PPACA Brief Overview
Salient Points for
Metropolitan Fire Chiefs
How it Works
ACA aims to reform US healthcare system through:
• “Guaranteed issue” limiting insurance companies’
pricing,
• even with pre-existing conditions
• Price based only on community rating and age
• “Individual mandate” – all must have insurance –
effort to get larger number into the insurance pool
• Tax subsidies to help pay premiums for people who
are not eligible for Medicaid/Medicare but not
wealthy enough to afford full cost of coverage
Individual Mandate
• Requires citizens and legal
• Exemptions granted for:
residents to have qualifying
– religious objections,
health coverage beginning in
– American Indians,
2014 or pay a tax penalty of the
– those without coverage for less
than 3 months,
greater of a dollar amount or a
– those for whom the lowest cost
percentage of household
plan option exceeds 8% of the
income
individual’s income,
• Penalty phase in:
– those with incomes below the tax
– $95/person (up to a max of 3) OR
1% of household income in 2014;
– $325 or 2% in 2015;
– $695 or 2.5% in 2016
filing threshold, etc.
Employer Mandate
• The Shared Responsibility for Employers Regarding Health
Coverage (employer mandate) requires large employers to offer
affordable coverage to their employees or pay a tax penalty
• Obama administration delayed the employer mandate by a year,
so large employers are not required to pay the tax penalty until
2015
• Starting January 2015, “large” employers with any employees
receiving a subsidy to buy coverage on the exchange will pay tax
penalties based on number of employees receiving subsidies
• Large employers for these purposes are those with 50+ full-time
employees or equivalents, with full-time meaning 30+ hours a
week
• Employer mandate does not require employers to offer coverage
to their retirees
Essential Health Benefits (EHBs)
ACA Metal Levels
Actuarial Values for Levels of Coverage Provided by
Qualified Health Plans
Actuarial Value for Levels
of Coverage
100%
90%
80%
70%
60%
10%
Bronze
Silver
Gold
Platinum
Exchanges
• Designed to enable consumers to compare
qualified health plans to find the ones that best
meet their needs and budget
• Some states run their own exchange; others
defer to the federal government
• Set standards for EHBs, oversee pricing, and set
rules insurers must follow to participate
Exchanges - Subsidies
• ACA provides a tax credit to subsidize the insurance premiums
• Premium tax credit is available to a taxpayer whose income is
100-400% of the federal poverty level (FPL) AND who is not
offered “affordable” employer-based coverage
• Coverage under an employer-sponsored plan is affordable if the
employee’s required contribution for self-only coverage does
not exceed 9.5% of the employee’s household income for the
taxable year
• Persons eligible for Medicare are not eligible for premium tax
credit;
• Retirees under 65 may be eligible for the credit
• In addition to the premium tax credit, taxpayers with income
100-250% of FPL may be eligible for cost-sharing assistance to
help with co-pays and deductibles
State Decisions as of August 2013
“Cadillac” Tax
• Effective 2018
• Tax will apply to trusts and retirees
• Health insurance issuers pay 40% tax on
premium amount above the threshold
• Threshold in 2018 is $27,500 (family) and
$10,250 (individual); indexed to inflation in
subsequent years
Grandfathered Plans & CBAs
• Grandfathered plans: ACA exempts most plans that existed on March 23,
2010 from some of the law’s consumer protections, even for enrollees
who joined such plans after that date
• Certain protections under ACA do not apply to grandfathered plans,
such as requiring the plan to provide certain preventive services at no
charge
• Other protections do apply to grandfathered plans, such as the
prohibition on applying lifetime dollar limits on EHBs
• Collectively bargained plans
• Fully-insured plans pursuant a CBA are grandfathered until expiration
date of a CBA related to that coverage
• Multi-employer plans (MEPs) are grandfathered until expiration date
of CBA related to plan regardless of employer
Going Forward
• Gather Data early
– Assess current costs of plans
– Assess current benefit use
• Question customary HC Plan providers
– don’t just accept any plan you are handed.
– Be prepared to select benefits
• Work with labor to select benefits to be included in the
plan and then negotiate costs with plan providers