Employers’ Council of Iowa Meeting
Wednesday, April 24, 2013
PPACA Update
Jesse A Patton LUTCF, HIA, MHP, FAHM, HIPAAA, EHBA, PHIAS
Health Reform Implementation…
This is not the end. It is not
even the beginning of the
end. But it is, perhaps, the
end of the beginning.
Winston Churchill, November 10, 1942
at the Lord Mayor's Luncheon at Mansion House in
London
Confused – Implementation overload!!
DON’T
PANIC
YET!!
We are at the
End of the
beginning—7 to 10
years of rule making
and changes.
Current Status
• On March 21, the House
passed HR 3590, the bill
passed by the Senate on
December 24, 2009, with a
219-213 vote. Signed into
law on March 23.
• The House and Senate
have also passed a
reconciliation bill, HR
4872, with a packages of
“fixes” to the Senate bill
• President Obama signed
the reconciliation bill.
“We have to pass the bill so
that you can find out what is
in it” …. Speaker Nancy
Pelosi
Implementation
Be forewarned, NAIC, CMS, DOL , Dept.
Treasury and DHHS will need to issue continued
guidance many issues which will impact our
understanding of these measures. There are
some questions you have today that cannot be
answered.
PPACA Cost more than Anticipated
• Estimates released by the Congressional
Budget Office: 10 year cost
March of 2010, just before the law was enacted,
cost $950 billion
August 2012, CBO estimated PPACA would be
$1.165 trillion
February 5, 2013, CBO estimated new 10 year
cost $1.329 trillion
Current Status of Regulations
• We now have 20,000
pages of Regulations
issued by Government
• Stands 7’3” tall
• Weighs 300 lbs.
Overall Approach & Objective
• Require most U.S. citizens to have health insurance
• Create American Health Benefit Exchanges with cost sharing
credits
• Expand Medicaid
• Impose new regulations on Health Plans
• Require Employers to pay penalties if employees get tax
credits
Average Annual Premiums for Single and Family Coverage,
1999-2012
$15,745*
* Estimate is statistically different from estimate for the previous year shown (p<.05).
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012.
Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to
Premiums, Inflation, and Workers’ Earnings, 1999-2012
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012. Bureau of Labor Statistics,
Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2012; Bureau of Labor Statistics,
Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2012 (April to April).
Essential Benefits Defined in 2014
Section 1302(b) defines essential health benefits to include:
•
•
•
•
•
•
•
•
•
•
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and Substance use disorder services
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory Services
Preventive and wellness services and chronic disease management
Pediatric services, including oral and vision care
CBO Analysis of PPACA Premium
Costs
• Moreover, the CBO makes clear that average premiums
would be 27 to 30 percent higher because the law
demands greater insurance coverage. The CBO
emphasized that those provisions, along with others, “
would have a much greater effect on premiums in the
non-group [individual] market than in the small group
market, and they would have no measurable effect on
premiums in the large group market.”
2014 Unaffordable For Smokers
• Health insurers are allowed to charge smokers
who purchase an individual policy up to 50%
higher premiums.
• "60-year-old smoker could wind up paying
nearly $5,100 on top of normal premiums.
• Government tax credits that will be available
to help pay premiums cannot be used to
offset the cost of penalties for smokers
2014 – Product Framing
Plus catastrophic plan offering for individuals
younger than 30/financial hardship
The benefit requirements listed above for exchange plans will
also apply to Individual and small group fully insured plans sold
outside of the exchanges
ACA Provisions for Insurance
Exchanges, 2014
• Each state must establish an American Health Benefit
Exchange and a Small Business Health Options Program
(SHOP) Exchange by 2014 for individuals and small employers;
states can create single exchange; regional exchanges
• If HHS determines in 2013 that a state will not have an
exchange operational by 2014, HHS is required to establish
and operate an exchange in the state
• Individual and small-group markets are not replaced by
exchanges, but same market rules apply inside and outside
• Non-grandfathered plans to provide essential benefit package
inside/outside
Marketplaces
Small Businesses
Up to 100 employees,
can buy thru Marketplace 2016
2014-2015 2-50 Employees
A web portal
“marketplace”
for health
insurance
Individuals
(no subsidies for ones offered
employer-based coverage, unless
that coverage is “unaffordable”)
Self-insured plans
not eligible to
Participate
Federal Government
• sets criteria for plan participation
and purchaser eligibility
• provides subsidies for small businesses
and individuals
• sets up Marketplace if a state fails to
©2010 Steptoe & Johnson LLP
States
• each sets up own Marketplace
• will be involved in premium
reasonableness reviews; can
approve/reject as provided
under state law
Flexible Exchange Options for States
Premium Tax Credits and Cost-Sharing Protections
Under the Affordable Care Act
Federal
poverty level
Income
Premium contribution
Out-ofActuarial value:
as a share of income pocket limits
Silver plan
<133%
S: <$14,484
F: <$29,726
2% (or Medicaid)
133%–149%
S: $14,484 – <$16,335
F: $29,726 – <$33,525
3.0%–4.0%
150%–199%
S: $16,335 – <$21,780
F: $33,525 – <$44,700
4.0%–6.3%
200%–249%
S: $21,780 – <$27,225
F: $44,700 – <$55,875
6.3%–8.05%
250%–299%
S: $27,225 – <$32,670
F: $55,875 – <$67,050
8.05%–9.5%
300%–399%
S: $32,670 – <$43,560
F: $67,050 – <$89,400
9.5%
S: $3,967
F: $7,933
70%
400%+
S: $43,560+
F: $89,400+
—
S: $5,950
F: $11,900
—
Four levels of cost-sharing: 1st tier (Bronze) actuarial value: 60%
2nd tier (Silver) actuarial value: 70%
3rd tier (Gold) actuarial value: 80%
4th tier (Platinum) actuarial value: 90%
94%
S: $1,983
F: $3,967
94%
87%
S: $2,975
F: $5,950
73%
70%
Catastrophic policy with essential benefits
package available to young adults and people
who cannot find plan premium <8% of income
Notes: FPL refers to federal poverty level; levels are for 2011. Actuarial values are the average percent of medical
costs covered by a health plan. Premium and cost-sharing credits are for the Silver plan.
