Many of my local clients have been asking a lot of questions about the exchange the past few weeks, so here are answers to the top 10 questions:

1. Individuals and small employer groups under 50 employees are eligible to purchase insurance through the exchange.
2. You are not required to buy insurance in the exchange. You can purchase individual and group insurance either in the exchange or on the open market just like you do today. You will not, however, be eligible for a subsidy or tax credit unless you go through the exchange. The application process will be detailed due to financial information requirements.
3. 22 insurance carriers have been approved to offer insurance through the exchange. They have until the end of April to submit their plans and rate requests to the Oregon Insurance Division.
4. Cover Oregon is funded by the Federal Government. The first grant of $59 million was for technical innovations with the stipulation that we will share what we learn with other states. An additional $226 million was to help get the program up and running through the first year. Of the $226 million, about another $96 million will be for technology.
5. The exchange will go live in October for shopping and health coverage will be effective on January 1, 2014
6. There is no template to use; we are the innovators. Cover Oregon will look like a fancier version of the Amazon.com site with calculators to determine if eligible for financial assistance.
7. There is an estimate that about 471,000 Oregonians will be using Cover Oregon by 2016 and that 50% may be eligible for a subsidy.
8. You will still be able to work with your health insurance broker in and out of the exchange. Your broker will be able to help you understand how the plans fit into your budget, company culture and meet the needs of your employees.
9. Small employers will have more options in the exchange. One employee, for example can choose Kaiser, another can choose Providence and another Regence and the employer will get one bill. There will be a base metal level (bronze, silver, gold or platinum) chosen by the employer. Or the employer can choose one carrier and the employees can choose within that carrier.
10. For this one, I need a crystal ball. We do not know if the rates will be higher than you are paying now, but word on the street is yes, they will be. As to how high, we will learn more once we receive information back from the state.

You can learn more at Cover Oregon or send me an email and I will be happy to review with you in more detail as it pertains to your business.

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Working with individuals and employers over the past three years has been difficult in many cases, to say the least, but my glass remains half full. I believe there have been many great outcomes that have resulted in reforming our health care system since inception just three years ago.

1) Due to the inclusion of all children under the age of 26 being allowed to stay on or join parents plans, over 3 million previously uninsured are now getting health insurance.

2) Based on the law requiring private health insurers to provide free preventive care (no copay or deductible), 71 million have received at least one free preventive service.

3) Children under the age of 18 are not subject to the pre-existing condition exclusion and 17 million have been protected and are able to have insurance.

4) Private insurers are required to spend at least 80-85% of revenue on quality of care or medical claims and if not, they must pay a rebate. Last year, insurers refunded about $1.1 billion.

What’s next? While we can see that good things are happening now,  a large portion of the changes are being rolled out in 2014. There is still some uncertainty and the majority of Americans don’t know what it means for them.

The public’s expectations of how the law will affect health care costs and quality are more negative than positive. PPACA requlations are being released at a fast pace and it’s difficult for those of us in the industry to keep up – I can only imagine what it’s like for the general public. The negativity is not surprising. About 48% of those surveyed did not know if they had a State or Federally run exchange.

The amount of misinformation is also astounding - 57% believe that PPACA includes a public option. The majority also did not know about tax credits to small businesses, the subsidy for individuals and the removal of health underwriting (guarantee issue) – less than they knew 3 years ago.

At the end of this week, it will only be 6 short months until our October 1, 2013 open enrollment in preparation of the January 1, 2014 effective date. A few things need to happen in order to get the public up to speed again; 1) The States need to do a better job communicating, 2) The process on a Federal level needs to be rolled out in a clearer fashion, and 3) like it or not, as a Nation, we need to start paying closer attention.

Stats thanks to: Kaiser Family Foundation, National Association of Health Underwriters and NY Times.

I had the privilege of speaking to a wonderful group of Health Systems Organization students at Portland State University this past week. Many of the students are looking to complete their Masters in Health Care Administration. or studying Health Care Policy.

Dr. Jill Rissi, Assistant Professor, Public Administration at Portland State University asked me to speak to her class on what it is like for a health insurance consultant on the ground in the Portland. The students learn policy and concept, but they often do not have a clear understanding of what it’s like for our local businesses and employees when it comes to group and individual health benefits.

