nd National Health Care Reform – Affordable Care Act – Jerry Rhinehart, CIC, CLU, ChFC, RHU Panama City, FL Rev 10-07-2013
2 Please note: DISCLAIMER
6 3 NHR - 100 Years in the Making
7 Patient Protection and Affordability Care Act Signed in to law March 23, 2010 HealthCare.gov
8 Other very useful websites as they relate to NHCR: NAHU.org (National Assoc of Health Underwriters) KFF.org (Henry J. Kaiser Family Foundation) aetna.com/health-reform-connection/ index.html UPC.com (United Health Insurance – Reform Resource Center)
9 93 TOTAL provisions will be enacted over the 10 year time span that will impact: every US citizen, health insurance coverage, health insurance companies, pharmaceutical companies, employers, Medicare, Medicaid, taxes (21 major), substantial regulations for hospital & physicians, … and even required posting of nutritional content at your favorite fast food restaurant.
9 Health Insurance Premiums and Cost-Sharing Subsidies (2014) • Provides refundable and advanceable tax credits and cost sharing subsidies to eligible individuals. Premium subsidies are available to families with incomes between 133-400% of the federal poverty level (FPL) to purchase insurance through the Exchanges, while cost sharing subsidies are available to those with incomes up to 250% of the poverty level.
Understanding Health Insurance Subsidies (2014) Required to show proof of a QHP- but no financial assistance of any form 400% FPL _ _400% FPL Required to show proof of a QHP- and eligible for advanced premium tax credits 250% FPL _ _250% FPL Per ACA rules… to qualify for Medicaid medical coverage there is only ONE test a person must meet – INCOME (but NOT assets) – (page 31) Required to show proof of a QHP- and eligible for advanced premium tax credits and cost-sharing reductions 133% FPL _ _133% FPL Eligible for Medicaid – little or no cost 100% FPL _ _100% FPL 2013: CMS
11 Introduction to Key ACA Terms MLR (Medical Loss Ratio – 80% Small Group and Individual – 85% Large Group) (eff 01-01-2011) Example of NAIC Calculation Model for MLR Refunds: $400 x 12 = $4,800 x 80% - 77% = 3% = $144 The difference between the required MLR and the insurer’s MLR Total Premium received by the insurer from the enrollee (minus applicable taxes & fees) X = Rebate Note: Insurers began making the1st round of rebates to affected consumers on August 01, 2012
11 Introduction to Key ACA Terms MLR (Medical Loss Ratio – 80% Small Group and Individual – 85% Large Group) (eff 01-01-2011) NOTE: The MLR requirement does NOT apply to ERISA plans - fully or partially self-funded. (See page 12) Also, note on page 12 the components of the MLR calculation
11 Introduction to Key ACA Terms MLR (Medical Loss Ratio – 80% Small Group and Individual – 85% Large Group) (eff 01-01-2011) FPL (Federal Poverty Level – 133% - 400%) (eff 01- 01-2014) (NOTE: Box #1 on the Employees W-2)
12 Introduction to Key ACA Terms Federal Poverty Level (FPL) – National Incomes (Gross) except for Hawaii and Alaska – 2012-2013 Source: http://www.familiesusa.org/resources/tools-for-advocates/guides/ federal-poverty-guidelines.html NOTE: Median Household Income for US in 2011 - $50,054 U.S. Census Bureau – http://www.census.gov/prod/2011pubs/p60-239.pdf
11 Introduction to Key PPACA Terms MLR (Medical Loss Ratio – 80% Small Group and Individual – 85% Large Group) (eff 01-01-2011) FPL (Federal Poverty Level – 133% - 400%) (eff 01- 01-2014) (NOTE: Box #1 on the Employees W-2) FTE (Full Time Employee – 30 hours per week) (eff 01-01-2014) NOTE: Definition applies to ACA ONLY Health Insurance Exchange (eff 01-01-2014) “Marketplace” as of 01-23-13 Exchange Navigators (eff 01-01-2014)
12 Recent ACA Legislative Changes W-2 Reporting (Fall 2010) – DELAYED - Now voluntary for 2011. Implementation begins in 2012 for ALL ‘ERs that provide health insurance who issued 250+ W-2s in 2011.
