affordable care act exchange 101
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Health Insurance Exchange and
Defined Contributions Health Planswww.kapnick.com
Solutions for a Superior Workplace | Disclaimer
The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reforms on individuals should be interpreted and applied. The impact of these reforms on individual situations may vary. The overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should no be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.
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Solutions for a Superior Workplace | Agenda
Individual Mandate
What is an Exchange? Public vs. Private?
When will the Exchange be available?
How will Exchanges differ?
What is the estimated cost of coverage on the Exchange?
Employer Responsibility
Defined Contributions Health Plans
Q&A3
Solutions for a Superior Workplace | Individual Mandate
Supreme Court issued its decision on June 28, 2012 5:4 ruling The individual mandate is constitutional
Jan. 1, 2014: Individuals must enroll in coverage or pay a penalty
Penalty amount: Greater of $ amount or a % of income 2014 = $95 or 1% 2015 = $325 or 2% 2016 = $695 or 2.5%
Solutions for a Superior Workplace | Health Insurance Marketplace
Exchange Marketplace
Solutions for a Superior Workplace | Public vs. Private Marketplaces
Difference between two types of
Marketplaces:
Public
Private
Solutions for a Superior Workplace | Public Marketplaces
Two Types of Public Marketplaces:
The public Health Insurance Marketplace is a state- or federal- run platform where individuals can obtain health insurance coverage. They will also be able to compare and choose health plans offered by private companies and find out if they are eligible for financial assistance
The Marketplaces will also operate a Small Business Health Options Program (SHOP). There, small employers can purchase a variety of plans, and then may choose to allow its employees to choose from plans it selects or one plan. HHS delayed multi-plan availability until 2015
Solutions for a Superior Workplace | Marketplace Availability
First Open Enrollment: October 1, 2013 - March 31, 2014
Coverage starts: January 1, 2014 for plan selections made by December 15, 2013
Annual Open Enrollment (after first year):October 15th - December 7th
Coverage begins January 1 of the next year
Solutions for a Superior Workplace | Public Marketplace
Each State can choose to: Create and run its own Marketplace – State-Based
Marketplace Partner with the federal government to run some
Marketplace functions – Partnership Marketplace Have a Marketplace that’s operated by the federal
government - Federally-facilitated Marketplace
Market Saturation
• 52 million uninsured Americans• About half will explore the new Marketplace• About 19 million will be eligible for a premium subsidy
Solutions for a Superior Workplace | States Marketplace Decisions
Partnership Marketplace (7 states)State-based Marketplace (16 states and DC)
Federally-facilitated Marketplace (27 states)
WA
OR
WY
UT*
TX
SD
OK
ND
NM
NV NE
MT
LA
KS
ID
HI
CO CA
ARAZ
AK
WI
WV VA
TN SC
OH
NCMO
MS
MN
MI
KY
IA
IN IL
GA
FL
AL
VT
PA
NY
NJ
NHMA
ME
CT
DE
RI
MD
DC
* In Utah, the federal government will run the marketplace for individuals while the state will run the small business, or SHOP, marketplace.
