HUMAN RESOURCE EXECUTIVE WEBINAR PREPARING FOR HEALTH CARE EXCHANGES

Transcription

1 HUMAN RESOURCE EXECUTIVE WEBINAR PREPARING FOR HEALTH CARE EXCHANGES FEBRUARY 13, 2013 Tracy Watts, Partner Mercer, Washington DC

2 AGENDA FOR TODAY Evolution of health care benefits environment Public Exchanges Private Exchanges and Defined Contribution 1

3 EVOLUTION OF HEALTH CARE BENEFITS ENVIRONMENT THE PERFECT STORM FOR CHANGE? Managed care Consumerism Reform Managed care: thru 2003 Consumerism: 2004 thru 2010 Reform: Source: Mercer s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, US City Average of Annual Inflation (April to April) ; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April)

4 WHAT IS A PUBLIC EXCHANGE? Created by PPACA Structured marketplace to sell and purchase health insurance; Subsidies provided for those who qualify based on income Goal: Insure all Americans 3

5 PUBLIC EXCHANGES STATUS OF STATE ELECTIONS AS OF 23 JANUARY 2013 Declared state exchange 23 Planning partnership exchange 7 Default to federal exchange 26 Sources: Kaiser Family Foundation (states); HHS, HealthCare.gov (territories) 4

6 WHAT DO THE PUBLIC EXCHANGES DO? Manage plan activities Determine eligibility, enroll individuals Assist consumers Provide financial management Ensure plan accountability 5

7 WHO CAN GET SUBSIDIZED GOVERNMENT INSURANCE? ASSUMES STATES EXPAND MEDICAID TO 138% FPL If, in 2014: Your household income is < 138% FPL, you re eligible for Medicaid** Your household income is < 400% of the Federal Poverty Level (FPL) you could be eligible for subsidized coverage in an Exchange Family Size 2013 FPL 2014 FPL* Medicaid Eligibility Threshold Estimate* (138% FPL) Exchange Eligibility Threshold Estimate* (400% FPL) Single $11,490 $11,835 $16,332 $47,339 Family of 2 $15,510 $15,975 $22,046 $63,901 Family of 3 $19,530 $20,116 $27,760 $80,464 Family of 4 $23,550 $24,257 $33,474 $97,026 Family of 5 $27,570 $28,397 $39,188 $113,588 Family of 6 $31,590 $32,538 $44,902 $130,151 * Federal Poverty Level (FPL) assumed to increase 3% per year ** Health reform legislation specifies income threshold of 133% FPL but also requires states to apply an income disregard of 5% of FPL in meeting income test; effective income threshold for eligibility is 138%.

8 2014: PRODUCTS OFFERED IN EXCHANGES EXCHANGE PRODUCTS WILL DIFFER FROM GROUP PLANS Plan options in public exchange are named after metals Exchanges Group Features Bronze Silver Gold Platinum Catastrophic (age <30) Plan design 1 Plan value 60% 70% 80% 90% HSA rules >60% Second lowest cost silver plan will be the baseline for calculating subsidy. Government subsidy and member contribution requirement are calculated based on income and vary by income level between Medicaid eligibility and 400% FPL Once subsidy determined for second lowest cost silver plan; can use for gold plan (and pay more) or bronze plan (and pay less)

9 ELIGIBILITY FOR MEDICAID, SUBSIDIES, COST-SHARING CREDIT BASED ON SECOND LOWEST COST SILVER PLAN IN 2014 Individual in 2014 (Estimated FPL = $11,835*) Percentage of Poverty Level Annual Household Income Plan Value with Cost Sharing Credit Maximum Monthly Employee Contribution in Exchange Percent of Household Dollars Income <100% < $11,835 Medicaid/Access Gap N/A N/A <138% < $16,332 Medicaid (if expanded) N/A N/A 138% $16, % to 94% 3.00% $41 150% $17, % to 87% 4.00% $59 200% $23,669 +3% to 73% 6.30% $ % $29,587 70% 8.05% $ % $35,504 70% 9.50% $ % $47,339 70% 9.50% $375 >400% > $47,339 70% No Maximum Full Cost Maximum monthly contribution for employee-only coverage to be below 9.5% of 138% of AHI to keep all eligible employees in the employer plan: $16,332 X 9.5% / 12 = $129 (illustrative only; actual amount will be based on 2014 FPL) * Note: All numbers based on Mercer forecasts for 2014 based on current contributions; illustrative only

