INTRODUCTION
The Health Reform Act (Patient Protection and Affordable Care Act) will require most U.S. and legal residents to have health insurance. Those that do not carry it will be taxed by the government. The law also requires each state to have a health insurance exchange where people can obtain coverage. People who do not get health insurance at work or cant afford work insurance, will be able to get it through the exchange. The exchanges will be an alternative to private health insurance although it is not clear how many companies if any will continue to offer private health insurance.
TYPES OF EXCHANGES
States have the option of using one of three exchange models: 1-State run facilitator exchange- Any insurance company meeting the minimum benefit and price requirements can offer a plan on the state exchange. 2-State Run active purchaser model -the state solicits bids from the companies and determines which plans to offer. (State negotiates the price and benefits) 3-Federally run model (managed by the US dept of Health and Human Services).
EXCHANGE PLANS
Exchanges will be offered in a tier format. The tiers will be Bronze,(60% coverage) Silver, (70% coverage)Gold (80% coverage) and Platinum (90% coverage). The base plan for everyone will be the Silver plan.
All plans must have “essential benefits” which means they have services offered in the 10 mandatory categories: Ambulatory , ER, Hospitalization, Maternity and Newborn care, Mental health treatment, Rx, Rehab, Lab services, preventative services and Pediatric services.
PREMIUMS AND ELIGIBILITY
Premiums for the individual and small group plans will not be based on health status. Instead it will be based on family tier, age, geography and tobacco use. The plans must also use 3-1 age bands which means the highest premium can not be more than three times the lowest plan premium.
Health insurance will be “guaranteed issue” which means you can not be denied or charged more for health reasons. People will have three choices when choosing a plan- 1- get coverage through your employer, 2-get coverage through the state based exchange, 3-go uninsured and pay a penalty unless exempt.
How much you pay for your plan will be based on the Federal poverty level which is $10,830 for an individual and $22,050 for a family. Anyone that is below 133% of the poverty level will be provided with Medicaid coverage. Anyone at 133% or above will pay the following percentage of their annual income toward health insurance premium. Premium credits will be used to achieve the premium cost shares listed.
133% to 150% = 3%-4% of income toward cost
150% to 200% = 4%-6.3% of income toward cost
200% to 250% =6.3% -8.05% of income toward cost
250% to 300% = 8.05 -9.5% of income toward cost
300% to 400% =9.5% of income toward cost
BENEFITS OF PLANS
All plans must have “essential benefits” which means they have services offered in the 10 mandatory categories: Ambulatory , ER, Hospitalization, Maternity and Newborn care, Mental health treatment, Rx, Rehab, Lab services, preventative services and Pediatric services.
The base silver plan will cover 70% of medical costs. These costs are decreased based on income relation to the Federal Poverty Level (FPL).
100 to 150% of FPL= 94%
150 to 200% of FPL= 87%
200 to 250% FPL = 73%
250 to 400% FPL=70%
PENALTY FOR NOT HAVING A PLAN
In 2014 legal U.S. citizens who do not have a minimum amount of health coverage will receive a penalty of $95 or 1% of their taxable income, whichever is greater. The penalty increases every year until 2016 when it will be $695 or 2.5% whichever is greater. The penalty will be then be adjusted annually on a scale that is not yet specified.
SMALL GROUP EMPLOYERS (Less than 49 employees)
Small businesses can use an exchange to find insurance for their employees. This exchange is specific to small groups and are called Small Business Health Options Programs or SHOP for short. The individual and SHOP exchanges may be separated or combined.
Options for small group employers are….
-Offer a fully insured plan through either a SHOP exchange or the traditional market
-Offer a ASO plan in states that allow small group self funding
-Stop offering coverage and let the employees buy a plan on the exchange
Employers must pay contribute an amount toward the health insurance premium that is equivalent to at least 9.5% of the employees annual salary to be eligible for tax credits.
Employers with 50 or fewer employees are exempt from penalties for not offering coverage
Employers with 51+ employees not offering coverage will be fined $2,000 per employee (excluding the first 30 employee
MEMBER ENROLLMENT AND CHANGE PERIOD
There will be a time period for members to enroll/change plans. This period will be from October through December for a January 1st effective date.
NEW TAXES AND FEES TO FUND HEALTH REFORM
Comparative Effectiveness Research Fee– funds research on the effectiveness of medical treatments – insurers will pay this fee.
10-1-2012 the fee will be $1 per participant per year – 10-1-2013 this fee will increase to $2 per participant per year and will increase with the medical inflation rate every year after.
Tax on high earners and unearned income- an annual tax on wages or unearned income of more than $200,000 for single people and $250,000 for married couples and families. Anyone at this income level will pay an additional 0.9% Medicare Surtax on wages and a 3.8% tax on income.
ACA Insurer Fee- An annual excise tax on health insurance to fund premium subsidies and Medicaid expansion. -Total fee to be collected across all insurers starts at $8 Billion in 2014 and increases to $14.3 billion in 2018. Starting in 2014 the fee is 2.46% of premium
ACA Reinsurance Fee- This will support the individual market and defray costs for high costs individuals.- The monthly fee to insurers will be $6.35 per participant per month.
Insurance Brokers Involvement- The exchanges don’t replace private health insurance but instead, provide a new place for individuals and small businesses to buy insurance. The exchanges are the only way that an individual can receive premium and credits and benefits subsidies. As a result, it is not anticipated that the non exchange based plans will be used often. Each state will determine how/if brokers will be involved in the enrollment process and will also determine if there is any compensation for enrolling members. I will provide more detailed information here when it is available.
CLICK HERE FOR A DETAILED HEALTH REFORM DOCUMENT
