Transcript Slide 1

Wisconsin Benefit Planning
Patient Protection and Affordable Care
Act (PPACA)
A Timeline of the Health Care
Provisions that could affect you.
2010
2018
2014
2010
Insurance plans prohibited
from imposing lifetime
benefit limits and restricted
annual limits.
Insurance plans required to
carry dependents up to the
age of 26.
Insurance plans required to
cover preventive services
without cost sharing.
Insurance plans prohibited
from denying coverage to
individuals under the age of
19 based on pre-existing
conditions.
Temporary (until 2014) high
risk pools established for
individuals (older than 19)
who are denied coverage
based on pre-existing
conditions.
Insurance plans prohibited
from rescinding coverage
except in cases of fraud.
2010 Cont’d
First Phase of Small Business Tax Credit:
Small businesses with less than 25 employees
and average annual wages of less than $50,000
are eligible for tax credits of up to 35% of the
employer’s contribution toward the employee’s
health insurance premium. Employers must
subsidize at least 50% of their employees’
premiums in order to be eligible for the tax
credit. Credit only available through 2013.
Establish an internet website
(www.healthcare.gov) to help
residents identify health coverage
options (effective July 1) and develop
a standard format for presenting
information on coverage options.
Create the Consumer Operated and
Oriented Plan (Co-Op) program to
foster the creation of non-profit,
member-run health insurance
companies in all 50 states. $6 billion is
appropriated to finance the program
and award loans and grants to
establish Co-Ops by July 1, 2013.
States begin reviewing premium trends
and companies must justify increases
over certain thresholds. There is no new
power to block rate increases but plans
may be excluded from exchanges.
2011
Insurance plans required to comply
with new medical loss ratios (MLR):
80% for individual and small group
plans and 85% for large group plans.
Companies required to provide
rebates to consumers if they fail to
comply with the MLRs.
Funding available for states to begin
establishing Exchanges until January
1, 2015.
Medicare Part D beneficiaries that
fall into the “donut hole” will
receive a 50% discount on covered
brand-name prescriptions. This will
grow to a 75% discount by 2020.
Over-the-counter drugs not
prescribed by a doctor may
not be reimbursed through
an FSA or HRA nor on a tax
free basis through an Archer
MSA or HSA.
2013
Increase Medicare tax rate on wages by
0.9% (from 1.45% to 2.35%) on earnings
over $200,000 ($250,000 for joint filers)
for individual taxpayers.
Contributions to FSAs limited to
$2,500 per year.
3.8% tax increase on investment
income for taxpayers making
$200,000 per year ($250,000 for
joint filers); however in real estate
transactions there is an exemption
in current law for $250,000
($500,000 for joint filers) for the
sale of a principal residence.
(IMPLEMENTATION OF THIS PROGRAM HALTED
INDEFINITELY BY HHS) CLASS Act: A national long
term care assistance/disability insurance plan is
established. The benefit is tied to one’s inability to
perform two or three Activities of Daily Living (ADLs)
and the benefit amount is varied based on the
“scale of functional ability” with a $50-7/day cash
benefit. All working adults will be automatically
enrolled in the program unless they choose to optout.
2014
Exchanges are created and open to
individuals and small businesses (2100 employees). Exchanges will
include four tiers of private
plans(Bronze- 60% actuarial value,
Silver-70%, Gold-80%, Platinum90%, and Catastrophic coverage).
Premium credits (subsidies for
purchase of health insurance)
available via exchanges for
individuals/families with incomes
between 100% and 400% of federal
poverty level who do not receive
employer based coverage.
Insurance plans required to abide
by guaranteed issue, minimum
benefit standards, revised rate
bands for individual and small group
market (2-100 employees).
Employers with more than 200
employees would be required to
automatically enroll employees into
health insurance plans offered by
employer (employees may opt-out).
2014 Cont’d
Individual Mandate: Individuals required to
purchase health insurance or face a tax penalty
of up to $95 per year (or 1.0% of income,
whichever is greater). In 2015 the penalty is
$325 per adult (or 2.0% of income) and in 2016
the penalty is $695/year (or of 2.5% of
income). After 2016, penalty amounts are
indexed to inflation.
Employer Mandate: Employers with more than
50 employees who do not offer their
employees health insurance will be subject to
a $2,000 tax penalty/per full-time employee
(per year) if one of their employees is eligible
for a tax credit subsidy (first 30 employees
exempted from calculation).