10 2014: FAMILY COVERAGE IN A PUBLIC EXCHANGE PREMIUMS AND SUBSIDIES WILL DETERMINE APPEAL 150% Individual product prices could be higher than in Group Plans 1 and may rise faster 2014 Family Silver Plan Total Premium at 150% = $2,653/Month Pay full premium Survey Data 2 -- Average employee contribution for PPO coverage $111/month individual $391/month family 110% Average group plan total premium Full Premium at 100% $1,769/month Individual product costs will vary by state Silver Plan $83/month Family of four $33K AHI $261/month Family of four $49K AHI Family of four $100k AHI Total monthly premium at 150% of average Family of 4 Average Iowa New York Silver $2,653 $2,202 $2, Oliver Wyman. Impact of the PPACA on costs in the individual and small-employer health insurance markets 2. Mercer Survey of Employer Sponsored Health Plans, 2012 Employers 500+ (All employers = $148/month for individual; $544/month for family)

11 EMPLOYERS AND PUBLIC EXCHANGES HOW WILL IT WORK? 1. Individual applies to exchange with 2012 income data 2. Individual provides employer data and certifies they do not have access to minimum coverage that is affordable from employer 3. Exchange reviews for Medicaid and/or subsidy eligibility and notifies individual if eligible 4. Individual enrolls subsidized coverage in exchange 5. Exchange notifies IRS 6. After close of plan year, IRS sends list of employees for possible tax to employer 7. Employer reviews list confirm/appeal 8. IRS sends employer bill for tax, as confirmed by the employer

12 WHAT IS A PRIVATE EXCHANGE? Marketplace with core and voluntary product offerings across many benefits and services Exchange sponsor stocks products and manages end-to-end consumer experience 11

13 PUBLIC VS PRIVATE EXCHANGES Open PUBLIC PRIVATE Closed Medical, prescription Dental, vision, life, voluntary, plus more Government sponsored Employer, broker, TPA, association Single or multiple carrier Insured or self-funded Actives, retirees Individuals Group plans 12

14 Growing interest in private health care exchanges Why are employers looking at private health care exchanges? One-stop shopping across core medical, life, disability and voluntary benefits Technology eases employee decisionmaking Collective buying power and influence help control total benefit cost Some allow employers to retain control Employees are not necessarily opposed to change as long as they see financial benefit Percent of employers that would consider offering a private exchange 18% 56% Mercer s National Survey of Employer-Sponsored Health Plans, 2012

15 HOW DOES DEFINED CONTRIBUTION RELATE TO EXCHANGES? Defined Contribution = Funding arrangement where employers manage their year-over-year increase in health and welfare benefits spend to a pre-defined amount With private exchanges, employers can successfully implement defined contribution Offer employees an array of choices Encourage employees to buy down to lower-cost medical coverage and use remaining dollars for other purchases Best achieved when employees can purchase other attractive products (life, accident, disability, critical illness, auto, etc.) Better meets employees personal needs Helps manage their benefit spend 14

16 PRIVATE EXCHANGES HOW DO THEY WORK? Integrate all benefit processes Funding DB or DC Employer defined contribution, employee contribution or combination Employee communications & education Online Call center Print & Enrollment Administration Eligibility Determination Data-driven Events Election Management Contribution Calculation Election Data Deductions Carriers Payroll Reporting & Premium Data HR Professionals February 14,

17 DELIVERED EFFECTIVELY, PRIVATE EXCHANGES WILL Reduce administrative burden of managing benefits and optimize your investment More effectively engage all of your people and meet their individual needs Improve per-capita costs and Benefit resources Value control the rate of increase year-over-year 16

18 Questions & Answers 17