How To Survive And Thrive In The Era Of Health Reform[1]
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Transcript of How To Survive And Thrive In The Era Of Health Reform[1]
HOW TO SURVIVE AND THRIVE DURING THE ERA OF HEALTH CARE
REFORM
By Jim Wisdom, CFP
James L. Wisdom Insurance Services
August , 2012
OVERVIEW
Health Reform Overview
Where Are You Today?
Where Do you Want To Go?
How Can We Help You Get There?
PATIENT PROTECTION AND AFFORDABLE CARE ACT ( PPACA)-OVERVIEW Tax Credits Employers with 10 or fewer workers Average annual wages of < $25,000 Eligible for credit of up to 35% of premiums costs through 2013 Phases out and disappears if employer has > 25 employees and
average annual income of $50,000 or more
PATIENT PROTECTION AND AFFORDABLE CARE ACT ( PPACA)-OVERVIEW ( CONT’D) 2011- Adult children to 26; No lifetime limits; Restricted
Annual limits; No Pre-Existing Conditions for Children under 19; Preventive Services with no cost sharing required
Employers must satisfy non-discrimination requirements of Section 105(h)- subject to $100/day penalty ( non-compliance)
PPACA- OVERVIEW ( CONT’D)
Form W-2 Reporting
2013- Broaden Medicare HI (+ .9% increase )
Medicare tax on investment income ( +3.8%)
Applies to income levels greater than $200K ( Individuals) and $250K ( Families)
Unearned income = interest, dividends, capital gains, annuities, royalties and rents
PPACA- OVERVIEW ( CONT’D)
2013 ( cont’d)
Tax of 2.3% on Medical Device Manufacturers
Itemized Deductions on Medical Expenses- Expenses must exceed 10% of income ( from 7.5% of income now)
PPACA- OVERVIEW ( CONT’D)
2014- Employer “pay or play” responsibility for 50 FTE’s or more ( includes part-timers)
If employer offers coverage, but has one employee receiving subsidized coverage in exchange: Employer pays lesser of $3,000 X # FTE’s receiving subsidized
coverage in an exchange or $2,000 X # FTE’s
If employer doesn’t offer coverage, employer pays $2,000 X # FTE’s, if at least one FTE obtains subsidized coverage in an exchange
PPACA- OVERVIEW ( CONT’D)
2014 ( cont’d)
Employer Free Choice Vouchers Subsidies available for low income employees
The Employee’s household income can’t exceed 400% of FPL
PPACA- OVERVIEW ( CONT’D)
2014 ( cont’d)
Wellness Incentives Increase from 20% to 30% of plan costs ( Health Care Reform “carrot”) for participation in employer sponsored wellness program
Incentive may increase to 50% of plan costs
PPACA- OVERVIEW ( CONT’D)
2014
Employee Health Coverage Reporting- Employers must report on the following:
If “minimum essential coverage” is offered Waiting period Lowest cost option in each enrollment category Employer share of total allowed costs of benefits Total number and names of FTE’s receiving coverage
PPACA- OVERVIEW ( CONT’D)
2014 ( cont’d)
Insurance market reform ( Exchanges) guaranteed issue; no underwriting, no pre-existing conditions; limits
on rating bands
PPACA- OVERVIEW ( CONT’D)
2018- “Cadillac Tax”
Excise tax on high-cost health plans 40% excise tax Applies to Individual coverage cost > $10,200 Applies to Family coverage cost > $27,500 Costs are aggregated ( i.e. PPO + H.S.A., etc. ) “Cadillac Tax to affect 60% of our clients”- Towers Watson – Benefit
Consultants
HIGH PERFORMING COMPANIES VS. LOW PERFORMING COMPANIES“There is a bigger price difference between High Performing
companies and Low Performing Companies than ever before.”
