Health Insurance
Exchanges
This presentation is a high-level summary and for general informational purposes only. The information in this presentation is not
comprehensive and does not constitute legal, tax, compliance or other advice or guidance.
A Division of Health Care Service Corporation, a Mutual Legal Reserve Company,
an Independent Licensee of the Blue Cross and Blue Shield Association
Exchange Overview Topics
Plans &
Benefits
Definitions,
Functions & Models
Credits and
subsidies
SHOP
Timeline
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
2
Definitions, Functions & Models
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
Exchanges Defined
The Affordable Care Act authorizes states to create and operate
exchanges, also known as health insurance marketplaces, for individuals
and for small business employers by 2014. A federal exchange will be
available if a state does not have its own exchange.
• Designed to be competitive and centralized online sites
for individuals to purchase health insurance plans.
• Meant to help people meet ACA’s minimum
coverage requirement (also called the
individual mandate).
• Intended to provide unbiased, “non-marketing”
information to help consumers better
understand the options available to them
and choose a plan.
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
4
What are Exchanges?
Think Catalog
Shopping Online
Health insurance exchanges are the online sites where individuals and
small business owners can shop health care plans offered by various
insurance carriers.
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
5
Exchange Functions
1
7
Inform
consumers about
individual mandate
exemptions
Provide toll-free
hotline for
assistance &
other avenues for
customer service
6
Run websites
that allow consumers
to shop for qualified
health plans
2
Help
consumers and
employers
choose & enroll
in coverage
Public
Exchanges
Perform Risk
Adjustment
5
Help eligible
individuals get
federal tax credits
& subsidies
Determine
eligibility for a
QHP, Medicaid,
CHIP & enroll if
eligible
3
4
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
6
Consumer Support
Consumers
Navigators
Brokers
Direct
Public
Exchange
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
7
Exchange Models
• A state may choose to establish and
operate its exchange, which is called a
STATE-BASED model.
• A state may decide to implement an
exchange operated by both the state and
Health and Human Services (HHS), also
called a STATE PARTNERSHIP model.
• If a state does not submit an exchange
blueprint to HHS, or if HHS finds the state
is not exchange-ready, then HHS will
operate a FEDERALLY FACILITATED
model for that state.
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
8
Plans & Benefits
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
Four Benefit Levels of Coverage
The key difference between the “metallic” plans is the expected percentage of
medical expenses shared between the health plan and the member.
Platinum
Gold
Silver
Bronze
Expected Percentage of Medical Expenses Covered by the Health Plan
Expected Percentage of Medical Expenses Covered by the Member
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
10
Qualified Health Plans
A Qualified Health Plan (QHP) is a health insurance plan that
has been certified to be allowed for purchase on an individual
exchange and SHOP.
• Only certified QHPs are allowed on an individual exchange
and SHOP.
• HHS established the criteria for how to certify a QHP.
Several things must happen. The product must:
• Get certified by the exchange (QHP certification).
• Provide essential health benefits (EHB) that meet state and federal
guidelines.
• Follow established limits on cost-sharing (such as deductibles and
copayments).
• Meet provider network adequacy rules.
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
11
Essential Health Benefits
In 2014, individual and small group plans on and off the exchange
must include Essential Health Benefits, which are generally services
and items in the following 10 benefit categories:
Hospitalization
Emergency
services
Laboratory
services
Prescription
drugs
Habilitative and
rehabilitative
services and
devices
Preventive and wellness
services and chronic
disease management
Maternity and
newborn care
Ambulatory
patient services
Mental health, substance
abuse disorder services,
behavioral health
treatment
Pediatric services,
including oral and
vision care
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
12
12
Benchmark Plans
EHBs and Benchmark Plans
• A benchmark plan serves as a state’s reference health plan
of essential health benefits (EHB).
• Each state had to select a health insurance
plan currently operating within the state to act
as the benchmark plan.
Default Benchmark
• If a state did not select a benchmark,
HHS determined that the EHB
benchmark defaulted to the largest
(by enrollment) small-group plan
in the state.
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
13
EHB Benchmark for Illinois*
Plan Type
Plan from largest small
group product, Preferred
Provider Organization
Issuer Name
Blue Cross and Blue Shield
of Illinois
Product Name
BlueAdvantage
Entrepreneur PPO
Plan Name
BlueCross BlueShield of
Illinois BlueAdvantage
Supplemented Categories
(Supplementary Plan Type)
Pediatric Oral (State CHIP)
Pediatric Vision (FEDVIP)
Filling in the 10 EHB Categories
•
•
•
•
ACA tasked HHS to define EHB details
HHS proposed a state-specific benchmark approach
Each state was asked to select a benchmark plan
States had until Dec. 26, 2012 to submit a plan to
represent the state’s version of EHBs for 2014 and
2015 plan years
• Default choice for states that did not select a plan:
The state’s largest small group health plan
• HHS released a proposed rule on EHBs, Actuarial
Value (AV) and Accreditation in late November 2012.
It was open for comment until Dec. 2012.
• HHS released final rule on Feb. 20, 2013 along with
FAQs on ACA Implementation about cost-sharing
limits related to EHBs.
*Source: http://cciio.cms.gov/resources/EHBBenchmark/illinois-ehb-benchmark-plan.pdf
Resources
• HHS final rule: http://www.gpo.gov/fdsys/pkg/FR-2013-02-25/pdf/2013-04084.pdf
• Center for Consumer Information & Insurance Oversight http://cciio.cms.gov/resources/factsheets/ehb-2-20-2013.html
• EHB benchmark plans for 50 states http://cciio.cms.gov/resources/data/ehb.html
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
14
Credits, Subsidies & Penalties
for Individuals
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
Understanding FPL
Federal Poverty Levels
Those with household incomes of 100-400% of FPL may be eligible to receive tax
credits and subsidies. A family of 4 with a household income of $94,200 or less
may be eligible to receive premium tax credits.
