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

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 www.healthcare.gov • 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

TYPE DEFINITION

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-insure Employer is responsible for paying health cost of enrollees up to a capped amount (stop loss insurance)

Health Insurance Markets

TERM DEFINITION

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 15th- December 15th

December 16th- January 15th

January 16th- February 15th

Effective Coverage Date

January 1, 2015

February 1, 2015 March 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 PTCo Qualifying individuals do not have to apply

for CSR separately

Help Paying for Health Insurance

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

ANDNo other Minimum Essential Coverage (MEC) (Including Medicaid and ESI is available)

ORAvailable 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 income Single Individual Family< 200% FPL $300 $600

200% to 300% FPL $750 $1,500300% 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

2014100-150% FPL 94% $2,250 $4,500150-200% FPL 87% $2,250 $4,500200-250% FPL 73% $5,200 $10,400

>250% FPL 70% $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: MedicareMedicaidCHIPVeteran’s Administration programs—TriCare and CHAMP VACoverage for Peace Corps VolunteersEmployer-sponsored coverageGrandfathered 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 onlyPregnancy 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 Tiers (Actuarial Value)

Metal Level AV target AV BandBronze 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 Agency Other

• 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 Agency Other

• 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 Medicaid5. 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 Agency Other

• 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 Agency Other

• Member of Health Care Sharing Ministry 503(c) registered organization.

Marketplace or IRS through tax filing process

Reapply every yearOnly eligible if a member of ministry at time application submitted, will not provide on probability of future membershipWill only provide retrospectivelyMarketplace will only grant in year it appliesFor previous year exemption through tax filing process

Incarceration Exemption

Exemption Qualifications

Through Agency Other

• 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 Agency Other

• 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 Agency Other

• 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 Agency Other

• 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 Agency Other

• 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 AgeAssign 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

2014Adult: $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: $48Maximum: $285

2015Adult: $325

2% of annual household income

Under age 18: $163Maximum: $975

2016

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: http://www.gpo.gov/fdsys/pkg/FR-2012-08-10/pdf/2012-19588.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