Provision Senate HELP Committee Bill (Affordable Health Choices Act) House Tri-Committee Bill, H.R Individual Mandate

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1 August 7, 2009 Cmparisn f the Cverage Prvisins in the Affrdable Health Chices Act as Apprved by the Senate HELP Cmmittee and the Huse Tri-Cmmittee Bill, H.R. 3200, America s Affrdable Health Chices Act Prvisin Senate HELP Cmmittee Bill (Affrdable Health Chices Act) Huse Tri-Cmmittee Bill, H.R Individual Mandate Includes an individual mandate t btain qualified health cverage r pay a $750 annual penalty. Requirement als applies t dependents f an individual subject t the cverage mandate. Penalty des nt apply t lapses f cverage f less than 90 days r unless affrdable health care cverage is nt available (subject t terms determined by the Secretary f Health and Human Services) and ther limited exceptins. Prvides a federal premium subsidy t individuals r families with incmes belw 400 percent f the federal pverty level wh btain cverage frm a qualified plan in a health insurance exchange s that they are able t btain affrdable cverage and meet the individual mandate. Includes an individual mandate t btain qualified health cverage r pay a 2.5 percent tax n incme in excess f an individual s mdified adjusted grss incme. Penalty culd nt exceed the natinal average premium fr a basic health plan ffered in a health insurance exchange. Requirement als applies t dependents f an individual subject t the cverage mandate. Directs the Secretary f Treasury t develp regulatins t nt apply the penalty in cases f de minimis lapses f cverage r in cases f hardship. Prvides a federal premium subsidy t individuals r families with incmes up t 400% f the federal pverty line wh btain cverage frm a qualified plan in a health insurance exchange s that they are able t btain affrdable cverage and meet the individual mandate.

2 Prvisin Senate HELP Cmmittee Bill (Affrdable Health Chices Act) Huse Tri-Cmmittee Bill, H.R Minimum Benefit Requirements and Wellness Prgram Incentives Service categries required t be cvered as essential benefits wuld be: Ambulatry patient services Emergency services Hspitalizatin Maternity and newbrn care Medical and surgical care Mental health and substance abuse Prescriptin drugs Rehabilitative, habilitative and devices Service categries required t be cvered as essential benefits wuld be: Hspitalizatin Outpatient hspital and utpatient clinic services, including emergency services Prfessinal services f physicians and ther health prfessinals Services, equipment supplies incident t a physician r ther health prfessinal s delivery f care Labratry services Prescriptin drugs Preventive and wellness services Rehabilitative and habilitative services Pediatric services, including ral and visin care Mental health and substance abuse The Secretary f HHS wuld als determine the criteria that cverage must meet t be cnsidered minimum qualifying cverage fr the purpses f the cverage mandate and the cnditins under which cverage wuld be cnsidered affrdable and available fr individuals and families at different incme levels. Directs the Secretary f HHS t determine the scpe f essential benefits equal t the scpe f benefits prvided under a typical emplyer plan. Permits emplyers t establish premium discunts r rebates, r mdify c pays r deductibles up t 30 percent t encurage participatin in health prmtin r disease preventin prgram. The Secretary wuld have authrity t issue regulatins t allw financial incentives up t 50 percent. (Existing regulatins limit these rewards r incentives up t 20 % f the cst f emplyee nly cverage.) Current law privacy and nn discriminatry prvisins f the HIPAA regulatins wuld cntinue t apply. Preventive services (as recmmended by the Task Frce n Clinical Preventive Services) Maternity care Well baby and well child care, including ral, visin and hearing services fr children up t age 21. Establishes a Health Benefits Advisry Cmmittee with a brad grup f stakehlders (including emplyers and insurers) t make recmmendatins n ther cvered benefits, terms and cnditins applied t cvered benefits and cst haring levels fr plans ffered in the insurance exchanges. Secretary is authrized t apprve the recmmendatins f the Cmmittee t apply t all health plans as cnditins fr qualified cverage. N cmparable wellness incentive prvisin, althugh it is pssible incentives t encurage wellness prgram participatin culd still be cnsidered when the bill is cnsidered by the full Huse f Representatives. 2

