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 CPI- U each year)

 The penalty for an individual will be capped at the national average premium for a bronze- level 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 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 or