The Affordable Care Act and New Health Insurance Marketplace

Learning Objectives I.Highlight the basics of the Affordable Care Act (ACA). II.Define common health insurance literacy terms and concepts. III.Deep dive: examine exemptions from the individual shared responsibility payment. IV.Discuss special enrollment periods, terminating health coverage plans, reenrollment, and appeal procedures.

The Patient Protection and Affordable Care Act (ACA or “Obamacare”) was passed in March 2010 under the Obama administration This created: –A new avenue to purchase health insurance coverage (Marketplace, or Exchange) –New requirements to maintain coverage –Tax subsidies to help individuals afford coverage –Tax penalties associated with not having health insurance –Restricted period of the year when coverage is available for purchase Eliminated the ability for insurers to deny coverage based on health status Coverage is guaranteed available and renewable Changed requirements around cost-sharing and the comprehensiveness of offered benefits Basics of the ACA

Eligible young adults can be covered under a parent’s plan until age 26 –Can be on parents’ coverage even if the dependent has access through an employer, lives in another location, is married, is not a financial dependent, or not a student Individuals with pre-existing conditions are no longer excluded from coverage offers Lifetime and annual maximums are eliminated Preventive and wellness services are mandated benefits without any cost-sharing requirements

Two ways for individuals to purchase health insurance: 1.The federal Marketplace Accessed through Administered by the federal Department of Health and Human Services (HHS) Serves individuals and small groups 2.The commercial health insurance market Overseen by the IDOI Serves individuals, small groups and large groups Health Insurance in Indiana

TYPEDEFINITION Individual Market  Policies cover an individual or family Small Group Market  Issued to employers with 50 or fewer eligible employees (30 hours or more per week; met waiting requirement)  At employer’s option to include families/dependents Large Group Market  Issued to employers with over 50 eligible employees  At employer’s option to include families/dependents Self-insureEmployer is responsible for paying health cost of enrollees up to a capped amount (stop loss insurance) Health Insurance Markets

TERMDEFINITION Premium  Monthly fee to maintain enrollment in coverage regardless of service use Deductible  Base amount that a member pays for services prior to their health insurance paying for coverage  Reset each year Coinsurance  Percentage of the cost of the service the health care provider will expect to have paid at the time of the visit Copayment  Specific dollar amount that an individual will pay for a particular service, regardless of the total cost of service Out-of-pocket maximums  Maximum amount the enrollee can expect to pay for services in any plan year  $6,350 for an individual plan  $12,700 for family plan Health Insurance Cost

2014/2015 Enrollment Date November 15 th - December 15 th December 16 th - January 15 th January 16 th - February 15 th Effective Coverage Date January 1, 2015 February 1, 2015March 1, 2015 Open Enrollment

Individuals can select a plan based on: –Quality –Covered benefits –Covered providers –Expected cost-sharing level To purchase coverage on the Marketplace, individuals must: –Be a United State citizen or legal resident –Reside or intend to reside in the state they are applying in –Not be incarcerated Purchasing Health Insurance

There are 2 programs to help qualified individuals afford health insurance and cost-sharing for health services 1.Advanced Payment of the Premium Tax Credit (APTC) o Based on the second lowest-cost plan (Silver) o Can be used to purchase any plan on the federal Marketplace 2.Cost-Sharing Reduction Program o Increase the Actuarial Value (AV) of health coverage plans for low-income consumers o Reduces out-of-pocket costs for consumers o Offered in addition to PTC o Qualifying individuals do not have to apply for CSR separately Help Paying for Health Insurance

The amount of the premium tax credit (PTC) and the level of cost-sharing reductions (CSR) are based on the applicant’s income For these programs income is expressed as a percentage of the federal poverty level (FPL). –Updated each year and published by HHS –100% FPL or below is designated as living in poverty For one person $11,670 For two people: $15,730 For three people: $19,790 For four people: $23,850

PTC Eligibility:  Must be a citizen, national or legal resident of the U.S., Indiana resident and non-incarcerated  Household income between 100% and 400% of the FPL AND  No other Minimum Essential Coverage (MEC) (Including Medicaid and ESI is available) OR  Available MEC (such as through an employer) has an individual premium more than 9.5% of household income OR does not provide minimum value (at least 60% actuarial value) Premium Tax Credit (PTC)

Three options for using the PTC: 1.Full Advanced Payment –Reduces premium costs –If income increases during the year, consumer may owe some or all of PTC back at tax filing 2.Partial Advanced Payment –Reduces premium costs & likelihood of PTC overpayment –Consumer bears more of the premium cost immediately than if full advancement payment is taken 3.Claim Later –Ensures that PTC is not overpaid and that consumer will not owe at tax filing –Consumer bears the full cost of the premium immediately Premium Tax Credit (PTC)