I prepared a case study of a local, 30 year old business that offers benefits to their 31 employees. This company received a 19.4% increase in premiums for the year which resulted in a $57,793 increase for 2013. The company generously pays 100% for employees and 75% for dependents for both medical and dental. We reviewed:

1. the plan type – If employees are flexible in terms of changing doctors and networks should we move from HMO to limited PPO network?
2. the plan components that affect cost such as copay, deductible, coinsurance, out of pocket maximum and alternative care and prescription riders. Is there enough cost savings by increasing out of pocket or eliminating / reducing riders? Is an HSA plan right for this group?
3. eligibility and contribution – Should some of the cost be passed to the employee? Should eligibility be changed so only 40 hour full time receive benefits which would leave fewer on the plan?
4. a Health Reimbursement Agreement (HRA) – If we can reduce the fixed cost premiums by increasing plan deductible, can we save by reimbursing employees for additional deductible incurred in a calendar year? If it is a healthy workforce, we are seeing this a wonderful option for employers.
5. health of the workforce – Are employees present at work? Is there a high utilization of medical care?
6. tobacco usage – Is there a high population of tobacco use? Is it time to implement a wellness program that addresses a tobacco surcharge for those that smoke so they pay a higher premium than a non-smoker?

The end result:

1. We increased the deductible from $1000 to $1500
2. We implemented an HRA so the employer reimburses deductible of $500 after the employee pays the first $1000
3. The eligibility and contribution remained the same
4. We reduced the prescription benefit
5. We implemented a tobacco surcharge so that tobacco users pay $50 more in premium per month than a non-smoker. We offered a one-time waiver to quit and smoking cessation classes for those interested
6. We reduced the premium increase from 19.4% to 6%.

After 10 minutes of my presentation, a few of the students became appalled at the system. It’s very easy to sit back and think that employers are mean because they are either reducing plan benefits or increase monthly employee contribution, but it becomes a different story when you start to understand the “why” behind it.

Two other areas of discussion became a hot topic. The first was that many people who apply for benefits are unable to obtain coverage due to pre-existing condition. Most of these students had never experienced this because they are either on their parents plan (thanks to ACA) or on the Student Health Plan. The other was the tobacco surcharge. The demographic of the students in the room from what I could gather were mostly non-smoker, but the discussion went down the path of “that’s too personal”, “what about obesity”, “what about drinking alcohol”.

The students could see that there is a great need for change in our system. We touched on what has changed to date with the Affordable Care Act and what’s to come. I believe that the students will now pay a little closer attention to their benefits. The final question asked by one student – “Do you believe that if we had a national health care system in place today, that we would still have so many unhealthy people in the United States?” Ponder that.

The written notice must include:

1) Health Insurance Exchange availability, description of services and contact information

2) If the employer does not offer an “affordable” plan, the employee’s potential eligibility for federal assitance

3) Information that employee may lose employer contribution toward cost of employer-provided coverage, and that all or a portion of the employer contribution may be excludable for federal income tax purposes.

HHS may distribute a model notice and if not, the insurance carriers may create an editable model notice template for employer partners use. We have not yet heard what penalties will be attached to non-compliance.

Amanda Fritz has proposed a requirement for all Portland employers to provide sick leave to their employees. This proposal will be brought to City Council on January 31st at 2:00 at the City Hall. The drive behind the proposal is if you have a fever and the flu, you should not be fired because you missed work to stay home and get well – it becomes a public health issue.

If passed, employers with six or more employees will have to provide up to 40 hours of paid sick leave per year and those with five or fewer employees will have to provide the same number of hours of unpaid sick leave. To obtain the leave, the employee must work a minimum of 240 hours per calendar year within Portland to qualify for the sick leave. Employers would not be able to retailiate against employees who were out sick.

There are not any additional reporting requirements attached to this proposal, however for those employers that have employees working both in and out of the City (and from home), may prove to be a bit trickier. They will need to keep better track internally of the 240 hours worked inside the City of Portland.

This proposal will effect all employers not already providing the required sick leave for their employees. At a local forum this past week, many believe that this should be a statewide policy so that this does not put Portland employers at a disadvantage.

I will continue to keep you updated as more information becomes available.

This benefit is basically a tax shelter for the dollars you spend on public transportation if your employer participates in the federal program. This is a one year extension and is tentatively set to last through December 2013. It can be implemented retroactively to January 1, 2012 with a bit of paperwork.

Interestingly, this $240 benefit has been available for people who drive to work and pay for parking. A bit counter productive as we try to encourage public transportation – but for today these benefits are now equal.

This is timely as employees we face increased payroll tax liability now that the Social Security tax level is returning to 6.2% and increased rates in public transportation. Employers now have an opportunity to help employees reduce their payroll tax liabilitiy through the transit benefits.