2013 poverty guidelines for 48 contiguous states and the District of Columbia
Size of
Family Unit
100% FPL
1
$11,490
$17,235
$22,980
$28,725
$34,470
$45,960
2
$15,510
$23,265
$31,020
$38,775
$46,530
$62,040
3
$19,530
$29,295
$39,060
$48,825
$58,590
$78,120
4
$23,550
$35,325
$47,100
$58,875
$70,650
$94,200
150% FPL 200% FPL 250% FPL 300% FPL 400% FPL
SOURCE:
2013 HHS Poverty Guidelines published by the U.S. Department of Health and Human Services at
http://aspe.hhs.gov/poverty/13poverty.cfm
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
16
Tax Credits & Subsidies for Individuals
Premium Tax Credits
• A tax credit is available based on a household income of
100-400% of the federal poverty level (FPL). The tax credit can
be applied to a plan at any metallic level. It is advanceable.
Note that premium tax credits are on a sliding scale.
Out-of-Pocket Maximum Subsidy
• An out-of-pocket maximum subsidy is available to those who
select a silver plan and have an income of 100-400% of the FPL.
Cost-Sharing Subsidy
• A cost-sharing subsidy is available to those who select a silver
plan and have an income of 100-250% of the FPL.
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
17
Penalties for the Uninsured
Beginning in 2014, citizens and legal residents must have and maintain a
minimum level of health coverage or pay a federal tax. Taxes are assessed
according to percentage of income or flat fee, whichever is greater, and will be
applied on federal income tax returns.
Year
Percent of Income or
Flat Fee
2014
1.0% of taxable income or
$95
2015
2.0% of taxable income or
$325
2016
2.5% of taxable income or
$695
after 2016
the tax will increase annually by the tax will increase annually by
the cost-of-living adjustment
the cost-of-living adjustment
Some individuals may qualify for an exemption from the requirement to carry
insurance coverage.
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
18
SHOP
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
Small Business Health Options Program
Small Business Health Options Program (SHOP)
SHOP is an online exchange where small employers (1-50 employees in
2014, 1-100 beginning 2016) can obtain health coverage for their
employees, and possibly take advantage of tax credits.
States will have the flexibility to determine who selects the coverage
Employer Choice
Hybrid Choice
Employee Choice*
Employer may be permitted to
select one or more specific
plan on behalf of employees,
or self
Employer can select metallic
level and then employee can
select any plan (from any
carrier) within that level
Employee can select any plan
offered, as long as it meets
SHOP benefit plan design
requirements
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
20
Tax Credits for Small Businesses
The Affordable Care Act also establishes a Small Business Tax Credit that will
help make offering health coverage more affordable for qualified small businesses.
Now
Beginning 2014
• Available to employers with fewer
than 25 full time employees, with
average annual wages less than
$50,000
• Available to qualified
employers that provide
coverage to their employees
on SHOP
• Employers must contribute a
uniform percentage of at least 50%
toward their employee's insurance
• Credits increase to up to
50% of the employer's
contributions (35% for nonprofit organizations)
• Worth up to 35% of employer
contributions to employees' health
insurance plan (25% for nonprofit
organizations.
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
21
Individual and SHOP Comparison
Differences between individual exchanges and SHOP:
Individual Exchange
SHOP
Benefit
Package
Plans include those with cost-sharing values of
60/40, 70/30, 80/20 and 90/10 (insurer/insured).
Catastrophic plans also available.
Same as Individual, but
no catastrophic.
Premium Tax
Credits
Premium tax credits are available based on
household income from 100-400% of the FPL. Tax
credits can be used at any metallic benefit level.
Not applicable.
Employer Tax
Credit
Not applicable.
Small groups eligible if
buying coverage via
SHOP.
Cost-sharing
Subsidy
Cost-sharing subsidies may be available for eligible
individuals with income from 100-250% of the FPL
Not applicable.
Out-of-pocket
Maximum
Subsidy
Out-of-pocket maximum reductions may be available
for eligible individuals with income from 100-400% of
the FPL
Not applicable.
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
22
Timeline
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
Expected Timeline
Deadline
Milestone
January 1, 2013 was the deadline for HHS to assess each state’s blueprint for a
state-based model and to either fully or conditionally certify the individual
exchange/SHOP or assume operational responsibility.
01-01-2013
The following states are conditionally approved to operate state-based models:
California, Colorado, Connecticut, District of Columbia, Hawaii, Idaho, Kentucky,
Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon,
Rhode Island, Utah, Vermont and Washington.
February 15, 2013 was the deadline for states to tell federal regulators if they plan to
implement a state-partnership exchange model.
02-15-2013
The following states are conditionally approved to operate state-partnership models:
Arkansas, Delaware, Illinois, Iowa, Michigan, New Hampshire and West Virginia.
10-01-2013
Exchanges must be fully operational and enrollment begins on October 1, 2013.
Initial open enrollment lasts until March 31, 2014. (In subsequent years, open
enrollment will begin on October 1 and end on December 7.)
01-01-2014
Coverage begins for plans purchased on exchanges (effective date).
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.
24
Questions?
PROPRIETARY INFORMATION. PROPERTY OF HEALTH CARE SERVICE CORPORATION. DO NOT USE WITHOUT PERMISSION.