The Affordable Care Act: A Summary on Healthcare Reform The Wyoming Department of Insurance
Additional Resources Wyoming Insurance Department: http://doi.wyo.gov/ or toll free at 1-(800)-438-5768 Information on the Federal Healthcare Reform: www.healthcare.gov Internal Revenue Service Information on the Penalty: For Employers: http://www.irs.gov/uac/newsroom/questions- and-answers-on-employer-shared-responsibility-provisions- Under-the-Affordable-Care-Act For Individuals: http://www.irs.gov/uac/questions-and- Answers-on-the-Individual-Shared-Responsibility-Provision The Henry J. Kaiser Family Foundation General Information on Health Insurance and Health Care Reform: http://healthreform.kff.org/
This information is solely for informational purposes. It is not intended to provide legal advice, accounting advice or any opinions. This presentation is to provide only general, nonspecific information and is only a general guide. It does not include all the details found in the Act and is not intended to express any opinions of the State of Wyoming as to the interpretation of the Act nor is it bound by its content. For the application of the Act to a particular situation, the reader is advised to consult the specific provisions of the Act and obtain advice from the appropriate source.
Health Reform Quiz Will the health reform law require nearly all Americans to have health insurance starting in 2014 or else pay a penalty? Yes. Starting in 2014, most U.S. citizens and legal residents will be required to obtain health coverage, or pay a penalty. 64% answered this question correctly.
Will the health reform law provide financial help to low and moderate income Americans who don t get insurance through their jobs to help them purchase coverage? Yes. Individuals who purchase coverage through the new insurance marketplaces and have incomes between 100-400% of the federal poverty level will be eligible for premium tax credits based on their income. 72% answered this question correctly.
Will the health reform law prohibit insurance companies from denying coverage because of a person s medical history or health condition? Yes. Starting in 2014, all health insurers will be required to sell coverage to everyone who applies, regardless of their medical history or health status. 67% answered this question correctly.
Will the health reform law require all businesses, even the smallest ones, to provide health insurance for their employees? No. The law does not require employers to provide health benefits. However, it does impose penalties, in some cases, on larger employers (those with 50 or more workers) that do not provide insurance to their workers or that provide coverage that is considered unaffordable. 25% answered this question correctly.
Will the health reform law create a new government run insurance plan to be offered along with private plans? No. The law does not create a new government-run health insurance plan. 27% answered this question correctly.
Will the health reform law allow undocumented immigrants to receive financial help from the government to buy health insurance? No. Undocumented immigrants are not eligible to receive financial help from the government to buy health insurance, nor are they eligible for Medicaid or to purchase insurance with their own money in the new marketplaces. 42% answered this question correctly.
Healthcare Reform So Far September 23, 2010 Immediate reforms: No lifetime limits and restricted annual limits Internal and external review standards Elimination of denial for pre-existing conditions for children under age 19 Adult Dependent Child coverage up to age 26 Coverage of preventive benefits Temporary High-Risk Pools (enrollment suspended Feb 2013) Rate Review Standards (rate increases 10%+ reviewed) Medical Loss Ratios with Rebates Summary of Benefits and Coverage (September 2013)
2014 Market Reforms For Small Group and Individual Coverage Sold or Renewed on or after January 1, 2014: Guaranteed Issue (cannot be denied or rated because of any health condition) No Pre-Existing Condition Exclusions Insurance Rating Guidelines Essential Health Benefits & Cost-Sharing Must Meet Established Value Levels These apply inside and outside of a marketplace
Insurance Rating Guidelines For the Small Group and Individual Markets: No rating based on health status Maximum age variation of 3:1 (ages 21-64) Maximum variation based on tobacco use of 1.5:1 Rates based on geographic areas Family rates built up based on age and tobacco use of each member A family premium is the sum of the individual premium for each adult and each child up to 3 under age 21.
Benefit Design Individual and small group plans must include Essential Health Benefits (EHBs). Large group and self-insured plans may not have annual or lifetime limits on EHBs. EHBs based on benchmark plan in each state Benefit levels: Platinum = 90% value Gold = 80% value Silver = 70% value Bronze = 60% value Catastrophic Plan (limited to young and those without affordable option in the market)
Do I have to do anything?
Individual Mandate Individuals required to have minimum qualified coverage beginning January 1, 2014 Penalties 2014 2015 2016 $95 per adult up to $285 or 1% of household income, whichever is higher $325 per adult up to $975 or 2% of household income, whichever is higher $695 per adult up to $2,085 or 2.5% of household income, whichever is higher Penalty for a child is ½ that of an adult Penalties indexed to the growth of CPI after 2016
Individual Mandate What is Minimum Essential Coverage Medicare Medicaid CHIP Tri-Care Employer Sponsored Coverage Individual Market Coverage Grandfathered Coverage Exemptions: Cost of coverage is more than 8% of household income Religious objection Financial hardship Tribal members
What will I do?