As of May 10, 2013
Solutions for a Superior Workplace | Public Marketplaces – Online Application
Solutions for a Superior Workplace | Public Marketplaces – Paper Application
Solutions for a Superior Workplace | Marketplace Reform Mandates
Health plans must comply with new market reforms:
Fair Premiums: Health status and gender not used to set premiums; limits
on age rating
Guaranteed Renewability:Coverage must be renewed for all policyholders with limited
exceptions
Single Risk Pool: Issuers cannot use separate risk
pools to charge certain customers’ higher rates
Guaranteed Availability: Coverage must be offered to all comers, with limited exceptions
Solutions for a Superior Workplace | Marketplace Reform Mandates
The only factors that can be used to vary the premium rate for a plan in the individual or small group market are:
Age | Family Status | Tobacco use | Geography
Health plans cannot change premium rates based on:
Health Status | Claims Experience | Gender
Solutions for a Superior Workplace | Marketplace Reform Mandates
Health plans must be certified to be offered in a Marketplace, and must include 10 required Essential Health Benefits:
Ambulatory Patient Services Emergency Services Hospitalization Maternity and Newborn Care Mental Health and Substance Abuse Prescription Drugs Rehabilitative and Habilitative Services Laboratory Services Preventive and Wellness Services and Chronic Disease
Management Pediatric Services including oral and vision care
Solutions for a Superior Workplace | Marketplace Reform Mandates
All plans must provide at least 60% actuarial value minimum
Actuarial Value is calculated as the percentage of total average costs that a subscriber will pay for covered services (e.g. copays, deductible, coinsurance, etc. Excludes premiums)
Four levels of coverage on the exchanges:
Bronze: Plans cover 60% of the costs
Silver: Plans cover 70% of the costs
Gold: Plans cover 80% of the costs
Platinum: Plans cover 90% of the costs
Solutions for a Superior Workplace | Marketplace Costs
What might unsubsidized Marketplace plans cost?
MI 25.8%
Increase
Solutions for a Superior Workplace | Marketplace Tax Credits and Subsidies
Individuals might be eligible for tax credits or subsidies
Who will be eligible? Individuals at 100% - 400% Federal Poverty Level without
access to affordable, minimum essential coverage that enroll in coverage through the Public Marketplace
Who won’t be eligible? Employees offered small or large employer plans that
provide affordable, minimum value coverage Individuals eligible for government-sponsored health care
Solutions for a Superior Workplace | Notice of Exchange
Employers must notify new and current employees of Marketplace information
Originally effective March 1, 2013 – Delayed Temporary Guidance: no later than October 1, 2013
Virtually all employers must provide to full-time and part-time employees - subject to Fair Labor
Standards Act (FLSA) – regardless if they offer coverage
Department of Labor Model Notices available
Solutions for a Superior Workplace | Notice of Exchange
Solutions for a Superior Workplace |
Defined Contribution Health Plans
Solutions for a Superior Workplace | Defined Contribution Health Plans
What is a Defined Contribution Health Plan?
Why might Defined Contribution Plans be appropriate now?
How does it work?
Benefits to Employers and Employees
Solutions for a Superior Workplace | Defined Contribution Health Plans
What is a Defined Contribution Health Plan?
Employer gives employees a fixed contribution to purchase Health Coverage
Employee uses the funds to buy or help pay for an insurance plan they select themselves
Solutions for a Superior Workplace | Defined Contribution Health Plans
Why now?
Marketplace is electronic platform that allows and requires insurance carriers to provide multiple options
Continued cost increases from medical inflation and ACA mandates
Solutions for a Superior Workplace | Defined Contribution Health Plans
How does it work?
Solutions for a Superior Workplace | Defined Contribution Health Plans
Example A – One Carrier
Solutions for a Superior Workplace | Defined Contribution Health Plans
Sample Menu Choices for Employer
PPO HMO
$1000 Ded 80/20 $100 Ded 80/20
$1250 Ded HSA 80/20 $1300 Ded HSA 80/20
$2500 Ded HSA 80/20 $1500 Ded HSA 80/20
$3000 Ded HSA 80/20 $3000 Ded 80/20
$4000 Ded 70/30 $4000 Ded 70/30
PPO HMO
$1000 Ded 80/20 $100 Ded 80/20
$1250 Ded HSA 80/20 $1300 Ded HSA 80/20
$2500 Ded HSA 80/20 $1500 Ded HSA 80/20
$3000 Ded HSA 80/20 $3000 Ded 80/20
$4000 Ded 70/30 $4000 Ded 70/30
Option A Option B
Solutions for a Superior Workplace | Defined Contribution Health Plans
Example B – Multi-carrier
Solutions for a Superior Workplace | Defined Contribution Health Plans
Benefits
Allows the employer to fix cost based on budget, not insurance rate increase
Allows an employee to select coverage that best fits their need and budget