Health Care Reform

2. Health Care Reform Rev. Nate Berneking

3. What is happening with Health Care reform?

4. What is happening? • Two pieces of legislation • Patient Protection & Affordable Care Act (ACA) • Health Care & Education Affordability Reconciliation Act (Reconciliation Bill)

5. Limited Insurance Company Limits • Prohibited lifetime limits • Established reasonable annual limits • Extended Dependent Care • Ended limits on pre-existing conditions • Changes in premium figuring • Deductibles will be limited

6. Established Essential Health Benefits, “EHBs” • Items typically already provided • Some items added • Employers may grandfather existing plans

7. Requires Individuals to have health insurance. • Referred to as the “individual mandate” • Considered a tax on those without insurance • Begins at 1% of income or $96, family will never have to pay more than $2,250

8. Creates a new place to shop for insurance. • Marketplaces, for those without affordable care to shop for coverage • Categorized by value of benefits: • Bronze: 60% • Silver: 70% • Gold: 80% • Platinum: 90%

9. Assists in paying for plans purchased on Exchanges. • Offers a Premium Tax Credit, “PTC” • Based on household income • May qualify if household income is less than 400% of the Federal Poverty Limit • For 2012 individuals making less than $43,000 and families of 4 making less than $88,000

10. Premium Tax Credit Details • Individuals are not eligible if their employer provides affordable coverage, below 9.5% of their household Modified Adjusted Gross Income, “MAGI” • PTC is payable in advance to the exchange so that the individual never experiences out of pocket costs for premiums

11. Forces large employers to share responsibility. • Employers with 50 or more FTE must provide affordable care • If not, they are charged a penalty • Delayed until 2015

12. What is Affordable Care? • Costs no more than 9.5% of household income • Based on individual coverage only • How do employers know household income? • Safe Harbor: 9.5% of W-2 wages

13. Created miscellaneous costs and benefits. • Small Business Tax Credit for employers with less than 25 employees • Closed Medicare Part D donut hole • Reduced Flexible Spending Account limits

14. What do we Do About it?

15. Pastors • We require every full-time charge to participate in Healthflex for all clergy • We bill churches for this coverage, pastor does not pay • This coverage is considered affordable

16. Family Coverage Example • Rev. Jim is married with 2 kids. He has a parsonage and a MAGI of $45,000. His wife work part-time receiving no benefits. Her MAGI is $40,000. What are their options? • Family coverage under Healthflex, $12,360 or 14.5% of their MAGI • Could go to the Marketplaces, but will not qualify for the PTC. Will likely cost less than Healthflex.

17. Family Coverage Example • Marketplaces will offer a range of options • Be cautious, lower premiums mean lower benefits • Limits on out of pocket costs and deductibles help protect families

18. Churches • New Reporting Requirements: • Actuarial Value of Health Insurance • Clergy and Lay staff • Further reporting to the Department of Treasury on the number of employees, cost of health coverage and how much employees are responsible for their own coverage

19. Churches • In order to preserve their small business tax credit, churches will have to use the “SHOP” Marketplace to obtain insurance for lay staff

20. Churches • Every church must provide notice of the Marketplace creation by October 1, 2013 • We have samples for you to use • We recommend hand delivering them

21. Observations • Employer based healthcare is considered less feasible • Many uncertainties remain • Pastors must understand how health insurance works in the new paradigm and make informed decisions about family coverage

22. Questions?