What will I do? Keep what I have Purchase inside the marketplace Purchase outside the marketplace Do nothing
Grandfathered Plans Coverage in which individuals were enrolled prior to March 23, 2010 are exempt from most provisions of the bill. Provisions that DO Apply: Lifetime limits Restrictions on rescissions Extension of dependent coverage Medical loss ratios Annual limits (group only) Preexisting condition exclusions (group only) Grandfather Status Can Be Lost Grandfathered plans will satisfy individual mandate Check with insurance agent or company to see if your current plan qualifies for grandfather status.
What is a marketplace? Virtual marketplace Qualifies individuals for Medicaid, CHIP or premium subsidies Offers only qualified health plans and dental plans Two marketplaces 1 Individuals 1 Small Groups Three types of marketplaces State based Partnership Federally facilitated marketplace (Wyoming) On October 1, 2013 you can enroll for health insurance at: www.healthcare.gov
Marketplace
Product Portfolio Individual and small group plans must include Essential Health Benefits (EHBs). Large group and self-insured plans may not have annual or lifetime limits on EHBs. EHBs based on benchmark plan in each state Benefit levels: Platinum = 90% value (Insurance should pay 90% of covered health care costs) Gold = 80% value Silver = 70% value Bronze = 60% value Catastrophic Plan (limited to young and those without affordable option in the market)
Plan Design A child-only plan must be offered at the same metal tier as any health plan that the issuer offers. Limited to individuals who are under age 21 as of the beginning of the plan year. A catastrophic plan is available to individuals who are under age 30 or who are exempt from the individual mandate due to a hardship or where cost of coverage, exceed 8% of income. Each issuer selling in the marketplace must offer at least one silver level, one gold level, and a child-only.
Plans Available in the Marketplace Qualified Health Plans Stand-Alone Dental Plans CO-OP Plans (not available in Wyoming) Multi-State Plans (not available in Wyoming)
2013 Federal Poverty Level Table Updated annually usually in late January
Premium Cap as % of Income Subsidies: Premium Tax Credit Available from 100% - 400% FPL. Covers the difference between premium for the second-lowest-cost Silver plan and a percentage of income. Advanced to insurer. Must purchase coverage in the individual marketplace Calculated based upon estimated income recipients may have to repay excess credits if actual income is higher. Premium Tax Credits 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 100% 133% 150% 200% 250% 300% 400% Household Income as % of FPL
Premium Tax Credit Calculation Example: Family of Four with Income of $50,000, Purchases Benchmark Plan The Premium Tax credit is generally based on the benchmark plan. The family s expected contribution is a percentage of the family s household income. Income as a Percentage of FPL: 224% Expected Family Contribution: $3,570 Premium for Benchmark Plan: $9,000 Premium Tax Credit: $5,430 ($9,000 - $3,570) Premium for Plan Family Chooses: $9,000 Actual Family Contribution: $3,570
Cost-Sharing Reductions Lowers the out-of-pocket costs at the point of service and has the effect of increasing the actuarial value of a plan. Only available to individuals enrolled in a silver-level qualified health plan. The amount varies with income: There will be no cost-sharing for a Tribal member with household income below 300% FPL. There will be no cost-sharing for any Tribal member who receives care from Indian Health Services or related provider. Due to mid-year income fluctuations, reconciliation will occur annually.
Individual Coverage and Enrollment Initial open enrollment period will be October 1, 2013 March 31, 2014. Annual enrollment will occur between October 15 December 7. Special enrollment period of 60 days from the triggering event. In the marketplace special enrollment period will be 60 days from the triggering event.
Marketplace Responsibility The Marketplace is responsible for determining the date the special enrollment period begins. Special enrollment triggers include: An individual or dependent losing minimum essential coverage; An individual gaining or becoming a dependent through marriage, birth, adoption, or placement of adoption; An individual experiencing an error in enrollment; When a plan or issuer substantially violates a material provision of the contract in which the individual is enrolled; An individual becomes newly eligible or newly ineligible for subsidies or a change in cost-sharing reductions; or When new coverage becomes available as a result of a permanent move.
How Do I Enroll? www.marketplace.cms.gov Toll free number to be established Navigators Potential Consumer s Assistors across the State Potentially Agents/Brokers
Outside the Marketplace An issuer can offer only in the Marketplace, only outside the Marketplace, or a combination of both. No subsidy or cost sharing reduction outside the marketplace Outside the marketplace companies may have products that will not qualify as minimum essential health coverage (Tax penalty) Limited benefit plans Specific illness plans (cancer policy) Need to check with agent/company to see if plan satisfies the Federal mandate Contact agents/brokers/companies to purchase Insurers may restrict sales of new policies in the individual market to open enrollment periods that align with those for marketplaces.
What Size of a Group Do I Have?
