Care Health Supplement
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Organization Health Care
Unlike pensions, healthcare produces positive current
outcomes for organization
Organization receives higher productivity, lower
absenteeism from healthy workforce
Organization has choice of paying higher wages or
making workplace safer, healthier
This called a compensating wage differential
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Medical and Other Health Benefits
Overview
Per Capita Expenditures
1993: $3,651
1960: $ 143
2008: $7,681
US Total Expenditures (billions)
1960: $
27.1
1993: $ 917.3
2008: $2,300.
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Sources of Health Coverage in the U.S.
- 2008
Employment Based 61%
Public 19%
Individual 6%
Uninsured 17%
Source: Employers, Workers and the Future of Employment-Based Health Benefits. EBRI Issue
Brief 339, February 2010. p. 4
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Firms Offering Health Benefits (2009)
Large Firms (200+ workers): 98%
Small Firms (3 199 workers): 59%
Smallest Firms (3 9 workers): 46%
Source: Employers, Workers and the Future of Employment-Based Health Benefits. EBRI Issue
Brief 339, February 2010. p. 5
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Average Employer Costs
Number of Employees
Average Total Health
Benefit Cost per
Employee
10 49
$7,720
50 499
$8,779
500 999
$9,276
1,000 4,999
$9,412
5,000 9,999
$9,589
10,000 19,999
$9,067
20,000 or more
$9,146
Source: Mercer Consulting, cited in Employers, Workers and the Future of
Employment-Based Health Benefits. EBRI Issue Brief 339, February 2010. p. 6
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Employer Actions if Health Care
Reform Increases Employer Costs
Likely Employer Action
% Responding
Very
Likely/Likely
Reduce benefits
87%
Increase prices for customers
38%
Reduce employment
30%
Reduce salaries/direct compensation
27%
Accept reduced profits
11%
Other
6%
Source: Towers Perrin Health Care Reform 2009, cited in Employers, Workers and
the Future of Employment-Based Health Benefits. EBRI Issue Brief 339, February
2010. p. 17
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Individual Determinants of Health
Care Utilization
Age
Gender
Sense of responsibility for personal health
Clinical risk factors
Personal perceptions of state of health
Personal health behavior
Attitudes about personal health
Attitudes about health care use
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Organizational/Environmental
Determinants of Health Care Utilization
Extent and scope of insurance coverage
Point of use cost sharing
Geographic access to services
Regional or local practice patterns
Provider incentives affecting diagnosis and treatment
decisions
New technologies
State and federal offerings/coverage mandates
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Typical Coverage Providers
Self insurance
Insurance companies
Blue Cross/Blue Shield
HMOs
PPOs
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HIPPA Rules
May not refuse to cover employee or dependent from
coverage under group plan for these reasons
Health status
Medical condition (physical, mental)
Claims experience
Receipt of health care
Medical history
Genetic information
Evidence of insurability
Disability
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Changes in Health Care Offerings
Year
Conv.
HMO
PPO
POS
1988
73%
16%
11%
1993
46%
21%
26%
7%
2003
5%
24%
54%
17%
2009
1%
20%
60%
Percentage of employer-based plans of each type
10%
HDHP
Source: Employer Health Benefits 2009, Kaiser Family Foundation, p. 147
HDHP = High Deductible Health Plan
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8%
HDHPs and CDHPs
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HDHP
HDHP High deductible health plan
Have individual deductible of $1000 or more
and family deductible of $2000 or more
With some stake in the game the covered
individual is thought to be more likely to use
care judiciously
Reduces need for plan controls
15
CDHP
Consumer Driven Health Plan
Similar to HDHP but employee has health care
account
CDHPs are more effective than HDHPs at
encouraging judicious use of health care
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Behaviors Enhanced by HDHPs/CDHPs
Checking whether plan covers specific care
wanted
Asking for generic drug rather than brand
name drug
Talking to doctor about prescription options
and costs
Asking doctor to prescribe less costly
prescription drug
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Developing budget to manage health care
expenses
Checking price of service before getting care
Checking quality rating of doctor, hospital
Using online cost tracking tool
Source: EBRI.org Issue brief, December 2009, No 337, p.10
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Patient Protection and Affordable
Health Care Act of 2010
(including adjustments through
reconciliation)
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Individual Responsibility
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Yes, requires U.S. citizens to maintain
minimum essential coverage
beginning in 2014. Individuals who do
not purchase coverage will pay the
greater of $95 in 2014, $495 in 2015
and $750 in 2016, or up to two
percent of income by 2016. Families
will pay half the amount for children up
to a cap of $2,250 for the entire family.
After 2016, dollar amounts will
increase by the annual cost of living
adjustment.
Decreases the flat dollar amounts
from $495 to $325 in 2015 and from
$750 to $695 in 2016. Raises the
percentage of income assessment
from 0.5% to 1% in 2014 and up to
2.5% in 2016 and subsequent years.
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Employer Responsibility
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
No requirement to offer coverage, but
all employers with more than 50 fulltime employees that do not offer
coverage (and have at least one fulltime employee receiving the premium
assistance tax credit) would be
required to make a payment of $750
per FTE to the government. If an
employee opts out of an employer
(continued)
Amends free rider assessment to
require employers not offering
coverage to pay $2,000 per FTE for all
full-time employees if even one
employee receives a subsidy and
purchases coverage in an exchange.
The first 30 employees, however,
would be excluded from this
calculation.
