Health Care Reform 101

Transcription

1 Health Care Reform 101 U P D A T E D N O V E M B E R U P D A T E D N O V E M B E R

2 P A G E 2 Overview The Affordable Care Act (ACA) includes several provisions to extend greater access to health insurance benefits to more people. Beginning in 2014, most Americans must purchase a minimum amount of health insurance or be taxed by the government. While there is a lot to be done when ACA is fully implemented, this useful guide provides important information to help you understand the implementation of the ACA in Arizona. This guide will review: The ways to purchase health insurance in Arizona have expanded Changes to health plan benefits Essential health benefits Actuarial value Rating What Individual consumers need to know Health insurance options for individuals and families Options outside open enrollment; plan renewals Cost sharing potential and premium tax credits Income requirements for federal tax credits and costsharing reductions Penalties for uninsured individuals What Businesses need to know Health Insurance options for small group employers Health Insurance options for large group employers Taxes and fees for businesses H E A L T H C A R E R E F O R M 1 0 1

3 The ways to purchase health insurance in Arizona have expanded P A G E 3 The ACA requires each state to operate a Health Insurance Marketplace, also known as an Exchange, where people can purchase coverage. The health insurance marketplace is an online site where consumers can compare plans of participating insurers and purchase health insurance. The U.S Department of Health and Human Services (HHS) runs the marketplace in states that choose not to create one, such as the case in Arizona. The Marketplace in Arizona is known as the Federally Facilitated Marketplace (FFM) for individuals and families, and the Small business Health Plan Federally Facilitated Marketplace (SHOP-FFM) for small group (small group is defined as 2-50 employees). The Open Enrollment Period (OEP) for the 2015 plan year is November 15, 2014 to February 15, When Enrollment Selection is Received Enrollments received between Nov 15, 2014 and Dec 15, 2014 January 1, 2015 December 16, 2014 to January 15, 2015 February 1, 2015 January 16, 2015 to February 15, 2015 March 1, 2015 Date Health Insurance Coverage Begins Options Outside of Open Enrollment Outside of Open Enrollment, you can buy a health insurance plan or change from one plan to another only if you qualify for a Special Enrollment Period. This is true for plans available both on the Marketplace and off the Marketplace. For most qualifying events the Special Enrollment Period lasts 60 days from the date of the qualifying event. The following is a list of the most common qualifying events. Please see for a complete list of qualifying events including Special Enrollment Periods for complex issues. Loss of eligibility for other coverage (for example, if you quit your job, were laid off, if your hours were reduced, if you lose student health coverage when you graduate). Note that loss of eligibility for other coverage because you didn't pay premiums, voluntarily ended coverage, or lost coverage that is not minimum essential coverage does not trigger a SEP Gaining a dependent (for example, if you get married or give birth to or adopt a child). Note that pregnancy does NOT trigger a SEP Divorce or legal separation Loss of dependent status (for example, "aging off" a parents' plan when you turn 26) Moving to another state, or within a state if you move outside of your health plan service area Exhaustion of COBRA coverage Losing eligibility for Medicaid, or the Children's Health Insurance Program For people enrolled in a Marketplace plan, income increases or decreases enough to change your eligibility for subsidies Change in immigration status Enrollment or eligibility error made by the Marketplace or another government agency, or somebody such as an assister, acting on their behalf.

