Healthcare Reform Update & Employee Benefits Presentation - The Partners Group, Portland, OR

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Welcome!The Seminar Series by The Partners Group

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Agenda

■TPG Overview■Take 20’s

⁃ Healthcare Reform Update⁃ Wellness Program Discussion⁃ Health Plan Alternatives

• Defined Contribution• Captive Solutions

■Wrap Up

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TPG Overview

TPG Overview

■ Financial & insurance consulting firm with services including:

• Employee benefits• Commercial & personal insurance• Wealth management • Business consulting & risk management

■ Helping your employees succeed in health, wealth and retirement planning

■ Locally owned with national strength & buying power

■ Experience, expertise & innovative solutions

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TPG Client

Health & Wellness

Vendor Management

& Negotiations

Communication & Education

Legislation &

Compliance

Ongoing Customer

Service

Reporting & Analytics

Risk Management / Commercial Insurance

Private Client Services – 401k, Financial Planning, Life, Disability

Employee Benefits Consulting – 500+ Clients

Other Services

TPG Overview

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Healthcare Reform Update

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What Did We Know March 1, 2013What Did We Know March 1, 2013

Health Care Reform Update

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What Did We Know July 4th, 2013?

Final Employer Mandate Rules

■ Quick Reminder⁃ What is the employer mandate?⁃ What are the two forms of penalty?

• Sledgehammer (No offer penalty)• Tack hammer (Inadequate coverage penalty)

■ Sledgehammer penalty is the most significant penalty because it can be triggered by a single individual but is assessed against what is potentially a large population

■ Tack hammer penalty is generally less worrisome because it is triggered and assessed on an individual basis

Delay for Mid-Size Employers

■ Small employers continue to be excluded from the employer mandate (fewer than 50 FTEE)

■ Additional one year delay for mid-size employers (50-99 FTEE)

■ The employer mandate will not apply to mid-size employers until the beginning of the 2016 plan year⁃ Employers may not reduce hours or headcount in 2014 to qualify

for the delay⁃ Employers may not significantly reduce or eliminate benefits

that were offered as of February 2014⁃ Employers will need to certify to qualify for the one year delay

■ The question is: Do you know if you are a small, mid-size or large employer?

Are You a Large, Mid Size or Small Employer?■ Summary of employer size calculation

⁃ 30 + hours per week equals 1.0 FTEE⁃ Part time employee hours are aggregated⁃ For 2015, employers can select any consecutive six month period

in 2014 to average the FTEE⁃ For 2016 and beyond, the look-back must be the entire preceding

calendar year■ ABC Company Example

⁃ 48 full time employees (working 30+ hours / week)⁃ 6 part time employees (working 15 hours / week)⁃ Total Full Time Equivalent Employees = 51 ⁃ 48 (Full Time) + 3 (6 Part time X 15 hours per week / 30 hours)

ABC is mid-size employer, and may apply for the one year delay. With the delay, the mandate to offer coverage to employees working 30+

hours per week or pay a penalty will begin for this employer effective with their 2016 plan year

Risk of Sledgehammer Reduced for 2015

■ In the proposed interim rules, the sledgehammer was triggered if the employer did not make an offer of MEC to at least 95% of full time employees

■ The final rules offer transition relief for one year only that reduces that minimum offer rate to 70%

■ There is still a risk of tack hammer penalties for full time employees “in the gap”

■ Significantly reduces the risk of triggering the sledgehammer penalty in 2015

■ Threshold increases to 95% in 2016

Sledgehammer Calculation Softened

■ In the proposed interim rules, the annual non deductible sledgehammer penalty was calculated by multiplying the total number of full time employees - 30 X $2,000

■ The final rules increase the exemption from 30 to 80 full time employees for 2015 only

Transition Relief for Fiscal Plan Years

■ The final rules make it clear that for non-calendar plan years, the employer mandate will not apply to an employer until the first plan year in 2015 or 2016 (for mid-size employers)

■ This transition relief only applies to plans that had a non-calendar plan year as of December 2012

■ So for any employer that renewed early in 2013 to delay certain 2014 ACA provisions, the transition relief will not apply

Defining Full Time Employees

■ The final rules provide clarification around the optional safe harbor rule that allows for employers to establish a “wait and see” measurement period for variable hour and seasonal employees

■ The final rules establish an alternative monthly measurement period

■ These rules are complex but they are important to understand now, to ensure you understand the impact of these rules on your organization

■ Simplified Employer Reporting⁃ Section 6056, Applicable Large Employers (ALEs)

(Employers with fewer than 50 FTEEs are exempt)⁃ Required to be reported by employer:

• For employees who receive qualifying offer for 12 months

⁃ To IRS and Employee: Names, addresses and taxpayer identification numbers and the fact that they received full-year qualifying offer.

