OVERVIEW OF THE AFFORDABLE CARE ACT. September 23, 2013

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2 OVERVIEW OF THE AFFORDABLE CARE ACT September 23, 2013

3 Outline The New Continuum of Coverage Medicaid and CHIP Are Changing The New Marketplaces Insurance Affordability Programs Shared Responsibility Requirement

4 The New Continuum of Coverage

5 Key Elements of the New Coverage Continuum Medicaid & CHIP Expansion and Improvements Expands eligibility to 133%* FPL for low-income adults As a result of the Supreme Court decision, some states may elect not to expand Medicaid In all states, makes major changes to simplify enrollment and allow for coordination with the Marketplaces. *138% FPL Health Insurance Marketplaces for Individuals and Small Businesses Launches in fall of 2013 with coverage effective 1/1/14 Will offer Qualified Health Plans (QHPs) with comprehensive benefits Individuals with incomes 100%- 400% FPL are eligible for premium tax credits and with incomes % FPL are eligible for cost-sharing reductions to help subsidize the cost of coverage. Private Insurance Market Reforms Guaranteed issue & renewability No annual or lifetime limits Health status may not be considered in setting premiums Must cover preventive health services at no-cost Young adults may remain on parent s plan until age 26.

6 Snapshot of Coverage in 2014 The type of health coverage a person receives is based on their income (measured as percent of the FPL) and other factors. 0% 100% 138% 200% 300% 400% Federal Poverty Level Medicaid eligibility levels vary by state Children s Health Insurance Program (CHIP) eligibility levels vary by state Qualified Health Plans Premium Tax Credits and Cost Sharing Reductions for Qualified Health Plans Employer-Sponsored Coverage

7 Medicaid is Changing

8 Medicaid Expansion Enhanced FMAP for Newly Eligible Adults 133% FPL Covers adults <65 with incomes up to 133% FPL* who do not fall into an existing coverage category Provides benchmark benefits to the new adult coverage group Enhanced federal funding All other Medicaid rules apply to new adult group About half the states will expand in 2014 Year State Share Federal Share % 100% % 100% % 100% % 95% % 94% % 93% % 90% *138% FPL

9 The New Vision for Medicaid Coverage Expansion: Expands eligibility for low-income adults Single Streamlined Application: Provides new, simple way to apply for coverage for Medicaid and CHIP and other insurance affordability programs (tax credits and cost sharing reductions). Simplified Eligibility and Enrollment Rules: Changes the way eligibility is determined ( MAGI-based rules ), simplifies Medicaid eligibility groups, and requires coordination across Medicaid, CHIP and other insurance affordability programs. Modernized Eligibility Systems: Increases reliance on electronic data sources, minimizes paper documentation, and makes renewal more automatic. Eligibility workers no longer will have to touch every case. Children s Coverage Improvements: Holds children s coverage steady through 2019 and applies Medicaid improvements to CHIP.

10 New Ways to Apply Individuals will have new ways to submit an application for coverage for Medicaid, CHIP and tax credits. They can apply online, inperson, by mail, or by phone. In-person Online Mail Phone

11 Help From Assisters is Available Certified Application Counselors State Agency (e.g., Depts. Of Health / Social Services) Navigators Non- Navigator Assisters Agents/ Brokers/ Producers Various kinds of entities will help people apply for coverage. Your state may already have groups, such as hospitals, clinics, and nonprofit organizations, that help individuals apply for Medicaid and CHIP. They can continue to do so as certified application counselor if they undergo training and meet other requirements. State eligibility workers will continue to help people apply for coverage. They may see an increase in volume as people hear about new coverage options. Marketplaces will establish new Navigator programs to help people applying for coverage. They will assist with QHP enrollment, but also be knowledgeable about Medicaid and CHIP. Sometimes also known as in-person assisters, they will provide the same services as Navigators but be funded by federal grants. Will help people and small businesses apply for Marketplace coverage.

12 The New Marketplaces

13 The Marketplace Marketplaces Will Open For Enrollment on October 1, 2013 Coverage is Effective January 1, 2014 Think: A simple way to shop for health insurance Find out your eligibility for QHPs Compare your plan options Choose a plan and enroll Marketplaces are a major new entryway to Medicaid. Find out your eligibility for Medicaid, CHIP, and subsidies Individual Marketplace Consumers shopping for themselves will use the Individual Marketplace SHOP Marketplace Small businesses shopping for their employees will use the Small Business Health Options Program (SHOP) Marketplace

14 Residents of All States Will Have Access to Marketplaces Three Marketplace Options for States: State-Based Marketplace State Partnership Marketplace Federally-Facilitated Marketplace State operates all marketplace functions; state may use federal government services for certain activities. State takes on some responsibility for running Marketplace, such as providing consumer assistance or managing which QHPs are offered. However, the Federal government remains ultimately responsible. HHS operates all functions.