Individuals that are eligible for APTC will reconcile these amounts when they file their 2014 taxes –Those that have received payments in excess of what they were eligible for will pay back this amount to the IRS; –Individuals that received less APTC will receive these payments as refunds on their tax return. The amount that an individual may owe the IRS due to an over payment of the APTC is capped, so individuals between 100% and 400% FPL may owe no more than the below amounts due to excess APTC payments. Premium Tax Credit (PTC) Reconciliation Household incomeSingle IndividualFamily < 200% FPL$300$ % to 300% FPL$750$1, % to 400%$1,250$2,500

Cost Sharing Reductions (CSRs) CSRs increase the Actuarial Value (AV) of the individual’s health plan and reduce the expected cost sharing an individual may pay throughout the year. –Only applies if the individual selects at least a silver plan. –Must also be eligible for the PTC and have income below 250% FPL Actuarial Value Individual Annual Out-of-Pocket Maximum 2014 Family Annual Out- of-Pocket Maximum % FPL94%$2,250$4, % FPL87%$2,250$4, % FPL73%$5,200$10,400 >250% FPL70%$6,350$12,700

Health Insurance Plans

Also called the Individual Shared Responsibility Requirement ACA component requiring individuals to maintain Minimum Essential Coverage (MEC) for themselves and dependents –Failure to maintain MEC may result in a tax penalty –Individuals may apply for an exemption from the requirement to maintain MEC Individual Mandate What is Minimum Essential Coverage (MEC)? The type of coverage needed to meet the individual responsibility requirement It must be maintained throughout the year

Coverage that is considered comprehensive health insurance under the ACA –Coverage for one day in the month is considered to be coverage for the entire month TYPES OF MINIMUM ESSENTIAL COVERAGE Coverage under a government sponsored program including:  Medicare  Medicaid  CHIP  Veteran’s Administration programs—TriCare and CHAMP VA  Coverage for Peace Corps Volunteers  Employer-sponsored coverage  Grandfathered health plan coverage  Refugee Medical assistance  Medicare advantage plans Minimum Essential Coverage (MEC)

NOT MINIMUM ESSENTIAL COVERAGE Medicaid programs not considered MEC:  Family Planning Services only  Tuberculosis Related Services only  Pregnancy related Services only  Emergency Medical Services only  Accidental Death & Dismemberment  Disability, general liability, and automobile liability insurance  Worker’s compensation  Separate policies for coverage of only a specific disease  Limited-scope vision, long-term care, and benefits provided under certain health flexible spending arrangements  Credit-only insurance  Coverage for employer-provided on-site medical clinics Minimum Essential Coverage (MEC)

Qualified Health Plans (QHPs) Standards Plans sold on the federal Marketplace or SHOP must be certified as a QHP Must meet the Essential Health Benefit (EHB) requirements Must offer metal level plans that are indexed to Actuarial Value, including bronze, silver, gold or platinum plans Must be accredited or in the process of gaining accreditation Must meet network adequacy and standard related to providing coverage through a satisfactory number of providers May not discriminate against individuals on any basis May not change premium amounts during the year, provided nothing changes in the enrollee’s circumstances Must offer provider lists and cost-sharing information

What are Essential Health Benefits (EHBs)? Comprehensive package of items and services within at least these 10 categories. Essential Health Benefits (EHBs)

Plans in the Marketplace are primarily separated into 4 health plan categories arranged by actuarial value Actuarial value– percentage of total average costs for covered benefits that a plan will cover PLATINUM GOLD SILVER BRONZE Higher Premiums & Lower Consumer Cost- Sharing Lower Premiums & Higher Consumer Cost-Sharing Metal Tiers (Actuarial Value)

Metal LevelAV targetAV Band Bronze 60%58-62% Silver 70%68-72% Gold 80%78-82% Platinum 90%88-92%

QHP that covers 3 primary care visits per year before the deductible is met Enrollees may expect to pay less for the policy, but bear a greater share of the expenses if they have a health event May only be purchased by those under 30 or who have received a hardship exemption from maintaining MEC Catastrophic Plans May provide family coverage, but not available in Small Group Not eligible for APTC

Health plans in existence prior to the passage of the ACA and do not have to comply with some provisions related to: –Benefits –Cost-sharing –Pre-existing condition exclusions –Annual maximum Plans may only maintain grandfathered if they do no make substantial changes to their policies Individuals offered grandfathered coverage through an employer may choose to not accept the coverage and purchase coverage that meets ACA requirements instead Grandfathered Plans

Plans that cover a specific service or condition and do not provide comprehensive health coverage Not subject to many of the ACA market reforms Most common is stand-alone vision Stand-alone dental plans are the only excepted benefit plans offered on the Marketplace Not offered in the metal tier levels of QHP Subject to a $700 maximum out of pocket amount for a single individual and $1,400 for family May be purchased using the APTC Not eligible for cost-sharing reductions Excepted Benefit Plans