• For employees who receive qualifying offer for up to 12 months

⁃ Simplified option will be offered with codes to indicate which months coverage was offered.

Reporting Rules Released

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■ Simplified Employer Reporting⁃ Employers offering to greater than 95% of

employees will have even more simplified reporting option

• The final regulations also give employers the option to avoid identifying in the report which of its employees are full-time, and instead to just include in the report those employees who may be full-time. 

• To take advantage of this option, the employer must certify that it offered affordable, minimum value coverage to at least 98 percent of the employees on whom it is reporting.

Reporting Rules Released

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■ Things Change!⁃ Get Customized Advice on Your Plan⁃ It’s Never Too Early to be Prepared!

What Do We Need to Know?

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The real “elephant in the room”

Why Wellness?

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Why Wellness?

20© 2011 Nurtur Health, Inc. All rights reserved

Body Mass Index (BMI): 30+

BRFSS, 1985

no data

<10%

10%–14%

Why Wellness?Body Mass Index (BMI): 30+

BRFSS, 2010

no data

<10

10–14%

15–19%

20–24%

25–29%

≥30%

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Program Types■ Outcome Based

■ More aggressive stance■ “Carrot or Stick” limited to 30% (HCR)■ Evolving programs■ Accommodations / ADA?■ The possible future?

■Participation Based ■ “Crawl, walk, run”■ Awareness■ Accountability■ Measureable ■ No HCR limits■ Plan design (accommodations)

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What is TPG Engagement?

Obtaining permission from employees leads to adherence

Voluntary Participation

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Measurable Results

■Pacific Northwest Hospital ⁃ 3,115 members⁃ Benchmark year: 92% employees agreed to engage⁃ Year One: 96% employees and spouses agreed to

engage⁃ Results

• Decreased percent of ill hours year over year 2010-2012• Increased employee satisfaction in benefit package• Multiple co-morbidity stabilized• 2012 American Heart Association Fit-Friendly Worksite Platinum

Achievement Award Winner• Portland Business Journal Healthiest Employer of Oregon Award

2012 & 2013

Measurable Results ■ 2,145 participated both years

⁃ biometric results■ Total cholesterol (greater than 200)

⁃ 2011 = 35.29% of population⁃ 2012 = 32.35% of population (8.3%

improvement)

■ High Blood Pressure– 2,145 lives (both years)

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Baseline Year One

Borderline 653 606 (-7%)

High 217 158 (-27%)

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Measurable Results

■260 Life Employer — Engagement Requirements

o Health risk assessment (HRA)o Biometric event = “Know Your Numbers”o Health coaching (if identified)

— Outcomes / Measuremento 98% HRA & biometric participationo 173 health coaching reacheso 294 individual employee goals set over 2 quarters

• 248 partially achieved• 36 fully achieved

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TPG’s “Engaged” Plan

■ Fully insured plan (Underwritten by Lifewise)

■ Multiple plan design options

■ Integrated wellness solutions⁃ Biometric screenings⁃ Online health assessment⁃ Telephonic coaching

■ Three year strategy meant to engage employees in their personal health and well being

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Program Goals

■ Competitively priced with rate stability

■ Simplified program⁃ Implementation & ongoing (administration)⁃ All wellness plan cost included in insured

premium⁃ Single plan (contribution) or Dual Plan (plan +

cont.)