4 P A G E 4 Individual Health plan Renewals - Marketplace All 2014 Marketplace health plans will come up for renewal January 1, Your insurance company will send you information this fall about updated premiums and benefits. Review your plan s 2015 changes to see if the plan still meets your needs. Call your broker or visit the plan s website to make sure your doctor and other health care providers will be in the plan network next year. Also make sure any prescriptions you take will be covered. If you re happy with your renewal changes and you want to keep your plan, and your income or household size haven t changed, you don t need to do anything. However, your insurance will auto-enroll you in the same plan for If your income or household size have changed, you ll need to report that to the Marketplace so you get the right premium tax credit. If you don t update this information, you ll get the same premium tax credit you got in If your income has gone up or your household size changes and you don t report these changes to the Marketplace, you may owe money at the end of 2015 when you file your tax return. If you want to change plans you can: Choose any other Marketplace health plan your company offers in your service area if you want to stay with your current insurance company. Choose a new health plan from a different insurance company through the Marketplace. Buy a new private health plan outside of the Marketplace. If you do this, you won t be eligible for premium tax credits and cost-sharing reductions offered through the Marketplace. In some cases, your current Marketplace plan won t be offered in If that s the case, the Marketplace will automatically enroll you in a similar plan so you don t have a gap in coverage, unless you choose another plan and enroll. Because your plan is ending, you ll qualify for a Special Enrollment Period that lets you enroll in an individual plan outside of Open Enrollment. Individual Health plan Renewals - Outside the Marketplace All plans purchased outside the Marketplace with an effective date in 2014 will renew January 1, Grandfathered plans and Grandmothered plans (non-aca, non-grandfathered) may renew at different times during the year. Your insurance company will send you information this fall about updated premiums and benefits. If you re happy with your renewal changes and the plan still fits your needs, in most cases, you don t need to do anything. However, your insurance company will notify you if any action needs to be taken. Be sure to contact your broker with any questions. In some cases your plan may no longer be offered in If that is the case your insurance company will notify you regarding the change and may automatically move you to another plan or require you to select a new plan to continue coverage.

5 Individuals and businesses now have more ways to purchase health insurance. P A G E 5 INDIVIDUALS 1. Direct purchase through a broker or insurance provider. 2. Those who are eligible and wish to obtain a federal subsidy or premium tax credit may purchase health insurance in the FFM. 3. Those who do not qualify for a federal subsidy or premium tax credit, still have the option to purchase health insurance in the FFM. BUSINESSES 1. Direct purchase through a broker or insurance provider. 2. Employers may use a broker to access the Small business Health Options Program (SHOP-FFM) to purchase a health plan online, or shop direct for plans. 3. Direct purchase through a private marketplace option. The FFM/SHOP-FFM will not replace private health insurance; it is simply a new place for qualified individuals and employers to shop for and purchase health insurance. Brokers and navigators* will work with individuals and small group employers looking for coverage on the FFM/SHOP-FFM. The FFM/ SHOP-FFM will allow brokers and navigators to help people enroll in Qualified Health Plans (QHPs), or help them with their application for premium tax credits and cost sharing reductions. As more guidance is shared about these roles, more information will be provided. * A navigator cannot receive compensation from any health plan in connection with enrolling someone in a plan offered through the FFM/ SHOP-FFM. Special Enrollment Period for small Employers (2-50) November 15 December 15 is a Special Enrollment Period for small employers (2 50) who don t meet participation or contribution requirements. This little known part of the Affordable Care Act requires health insurance companies to offer an annual one month Special Enrollment Period (From 11/15 to 12/15 for January effective dates.) This means employers do not have to meet the normal 75% participation requirement, or 50% premium contribution rule. So if you have 30 employees and only 2 want it, that s okay. It doesn t matter. And the contribution amount, well, you set it up how you want to, but it can be way lower than 50%, and it does need to be the same for each employee.

