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University of Alaska Healthcare Reform L O C K T O N D U N N I N G B E N E F I T S
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Healthcare Reform 2012 Regulation Plans required to produce 4 page plan summaries starting with 9/23/2012 – Open Enrollment April 2013 W – 2 reporting of health plan values (Requires 2012 reporting received Jan 2013) New appeals process with external review (most claim payers are in compliant with rule) Health Insurance Taxes and Fees - Annual Excise Tax Pharmaceutical tax $2.8B annually -Comparative Effective Research assessment of $1 per enrolled employee (What healthcare treatments are appropriate in given circumstances) 2013 Regulation Limit Health FSAs to $2,500 (current is $5,000, will change at 7/1/2013) .9% additional Medicare tax and 3.8% passive income tax on individuals earning +$200,000 ($250,000 for families) Health Insurance Taxes and Fees -Annual Excise Tax Pharmaceutical tax - $2.8B annually - Comparative Effective Research assessment increases to $2 per enrolled employee 2
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Healthcare Reform 2014 Regulation Free Rider Surcharge – Must offer qualifying coverage (60%) at an affordable cost (no more than 9.5% of household income) - $2,000 non-deductible penalty per FTE for not offering a plan ($3,000 for offering non-qualifying/non-affordable coverage) Automatic enrollment (deferred until regulations issued) Cover Clinical Trials - Insurers will be prohibited from dropping or limiting coverage because an individual chooses to participate in a clinical trial. This applies to all clinical trials that treat cancer or other life-threatening diseases All employees working more than 30hrs per week are eligible for coverage Transitional Reinsurance Program Fees – Estimated at $150 PEPY 2018 Regulation Cadillac Tax – 40% excise tax on health benefits for “high value” plans. THE “EFFICIENT FRONTIER” Optimizing Plan Design and Contribution Strategies by modeling over 800 alternative plan design and contribution strategies to assist in finding an optimal strategy that minimizes cost to the employer – mostly by taking advantage of Exchange subsidies - and maximizes value for employees. 3
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Pay or Play – Average Additional Costs (Losers) or Savings (Winners) under the Pay option 4
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University of Alaska Health Reform Projections 2014 5
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Illustrated 2014 Exchange Plan Design UA Plans – 76% 6
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Healthcare Reform Options  Cost Before Reform - 2014     Option 1 – Play and offer qualifying coverage     Estimated Employees in Plan of 4,155 Estimated University Cost of $65,214,000 Estimated Employee Cost of $40,902,000 Option 2 – Pay $2,000 per employee (+30 hours) Penalty     Estimated Employees in Plan of 3,942 Estimated University cost of $60,557,000 Estimated Employee cost of $37,930,000 Estimated Employees in Exchange 4,794 Estimated University Cost of $10,871,000 Estimated Employee Cost of $68,784,000 Option 3 – Non-Qualifying Plan    Estimated Employees in Exchange of 119 and 4,083 in the plan (4,202) Estimated University Cost of $63,795,000 Estimated Employee Cost of $39,112,000 7
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Our Mission To be the worldwide value and service leader in insurance brokerage, employee benefits, and risk management Our Goal To be the best place to do business and to work www.lockton.com © 2011 Lockton, Inc. All rights reserved. Images © 2011 Thinkstock. All rights reserved. 8
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