January 1, State Notification Regarding Exchanges

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1 January 1, 2013 State Notification Regarding Exchanges While the ACA notes implementation won t begin until January 1, 2013, states must have their health insurance exchange blueprints submitted to the federal government by November 16, The exchanges will be available to the public beginning in Medicare Bundled Payment Pilot Program This establishes a new pilot program to develop and evaluate bundled payment options for acute, inpatient hospital services, physician services, outpatient hospital services, and post-acute care services. Medicare Coverage for Preventative Services An one percentage point increase in federal government matching payments for preventative services in Medicaid. This applies to states that offer Medicaid coverage with no patient cost sharing for USPSTF recommended services and immunizations. Tax on Medical Devices An excise tax of 2.3% will be added to the sale of any taxable medical device.

2 January 1, 2013 Medicaid Payments for Primary Care Medicaid payments will increase for primary care services provided by primary care physicians. They will increase to 100% for the years 2013 and 2014, paid in full by the federal government. This provision is set to expire December 31, Itemized Deductions for Medical Expenses The health care expense deduction threshold on federal taxes will increase from 7.5% to 10% of one s adjusted gross income. This provision is waived for individuals age 65 years or older for tax years Flexible Spending Account Limits Contributions to flexible spending accounts for medical expenses will be set to $2,500. This limit will increase annually based on the federal cost of living adjustment. Medicare Tax Increases The tax rate on Medicare Part A increases to 2.35%, up from 1.45%, for individuals who earn in excess of $200,000 ($250,000 for joint filers). A 3.8% tax will be imposed on investment income. This applies to earners in excess of $200,000 ($250,000 for joint filers).

3 January 1, 2013 Employer Retiree Coverage Subsidy Eliminates the tax-deduction for employers who receive the Medicare Part D retiree drug subsidy payments. July 1, 2013 CO-OP Health Insurance Plans Consumer Oriented and Operated Plans (CO-OP) must be established and government loans will be awarded by this date. CO-OPs will be available to the public, via health exchanges, beginning in 2014.

4 October 1, 2013 Medicare Disproportionate Share Hospital Payments Reduces Medicare Disproportionate Share Hospital (DSH) payments initially by 75% and subsequently increases payments based on the percent of the population uninsured and the amount of uncompensated care provided. Medicaid Disproportionate Share Hospital Payments Subsidies will begin to be phased-in for brand-name prescription drugs. This will reduce coinsurance to 25% by January 1, 2014 Health Insurance Exchanges Health Insurance Marketplaces and Small Business Health Options Program (SHOP) Marketplaces will be available to individuals and small businesses (up to 100 employees) who wish to purchase health insurance coverage.

5 January 1, 2014 Individual Mandate Enforcement of the individual mandate begins. All U.S. citizens and legal residents have to have qualifying health insurance or they will be subjected to a tax penalty. These two exchanges can be merged into one exchange, should the states desire to do so. Guaranteed Availability of Insurance Requires guarantee issue and renewal of health insurance, regardless of one s health status. Changes in ratings will occur, too. Essential Health Benefits Essential Health Benefit packages will be available through the individual and SHOP exchanges. These packages must include at least ten pre-approved health services including emergency services, hospitalization, laboratory services, and prescription drug coverage. No Annual Limit on Coverage Prohibits annual financial limits on coverage.

6 Basic Health Program January 1, 2014 This provision will allow states the ability to create a Basic Health Program for low-income, uninsured individuals. Multi-State Health Plans Every state must offer two multi-state plans (MSPs) that will be administered by the federal government (Office of Personnel Management - OPM). OPM will negotiate premiums, set rates, and formulate the MLR margins, in addition to other regulatory responsibilities. Expanded Medicaid Coverage Medicaid will now include low-income individuals not eligible for Medicare under age 65. A federal eligibility threshold will allow the individuals whose income is currently above their state eligibility levels to now access Medicaid. Presumptive Eligibility for Medicaid Medicaid participating hospitals will be allowed to make presumptive eligibility determinations for Medicaid eligible individuals.

7 January 1, 2014 New Subsidies for Health Insurance Premium and Cost Sharing Tax credits and cost sharing subsidies will be available to certain individuals to purchase health insurance coverage through the exchanges. These credits are reserved for individuals who do not receive employer-sponsored coverage. Reinsurance Program A reinsurance program will be created that uses premium dollars from the individual and group markets to provide payments to plans in the individual, high-risk market. This is a temporary program that terminates December 31, New Loss Ratios for Medicare Advantage Plans Medicare Advantage Plans will have to have an MLR no lower than 85%

8 January 1, 2014 New Wellness Programs Rewards for Wellness Programs will increase up to 30% of employee s coverage. New Tax on Insurance Companies Insurance companies will be exposed to a new tax on written net premium amount. Waiting Period Limitation The waiting period for new coverage cannot exceed 90 days.

9 January 1, 2015 New Employer Requirements For employers of at least 50 full-time employees, a fee of $2,000/full-time employee (excluding the first 30 employees) will be charged should the employer not offer insurance coverage. Employers of at least 50 full-time employees can also be subjected to fees should they offer coverage and have at least one employee that is receiving a premium tax credit. More information can be found here. Increase of Federal Match to CHIP The federal match to Children s Health Insurance Program (CHIP) will increase to 23% up to a cap of 100%. January 1, 2016 State Compacts States will be allowed to form Health Care Choice Compacts which will allow insurers to sell policies in any state that participates in the respective compact.

10 January 1, 2017 Increase Availability of SHOP Exchanges States will be given the flexibility to allow businesses with more than 100 employees to purchase coverage in the SHOP Exchange. Up until this date, this is reserved for businesses with fewer than 100 employees. January 1, 2018 Cadillac Tax A new 40% tax will be imposed on high-cost insurance policies. A high-cost plan is defined as costing in excess of $10,200 for an individual and $27,500 for a family. This includes contributions to flexible spending accounts and health savings accounts.