6 Changes to health plan benefits In order to sell on the FFM/SHOP-FFM, carriers must offer Qualified Health Plans (QHPs) in the individual and small group markets. This means plans must be certified by the FFM/SHOP-FFM and meet a number of coverage and other requirements, including a specific set of services and items called Essential Health Benefits (EHB). Additionally, the ACA requires QHPs offered off the FFM/SHOP-FFM to offer standardized benefit packages in the individual and small group markets. These packages represent four levels of value which make it easier to compare options. (See page 7 for levels.) P A G E 6 ACA requirements for QHPs on the FFM/SHOP-FFM. Beginning January I, 2014, the small group and individual insurance market will offer QHPs. Under the ACA, all ACAqualified plans must follow new coverage and benefit rules with requirements based on: Whether the plan is offered in or outside the FFM/ SHOP-FFM Whether the plan is fully insured or self-insured Group size Not only does the ACA mandate that nearly all Americans must purchase health care, the law also requires health insurance to be Guaranteed Issue. This means a person (or family) can t be denied coverage or charged more because of a pre-existing health condition. Rather than establish premiums based on health status, rates for these individual and small group plans will be based on variables that include: Family status Age Geographic area Tobacco use (1.5%) In addition, the federal healthcare law requires QHPs to use 3-to-1 age-rating bands. As a result, the highest premium cannot be more than three times the lowest premium for the same plan. Essential Health Benefits are key components of coverage Whatever the level of coverage, each of the benefit plans has to include Essential Health Benefits. According to the ACA, an essential health benefits package must include services and items in these 10 broad categories of care: 1. Ambulatory patient services 2. Emergency services 3. Hospitalization 4. Maternity and newborn care 5. Mental Health and substance use disorder services, including behavioral health treatment 6. Prescription drugs 7. Rehabilitative and habilitative services and devices 8. Laboratory services 9. Preventive and wellness services and chronic disease management 10. Pediatric services including oral and vision care (Insurance policies must cover these benefits in order to be certified and offered in the FFM/SHOP-FFM, and all Medicaid state plans must cover these services by For more information visit: healthcare.gov)

7 Standard benefits package - 5 Levels of Coverage P A G E 7 Sometimes referred to as metal plans, or metallic plans the different tiers are defined by the percentage each plan will pay toward healthcare expenses for an average person (known as the actuarial value.) Here s how the metal or metallic levels break down: Bronze Silver Gold Platinum Catastrophic Plans Plans provide 60% coverage Plans provide 70% coverage Plans provide 80% coverage Plans provide 90% coverage Mixing the metals Health Insurers offering QHPs must offer at least one plan at the Silver level, and one plan at the Gold level on and off the FFM/SHOP-FFM. Although not a requirement, they also have the option to offer a choice of Bronze, Platinum or Catastrophic plans. Under each metal level there can be several plans available, which will vary according to the deductibles, coinsurance and copays offered. At-a-Glance Coverage & Essential Health Benefits P A G E 7 Example: As an example, a Bronze plan will generally have the lowest monthly premium and pay 60% of healthcare services; enrollees are responsible to pay 40% for healthcare services through some combination of cost shares. Although cost shares will be just 10% for Platinum plans, this level will also have the highest monthly premium. Catastrophic plans provide affordable coverage options for young adults and people for who coverage would otherwise be unaffordable. These plans have higher deductibles than the Bronze, Silver, Gold or Platinum plans. The benefits of a Catastrophic plan is that the premiums will be lower than the metallic plans. They offer protection against out-of-pocket costs above the $6,600 for an individual, and $13,200 for a family. Preventive services (as long as recommended) will be covered without cost sharing. The eligibility for Catastrophic plans is limited to: individuals under the age of 30, OR individuals who otherwise do not have an affordable coverage option, or who otherwise qualify for a hardship exemption to the minimum essential coverage rule. Inside FFM/SHOP- FFM Include essential health benefits Provide 60% actuarial value minimum Adhere to deductible and out-of-pocket maximum limits Comply with metal levels benefits (actuarial values-60, 70, 80, 90 percent) Be certified by the marketplace through which the plan is offered Out-of-pocket maximum requirements Outside FFM/SHOP- FFM - Fully insured small group and individual Outside FFM/SHOP- FFM - Fully insured large group and selfinsured Note: The healthcare reform law does not require carriers to offer plans with at least a 60% actuarial value, nor does it require employers to provide health coverage. However, it imposes penalties on employers with 50+ FTEs that do not provide minimum coverage if an employee purchases coverage on the SHOP- FFM and received a premium tax credit or cost sharing reduction.