3 Prvisin Senate HELP Cmmittee Bill (Affrdable Health Chices Act) Huse Tri-Cmmittee Bill, H.R Emplyer Mandate Emplyers wuld be subject t an annual pay r play penalty f $750 fr each full-time emplyee and $375 fr each part-time emplyee if they fail t ffer qualifying cverage r d nt cntribute at least 60 percent f the cst f qualifying cverage. Emplyees wh are ffered qualifying cverage under an emplyer plan are nt eligible t receive premium subsidies fr cverage btained in a health insurance exchange unless the emplyee s share f the premium fr their emplyer cverage exceeds 12.5 percent f adjusted grss incme. Emplyers wuld be subject t an annual pay r play penalty equal t 8 percent f average ttal wages paid by the emplyer if they fail t ffer qualifying cverage r d nt cntribute at least 72.5 percent fr self-nly cverage r 65 percent fr family cverage (based n the lwest cst plan ptin ffered by the emplyer). Emplyers may make separate electins under regulatins t be develped by the Secretary f Treasury with respect t separate lines f business and full-time vs. part-time wrkers abut whether t prvide qualifying cverage (and make the minimum cntributin t cverage) r nt ffer cverage and pay the 8 percent penalty. Beginning in Year 2 after insurance exchanges are established, the emplyer wuld als be required t pay the 8 percent penalty fr each emplyee wh pts-ut f the emplyer s plan and btains cverage frm a plan in the health insurance exchange. Emplyers wuld be required t autmatically enrll an emplyee in its lwest cst self-nly cverage plan unless an emplyee affirmatively elects anther cverage ptin r pts-ut f the emplyer s plan within 30 days. Emplyees wh are ffered qualifying cverage under an emplyer plan are nt eligible t receive premium subsidies fr cverage btained in a health insurance exchange unless the emplyee s share f the premium fr their emplyer cverage exceeds 11 percent f adjusted grss incme. 3

4 Prvisin Senate HELP Cmmittee Bill (Affrdable Health Chices Act) Huse Tri-Cmmittee Bill, H.R Insurance Exchanges Establishes health insurance exchanges (referred t as a Gateway in the Senate HELP bill) t facilitate the ffering f qualified health insurance plans with different levels f cverage. Generally, exchanges are expected t be established by states, but will be maintained by the federal gvernment if a state fails t establish an exchange. Exchanges are t be effective in Plans ffered thrugh the health insurance exchange are available t individuals wh are nt entitled t cverage under Medicare r eligible fr cverage under Medicaid, TRICARE, the federal emplyee health benefits prgram, r an emplyer plan (unless the cverage under the plan des nt meet qualifying cverage standards under this Act r is nt affrdable because the emplyee s share f the premium exceeds 12.5 percent f adjusted grss incme.) Emplyers may ffer cverage by allwing emplyees t elect plans ffered thugh the exchange, but nly if eligible based n grup size as determined by the state. In a state where n exchange has been established, the Secretary f Health and Human Services will determine the grup size that may participate in the exchange, r if the Secretary fails t establish a grup size, the emplyers with up t 10 emplyees may participate in the exchange. [Nte: Generally, exchanges are expected t nly be available t thse in the individual market and fr very small emplyers, althugh eventually larger emplyers may be eligible t participate in insurance exchanges based n subsequent State r federal determinatins.] Establishes health insurance exchanges t facilitate the ffering f qualified health insurance plans with different levels f cverage. Generally, exchanges are expected t be established by states, but will be maintained by the federal gvernment if a state fails t establish an exchange. Exchanges are t be effective in Plans ffered thrugh the health insurance exchanges are available t individuals wh are nt enrlled in cverage under Medicare, Medicaid, TRICARE, the Veterans Administratin, a state high risk pl, r a qualified emplyer-spnsred plan. Beginning the first year that exchanges are available (2013), emplyers with 10 r fewer emplyees may ffer cverage by allwing emplyees t elect plans ffered thrugh the exchange. In the secnd year, emplyers with 20 r fewer emplyees wuld be eligible t participate. In the third and subsequent years, larger emplyers wuld be eligible t participate up t grup sizes t be determined by the new federal health cmmissiner. 4