Source: Commonwealth Fund Health Reform Resource Center: What’s in the Affordable Care Act? (PL 111-148 and
111-152), http://www.commonwealthfund.org/Health-Reform/Health-Reform-Resource.aspx.
2012 Annual Federal
Poverty Guidelines
# Family
100%
133%
150%
200%
300%
400%
1
$11,170
$14,856
$16,755
$22,340
$33,510.
$44,680
2
$15,130
$20,123
$22,695
$30,260
$45,390
$60,520
3
$19,090
$25,390
$28,635
$38,180
$57,270
$76,360
4
$23,050
$30,657
$34,575
$46,100
$69,150
$92,200
5
$27,010
$35,923
$40,515
$54,020
$81,030
$108,040
6
$30,970
$41,190
$46,455
$61,940
$92,910
$123,880
7
$34,930
$46,457
$52,395
$69,860
$104,790
$139,720
8
$38,890
$51,724
$58,335
$77,780
$116,670
$155,560
Single Person Income and
Premium 2012 FPL
Min Income
Annual
Max Income
Annual
Min Premium
Monthly
Max Premium
Monthly
$11,170.00
$14,856.10
$0
$24.76
$14,856.10
$16,755.00
$37.14
$55.82
$16,755.00
$22,340.00
$55.85
$117.29
$22,340.00
$27,925.00
$117.29
$187.33
$27,925.00
$33,510.00
$187.33
$265.29
$33,150.00
$44,680.00
$265.29
$353.72
Family of Four Income
and Premiums 2012 FPL
Min Income
Annual
Max Income
Annual
Min Premium
Monthly
Max Premium
Monthly
$23,050.00
$30,656.50
$0
$51.09
$30,656.50
$34,575.00
$76.64
$115.25
$34,575.00
$46,100.00
$115.25
$242.03
$46,100.00
$57,625.00
$242.03
$386.57
$57,625.00
$69,150.00
$386.57
$547.44
$69,150.00
$92,200.00
$547.44
$729.92
Appendix A: List of Questions in the
Online Application to Support Eligibility
Determinations for Enrollment through
the Health Insurance Marketplace and
for Medicaid and the Children’s Health
Insurance Program
Employer Responsibilities
Transitional Relief for Non-1/1 Effective
Date Plans
The transition relief includes the following components:
•
•
If employees who are eligible for employer-sponsored coverage under the terms
of the plan in effect on Dec. 27, 2012, are offered affordable, minimum value
coverage that starts no later than the first day of the 2014 plan year, the employer
will not be assessed a shared responsibility penalty for any of those employees
before the 2014 plan year begins.
If an employer has at least one quarter of its employees covered under a fiscal
year plan (or if the employer offered coverage under the plan to at least one third
of its employees during the most recent open enrollment period, before Dec. 27,
2012), the employer will not be subject to shared responsibility payments for any
of its full-time employees until the first day of the 2014 plan year, provided that
those employees are offered affordable, minimum value coverage no later than
the first day of that plan year.
Although these regulations are proposed and not final, employers can rely on
them until final guidance is issued.
Who is a Large Employer under ACA
• Any employer with 50+ full-time equivalents
• IRC 4980H applies to all common law
employers including governmental entities,
churches, tax-exempt organizations with at
least 50 full-time equivalent employees.
• Foreign companies with at least 50 full-time
equivalent performing working in the US with
US-source compensation
Transition Relief for Smaller Employer
• Employers can determine whether they are
large employers based on a period of six
consecutive calendar months as chosen by the
employer in the 2013 calendar year, rather
than based on the entire 2013 calendar year.
The January 1, 2014, compliance deadline is
not delayed for smaller employers determined
to be large employers based on the six-month
calculation.
Penalty in 2014
Summary of Potential Employer Penalties under PPACA, Congressional Research Service
May 14, 2010
Does Group Coverage Meet the
Affordability Test?
Federal Poverty Limit FPL
2011 FPL
Hourly
Rate (40 hr
week)
100% (Possibly Medicaid
Eligible)
$10,890
$5.24/hr
9.5%
$86/mo
133%(Possibly Medicaid
Eligible)
$14.484
$6.96/hr
9.5%
$114/mo
150% (Minimum Wage)
$16,335
$7.85/hr
9.5%
$130/mo
200%
$21,780
$10.47/hr
9.5%
$172/mo
250%
$27,225
$13.09/hr
9.5%
$216/mo
300%
$32,670
$15.71/hr
9.5%
$259/mo
350%
$38,115
$18.32/hr
9.5%
$302/mo
400%
$43,560
$20.94/hr
9.5%
$345/mo
9.5%
$345/mo since employer only has to use
the single rate for lowest tier plan to
calculate affordability
400% family of 4
$89,400
$20.94/hr
W2
Wage
Employee Share of Single Premiums per
Mo @ 9.5% income Standard
Questions