mandates
Health plans must comply with new market reforms:
Fair Premiums:
Health status and gender not
used to set premiums; limits
on age rating
Guaranteed Renewability:
Coverage must be renewed for
all policyholders with limited
exceptions
Single Risk Pool:
Issuers cannot use separate risk
pools to charge certain
customers’ higher rates
Guaranteed Availability:
Coverage must be offered to all
comers, with limited exceptions

14. Solutions for a Superior Workplace | Marketplace Reform Mandates
The only factors that can be used to vary the
premium rate for a plan in the individual or small
group market are:
Age | Family Status | Tobacco use | Geography
Health plans cannot change premium rates
based on:
Health Status | Claims Experience | Gender

15. Solutions for a Superior Workplace | Marketplace Reform Mandates
 Health plans must be certified to be offered in a
Marketplace, and must include 10 required Essential
Health Benefits:

Ambulatory Patient Services

Emergency Services

Hospitalization

Maternity and Newborn Care

Mental Health and Substance Abuse

Prescription Drugs

Rehabilitative and Habilitative Services

Laboratory Services

Preventive and Wellness Services and Chronic Disease
Management

Pediatric Services including oral and vision care

16. Solutions for a Superior Workplace | Marketplace Reform Mandates
All plans must provide at least 60% actuarial value
minimum
Actuarial Value is calculated as the percentage of
total average costs that a subscriber will pay for
covered services (e.g. copays, deductible,
coinsurance, etc. Excludes premiums)
Four levels of coverage on the exchanges:
Bronze: Plans cover 60% of the costs
Silver: Plans cover 70% of the costs
Gold: Plans cover 80% of the costs
Platinum: Plans cover 90% of the costs

17. Solutions for a Superior Workplace | Marketplace Costs
What might unsubsidized Marketplace plans cost?
MI
25.8%
Increase

18. Solutions for a Superior Workplace | Marketplace Tax Credits and Subsidies
Individuals might be eligible for tax credits or
subsidies
Who will be eligible?

Individuals at 100% - 400% Federal Poverty Level without
access to affordable, minimum essential coverage that
enroll in coverage through the Public Marketplace
Who won’t be eligible?

Employees offered small or large employer plans that
provide affordable, minimum value coverage

Individuals eligible for government-sponsored health care

19. Solutions for a Superior Workplace | Notice of Exchange
Employers must notify new and current
employees of Marketplace information

Originally effective March 1, 2013 – Delayed

Temporary Guidance: no later than October 1, 2013
Virtually all employers must provide to full-time
and part-time employees - subject to Fair Labor
Standards Act (FLSA) – regardless if they offer
coverage
Department of Labor Model Notices available

20. Solutions for a Superior Workplace | Notice of Exchange

21. Solutions for a Superior Workplace |
Defined Contribution Health Plans

22. Solutions for a Superior Workplace | Defined Contribution Health Plans
What is a Defined Contribution Health Plan?
Why might Defined Contribution Plans be
appropriate now?
How does it work?
Benefits to Employers and Employees

23. Solutions for a Superior Workplace | Defined Contribution Health Plans
What is a Defined Contribution Health Plan?

Employer gives employees a fixed
contribution to purchase Health Coverage

Employee uses the funds to buy or help pay
for an insurance plan they select themselves

24. Solutions for a Superior Workplace | Defined Contribution Health Plans
Why now?

Marketplace is electronic platform that allows
and requires insurance carriers to provide
multiple options

Continued cost increases from medical
inflation and ACA mandates

25. Solutions for a Superior Workplace | Defined Contribution Health Plans
How does it work?

26. Solutions for a Superior Workplace | Defined Contribution Health Plans
Example A – One Carrier

27. Solutions for a Superior Workplace | Defined Contribution Health Plans
Sample Menu Choices for Employer
PPO HMO
$1000 Ded 80/20 $100 Ded 80/20
$1250 Ded HSA 80/20 $1300 Ded HSA 80/20
$2500 Ded HSA 80/20 $1500 Ded HSA 80/20
$3000 Ded HSA 80/20 $3000 Ded 80/20
$4000 Ded 70/30 $4000 Ded 70/30
PPO HMO
$1000 Ded 80/20 $100 Ded 80/20
$1250 Ded HSA 80/20 $1300 Ded HSA 80/20
$2500 Ded HSA 80/20 $1500 Ded HSA 80/20
$3000 Ded HSA 80/20 $3000 Ded 80/20
$4000 Ded 70/30 $4000 Ded 70/30
Option A Option B

28. Solutions for a Superior Workplace | Defined Contribution Health Plans
Example B – Multi-carrier

29. Solutions for a Superior Workplace | Defined Contribution Health Plans
Benefits

Allows the employer to fix cost based on
budget, not insurance rate increase

Allows an employee to select coverage that
best fits their need and budget