The Affordable Care Act: Impact on Business
September 10, 2013
Jesse A Patton LUTCF, HIA, MHP, FAHM, HIPAAA, EHBA, PHIAS
The Patient Protection & Affordable Care Act
• Coverage expansions to
reduce number of uninsured
• Health insurance reform to
improve affordability of
coverage
• Delivery system changes to
contain costs and improve
quality
ACA Passes
• 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.
Confused – Implementation overload!!
DON’T
PANIC
YET!!
We are at the
End of the
beginning—7 to 10
years of rule making
and changes.
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
Rates in New York to Drop 50%
• New York’s insurance market has always been a little different,
and not necessarily in a positive way. The market itself is
highly regulated and, like everything in the big apple,
incredibly expensive.
• New York State has approximately 2.5 million uninsured
people, yet only 17,000 people statewide purchase their own
individual insurance coverage. New York’s individual market
has long been one of the most expensive and regulated in the
country, due to pure community rating and guaranteed issue
of coverage without regard to preexisting conditions.
Indiana Officials Claim ACA To
Increase Insurance Premium
• Logan Harrison, chief deputy commissioner at the Indiana
Department of Insurance, rates or individual coverage are
expected to increase, on average, 72 percent in 2014
• The Indiana Insurance Department forecast that monthly
costs for individuals there will increase “to $570 in 2014 from
$255 in 2012,” although that does “not account for tax
subsidies that will be available to many consumers purchasing
their coverage individually.”
Major Consumer Protections in the
Affordable Care Act
The Affordable Care Act included many provisions designed to help ensure that
consumers have access to effective health care coverage, and to limit their costs.
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•
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Extension of health insurance coverage to children up to age 26
Expansion of the “guaranteed issue” requirement to ensure that health insurance
issuers offer group and individual market policies to any eligible individual in a
state, regardless of health status
Prohibition on charging consumers a higher premium based on health status or
gender
Elimination of annual and lifetime coverage limits
Prohibition on coverage limitations or exclusions based on pre-existing conditions
Prohibition on precluding a qualified individual’s participation in an approved
clinical trial, or discriminating against that individual based on such participation
Introduction of an 80/20 MLR rule to ensure that at least 80 percent of the
premium dollars paid to a health insurance issuer are spent on providing health
care
One-year transition period for employer
information reporting requirements
►The Administration on July 2 announced that compliance with employer information
reporting requirements under IRC §§6055 and 6056 will be mandatory for 2015, rather
than for 2014.
►IRC §6055: Reporting of enrollment in health coverage by insurers and self-insured
employers
►IRC §6056: Reporting of coverage offered by large employers
►The Administration plans to engage with employers, insurers and experts to
streamline the ACA’s information reporting requirements.
►The Administration plans to issue proposed rules on the information reporting
requirements this summer.
Proposed Reporting Simplification
• The proposed rules include a variety of proposals the IRS is considering to
streamline information reporting. There is a 60-day comment period to
allow employers and insurers to provide feedback to the IRS.
Some of the proposed simplifications include:
•
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Allowing employers to report employer-sponsored coverage to employees on the Form W-2
issued at the end of each year rather than on a separate statement.
Not requiring insurers and employers to report the specific dates of coverage, but instead to
report only the month of coverage.
Eliminating the need to determine whether particular employees are full-time if adequate
coverage is offered to all potentially full-time employees.
Allowing employers to report the specific cost of employer-sponsored coverage to an
employee only if the cost is above a specified dollar amount.
Allowing self-insured employers to provide a single statement to employees that meets both
the individual mandate and employer mandate reporting requirements.
Not requiring health insurers to provide reporting for individual coverage offered through the
Marketplace/Exchange because that information will be provided by the Marketplace
Transition period for employer tax
penalties
►As part of the transition period, large employers will
not face tax penalties under the ACA’s employer
mandate (IRC §4980H) for 2014.
►Employer tax penalties will apply beginning January
2015.
►The Administration encouraged employers to
“maintain or expand health coverage” in 2014.
University of California Berkeley
• According to a recent University of California
Berkeley Labor Center study, as many as 2.3
million Americans, mostly hourly workers in
the restaurant, nursing home, retail and
service industries, would see their hours cut
as their employers adapt to the new rules.
S.1188 — Forty Hours Is Full Time Act of 2013
• To amend the Internal Revenue Code of 1986 to
modify the definition of full-time employee for
purposes of the individual mandate in the Patient
Protection and Affordable Care Act.
• Ms. COLLINS (R) Maine Mr. DONNELLY (D) Indiana
introduced the bill in Senate.
• Rep. Daniel Lipinski (D-Ill.), introduced a bill that
would change the definition of “full-time
employment” under the Obama health care law from
30 hours to 40 hours. Forty Hours Is Full Time
Act of 2013, H.R. 2988
Key employer provisions remain in
effect
►The transition period does not apply to:
• ►Individual mandate
• ►Establishment of Exchanges, including availability of premium assistance
tax credits and cost-sharing subsidies
• ►Medicaid expansion
• ►Insurance market rules such as the prohibition on lifetime and annual
limits on essential health benefits, and the coverage of preventive care at
no cost
• ►Prohibition on waiting periods exceeding 90 days
• ►Exchange notices to employees
• ►Transitional reinsurance fee, Health Insurance Tax & PCORI fee
Individual responsibility

Beginning in 2014, individuals can choose to:
 carry health insurance, or
 pay a fee to offset the cost of treating the uninsured
 Qualifying coverage: Medicare, Medicaid, Veterans’ coverage , Tri-care, employer
coverage, private insurance

The fee is the greater of:
 $95 per person in the household or 1% of your income that exceeds
the tax filing threshold in 2014
 $325 per person or 2 percent of income in 2015
 $695 per person or 2.5% of income in 2016 and thereafter
 Maximum per household is the income percentage or 3 times the flat fee
 The flat fee for each child is half the adult amount
Insurance Exchange (Marketplace)
Notices
• The Department of Labor (DOL) has released 3 model notices as a result
of changes under Health Care Reform:
• Exchange Model Notice for Employers Who Offer a Health Plan to Some or
All Employees (must be distributed to current employees no later than
October 1, 2013)
• Exchange Model Notice for Employers Who Do Not Offer a Health Plan
(must be distributed to current employees no later than October 1, 2013)
• Revised Model COBRA Election Notice (provided to eligible employees and
dependents when a qualifying event occurs)
The ACA Medicaid Expansion Fills Current Gaps in
Coverage
Medicaid Eligibility
in 2014
Medicaid Eligibility Today
Limited to Specific Low-Income Groups
Elderly &
Persons with
Disabilities
Extends to Adults
≤138% FPL*
Children
Extends to Adults ≤138% FPL*
Pregnant
Women
Parents
Adults
NOTE: The June 2012 Supreme Court decision in National Federation of Independent Business v. Sebelius maintained
the Medicaid expansion, but limited the Secretary's authority to enforce it, effectively making the expansion optional for
states. 138% FPL = $15,856 for an individual and $26,951 for a family of three in 2013.
How People Get Covered
With Medicaid Expansion
Without Medicaid
Expansion
Up to 100% of poverty
Medicaid
Unsubsidized
100-138% of poverty*
Medicaid
Exchange
138-400% of poverty
Exchange
Exchange
>400% of poverty
Unsubsidized
Unsubsidized
NOTES: Poverty Level is $11,170 for a single person and $23,050 for a family of four
*Medicaid eligibility cut off is 133% FPL, however 5% of income is disregarded, making the threshold 138% FPL
SOURCE: Kaiser Family Foundation
Health Insurance Marketplaces
Beginning in 2014, insurance Marketplaces will allow
consumers to look for the plan that is best for them
 You might think of these as an
Amazon.com for health insurance
 Insurance options available at your
fingertips
States can design their own
Marketplaces or the federal government
will run the marketplace
 In Missouri, Kansas and Nebraska, the federal government will operate the
Marketplace. In Iowa, the Marketplace is operated jointly by state and federal officials
 These will be the same marketplaces where members of Congress will
choose their health insurance plans
Continuum of Exchange Options
State-based Exchange
State operates all exchange activities
State-Federal Partnership Exchange
State operates plan management and/or consumer
assistance activities; may determine Medicaid/CHIP
eligibility
Federally-Facilitated Exchange
HHS operates all exchange activities; state may
determine Medicaid/CHIP eligibility
States Health Insurance Marketplace Decisions, May 10, 2013
VT
WA
ND
MT
NH
MN
OR
WY
CA
AZ
CO
MI
PA
IA
NE
UT*
NY
WI
SD
ID
NV
IL
KS
OK
NM
TX
IN
OH
WV
MO
KY
DC
SC
AR
AL
VA
CT
NJ
DE
MD
NC
TN
MS
AK
ME
GA
LA
FL
HI
State-based Marketplace (16 states and DC)
Partnership Marketplace (7 states)
Federally-facilitated Marketplace (27 states)
* In Utah, the federal government will run the marketplace for individuals while the state will run the small business, or SHOP, marketplace.
MA
RI
Consumer Assistance Options Available for Getting
People Enrolled into Exchange Coverage
• Navigator Program
State-based Exchange:
States assumes all functions
• In-person Assister
Program (optional)
Federally – Facilitated Exchange:
HHS assumes all functions
• Website management
• Education and outreach
State Functions
HHS Functions
•
• Call center operations
•
• Website
• Call center
• Written
correspondence
• Navigator Program
• Written correspondence
with consumers to
support eligibility and
enrollment
Outreach &
Education
In-person
Assister
Program
Federally – Facilitated Exchange:
HHS assumes all functions
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
Automated Eligibility Processes Facilitate
Enrollment into Coverage Through the
Exchange or Public Coverage
Medicaid/CHIP
Health
Coverage
Premium Tax
Credits
Plan
A
Plan
B
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Plan C
John Doe
123 Main Street
12345
Unsubsidized
Exchange Coverage
Single Door to
Health
Coverage
Eligibility for Multiple
Programs Determined in
Real Time
Information Provided
on Available Plans
for Comparison
Enrollment Into
Selected Plan
The ACA Streamlines Enrollment Processes,
Making it Easier to Obtain Coverage
Multiple Ways
to Enroll
2014 Marketplaces
HEALTH
INSURANCE
$
Medicaid
CHIP
Exchange
Data
Hub
Single Application
for Multiple Programs
#
Use of Electronic
Data to Verify Eligibility
Dear ______,
You are
eligible for…
Real-Time Eligibility
Determinations
Marketplace Call Center
Call Center launched in June
TTY/TDD line for hearing-impaired callers:
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Health insurance and how it works
Premium assistance and health care affordability programs
Steps to take now to get ready for open enrollment beginning Oct. 1
General inquiries, such as “I have insurance. How will I be affected?”
After Oct. 1, the call center will help with:
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1-855-889-4325
Helps with wide range of questions, including:
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1-800-318-2596
Filling out the application
Plan selection
Assistance is Available 24/7 in English and Spanish

Help in 150 other languages is available
Finding the right health plan
 Once an account is created, the
website offers:
 A comparison tool to evaluate policies
 A calculator to estimate each plan’s:
 premiums
 co-payments
 deductibles
 maximum out-of-pocket costs
 Filtering options to let the user narrow
the choices based on specific criteria
 The most relevant plans are presented
first, based on the applicant’s answers
 Key data listed with links to plan details
Annual Premium Amount and Tax Credits
for a Family of Four Under the Affordable Care Act, 2014
Annual premium amount paid by policy holder and premium tax credit
Premium tax credit
Required premium payment by policy holder
Full premium = $12,130
Contribution
capped
at 3.3%
of
income
$32,326
$35,137
Contribution
capped at
8.05% of
income
Contribution
capped
at 6.3%
of
income
Contribution
capped
at 4.0%
of
income
$46,850
Contribution
capped
at 9.5%
of
income
$58,562
$70,275
Notes: For an family of four, policy holder age 40, in a medium-cost area in 2014. Premium estimates are based
on an actuarial value of 0.70. Actuarial value is the average percent of medical costs covered by a health plan.
FPL refers to federal poverty level.
Source: Premium estimates are from Kaiser Family Foundation Health Reform Subsidy Calculator,
http://healthreform.kff.org/Subsidycalculator.aspx.
$117,125
Maximum Limits on Health Insurance Exchange
Subsidy Repayments,
by Income Level
Note: Repayment amounts reflect current law. Individuals and families with income greater than 400% FPL are required to repay the
full amount of advance payment received.
Source: Public Law 112-9. April 14, 2011, http://www.gpo.gov/fdsys/pkg/PLAW-112publ9/pdf/PLAW-112publ9.pdf .
Sources of enrollment help
 Navigators
 Navigators are eligible for grants from Marketplace funds
 They must provide community outreach and education programs
 They are agencies or individuals trained to work with the uninsured and the
underinsured and with employers buying health benefits for employees
 Key groups that Navigators will work with include:
 Young people who may never have had health insurance
 The self-employed, many of whom previously could never afford insurance
 Vulnerable populations, including
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Low-income groups
Non-English-speaking populations
People with disabilities
Workers between jobs
 To ensure that their advice is impartial, Navigators cannot accept compensation
directly or indirectly from any health insurer
 Navigators will be listed on the Marketplace website under “Find Local Help”
Sources of enrollment help
 Application Counselors
 Receive the same training as Navigators, must pass the same test
 Counselors are certified by the organization they work or volunteer for
 Most counselors are likely to be staff and volunteers of organizations
with a business interest or a social mission to get people insured
 Organizations designated as Application Counselors will be listed on the
Marketplace website under “Find local help”
 Counselors must show applicants all insurance options available
 To ensure unbiased advice, counselors cannot accept compensation
directly or indirectly from a health insurer
Sources of enrollment help
 Licensed health Insurance agents and brokers
 Paid by insurers
 Must undergo training on:
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website enrollment
Marketplace affordability programs
Medicaid options
security of personal information
 Brokers and agents represent certain insurance companies and
are not required to show applicants all insurance options
The fall campaign
 A tremendous effort is under way by both public and private
organizations to help people enroll
 A few examples:
 $67 million for Navigator organizations across federally run Marketplaces
 $1.33 million in Missouri
 $600,000 each in Kansas, Iowa and Nebraska
 Individual grants will be awarded in mid-August 2013
 $150 million for Community Health Centers to enroll clients
 $2,947,351 awarded in Missouri
 $1,633,928 awarded in Kansas
 $1,474,583 awarded in Iowa
 $678,562 awarded in Nebraska
The fall campaign
 U.S. Agriculture Department work through extension
centers
 Advertising this fall on television, radio and on-line
 Outreach efforts through:
 Medicaid and the Children’s Health Insurance Program
 Social Service organizations and non-profit groups
 Public health agencies, pharmacies, clinics, labor organizations
 Insurance agents and brokers – 300,000 expected to take the
required training
Six Health Insurance Companies will Sell
Plans on Iowa Health Exchange
• CoOportunity Health, Gunderson Health Plan, Avera Health
Plans, Health Alliance Midwest, Sanford Health and Coventry
Health Care of Iowa
• CoOportunity Health and Coventry will provide statewide
individual insurance coverage plans. CoOportunity intends to
offer statewide small group plans as well
• Gunderson and Avera will offer both individual and small
group plans in specific regions and Avera and Sanford will
exclusively sell small group plans
Health Insurance CO-OPs
• Federal government now pledged $3.8 billion in grants and
loans to assist in the establishment of non-profit member-run
health CO-OPs. Originally PPACA established $6 billion. Finally
cut down $1.8 billion in fiscal cliff deal.
• Candidates to create a CO-OP
Accountable Care Organization
Integrated Delivery Systems
Chambers of Commerce
Associations
• Grants assist CO-OPs with State Solvency/Reserves must be
repaid in 15 years. Loans that assist in start-up cost repaid in
5 years
CO-OPs
Unlike many health insurance companies today, a CO-OP:
• Gives its enrollees a say in their health plan. CO-OP members elect the
board of directors, a majority of whom must also be enrolled in the CO-OP
health plan.
• Uses profits to benefit enrollees. CO-OPs are required to use their profits
to lower premiums, improve health benefits, improve the quality of health
care, expand enrollment or otherwise contribute to the stability of
coverage for members.
• Educates enrollees about the plan. Because a CO-OP relies on its
enrollees to help decide the direction of the plan, communication about
key features of the plan will be a high priority.
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
Essential Benefits Defined in 2014
Section 1302(b) defines essential health benefits to include:
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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
Illustrative Plan Designs for Single Coverage
Tier
Actuarial
Value
Deductible
Patient
Coinsurance
Out-of-Pocket
Limit
Bronze 1
60%
$4,375
20%
$6,350
Bronze 2
60%
$3,475
40%
$6,350
Silver 1
70%
$2,050
20%
$6,350
Silver 2
70%
$650
40%
$6,350
NOTES: http://www.kff.org/healthreform/upload/8303.pdf
SOURCE: Kaiser Family Foundation
Minimum Plan Value Calculation
Large Employer Qualified Health Plan (QHP) Test – Does the plan pay for at least 60
percent of the cost of benefits?
IRS has created a “minimum value” (MV) calculator to be used for calculating the
actuarial value (AV) of these plans to confirm qualified health plan (QHP) status
Rather than being based on EHBs, the larger employer plan MV calculator would
consider the costs of four general categories of services:
1.
2.
3.
4.
Physician and mid-level practitioner care;
Hospital and emergency room services;
Pharmacy benefits
Laboratory and imaging services
Employers Eye Bare-Bones Health
Plans Under New Law
• Federal officials say this type of plan, in concept, would appear to qualify
as acceptable minimum coverage under the law, and let most employers
avoid an across-the-workforce $2,000-per-worker penalty for firms that
offer nothing.
• But a close reading of the rules makes it clear that those mandates affect
only plans sponsored by insurers that are sold to small businesses and
individuals, federal officials confirm.
• Some benefits advisers worry that since the idea of the low-benefit plans
is so new, they could yet invite scrutiny from regulators, and may run afoul
of other health law requirements.
A version of this article appeared May 20, 2013, on page A1 in the U.S. edition of The Wall Street Journal, with the headline: Employers Eye
Bare-Bones Health Plans Under New Law.
Large Employer's Plan
The IRS has come up with three sample plan designs that large
employers could use to meet the minimum-value standard:
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A plan with a $3,500 integrated medical and drug deductible, 80 percent plan costsharing, and a $6,000 maximum out-of-pocket limit for employee cost-sharing.
A plan with a $4,500 integrated medical and drug deductible, 70 percent plan costsharing, a $6,400 maximum out-of-pocket limit, and a $500 employer contribution
to a health savings account (HSA).
A plan with a $3,500 medical deductible, $0 drug deductible, 60 percent plan
medical expense cost-sharing, 75 percent plan drug cost-sharing, a $6,400
maximum out-of-pocket limit, and drug co-pays of $10/$20/$50 for the first,
second and third prescription drug tiers, with 75 percent coinsurance for specialty
drugs.
Questions