8 What individual consumers need to know P A G E 8 Health Insurance options for Individuals and families Consumers purchasing insurance in the individual market will be guaranteed coverage for preexisting conditions and their premiums cannot vary based on their gender or medical history. Here are some options, benefits and criteria for individuals and families purchasing health insurance in Keep their grandfathered plan OR Buy a plan through either: The FFM using a broker Direct through broker or an insurer outside of the FFM. OR Go uninsured and pay a penalty, unless exempt The online marketplace allows consumers to: Shop for and compare a variety of private health plans Get answers to questions about health coverage options Find out if they re eligible for health programs like Medicaid and the Children s Health Insurance Program (CHIP) Receive premium tax credits Cost-sharing reductions Enroll in a health plan that meets their needs Premium Assistance People who purchase coverage in the FFM may be eligible for a premium tax credit as long as their household income is between 100%- 400% of federal poverty guidelines. Those below 100% of federal poverty level will be directed to apply through their state Medicaid program. Figures based on January 2014 federal poverty guidelines: For an individual, that equals $11,670 to $46,680 For a family of four, that equals $23,850 to $95,400 The assistance amount that a person can receive varies with income. The tax credit may be applied to Bronze, Silver, Gold, or Platinum. Tax credits cannot be applied to catastrophic plans. Cost Sharing reductions and premium tax credits for individuals To address the needs of those who fall in certain income levels and cannot afford minimum essential health benefits, the law includes provisions for federal subsidies to reduce the cost of premiums, with a cost-sharing reduction.

9 P A G E 9 Income requirements for cost-sharing reductions Those who earn up to 250% of federal poverty guidelines and enroll at the Silver level only may also be eligible for reduced cost sharing. Again, the subsidy amount will vary according to income. Examples of cost sharing that may be reduced include deductibles, co-insurance, co-payments or similar charges and do not include balance billing for non-network providers or spending on non-covered services. Penalties for uninsured individuals In 2015, legal U.S. citizens who do not carry a minimum amount of health coverage will receive a penalty of $325 or 2% of their taxable income, whichever is greater. Penalties will increase each year through 2016; and annually thereafter. Who is subject to a penalty under the Individual Mandate? CRITERIA: Part of a religious group with an exception Incarcerated Undocumented resident American Indian Pay more than 8% of take-home pay for employer coverage Such low-income, you don t pay federal income taxes Someone who falls into a Medicaid expansion coverage hole Some other hardship exemption OR DO YOU HAVE: Coverage through a job Coverage through an exchange Medicaid, Medicare, CHIP Tricare or VA Care Student Health Plan Grandfathered plan YES NO No Penalty Penalty Penalty Timeline 2014 Greater of $95 or 1% of taxable income 2015 Greater of $325 or 2% of taxable income 2016 Greater of $695 or 2.5% of taxable income 2017 And beyond, annual adjustments

10 What businesses need to know Small businesses also can use the SHOP-FFM to find insurance for their employees. These are called Small Business Health Options Programs, or SHOPs, for short. Individual insurance and SHOP programs may be available separately or combined in a single online marketplace. Employers can opt to: P A G E Offer a fully insured plan through either: A SHOP-FFM The traditional brokered market OR 2. Stop offering coverage and let employees buy an individual plan in or outside the FFM/ SHOP-FFM. (Small employer is defined differently for different purposes. Penalties may apply to employers 50+ FTEs in 2015.) SHOP - Eligible Employees For the initial SHOP application, all employees on the census are eligible for coverage on the effective date of coverage for the group waiting periods will not be considered. Waiting periods will only be considered after coverage has become effective. If a retiree is covered, the employer contribution will be the same as for all other employees. Multiple classes (carve outs) will not be allowed in the SHOP. (This is still being determined.) All full-time employees (30 or more hours per week). Dependent coverage is optional (unless mandated by the state). Dependent child coverage to age 26. May not limit eligibility to geographic location. New employee waiting periods may be no longer than 90 days. To comply, many carriers offer a maximum od FOMF 60 days. The waiting period options are: 0 days, 15 days*, 30 days, 45 days* and 60 days *Limited carriers only Small Business Healthcare Tax Credit In 2014, tax credits will increase for employers with 25 or fewer employees (with an average wage of less than $50,000 a year) who offer coverage through the marketplace. The credit will cover up to 50% of the employer s cost (35% for small nonprofit organizations). Employers will be eligible for credits in the first two years they offer coverage through the SHOP-FFM. Credits will decrease on a sliding scale as group size and employee wages increase.