■ Focus on improving health vs. “next renewal”

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TPG’s “Engaged” Plan

■ Wellness Design⁃ Year 1 – Employee engagement with biometrics⁃ Year 2– Biometrics+ health assessment + coaching⁃ Year 3 – Repeat year two + customize based on group

■ Pricing & Rate Stability⁃ 1st year soft rate cap (based on loss ratio)⁃ Lower fixed fees( admin & pooling)⁃ Reduced medical trend calculation (-2%)⁃ Engagement discounts based on employee participation

■ Next Steps⁃ Program deep dive⁃ Proposal with proposed iImplementation timeline

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Health Plan Alternatives

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Agenda

■Defined Contribution Plans⁃ Why now & what are they⁃ Pros & cons⁃ What’s new?

■Captive Risk Programs⁃ Why now & what they are ⁃ How they work⁃ Who may qualify

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Defined Contribution

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Why DC Now?■ Affordable Care Act

⁃ SHOP = choice⁃ Mandates- employer & individual

■ Technology⁃ Enrollment platforms⁃ Payroll systems⁃ Carrier options

■ Consumerism / Choice⁃ Diverse workforce

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What is DC?■ “Cafeteria Plan”

⁃ Flat dollar amount given to each employee to spend as they see fit

■ “Pros”⁃ Employer can budget more easily⁃ Employer contribution is decoupled from medical inflation⁃ Employees have more choices to customize their benefits

■ “Cons”⁃ Must offer cash out option (25%?)⁃ Current contribution model?⁃ Choice = Complexity

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What’s New?■ Choice of multiple carriers and/or plans for

both medical and dental plans – “Private Exchange”

■ Voluntary Options (Traditional & New)■ Enrollment Platform

⁃ Stand alone / Carrier Agnostic⁃ Integrated Payroll Platform (ADP/Other)⁃ Self serve / HR controlled

■ Consolidated Billing■ Decision Support Tools / Education

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Enrollment Platform

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Enrollment Platform

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Enrollment Platform

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Enrollment Platform

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TPG Response■ Private Exchange Option (7/1)

⁃ “Partners Marketplace”⁃ Multiple plan and multiple carrier options⁃ All benefit related programs

■ Benefit Consulting⁃ Full market survey⁃ Best option for each specific employer

■ Evolving Marketplace⁃ Carriers / payroll vendors

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Captive Discussion

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What Is Driving Demand?■ Escape the fully insured marketplace

⁃ Carrier changes in underwriting practices⁃ Year over year increases in premium⁃ Lack of transparency and ability to control costs

■ Health Care Reform Fees■ Carrier Margins / Administration Load■ Subsidizing Carrier Rating Pool

⁃ Healthy – historically well performing group■ Self Funding - Controlled Risk

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How Does A Captive Work?■ Self Funded – “Bundled Plan”

⁃ Third Party Administrator (pays claim / runs plan)⁃ Provider network ( physician, clinic and hospital

discounts)⁃ Pharmacy benefit manager (RX discounts)⁃ Stop loss protection

• Specific stop loss – 25K to 75K (Employer risk per member)• Captive stop loss – SSL up to 250K (Captive risk per

member)• Reinsurance over 250K to separate insurance carrier

⁃ Captive surplus is shared with individual employers based on performance of captive and individual employers

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Captive Candidates?

■ 75 – 300+ Employees■ Stable workforce■ Good Demographics■ Strategic, long term buyer■ Fully insured and frustrated with lack of

control and lack of access to data■ Historically good, stable claims experience /

rates■ Focused on risk management with wellness

intent

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What We Want To Achieve!■ Transparency

⁃ Funding / claims / expenses■ Access

⁃ Proprietary programs & services not available to mid-size employers (Active Care = diabetes program)

■ Risk Share⁃ Like minded employers – focused on members health

■ Rate Stability⁃ Long term / pay for what you consume / SL protection

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Next Steps?■ Interest?

⁃ Deeper dive into program⁃ Qualification discussion⁃ Proposal / program details⁃ Implementation timeline

■ Not A Captive Candidate?⁃ Improve profile⁃ Stand- alone options⁃ Healthcare Reimbursement Account

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Wrap Up■ Three Key Topics

⁃ Healthcare Reform ⁃ Wellness Options⁃ Health Plan Alternatives

■ Overview Only – Each Group Is Unique

■ We Appreciate Your Time This Morning!