Phase II of Small Business Tax Credit: Small
businesses with less than 25 employees and
average annual wages of less than $50,000 are
eligible for tax credits of up to 50% of the
employer’s contribution toward the
employee’s health insurance premium.
Employers must subsidize at least 50% of their
employees’ premiums in order to be eligible
for the tax credit. Credit only available for two
years.
New Health Insurance Tax is levied on
insurance companies based on net
premiums written. This tax will raise an
estimated $8 billion in 2014, reaching
$14.3 billion by 2018. The tax does not
sunset and is indexed thereafter.
2014 Cont’d
States must expand Medicaid to 133% of
federal poverty level. States will receive 100%
federal financing from 2014-2016, 95%
financing in 2017, 94% financing in 2018, 93%
financing in 2019, and 90% financing in 2020
and beyond. However, the Supreme Court
struck down the ability of the federal
government to withhold their portion of
current Medicaid funds to force states to
comply with the expansion.
Allow states the option of merging the
individual and small group markets in
Exchanges.
Waiting periods for coverage cannot exceed
90 days.
2017
States are permitted to allow businesses with
more than 100 employees to purchase coverage in
SHOP Exchanges.
2018
“Cadillac Tax” takes effect. A 40% excise tax is levied on
insurers of employer-sponsored health plans with
aggregate values that exceed $10,200 for individual and
$27,500 for family. The tax is applied to the amounts that
exceed the threshold and it will be indexed for inflation.
Closer Look at Medical Loss Ratios
“Other non-claims costs,” such as administrative costs, cannot be more
than 15% of the premium in the large group market or 20% in the
small group/individual markets.
In January 2011, HHS deemed that agent commission must fit within
that 15%/20%, leading to a squeeze on agent compensation.
Big “I” is focused on congressional legislation that would statutorily
exclude agent compensation from the MLR formula. In the House Mike
Rogers (R-MI) and John Barrow (D-GA) introduced H.R. 1206 which has
over 200 bipartisan cosponsors.
Senators Mary Landrieu (D-LA) and Johnny Isakson (R-GA) have
introduced S.2288, the “Access to Professional Health Insurance
Advisors Act of 2012” which is a companion to the House bill.
Closer Look at Individual Mandate
Beginning in 2014, virtually every U.S. citizen and legal resident will be required to purchase
health insurance or face a tax penalty.
There are certain exemptions from the individual mandate including: those who choose not
to buy a policy for religious reasons, undocumented immigrants, incarcerated citizens,
members of Native American tribes, those with family income below the threshold
requiring a tax return.
To satisfy the mandate, individuals must obtain health insurance for the entire year through
one of the following sources: Medicare, Medicaid, CHIP, veteran’s health programs, a plan
offered by an employer, insurance purchased on your own that is at least at the Bronze
level (60% actuarial value).
The penalty for non-compliance will be phased-in according to the following schedule: $95
(or 1% of income, whichever is higher) in 2014, $325 (or 2% of income) in 2015, and $695
(or 2.5% of income) in 2016. After 2016, the penalty will be increased annually by the costof-living adjustment.
Closer Look at Employer Mandate
Beginning in 2014, employers with 50 or more full-time employees that do
not offer coverage and have at least one full-time employee who receives a
premium tax credit will be assessed a fee of $2,000 per full-time employee,
excluding the first 30 employees from the assessment.
Employers with 50 or more full-time employees that offer coverage but have
at least one full-time employee receiving a premium tax credit, will pay the
lesser of $3,000 for each employee receiving a premium credit or $2,000 for
each full-time employee, excluding the first 30 employees from the
assessment. (Effective January 1, 2014).
Employers with 200-plus full-time employees must automatically enroll their
employees into health insurance plans.
Closer Look at Exchanges
Exchanges are a government created platform for the sale of health insurance,
intended to bring all “qualified” plans into one forum by establishing common
rules regarding the offering and pricing of insurance, and providing information
on these plans to consumers.
Also through the exchanges, consumers may sign up for government programs
such as Medicaid and Children’s Health Insurance Program (CHIP).
In addition, through the exchanges qualified consumers (up to 400% of the
poverty level) will receive government assistance to purchase private insurance
through the use of premium tax credits.
States face a Jan. 1, 2013 deadline for certification of their exchanges by HHS,
initial enrollment on Oct. 1, 2013 and a “go live” date of Jan. 1, 2014. If they do
not meet these deadlines, the federal government will step in. At this point, with
the lack of progress in the majority of states, some level of federal involvement in
the majority of exchanges is likely.