15 Who is Eligible for a Qualified Health Plan in the Marketplace? Resident of the state Lawfully present Not incarcerated

16 Premium Costs Higher Premium Costs Lower Types of Qualified Health Plans Offered in the Marketplace Benchmark Catastrophic High Deductible Health Plan for individuals up to age 30 or individuals exempted from mandate Bronze 60% actuarial value Silver 70% actuarial value What is actuarial value? The percentage of an enrollee s medical costs that a plan will cover on average. The balance will be covered by the enrollee though co-pays and deductibles. Gold 80% actuarial value Platinum 90% actuarial value

17 QHPs Cover 10 Essential Health Benefits Ambulatory Patient Services Prescription Drugs Emergency Services Rehabilitative & Habilitative Services & Devices Hospitalization Laboratory Services Maternity and Newborn Care Mental Health and Substance Use Disorder Services, including Behavioral Health Treatment Preventive & Wellness Services & Chronic Disease Management Pediatric Services, Including Oral & Vision Care

18 Insurance Affordability Programs

19 Insurance Affordability Programs Insurance Affordability Programs The Affordable Care Act creates new coverage options by expanding Medicaid and creating Health Insurance Marketplaces that offer Qualified Health Plans (QHPs). The law includes several programs that help low- and moderate-income people purchase health insurance coverage. Together, they are known as insurance affordability programs. Advance Premium Tax Credits (APTC) Cost- Sharing Reductions (CSR) Medicaid Children s Health Insurance Program (CHIP) 19 NEW federal program that uses tax credits to reduce premium costs for QHP enrollees. For people who meet financial criteria and don t have access to other coverage. Can be paid in advance to provide immediate help in paying premiums. IRS reconciles over/under payments of advance premium tax credits when people file taxes. NEW federal program Helps reduce out-ofpocket costs for enrollees in QHPs. Payments are made directly to issuers to reduce deductibles, co-insurance and/or copayments (out of pocket) costs. Existing federal-state health insurance program for low income people. Expanded to more low-income adults by the ACA. States can opt out of expansion. Provides comprehensive health care benefits Minimal out-of-pocket costs. Existing federal-state health insurance program for low- and moderate-income children. Provides comprehensive health care benefits Modest out-of-pocket costs.

20 Two Types of Financial Assistance for QHPs Premium Tax Credit: 100% - 400% FPL New federal tax credit that will help subsidize the cost of purchasing a QHP on the Marketplace for individuals without access to other coverage. Cost Sharing Reductions: 100% - 250% FPL New federal financial assistance that will help reduce out-of-pocket costs after payment of premiums. Individuals can receive both a premium tax credit and a cost sharing reduction.

21 Financial Assistance for the Cost of Insurance Premiums Individuals and families with incomes from % of the FPL who are ineligible for Medicaid and legal immigrants with incomes less than 100% FPL who but for their immigration status would be eligible for Medicaid are eligible for premium tax credits. Income Level Income Annual Dollar Amount (2013) Premium Tax Credits Expected Family Contribution Premium Contribution as a Percentage of Income Monthly Premium Contribution Individual % FPL $11,490-$15,282 2% $19-$ % FPL $15,282-$17, % $38-$ % FPL $17,235-$22, % $57-$ % FPL $22,980-$28, % $121-$ % FPL $28,725-$34, % $193-$ % FPL $34,470-$45, % $272-$364 Family of Four % FPL $23,550-$31,322 2% $39-$ % FPL $31,322-$35, % $78-$ % FPL $35,325-$47, % $118-$ % FPL $47,100-$58, % $247-$ % FPL $58,875-$70, % $395-$ % FPL $70,650-$94, % $559-$745

22 Premium Tax Credits at Work Mr. Jones Estimated monthly premium costs of a silver plan for an individual in California making $25,000 per year (218% FPL). $513 Monthly Premium Age $294 $369 $231 $87 $150 $144 $144 $ Tax Credit Out of Pocket Amount = 6.9% of Income

23 Cost-Sharing Reductions Families are eligible to receive cost-sharing reductions (CSR) to help with out-of-pocket costs (not premiums) if their income is below 250% FPL and they enroll in a silver level plan. The amount of help provided by a CSR depends on a person s income more substantial help is available to people at lower income levels. People who apply for insurance affordability programs are automatically assessed for CSR.

24 Premium & Cost Sharing from Patient s Perspective Silver Marketplace Plan New York % FPL $11,490 -$17,235 CSR Version % FPL $17,235 -$22,980 CSR Version % FPL $22,980 -$28,725 CSR Version >250% FPL >$28,725 Max Monthly Premium $19-$57 $57-$121 $121-$193 $193-$364* Inpatient Facility/ SNF/ Hospice $100 Per admission $250 Per admission $1500 Per admission $1500 Per admission Outpatient Facility $25 $75 $100 $100 PCP $10 $15 $30 $30 Source: New York Standard Benefit Design Description Chart * Premium Tax Credits only available under 400% FPL

25 Shared Responsibility Requirements

26 Individual and Shared Responsibility Requirement Beginning in 2014, individuals with access to affordable coverage will be required to have health insurance that meets minimum standards or will be assessed a shared responsibility payment. Reason for New Requirement: The new requirement is designed to support the private market insurance reforms included in the ACA, such as the ban on denying coverage to people with a pre-existing health condition. In the absence of this requirement, individuals might wait until they got sick to purchase insurance, making it impossible to sustain the private insurance market reforms.