1) They need stay competitive in the marketplace. It’s been difficult to find great talent locally and benefits are still a great incentive for new hires- they see the value

2) They aren’t ready to evaluate or deal with the penaly. One of my groups said it just feels wrong to pay a penalty when they could be spending that money to help employees and families

3) Employers like knowing that the benefits they offer is a value in addition to salary. They are not inclined to increase salaries to have employees go out in the health care market on their own

While they are staying in the game, a few things will change:

1) More voluntary benefits will be offered such as accident and illness plans, vision and dental. Our carriers are offering a greater variety of voluntary benefits making it easy for employees to enroll.

2) Increased education on navigating the health care system.  I personally add information on becoming a smarter consumer with resources to help understand benefits and cost.

3) Introduction to wellness in the workplace and no-cost wellness resources from the carriers. Employers are understanding that wellness information now needs to be introduced in the workplace to help engage employees and families in better health.

4) Majority of employers will now be offering some form of a consumer driven health plan (CDHP) where more cost will be shifted to employee with incentives for good health.

So for today, it’s business as usual with a small amount of change. As we approach 2014, that may change again.

1. Costs will increase – An increase in costs will come from Direct Costs by way of taxes and penalties, Indirect Costs by way of administrative reporting and Unknowns that will have to do with compliance.
2. Medical Loss Ratio – For those employees that received a rebate from the carriers, the rebate should have been used to benefit the member at the same ratio the member paid in for the premium. If the money has not been used in that capacity it would need to be placed in a trust fund. The rebate could not sit idle for more than 3 months. Now is the time to put those funds in order.
3. W-2 Reporting – Employers with less than 250 employees are not subject to health care W-2 reporting. If an employer has more than one EIN number, the reporting is based on each separate EIN number. This is the only place in the law where this applies.
4. Levels of coverage in the exchange – Bronze = 60%, Silver = 70%, Gold = 80%, and Platinum = 90%; Basically that means in a bronze level plan, the member would pay 40% of costs and the carrier would pay 60%. Catastrophic Care will be available for members under 30 years of age
5. 90 Day Enrollment Requirement – Employers cannot wait until the first of the month following 90 days anymore. The eligibility period for an employee can be no more than 90 days regardless of whether it landed on the first day of the month.
6. Pay or Play – Some employers have been talking about reducing hours for their employees to under 30 so they can avoid the participation and penalties. This will not work because all full time employees are factored in and reported as ‘full time equivalent’. Also, if you have 80% ownership in several companies (with different EIN numbers), you will be required to count all the companies as a “controlled group”. This way large companies will not be able to separate into small companies to try to avoid the mandate.
7. For employers that have employees with variations in hours, the employer has 12 months to average the number of hours. If it is determined that the employee worked the minimum 30 hours, the employer has one month to begin offering benefits. The employer can go no longer than 13 months from the start of employment
8. There is no difference in the law if you are a for profit or non-profit business – all rules apply.
9. Employers will be required to offer a plan that is no more than 9.5% of the employees earnings. f an employee is on a group plan and adds his wife and child and at that point cannot afford the coverage, the employer is not penalized. The employer is only responsible for offering an affordable plan for the employee only. The spouse and child could then go to the exchange for coverage.
10. It is recommended that every employer have a mandatory requirement for employees to sign a waiver if employee is waiving or declining coverage. If an employee waives and then goes to the exchange and receives a subsidy, the employer will not get penalized.

Compliance will be very important in the coming months. Employers will be required to provide monthly reporting to the government to show they are complying with the mandate.

The employer groups that sponsor a health plan  now must prepare for a few deadlines:

1. Summary of Benefits and Coverage – These are provided by the carrier and are employers are required to make them available to participants for plan years beginning on or after September 23, 2012
2. 60-Days notice of plan changes – A health plan or issuer must give 60 days notice of any modifications to the plan off renewal cycle-employers must pass on to employees.
3. There is a $2,500 limit on health flexible spending account (FSA) contributions beginning January 1, 2013.
4. W-2 reporting for groups over 250 employees beginning with the 2012 tax year.
5. Employer Notice of Exchanges – Effective March 1, 2013 employers must notify employees of the health care reform exchange. Health and Human Services will provide model notices that employers can use as a starting point.
6. Additional Medicare Tax for high wage earners making more than $200,000 (or $250,000 for married filing jointly). Employers will withhold additional amounts once the employees cross that threshold.

There are pending regulations and guidance from DOL, Treasury and HHS that is expected shortly now that the election is over. Here are the top 3:

1. Employer pay or play Mandate – guidance to help employers determine how to comply with the shared responsibility of the law
2. Automatic enrollment – DOL will issue regulations that require large employers that offer benefits to automatically enroll new employees.
3. Nondiscriminiation Rules for Fully-insured plans – Employers will not be able to discriminate in favor of highly-compensated employees.