11 P A G E 11 Large group employers P A G E 11 Health insurance options for large group employers 1. Offer health insurance (either fully insured or a self-insured plan) that meets the minimum coverage definition and is affordable. OR 2. Offer some level of coverage that does not meet minimum requirements and risk the employer penalty. OR 3. Stop offering coverage and let employees buy insurance through the FFM, and risk the employer penalty (which is not tax deductible). Penalties for large group employers (50+) Note: the Employer Mandate has been delayed until 2015; the fines for not offering coverage will apply then. It is essential to start preparing now to avoid any fees or penalties. If minimum coverage is not offered to full-time employees, and at least one employee gets subsidized coverage through the FFM/SHOP-FFM, then a $2,000 penalty is assessed for each employee (after the first 30). If minimum coverage is offered to full-time employees but is not affordable for an employee or does not meet minimum value requirements and that employee gets subsidized coverage through the FFM/SHOP-FFM, then a $3,000 penalty is assessed for each employee who receives subsidized coverage. Basic Coverage Rules for Large Employers Large employers may be subject to an excise tax if at least one full-time employee whose household income is between % of FPL level received a premium tax credit on the FFM/SHOP-FFM and the employer either: Fails to offer minimum essential coverage to full-time employees and their dependents. Offers coverage to full-time employees that does not meet the law s affordability or minimum value standards.

12 Other taxes and fees P A G E 12 Individuals and employers may be responsible for other taxes and fees related to the healthcare reform law. The chart below highlights some of them. Tax/Fee Effective Date Responsible Party Annual Tax/Fee Amount Comparative effectiveness research fee this fee funds research on the effectiveness through the Patient-Centered Outcomes Research Institute. Plan/policy years that end after September 30, 2012 and beginning before October 1, Issuers of fully insured plans. Self-insured plan. For plan years that end during October 1, 2012, through September 30, 2013, this fee is $1 per participant per year. For plan years that end during October 1, 2013, through September 30, 2014, this fee increases to $2 per participant, per year. Tax on high earners and unearned Income an annual tax on wages or unearned income of more than $200,000 for singles, and $250,000 for married couples. ACA insurer fee an annual excise tax on health insurance to fund premium subsidies and Medicaid expansion. Tax years beginning January 1, 2013, and later. Tax years beginning January 1, 2014 and later. Individual taxpayers. Issuers of fully insured plans. After that, the rate increases each year by the medical inflation rate. 0.9% Medicare surtax on wages in excess of $200,000 single/ $250,000 married couples. 3.8% tax on unearned income for taxpayers with modified adjusted gross income in excess of $200,000 single/$250,000 married couples. Based on the insurer's market share of net premiums written based on previous year. For example, the 2014 fee will be based on 2013 premiums. Total fee amount to be collected across all insurers starts at $8 billion in 2014, and increases to $14.3 billion in ACA reinsurance fee this will support the transitional reinsurance program that aims to stabilize premiums for coverage in individual market and lower the effects of adverse selection. Plan/policy years beginning in the 3-year period starting January 1, Issuers of fully insured plans. Self insured plans. Funds will be used to make reinsurance payments to health insurance issuers that cover high-cost individuals in non-grandfathered individual market plans. High-cost insurance tax an annual excise tax on high-cost health plans Tax years beginning January 1, 2018 and later. Issuers of fully insured plans. Sponsors/administrators of self-insured plans. Tax of 40% on health plan costs that exceed Cadillac plan thresholds of $10,200 for single coverage, or $27,500 for family coverage.

13 Additional helpful Resources: P A G E 13 Healthcare.gov Healthcare.gov--small-businesses CCIIO Webpage for agents and brokers: Role of Agents and Brokers: pdf General CCIIO Resources: Not covered in this publication, but very important: Employers will have to provide notices to employees no later than October 1, 2013 whether they offer coverage or not. This is an employers responsibility. For more information please visit: Model Exchange Notices For any additional questions that may not have been covered under additional helpful resources contact your Account Executive or BGA at marketing@blackgould.com Disclaimer: Health Care Reform legislation is subject to ongoing guidelines interpretations, and safe harbors from the Department of Health and Human Services, Treasury Labor. The information and statistics provided at this time may change with additional guidance.