27 Individual Shared Responsibility Payment Grows Over Time per adult per child per family % of family income above tax filing threshold $95 $47.50 $285 max 1% family income $325 $ $975 max or 2% family income $695 $ $2085 max 2.5% family income whichever is greater

28 Exemptions from the Individual Payment Individuals who decide to pay penalty are uninsured and thus responsible for all healthcare costs. 1. Individuals who cannot afford coverage 2. Individuals with household income below the federal tax filing threshold 3. Members of federally- recognized Indian tribes 4. Individuals who experience a hardship, including individuals deemed ineligible for Medicaid solely because their state did not expand 5. Individuals who experience a short coverage gap of < 3 months 6. Members of certain religious sects 7. Members of a health care sharing ministry 8. Incarcerated individuals 9. Individuals who are not lawfully present MEDICAID IMPACT Low-income adults below 133% FPL are exempt from the shared responsibility payment if they reside in a state that has failed to implement the Medicaid expansion.

29 Implications for Community Providers and Small Employers

30 Opportunities & Challenges for Community Providers Fewer uninsured Patients will be covered through QHPs and Medicaid Providers will need to contract with QHPs and Medicaid managed care plans Providers will need claims processing systems Government grants and funding pools will decrease

31 Opportunities & Challenges for Small Employers Eligible to purchase insurance through the SHOP Marketplace, which may provide more choices/options Ability to access small business tax credit, if eligible (sliding scale based on < 25 FTEs and avg. wages of < $50,000) Some employers may drop coverage; refer employees to the individual Marketplace/subsidies Some employers may hire part-time workers to stay below the 50 threshold for 2015 penalties

32 Conclusion Medicaid and CHIP are a key part of the continuum of health coverage under the ACA The outreach and education accompanying ACA will foster greater awareness and interest in Medicaid and CHIP The new Marketplaces may become a major new gateway to Medicaid and CHIP coverage As a result of the Supreme Court decision, some states may not expand Medicaid, creating a coverage gap and logistic and communications challenges in those states In all states, however, sweeping improvements are coming in the way that people sign up for and renew their Medicaid and CHIP coverage

33 Questions? Deborah Bachrach, Esq Partner, Manatt Health Solutions (212)

34 Appendix

35 ACA Glossary Marketplace: An online portal where people can shop for health coverage, compare plans, and see if they qualify for financial assistance. Qualified Health Plan (QHP): Private health plans offered on the Marketplace. They must cover a core package of benefits, known as essential health benefits, like prescription drugs and mental health. Insurance Affordability Programs (IAPs): Programs designed to make it more affordable to enroll in a QHP and to use health care services. Includes premium tax credits, cost-sharing reductions, Medicaid and CHIP. Modified Adjusted Gross Income (MAGI): The way income is defined when evaluating people s eligibility for insurance affordability programs. Based on IRS rules about what counts as income. Metal Levels: Type of QHPs offered on the Marketplace that vary in their Actuarial Value. They include Platinum, Gold, Silver, and Bronze. Premiums: What a person must pay in order to enroll in health coverage. Premiums are usually paid monthly to the insurer. MAGI-based Medicaid: MAGI is used to determine Medicaid eligibility for children, pregnant women, parents, and other non-disabled adults. Seniors, people with disabilities, and some other populations are evaluated based on current rules. Cost-Sharing: What a person must pay when they use health services, such as doctors or hospital visits. They are often called out-of-pocket costs. 35

36 ACA Timeline: Key Examples of Early Changes Early Changes Young Adult Coverage -- Young adults up to the age of 26 can be covered under a parent s plan Preventive Care -- All new health plans must cover specific preventive services, such as mammograms, colonoscopies, and recommended immunizations No Lifetime Limits -- Health plans no longer can impose a lifetime dollar limit on essential health benefits a consumer receives. Scrutiny of Rate Increases -- States have new federal funding to review proposed health insurance rate increases. Ensuring Premium Dollars are Used for Health Coverage ( Medical Loss Ratio ) -- Health plans must provide rebates to consumers if they spend too much of their premium dollars on profit, marketing and other administrative expenses Ban on Pre-Existing Condition Exclusion for Children -- Health plans are banned from imposing a pre-existing condition exclusion on children under age 19.

37 ACA Timeline: Key Examples of Early Changes 2013/2014 Changes New Marketplaces open to allow people to begin shopping for a health plan October 1, 2013 (with coverage effective January 1, 2014) and to apply for insurance affordability programs Medicaid expansion for low-income adults goes into effect January 1, 2014 for participating states Major private insurance market reforms Ban on pre-existing condition exclusions Guaranteed issue and renewal No annual dollar limits on coverage New fair premium pricing policies New shared responsibility requirement is effective for 2014 Improvements to the application and renewal process for Medicaid, CHIP and other insurance affordability programs.

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