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Employer Responsibility (continued)
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
plan because the premium would
exceed 9.8 percent of the employees
income and receives a tax credit, the
employer assessment would be the
lesser of $3,000 for each employee
receiving a premium credit or $750 for
each full-time employee. Employer
health care coverage must have an
actuarial of at least 60 percent or
penalties are assessed.
Employers offering unaffordable
coverage would be assessed a $3,000
penalty for each full-time
employee that receives a subsidy and
purchases coverage through an
exchange. Coverage is considered
unaffordable if the employees
premium exceeds 9.5 percent of
family income.
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Employer Penalty
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
See above. In addition, an employer
with more than 50 FTEs that requires
a waiting period before an employee
can in enroll health care coverage will
pay $400 for any full-time employee in
a 30-60 day waiting period and $600
for any full-time employee in a 60-90
day waiting period in 2014. Exempts
employers with 50 or fewer employees
from any of these
penalties.
See above. Eliminates free rider
penalty for employees in a waiting
period but the length of the waiting
period could not exceed 90 days
beginning in 2014.
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Free Choice Voucher
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Requires employers that offer
coverage to provide a free choice
voucher to employees with incomes
less than 400% FPL whose share of
the premium exceeds 8% but is less
than 9.8% of their income and who
choose to enroll in a plan in the
exchange. The voucher amount is
equal to what the employer would
have paid to provide coverage to the
employee under the employers plan.
Maintains these provisions.
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Free Choice Voucher (continued)
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Employers providing free choice
Maintains these provisions.
vouchers will not be subject to
penalties for employees that receive
premium credits in the exchange.
Requires employers with more than
200 employees to automatically enroll
employees into health insurance plans
offered by the employer, allowing for
an employee opt-out.
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ERISA
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Retains state regulation of insured
health plans and federal regulation of
self-insured plans. Allows states to
obtain limited waivers of federal
health-related laws and regulations to
pursue state reform initiatives, but the
waivers do not apply to ERISA
covered plans.
Maintains these provisions.
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Health Care Cooperative
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Yes. Establishes a federal program to
assist establishment and operation of
nonprofit, member-run health
insurance issuers.
Maintains these provisions.
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Cafeteria Plans
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Caps FSA contributions at $2,500.
Excludes over-the-counter
medications without a doctors
prescription as reimbursable
expenses under FSAs, HRAs, MSAs
and HSAs. Increases penalties on
non-medical HSA and MSA
distributions to 20 percent.
Maintains these provisions.
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Wellness Provisions
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Allows employers to offer premium
discounts and other awards for up to
30 percent of the total premium to
individuals who satisfy a health
standard and includes provisions to
ensure that discriminatory practices
do not occur. The Secretary of HHS
would have the authority to issue
regulations to allow financial
incentives up to 50 percent. Provides
grants for up to 5 years to small
employers that establish wellness
programs.
Maintains these provisions.
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Health Care Quality Improvements
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Provides access to Medicare claims
data for use in measuring provider
performance. Establishes a valuebased purchasing program for
hospitals starting in 2013 and makes
improvements to the physician quality
reporting initiative.
Maintains these provisions.
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Tax Credits
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Provides a refundable credit for
coverage under a qualified health plan.
The premium assistance credit amount
is calculated on a sliding scale starting
at 2.8 percent of income for those at or
above 100 percent of poverty and
phasing out to 9.8 percent of income for
those at 400 percent of poverty.
Provides a sliding scale tax credit to
small employers with fewer than 25
employees and average annual wages
of less than $50,000 that purchase
health insurance for their employees.
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Excise Tax
H.R. 3590, the Patient Protection and
Affordable Care Act, signed into law
03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
40% excise tax on insured and self-insured
group health coverage that is above a
threshold of $8,500 for single coverage and
$23,000 for family plans. The tax would
apply to the amount of the premium in
excess of the threshold. The threshold would
be indexed at CPI-U plus one percentage
point, and a transition rule would increase
the threshold for the 17 highest cost States
for the first 3 years. An additional threshold
amount of $1,350 for singles and $3,000 for
families is available for retired individuals
age 55 and older and for plans that cover
employees engaged in high risk professions.
Excludes stand alone dental and
vision benefits from the excise tax
calculation. Delays the effective
date to 2018. Increases the
thresholds to $10,200 for single
coverage and $27,500 for families.
Indexes the threshold to the rate of
general inflation plus one
percentage point beginning in 2019.
Includes a permanent adjustment in
the threshold for retirees and for
employees in highrisk professions.
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Medicare HI Tax
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Imposes an increase of .9 percent in
the FICA tax paid on wages above
$200,000 (single, $250k couples)
beginning in 2013. Increase is only
applicable to amounts paid by the
employee.
For single taxpayers with adjusted
gross income of $200k or more and
joint filers with AGI of $250k, imposes
an increase of 3.8% in the FICA tax on
unearned income from interest,
dividends, annuities, rents, capital
gains, and royalties.
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Retiree Health Care
H.R. 3590, the Patient Protection
and Affordable Care Act, signed
into law 03/23/2010
H.R. 4872, the Reconciliation Act
of 2010, signed into law on
03/26/2010
Eliminates the deduction for the
subsidy for employers who maintain
prescription drug plans for their
Medicare Part D eligible retirees
beginning in 2011.
Eliminates the deduction for the
subsidy for employers who maintain
prescription drug plans for their
Medicare Part D eligible retirees
beginning in 2013.
Source: Society for Human Resource Management
http://www.shrm.org/Advocacy/Issues/HealthCare/Documents/010PPACA%20Chrt%203-25-10.pdf
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