The current state of PPACA & employee health benefits
US Healthcare Reform & The Impact on Employers
Key PPACA provisions affecting Employer-Sponsored Insurance…• Minimum Loss Ratios By Market Of 80% Or 85% (Large Vs.
Small Employers)
• Rate Review
• Guaranteed Issue
• Guarantee Renewability
• Policies Cannot Carry Pre-existing Conditions
• No Discrimination On Health Status
• No Discrimination Of Plan For Highly Compensated Employees Vs. Non Highly Compensated Employees (Executives Vs. Non Executive)
Key PPACA provisions affecting Employer-Sponsored Insurance…• Additional taxation of certain types of policies by 2018 for
exceptionally rich benefits if not offered to everyone (some employers offer more than one plan and employees may choose)
• No lifetime maximums nor annual limits
• Coverage of preventative care without cost sharing
• Extension of adult dependent coverage to age 26
• No pre-existing condition restriction
• Must provide “essential health” benefit package as outlined by the law
Future PPACA Provisions Affecting Employers To Be Implemented…
#HealthInsights
JANUARY 2015
Employer Shared Responsibility takes effect.
JANUARY 2018
Excise Tax on Cadillac plans takes effect. “Cadillac Tax”
Comparing Plan Types…
ProvisionExchange
Plan
Grand-fathered
Plan
Employer Sponsore
d plan
Self-Insured
plan
No lifetime or annual limits. ✔✔
(Annual limits do not apply)
✔ ✔
Dependents under age 26. ✔ ✔ ✔ ✔
Plan administrative costs. ✔ ✔ ✔
Preventive services. ✔ ✔ ✔
Patient protections. ✔ ✔ ✔
Out-of-pocket maximums. ✔ ✔ ✔
Pricing. ✔ Small group only.
Deductibles. Small group only.
Small group only.
Minimum services covered. ✔ Small group only.
Starting in 2018, a 40% excise tax will be imposed on the portion of employer-sponsored health coverage that generally exceeds $10,200 a year for single coverage and $27,500 for families.
Excise Tax on Cadillac Plans…
#HealthInsights
Insurers will group your company with
other local employers and set premium
rates based on age, location, family size
and smoking status.
Beginning in 2014, the PPACA requires a modified community rating for individual & small-group markets…
More than 2/3 of employers currently providing health benefits (69%) have analyzed how the PPACA will affect their health care plan costs.
Are US Employers prepared for the PPACA?
80/20 medical loss ratio
Comprehensive coverage for health benefits package
Essential health benefits requirements
Guaranteed issue and renewability
Prohibition of discrimination based on salary
Annual limitation on deductibles for employer sponsored plans
PPACA mandates contributing to increasing costs…
Medium-size and large employers are experiencing cost increases close to 5% due to the PPACA. A considerable portion of smaller businesses are experiencing cost increases above 15 percent.
0-50 FTEs 51-499 FTEs 500-4,999 FTEs 5,000-9,999 FTEs 10,000 FTEs0%
5%
10%
15%
20%
25%
30% 28%
19%
1%
4% 4%
Employers have begun to see cost increases to their employee health plans of as much as 15%.
Providing Insurance to Uninsured
Transitional Reinsurance
Human Resources & Employee
Communication
Administrative Cost
PCORI Fee
28% 35%38%
18%13%
In 2007, 73% of large companies surveyed said they would continue to offer health care benefits for the next 10 years. today only 23% make this prediction.
How will employers react?
53%
36%28%
29%
Shift High Cost Employees Into Private
Exchanges
Increase Preventative Measures (i.e. Wellness,
Value-based Health, Disease Management)
Reduce Current Levels of Health Benefit Coverage &
Contributions
Shift to High-Deductible Plan
Employer contributions have increased 89% in 10 years
Employer Contributions - $6,657Employee Contributions - $2,412
Employer Contributions - $11,786Employee Contributions - $4,565
Avg. Annual Premium $9,068
2003
2013Avg. Annual
Premium $16,351