Student Health Insurance Only self-funded student health coverage qualifies as MEC. Effective May 12, 2014, student health plans are not required to be offered as a calendar year plan Student health insurance is exempt from the requirement to establish open enrollment period and coverage effective dates based on a calendar policy year

Consolidated Omnibus Budget Reconciliation Act (COBRA) COBRA gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as: –Voluntary or involuntary job loss –Reduction in the hours worked –Transition between jobs –Death, divorce, and other life events Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan

Exemptions may be requested or applied for through the IRS or the Marketplace These individuals will not face a shared responsibility tax penalty for not maintaining MEC Eligibility exemptions can be categorical, based on income, or related to other circumstances Individuals may apply for one or more of the 9 exemption types Exemptions from Maintaining MEC

Religious Conscious Exemption Exemption Qualifications Through AgencyOther Be a practicing member of recognized religious sect or division (established pre- 1950) with recognized ethical or moral objections to health insurance. Must also waive social security benefits. Marketplace Exemption may be granted for more than one year Exemption will be granted prospectively or retrospectively Child turning 21 has to resubmit exemption application

Hardship Exemption Exemption Qualifications Through AgencyOther Individual who is determined to have suffered a hardship with respect to the capability to obtain coverage under a QHP Marketplace or IRS depending on Hardship type Details of types of Hardship Exemptions discussed in next slide

Hardship Exemption 1.Inability to purchase Due to financial or domestic causes, or natural/ human-caused events 2.Lack of affordable coverage based on projected income Cost of lowest cost option is > 8% of income 3.Below filing threshold 4.Medicaid expansion population State (like Indiana) did not expand Medicaid 5.Employer-sponsored coverage exception: Combined coverage cost 6.Eligible for services through Indian health care provider But not member of federally recognized tribe There are 6 different types of hardship exemptions:

Indian Tribe Exemption Exemption Qualifications Through AgencyOther Be a member of a federally recognized tribe Marketplace or IRS through tax filing process Marketplace must grant eligibility exemption on continuing basis Granted until Marketplace notified no longer in effect by applicant May be granted prospectively or retrospectively

Health Care Sharing Ministry Exemption Qualifications Through AgencyOther Member of Health Care Sharing Ministry 503(c) registered organization. Marketplace or IRS through tax filing process Reapply every year Only eligible if a member of ministry at time application submitted, will not provide on probability of future membership Will only provide retrospectively Marketplace will only grant in year it applies For previous year exemption through tax filing process

Incarceration Exemption Exemption Qualifications Through AgencyOther Incarcerated at least one day in a month after the disposition of charges Marketplace or IRS through tax filing process Marketplace can only grant exemption if requested in applicable calendar year, IRS can grant retrospectively

Household income Below Filing Limit Exemption Exemption Qualifications Through AgencyOther Individuals below the filing limit IRS through tax filing process Requires assessment of actual household income to be completed after year end through tax filing process

Inability to Afford Coverage Exemption Exemption Qualifications Through AgencyOther Lowest cost Minimum Essential Coverage option costs more than 8% of income IRS through tax filing process Requires assessment of actual household income and cost of coverage to be completed after year end through tax filing

Not-lawfully Present Exemption Exemption Qualifications Through AgencyOther Individuals not lawfully present not required to be covered IRS through tax filing process  Exemption implemented exclusively through tax filing

Short Coverage Gaps Exemption Exemption Qualifications Through AgencyOther One gap of less than 3 months permitted without penalty IRS through tax filing process Exemption may not be granted until year concludes

The ACA limits the factors that major medical plans can base the price of their plan on to age, location and tobacco use Rating for Age –Limited to a 3 to 1 ratio—Older adults may be charged no more than 3 times the premium as younger adults Rating Rules

Rating for Location –The ACA allows insurers to adjust their premiums depending on enrollee’s location –There are 17 rating areas in Indiana Rating for tobacco –Up to 1.5 times the premium for individuals that use tobacco –Tobacco use defined as use of any tobacco product on average four or more times per week over the past 6 months –At no point may a rate increase for tobacco based on age contradict the 3 to 1 rating limit Rating Rules

Rating for Family Plans Family Members 21 and older Family Members 20 and under Rate for Age Assign an age rating to each family member Rate for the oldest 3 family members 20 and under Rate for Tobacco Use Assign a tobacco rating to each family member Rate for the oldest 3 family members over 18 and 20 or under Rate for Location Assign a location rating to each family member Rate for the oldest 3 family members 20 and under Calculate Premiums Determine premium for each individual Determine premium for the oldest 3 members 20 and under Family Premium Sum premiums for members 21 and older and the oldest three family members 20 and under to reach the total amount of premium for the family