5 Prvisin Senate HELP Cmmittee Bill (Affrdable Health Chices Act) Huse Tri-Cmmittee Bill, H.R Additinal Requirements n Grup Health Plans (bth insured and selfinsured plans) Prhibits applicatin f pre-existing cnditin exclusins. Applies insurance rating rules t insured cverage, with exceptins fr large plans. Requires guaranteed issue and guaranteed renewability f cverage. Prhibits establishment f eligibility rules fr cverage based n health status r ther health related factrs. Requires reimbursement plicies fr services f health care prviders that prvide incentives fr high quality care and implements case management, care management, chrnic disease management, medicatin and care cmpliance and the use f a medical hme mdel. Prhibits cst sharing fr preventive health services (except fr minimal cst sharing as defined by the Secretary f HHS). Requires cverage f child dependents up t age 26. Prhibits annual r lifetime dllar limits n cverage. Prhibits eligibility rules fr any full-time emplyee that are based n the ttal hurly r annual salary f the emplyee. Extends COBRA cverage until the earlier f the date n which a COBRA-eligible individual becmes eligible fr cverage under an emplyer plan r is eligible fr cverage under a plan ffered in an insurance exchange (expected t be 2013). Other current law prvisins apply which als terminate COBRA cverage (e.g., Medicare eligibility, failure t pay claims, etc.) Prvisin des nt extend the 65 percent COBRA subsidy prgram enacted earlier this year. Prhibits applicatin f pre-existing cnditin exclusins. Applies insurance rating rules t insured cverage. Establishes netwrk adequacy standards. Requires plans t meet any new grievance and appeals prcedures established by the federal health cmmissiner. Requires plans t meet new standards fr infrmatin transparency relating t plan dcuments, terms and cnditins, payment plicies and practices, enrllment, claims denials, rating practices and ther matters determined by the new federal health cmmissiner. Applies federal timely claims payment standards t all health plans. Public Health Insurance Plan Optin Establishes a Cmmunity Health Insurance Plan ptin (i.e., public health insurance plan) which wuld be available alngside qualified private health insurance plans ffered thrugh the new health insurance exchanges. Public health insurance plan wuld be required t negtiate reimbursement rates with health care prviders fr cvered services and meet ther federal and state insurance rules which apply t private plans (e.g., benefits standards, slvency requirements, and cnsumer prtectin standards). Establishes a Public Health Insurance Plan which wuld be available alngside qualified private health insurance plans ffered thrugh the new health insurance exchanges. Public health insurance plan wuld use Medicare reimbursement rates fr payments t health care prviders fr three years (plus a bnus payment f 5 percent fr prviders wh participate in bth the public plan and Medicare) and then prvides brad discretin t the Secretary f HHS establishing payment rates fr future years. (Nte: Huse Energy and Cmmerce Cmmittee apprved an amendment t require public plan t negtiate reimbursement rates with health prviders.) 5

6 Prvisin Senate HELP Cmmittee Bill (Affrdable Health Chices Act) Huse Tri-Cmmittee Bill, H.R Retiree Health Reinsurance Establishes a temprary reinsurance prgram fr qualified emplyers with retirees between ages 55 and 64 until such time as the state in which the retiree resides establishes a health insurance exchange. Reinsurance payments fr 80 percent f valid retiree claims csts that exceed $15,000 and are nt greater than $90,000 (i.e., a maximum reinsurance amunt f $60,000 per retiree). Ttal funding fr the prgram is capped at $10 billin. Same retiree health reinsurance prvisins as in the Senate HELP bill. [Nte: See als the prvisins prhibiting reductins in retiree health benefits described under ERISA prvisins.] Requires that all reinsurance payments be used t reduce retiree health insurance premiums r lwer cst-sharing and shall nt be used t reduce the csts f an emplyer maintaining the participating emplyment-based plan. ERISA Retains state regulatin f insured health plans and federal regulatin f self-insured plans. Adds numerus new federal requirements under ERISA n emplyer-spnsred health cverage, whether insured r self-insured, t implement the prvisins f the Affrdable Health Chices Act. (See requirements discussed under Minimum Benefit Requirements and Additinal Requirements.) Requires the Secretary f Labr (except in extrardinary circumstances) t waive ERISA s preemptin rules t permit a state which has enacted a single payer system t require emplyer participatin in the state prgram. Prhibits any reductins in emplyer-spnsred retiree health benefits after an individual retires, unless the same change is made in benefits fr active emplyees. Applies State law individual rights and remedies t emplyer-spnsred cverage btained thrugh a health insurance exchange. Applies numerus new federal requirements under ERISA n emplyer-spnsred health cverage, whether insured r self-insured, after an initial 5-year grace perid, and requires emplyers t prvide such infrmatin as may be required by the new federal health Cmmissiner t determine whether emplyers are in cmpliance. 6

7 Prvisin Senate HELP Cmmittee Bill (Affrdable Health Chices Act) Huse Tri-Cmmittee Bill, H.R Tax Prvisins Relating t Health Benefits Generally n changes in tax plicy because Senate HELP Cmmittee des nt have jurisdictin ver the tax cde. Nte: The Senate Finance Cmmittee is cnsidering a prvisin t tax high cst health benefits abve a specified level, indexed in future years by CPI. Tax wuld reprtedly apply t all health related benefits ffered t an emplyee including benefits such as dental, visin services, and executive physicals. Tax threshld may als include medical FSAs, althugh a separate cap n annual FSA deferrals fr qualified medical expenses is als reprtedly under cnsideratin. Includes a federal premium tax n insured and self-insured plans t finance a cmparative effectiveness research prgram. Tax wuld initially be $2.00 per average number f cvered lives under the plan and wuld be indexed t the medical cmpnent f CPI. Extends the current law incme and payrll tax exclusin fr the cst f health insurance prvided by an emplyer t individuals wh, under the terms f the plan, are eligible fr cverage. This includes dmestic partners, ther relatives, lder children r any ther individual wh is an eligible beneficiary under the terms f the plan. Directs the Secretary f Treasury t issue guidance t permit reimbursements frm FSAs and HRAs fr such eligible beneficiaries. 7