Towers Watson- 2010 Health Care Survey
KEY CHARACTERISTICS OF HIGH PERFORMING COMPANIESProactive vs. Reactive
Consumer Driven Health Plan Option ( i.e. HSA, HRA)
Company Sponsored Wellness Program
Source: Towers Watson 2010 Health Care Survey
CONSUMER DRIVEN HEALTH PLANS
HRA – Health Reimbursement Arrangement
HSA- Health Savings Account “Health Care IRA” 20% to 30% discount vs. Traditional Plans “Triple Tax Punch”
Tax- Favored at Deposit, Growth and Withdrawal Phase Unused $$ rolls over to the next year- tax-favored Maximum Deposit ( 2012):
Individuals: $3,100 Families: $6,250
WELLNESS PROGRAMS
$2.5 Trillion spent on health care annually
Approx. 50% of all health care costs due to lifestyle “The Big Three”- Diabetes, Obesity, Heart Disease
70% of all health care costs due to: Diabetes Asthma Congestive Heart Failure Coronary Artery Disease Depression
VALUE BASED PLANS: OVERVIEW
What are Value Based Plans?
What makes them unique?
What is the long term outlook for Value Based Plans?
WHAT ARE VALUE BASED PLANS?
Like typical health plans, when a member is injured or sick, Value Based Plans will pay their claims
Unlike typical health plans, Value Based Plans go further by rewarding employees to take action to improve or manage their health.
The difference: Health Insurance vs. Healthy Insurance
POTENTIAL BENEFITS - VALUE BASED HEALTH PLANSProvide financial incentives to employees to complete “Health
Actions” and monitor health and lifestyle
Lower Health Claims Costs, lower health premiums over the short and long-term
Lower, more stable health premiums over the short and long-term
A healthier, more educated workforce
Lower presenteeism
Lower absenteeism
Higher employee morale and productivity
A more profitable employer
POTENTIAL FUTURE BENEFITS – VALUE BASED PLANSValue Based Plans have offered rate increases averaging 1.5%
per year for the last two years ( far below industry norms)
For groups of 51+ employees, some vendors are offering two year rate guarantees
Value Based Plans may be attracting a healthier risk pool
If this happens, Value Based Plans may continue to offer lower annual rate increases
The above phenomenon would adversely affect the annual rate increases with traditional health plans ( HMO, PPO) – adverse risk pool = higher than normal rate increases
WHERE ARE YOU TODAY?Level I I Level III
Multi Plans Yes Yes
Pre-Tax Premiums Yes Yes
Rollover Unused $ No YesPay Claims Pre-Tax Yes YesHC Financial Option No YesPrice/Quality Tools No YesInv. Options ( tax-adv.) No YesHealth Risk Tools Yes YesHealth Risk Prev. Tools No No Wellness Program No No
WHERE ARE YOU TODAY?
Level IV PlanningMulti Plans YesPre-Tax Premiums YesRollover unused $ YesPay Claims Pre-Tax YesHC Financial Option YesPrice/Quality Tools YesInv. Options (tax adv) YesHealth Risk Tools YesH R Prev. Tools YesWellness Program Yes
WHY JAMES L. WISDOM INSURANCE SERVICES24 years of experience in Insurance and
Financial ServicesSpecialize in privately held employer groupsCertified Financial Planner DesignationHealth Care Consulting Comprehensive Fee Based Financial Planning –
Owners and Key ExecsHealth Care Reform SpecialistsProperty & Casualty / Worker’s Comp. Expertise Through Associate Firms
WHY JAMES L. WISDOM INSURANCE SERVICESHow we approach your business:
Each company is unique and different
Fully understand your company, culture, industry and business objectives
Identify your 2-5 year Strategic Business Plan
Help create a 2-5 year Insurance/Risk Management Plan
Consult, counsel and adapt during this time frame
Follow-through ( measuring and reporting)
JAMES L. WISDOM INSURANCE SERVICES- ADD’L SERVICESI. Insurance/Risk Management Planning
II. Retirement Planning
III. Estate Planning
IV. Business Succession Planning
CONTACT INFORMATION
James L. Wisdom Insurance Services
4607 Lakeview Canyon Road- Suite 482
Westlake Village, CA 91361
Work: 805-497-9264
Cell: 818-469-6640
Fax: 805-435-3636
CA License # 0699524
Web Site: www.wisdomhealthplans.com
E-Mail: [email protected]
Health Care Reform Blog: www.jimwisdom.wordpress.com
THANK YOU!