The Affordable Care Act Overview
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Transcript The Affordable Care Act Overview
The Changing Face of Health Insurance in the US
The Patient Protection and Affordable Care Act
is enacted March 23, 2010 (PPACA)
Main Priorities
Expansion of access to health care coverage
Reduction of premium costs and make coverage
affordable
Creation of standardized coverage
Guarantee issue & limited pre-existing
State/Federal based exchanges where you can
purchase qualified health insurance
In 2014 all US citizens and legal residents are
required to purchase health insurance or face
a tax penalty
Tax in 2014 is:
Incomes under $20,000 will pay $95
Incomes over $20,000 will pay 1% of income
The IRS will issue notices and attempt to
collect penalties (individuals failing to pay will
not be subject to criminal prosecution)
In 2015 the tax increases to:
Incomes below $25,000 will pay $325
Incomes above $25,000 will pay 2% of income
In 2016 the tax increases to:
Incomes below $37,000 will pay $695
Incomes above $37,000 will pay 2.5% of income
Incomes below the filing threshold of $9,350 in 2010
have no penalty (this threshold will be higher in 2014
but is not known at this time – indexed based on CPIU each year)
The penalty for an individual will be capped at
the national average premium for a bronzelevel plan
The CBO (Congressional Budget Office)
estimates this amount to be between $4500
and $5000 in 2016
The following two illustrations show these
caps for individuals
In 2014:
Incomes below $55,000 will pay $285
Incomes above $55,000 will pay 1% of income
In 2015:
Incomes below $75,000 will pay $975
Incomes above $75,000 will pay 2% of income
In 2016:
Incomes below $110,000 will pay $2,085
Incomes above $110,000 will pay 2.5% of income
Based on a family of four
General rule: Employee’s share of the self-only premium for the
employer’s lowest-cost plan that provides minimum value cannot
exceed 9.5% of household income or the employee may be
eligible for a premium tax credit to purchase Exchange coverage
Treasury-proposed safe harbor: No employer penalty if the
employee’s share of the self-only premium for the employer’s
lowest-cost, minimum value plan does not exceed 9.5% of the
employee’s current W-2 wages from the employer
Clarifies that an employer must offer coverage to employees and
dependents, but that the affordability test is based on employee
contribution to self-only coverage
The ACA establishes community rates on all
qualified health plans which are marketed as tiers
with a pre-established Actuarial Value (AV) of the
required Essential Benefits
Proposed AV Tiers:
Platinum = 90%
Gold = 80%
Silver = 70%
Bronze = 60%
Tiers will be based on Actuarial Value (AV)
Scores
AV Tiers will have a variation of +/- 2
percentage points
For example rates for the Silver tier will have an
AV between 68 and 72%
This approach greatly reduces rate
differentials between plans and carriers
Recommended set of 10 benefits in each plan
which include:
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental Health and Substance Abuse (behavioral
health)
Prescription Drugs
Rehabilitative and habilitative services and
devices
Laboratory services
Preventive and wellness services and chronic
disease management
Pediatric services, including oral and vision care
No annual dollar limits
Maximum deductible of $2000 individual and
$4000 family
Employers with 50+ employees:
Employer requirement to offer essential
benefits
Penalty of $2,000 per employee for failure to
comply
Small group redefined as 1 to 100
Premium taxes on carriers – can be passed
directly to the fully insured plan
Medicaid Program Expansion – state decision
to offer coverage to individuals up to 133% of
the Federal Poverty Level
Guarantee Issue
No Pre-Existing Conditions for adults
All health insurance plans will no longer be
underwritten – coverage is guaranteed
regardless of health
No pre-existing condition limitations for
adults
Children have been exempt since 2010
Must have Creditable Coverage
Creditable Coverage – must have had
continuous coverage for 12 months with no
gap longer than 63 days
No pre-existing condition limitations for
adults
Children have been exempt since 2010
Must have Creditable Coverage
Creditable Coverage – must have had
continuous coverage for 12 months with no
gap longer than 63 days
Without Creditable Coverage an adult has a
12 month pre-ex limitation
Mechanism to purchase health insurance for
individuals and employer groups with 1 to 100
employees
ACA was drafted for states to run exchanges,
but a majority of states have refused to
comply and deferred to the Federal
Exchange, including Ohio
Certify that health plans are ‘qualified’ with
Essential Benefits
Operate website for comparisons
Operate a toll-free hotline
Determination of consumer eligibility for
plans and affordability programs (tax credits,
Medicaid, CHIP, etc.)
Facilitation of consumer enrollment
Accepts all health insurance carriers
Guidance indicates intent to work with
agents and brokers
Will not replace a states Department of
Insurance
HHS (Health and Human Services) will
manage web site and consumer hotline
Exchanges will allow employer groups to
enroll
Employees allowed choice among plans
Coverage from multiple carriers but one bill
Employers can also offer a single plan
Includes groups with 1 to 100 employees
In 2017 100+ employee groups can enroll
Guidance from HHS suggests a role a
‘Navigators’
Must pass certification
Recent proposed legislation on MLR and
commission exclusion passed Senate in
September
HHS will integrate link to web portal for
certified agents/brokers
Defined Contribution Health Plans
For employers with under 50 employees drop
coverage altogether and fund a fixed dollar amount
into individual medical accounts for employees to
purchase their own coverage
Eliminates renewals, fiduciary liability and provides
employees more choices
ERISA (self-funded plans) are exempt from ACA
regulation
Additional exemptions – Unions, MEWA’s, etc.
If you want to learn more about PPACA and
receive future updates subscribe to our
newsletter or call me:
Doug Helser, Life & Health Specialist
MMA Insurance
614-834-6624 or 614-961-0339
[email protected]
www.mmains.net