Shared Responsibility Payment For months when a non-exempt individual does not have at least one day of Minimum Essential Coverage (MEC), then a penalty (Shared Responsibility Payment) is owed through taxes Calculated on a monthly basis = 1/12 of the annual penalty amounts, for each month without coverage

Shared Responsibility Payment Penalty is the greater of: Maximum Penalty Dollar Penalty, assessed for every household member without MEC Percent Penalty 2014 Adult: $95 1% of annual household income Maximum Shared Responsibility Payment: National Average Premium for a QHP Bronze Plan that would cover the applicable individual(s) Under age 18: $48 Maximum: $ Adult: $325 2% of annual household income Under age 18: $163 Maximum: $ Adult: $695 3% of annual household income Under age 18: $348 Maximum: $2,085

Special Enrollment Periods (SEPs) Other than the open enrollment periods, individuals may only enroll in or change QHPs during a special enrollment period Certain life events trigger SEPs which generally last 60 days from the event Individuals losing coverage from an employer have 30 days after the event

Special Enrollment Periods (SEPs) 1.Loss of Minimum Essential Coverage (MEC) 2.Marriage, birth, adoption or placement of adoption or foster care 3.Citizenship status 4.Current QHP violated a material provision of its contract in relation to the enrollee 5.Enrolled individual is found newly eligible or ineligible for advance payments of the PTC, or change in eligibility for CSRs. This includes individuals who will lose employer- sponsored coverage within 60 days, or the coverage will become unaffordable or not provide minimum coverage. 6.Qualified individual or enrollee gains access to new QHPs as a result of a permanent move

Special Enrollment Periods (SEPs) 7.Individuals with Indian status may enroll in a QHP or change from one QHP to another one time per month. Indian status means the individual can be verified as a member of one of the 566 federally recognized tribes referenced at: pdf pdf 8.SHOP specific special enrollment for individuals newly eligible or ineligible for Medicaid premium assistance for Employer- Sponsored Insurance

Limited Circumstance Special Enrollment Periods Natural disaster, medical emergency, and planned system outages that occur on or around plan selection deadlines Misinformation, misrepresentation or misconduct by individuals or entities providing formal enrollment assistance Individual enrolled through the Marketplace, but the insurance company did not get their information System errors related to immigration status Display errors and other error messages prevent timely submission Applications not transferred to the State Medicaid or CHIP agency from the Marketplace in time Caseworker unable to complete application before deadline Married and victim of domestic abuse

Reporting Changes Individuals may report changes that impact their eligibility throughout the year such as: –Add or remove a dependent on policy, –Change location –Experience another significant event that qualifies them for a special enrollment period. Some changes may allow individuals to change their QHP selection or modify their APTC or CSR amount Reporting other changes ensures that the federal Marketplace has up- to-date information for completing annual redeterminations The Marketplace will also conduct periodic data queries to see if enrollees are still eligible for QHP enrollment through the federal Marketplace

Terminating Plans Individuals may terminate their enrollment in a Qualified Health Plan (QHP) at any time –To terminate enrollment in a QHP the individual should contact their qualified health plan directly. QHPs may terminate enrollees for non-payment of premiums, enrollment in another QHP, or fraud. Coverage under the QHP does not initiate until the first premium payment is received. –After the first payment, individuals enrolled in a QHP that do not receive APTC will have a 30-day grace period for subsequent premium payments. –After their initial premium payment, individuals that receive APTC will have a 90 day grace period to pay their premiums.

Reenrollment All individuals who enrolled through the federal Marketplace will receive a notice prior to the next open enrollment period asking them to report any changes in circumstances. –Any changes reported will be considered by the federal Marketplace in the annual eligibility redetermination. –Individuals that do not report changes will have their eligibility redetermined based on the information available to the federal Marketplace through electronic data sources. Individuals may not receive a Premium Tax Credit (PTC) without providing authorization for the federal Marketplace to access their tax information and may not receive an advanced payment of the Premium Tax Credit (APTC) after their initial year, if they did not file taxes for the year of receipt. –If an individual who receives APTC does not provide authorization in a subsequent year for the federal Marketplace to access their tax information, then they will not receive a redetermination until they provide this authorization.

Appeals Individuals that believe their eligibility determination for a QHP, or eligibility for APTC or CSR is incorrect, should contact the federal Marketplace to file an appeal –Individuals may file appeals for up to three years after they experienced the triggering event. Individuals that believe they have been denied a provider or service they should have had access to through their QHP, should contact the plan administrator. –Contact the QHP issuer as soon as possible –Individuals who do not feel their situation is resolved through the QHP grievance procedure may request an appeal from the QHP issuer