How to determine Full Time Equivalent (FTE)? ACA refers to FTE rather than actual number of employees. To calculate total FTEs, add the following: All employees who work at least 30 hours per week (full time); PLUS Total number of hours worked in a month by part-time employees (<30 hours per week) divided by 120.
FTE Calculation Example Employer has 35 employees regularly working at least 30 hours per week and 16 employees regularly working 24 hours per week (total of 96 hours per month). Full time = 35 Part time = [16 employees X 96 hours] = 12.8 Total FTE = 47.8 120 Federal government guidelines specify to round down to the nearest whole number
Seasonal Employee: Definition: Performs labor or services exclusively during certain seasons or periods of the year which, from its nature, is not continuous or carried on throughout the year. Includes retail workers employed exclusively during holiday seasons. If employer s workforce exceeds 50 FTE for no more than 120 days during the calendar year and the employees in excess of 50 were seasonal workers, then the employer is not considered to have more than 50 employees.
New Employees: If the new employee is reasonably expected to consistently work at least 30 hours per week, then consider the employee as full time.
Small Employers 1-49 full-time or full-time equivalent employees during the preceding calendar year. The fulltime equivalent employee count includes seasonal employees (if they work more than 120 days per year). There is NO penalty for small employers who do not offer health insurance to their employees.
Subsidies: Small Business Tax Credit Businesses with 25 or fewer employees. Average wages less than $50,000. Contribute at least 50% of premium. Phases out as size and wages of business increase. 2010-2013: Up to 35% of total employer contribution. 2014 and later: Up to 50% of contribution.
The Marketplaces) Small Group (SHOP) Marketplace: For small employers 1-49 ( 1 defined as employer and one employee) 70% participation rate allowed in federal SHOP. Employer may choose coverage level and allow employees to choose from insurers offering at that level beginning in 2015. Marketplace collects and combines premiums and sends to insurers beginning in 2015.
Small Group Coverage and Enrollment Initial open enrollment period will be October 1, 2013 March 31, 2014. Enrollment may occur at any time if that small employer has a 70% minimum participation rate (the level of participation of the employees). Annual enrollment period will occur between November 15 December 15. Special enrollment period of 30 days (60 days for those losing Medicaid or CHIP coverage) from triggering event. Enrollment periods will be the same inside and outside the Marketplace.
Large Employers 50+ full-time or full-time equivalent employees during the preceding calendar year. The full-time equivalent employee count includes seasonal employees (if they work more than 120 days per year) Large employers MUST provide minimum essential and affordable health insurance or pay a penalty. Minimum essential coverage means that insurance pays for at least 60% of covered healthcare expenses. Affordable means it cannot cost the employee more than 9.5% of that employee s income.
Employer Responsibilities Employers of over 200 employees must auto-enroll with opt-out (final rules and regulations have not been released) The penalty for large groups (50+ FTE) not providing health insurance, if at least one employee receives a subsidy from the Marketplace, will be $2,000 per each full-time employee above the first 30 workers. Example: A business employs 55 full-time employees; 2 receive a subsidy. The employer would pay a penalty of $50,000. ($2,000 x (55-30) = penalty). The penalty for not providing affordable coverage will be $3,000 annually for each full-time employee who receives a subsidy from the Marketplace, with a maximum of $2,000 times the number of full-time employees above the first 30 workers. Example: A business with 55 full-time employees; 2 receive a subsidy. The employer would pay a penalty of $6,000. ($3,000 x 2) = penalty. The maximum penalty for this business would be $50,000. ($2,000 x (55-30) = penalty).
Self-Insured Groups Self-insured groups are not required to: Cover essential health benefits Limit deductibles Justify large rate increases Extend health insurance to anyone who applies (but they cannot discriminate based on a pre-existing condition) Guarantee to renew coverage Standardize cost-sharing tiers based on actuarial value Prohibit higher premiums based on health status
Penalties for Employers not offering affordable coverage START HERE Does the employer have at least 50 full-time equivalent employees? No Penalties do not apply to small employers If the employer has 25 fewer employees and average wage up to $50,000.00, it may be eligible for a health insurance tax credit. Yes Does the employer offer coverage to its workers? No Did at least one employee receive a premium tax credit or cost sharing subsidy in an Exchange? Yes The employer must pay a penalty for not offering coverage The penalty is $2,000 annually times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums.. Yes There is no penalty payment required of the employer since it offers affordable coverage. No Does the insurance pay for at least 60% of covered health care expenses for a typical population? Yes Do any employees have to pay more than 9.5% of family income for the employer coverage? No Yes Employees can choose to buy coverage in an Exchange and receive a premium tax credit. Those employees can choose to buy coverage in an Exchange and receive a premium tax credit. The employer must pay a penalty for not offering affordable coverage The penalty is $3,000 annually for each full-time employee receiving a tax credit, up to a maximum of $2,000 times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums.