2014 Update of Affordable Care Act
Provisions
South Dakota Association of School Business Officials
Annual Fall Conference
September 25, 2013
Lisa Carlson
Director of Planning & Regulation
Our discussion today…
2014 Implementation Overview
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Individual mandate to have health insurance
Six Major Changes to Small Group and Individual Insurance
The Public Marketplace (insurance Exchange) and how it will work
Large Employer “Play or Pay” Mandate (Postponed until 2015)
Who’s eligible for subsidies on the exchange?
Notice to Employees of Insurance Exchange Options due Oct. 1
The Individual Mandate Starts in 2014
Penalty for Failing to have Insurance
If you don’t have insurance in 2014, you will pay a tax
penalty (that increases over time)
• 2014 - greater of $95 per adult or 1% of taxable income
• 2015 - greater of $325 per adult or 2% of taxable income
• 2016 - greater of $695 per adult or 2.5% of taxable
income
• After 2016, the tax penalty increases annually based on a
cost-of-living adjustment
Penalty for Failing to have Insurance
• Penalty is pro-rated - a person will only pay one-twelfth
of the total annual penalty for each month without
coverage
• The penalty for a child is half that of an adult
• A maximum penalty would be calculated based on
premiums for plans offered through the Exchange
Penalty for Failing to have Insurance
There are a few exceptions to the penalty, including:
• Religious reasons
• Not present in the United States
• In prison
• Not able to pay for coverage that is more than eight
percent of the household income
• An income that is below 100% of the poverty Level
• Having a hardship waiver
• Not covered for less than three months during the year
Individual Marketplace
Yes, you’ll be forced to have health insurance, but the
government will help you pay for it and make it
accessible either through…
• The federal insurance exchange, The Marketplace; or
• By making large employers offer coverage to all full-time
employees, i.e. pay or play mandate – NOTE: this has been
delayed until 2015
Individual Marketplace
Who can purchase insurance on the exchange?
• Individuals who do not have access (i.e. part time EEs) to “minimum
essential coverage” or “affordable coverage” through their
employer (large or small)
Who would want to purchase insurance on the exchange?
• Individuals who are eligible for financial assistance:
1. Advance premium tax credits and/or
2. Cost sharing reductions to out-of-pocket maximums/
• Individuals eligible for Medicaid will also be identified
through the Marketplace
Individual Marketplace
What does “affordable access” to insurance mean?
• Are you eligible for group-sponsored insurance where
your cost for self-only coverage under the lowest cost
option plan does not exceed 9.5% of the employee’s
income as reported on their W-2, Box 1 or rate of pay?
• If yes, then neither you nor your family are eligible for
subsidies in the Marketplace, regardless of how much
you have to pay for family coverage (which may be more
than 9.5% of your salary)
• Assumes the employer offers coverage to spouses and children
(permissible for small groups)
• Even if employer contributes 0% to a family policy,
the spouse & dependents would not qualify for
subsidies in the Marketplace
South Dakota’s Federally Run Exchange
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92,441 (13%) of South Dakota residents are uninsured and eligible
(HHS.gov) for insurance coverage through the Marketplace
3 companies licensed to sell in South Dakota’s Marketplace
Individual Market
• Sanford Health Plan
• Avera Health Plans
• DakotaCare
Small Group Market
• Sanford Health Plan
• Avera Health Plans
• DakotaCare
Six Major Changes to Health Insurance
South Dakota’s Federally Run Exchange
www.healthcare.gov
The Public Marketplace
An Online Buying Experience!
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Think “Expedia.com” or “Zappos.com”
Facilitate the purchase of Qualified Health Plans (QHPs)
Offer similar Plan and Carrier options side by side for enrolling
Two Types: Individual and SHOP (small business)
• In 2017, states may permit employers in the large group (100+) market
to buy group insurance inside the Exchange
Operate toll-free hotline to provide consumer assistance
Identify those eligible for financial assistance
• Premium Tax Credit
• MOOP cost-sharing reductions
• CHIP
• Medicaid
No “wrong door” when purchasing through Marketplace
The Public Marketplace
What does covering pre-existing conditions mean?
• Everyone will have guaranteed access to health insurance,
including coverage for pre-existing medical conditions for
those who purchase coverage on their own
• Consumers will be able to purchase health insurance in open
enrollment periods even after they become ill or injured
• No one will be denied health insurance or charged more
because of a medical condition
The Public Marketplace
What does broader benefits mean?
• Requiring “Essential Health Benefits”
• The ACA expands the list of required benefits, many of which
are not included in the coverage many people currently choose
to purchase today
• As a result, millions of Americans will have coverage that is
more comprehensive and hence more valuable than they have
today
Standardized Metal Plans
Plan Pays:
Bronze = 60% coverage of benefits
Silver = 70% coverage of benefits
Gold = 80% coverage of benefits
Platinum = 90% coverage of benefits
Member Pays:
Bronze = 40% coverage of benefits
Silver = 30% coverage of benefits
Gold = 20% coverage of benefits
Platinum = 10% coverage of benefits
Essential Health Benefits
10 Minimum Standards covered as part of the required “Benefit Design”:
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Ambulatory patient services
Emergency services
Hospitalization
Maternity & newborn care
Mental health and substance use disorder services, including behavioral health
treatment
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory services
Preventive and wellness services and chronic disease management
Pediatric dental and vision care (up to age 19)
Limiting Premium Differences
• Effective 1/1/2014 for non-grandfathered small group and individual plans
• Can no longer differentiate rates by gender (male vs. female)
• In individual market, insurers can no longer underwrite based on health
status (known as guarantee issue)
• Premiums may only vary by:
- Age (3:1 maximum) – we’re now at 5:1 in South Dakota
- NAIC defined permissible age bands
- Tobacco (1:5:1 maximum) – we’re at 1:15:1 now
- Geographic rating are determined in each state for all carriers – each
carrier currently does their rating regions based on provider contracts
- Two coverage tiers (individual or family) using per member rating or
community rating
• Rates for these plans sold inside the exchange or outside the exchange must
be the same, whether sold direct or through an agent
South Dakota’s Federally Run Exchange
Limiting Maximum Out-Of-Pocket…
Maximum Out-Of-Pocket (MOOP) – For 2014, the annual cost-sharing limits
cannot exceed $6,350 for an individual and $12,700 for families. This includes
deductible, coinsurance, medical and pharmacy copay amounts.
MOOP Tips:
- Applies to non-grandfathered individual, small group and large group markets
beginning in 2014
- Out-of-network services do not count towards deductible caps or MOOP
- All cost sharing does apply towards MOOP, including medical and pharmacy
copays
- Medical and pharmacy copay amounts apply towards MOOP, but they do not
apply towards the deductible caps
Financial Assistance Available through
Marketplace
Providing Financial Assistance
• New expanded benefits and limits on cost-sharing will increase
premiums for some, and decrease premiums for some as well
• But the ACA provider financial assistance for qualifying
applicants through the health insurance exchanges
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Individuals can get premium tax credit and/or cost sharing reductions
Small employers may be eligible for small group tax credit
Financial Assistance Calculation
www.healthcare.gov
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Based on 2014 Federal Poverty Levels (FPL)
This table shows the maximum percent of income you should have to pay for
healthcare premiums according to the ACA
When applying for coverage through the Marketplace, the tool will calculate
your options for you
Cost-Sharing Reductions
Cost-sharing Subsidies are when the government helps pay the costs of
deductibles, coinsurance & copayments (does NOT include premiums, out-ofnetwork provider costs)
Which Exchange Plans qualify for reductions?
• Only individual and family Silver plans qualify for cost-sharing subsidies.
Who qualifies for Cost-Sharing Reductions?
• Individuals making less than 250% of the federal poverty line (FPL)
How do the Cost-Sharing Subsidies breakdown?
• The Silver plan is set up so that 70% of medical costs are covered
• With cost-sharing subsidies the government will pay of out-of-pocket
health services based on a sliding scale
Cost-Sharing Reductions
• If your income is 100-150% of the FPL, the actual coverage of a Silver plan is
94%
• If your income is 150-200% of the FPL, the actual coverage of a Silver plan is
87%
• If your income is 200-250% of the FPL, the actual coverage of a Silver plan is
73%
Premium Tax Credits
The Marketplace
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Initial Open Enrollment Period for Individuals
• October 1, 2013 – March 31, 2014
• Outside the open enrollment period only qualified events will allow an
individual to make changes to their plan
Small employer groups can continue to have year-round open enrollment
periods
Individuals and Small employers can continue to shop outside of the
Marketplace. But why would you do that?
• Your small business is not eligible for the tax credit
• Individuals not eligible for financial assistance
• Benefits are the same inside and outside the Marketplace
• Premiums are the same inside and outside the Marketplace
The Public Marketplace
How will people know the Insurance Exchange exists?
• Public awareness campaigns
• Employers will be required to send a Model Notice to Employees of Coverage
Options to their employees by Oct. 1, 2013
• Employers that are subject to the Fair Labor Standards Act (FLSA),
regardless of size, funding type or if they offer health coverage today or
not, must provide a notice of coverage options to each employee.
• Employees must receive the notice whether or not they are enrolled in a
health plan today or if they are part-time or full-time.
• Employers are not required to provide a separate notice to dependents or
other individuals who are or may become eligible for coverage under the
plan but who are not employees.
The Public Marketplace
An Online Buying Experience!
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Initial Open Enrollment Period for Individuals
• October 1, 2013 – March 31, 2014
• Outside the open enrollment period only qualified events will allow an
individual to make changes to their plan
Small employer groups can continue to have year-round open enrollment
periods
Sanford Health Plan is committed to providing information to help
you understand the many layers of Health Care Reform and how it
may impact your business. We appreciate your time today and
please contact our team at any time or visit the Health Care Reform
section of our website at sanfordhealthplan.com
Questions? Thank you…