12 Recent ACA Legislative Changes W-2 Reporting (Fall 2010) – DELAYED – Now voluntary for 2011. Implementation begins in 2012 for ALL ‘ERs that provide health insurance who issued 250+ W-2s in 2011. 1099 Reporting ($600) – REPEALED – Spring 2011 CLASS (LTC Option) – Tabled Late-Summer 2011 – “killed” by the “fiscal cliff” negotiation - 01/2013 Employer Penalty (50 or more FTEs) –DELAYED (07/02/13) – Now to be implemented 01-01-2015 Per ACA published rules, individuals applying for a ‘subsidy’ would have to should proof of income. Now: “no proof required – we take your word”. (07/05/13)
13 Health Reform Implementation Timeline 2010 Insurance reforms
13 Key Provisions of Insurance Reforms (2010) Provide dependent coverage up to age 26 (eff 09-23-10) -Includes adult children that no longer attending college, those not living with their parents, and those adult children who are married (even with their own children). *This provision does not extend to the spouse or any children of the adult child being covered. -Applies to plans that already offer dependent coverage. If coverage exist, the ‘ER must inform ‘EEs that their children, who may have aged out of the plan, will again be eligible starting January 1, 2011.
13 Key Provisions of Insurance Reforms (2010) Prohibit individual and group plans from placing limits on coverage (eff 09-23-10)
Key Provisions of Insurance Reforms (2010) Policy Limits (Annual and / Lifetime) -Lifetime limits prohibited on health coverage (2010) -Annual limits prohibited (2014) (“Mini-Med” issue) Effective 2014 No Plan Can Have any Annual Policy Limit cap and Phased in as Follows: 2011 - $750,000 2012 - $1.25 million 2013 - $2 million
Key Provisions of Insurance Reforms (2010) Policy Limits (Annual and / Lifetime) -Lifetime limits prohibited on health coverage (2010) -Annual limits prohibited (2014) (“Mini-Med” issue) By August 30, 2011 there had been 1,497 “waivers” granted by HHS. “Waivers” are granted for 1 year. Any new “waivers” ended as of 09-22-11. Currently there @ 3 million EEs covered under “waived plans” – 1.5 million are in various unions.
13 Key Provisions of Insurance Reforms (2010) Pre-existing conditions - Creates a temporary program to provide health coverage to individuals with, 1) pre-existing medical conditions, and, 2) who have been uninsured for at least six months. - Children under age 19 cannot be denied insurance coverage due to a pre-existing condition. Tax credit to small employer (25 and under) that provide health insurance - with wage restrictions. MLR (80% - 85%) Required “wellness” benefits for most plans Note: This program / provision ran out of funding 03-01-13. No new applicants are being accepted.
13 Health Reform Implementation Timeline 2010 Insurance reforms Medicare (Part D - $250 rebate) Tax changes (Indoor Tanning Salons / Health Insurance Executive compensation)
14 Health Reform Implementation Timeline 2011 Long-term care (CLASS) Prevention / Wellness (Included for most plans – Individual, Group plan AND Medicare) Tax Changes
14 Key Provisions of Tax Changes (2011) New or revised taxes to help pay for NHCR -Excludes OTC drugs (not prescribed) from reimbursement or coverage under a CDHP (HSA, FSA, etc.). Insulin is not included in this provision. -Increase tax / penalty from 10% to 20% on non-qualified distributions from CDHP -New annual fees on the pharmaceutical manufacturing sector
14 Health Reform Implementation Timeline 2012 Medicare - Reduce rebate by Feds to cover Medicare Part - C (Advantage Plans) Released 04/02/2013 - The CMS announced a reversal of the funding for Advantage Plans. The ACA had a provision that would have cut funding by 2.3% - but a big push by most Republicans and many Democrats in the U.S. Congress has now resulted in an increase of funding for 2014 by 3.3%.
14 Health Reform Implementation Timeline 2012 NEW – 08/01/2012 (8 new preventive health benefits to women at no cost). They include: - contraceptives, breast-feeding supplies, screenings for gestational diabetes and sexually transmitted infections and domestic violence, as well as routine check-ups for breast and pelvic exams, Pap tests, and prenatal care.
14 Health Reform Implementation Timeline 2012 Summary of Benefit (Standardized language – eff 09-23-12) (see additional comments on page 26) See: www.healthcare.gov Search: Summary of Benefits and Coverage
15 Health Reform Implementation Timeline 2013 Insurance Reforms (CO-OP; enhanced use of e-filing) CO-OPs were also affected by the “fiscal cliff” negotiation in early January of 2013
Health Reform Implementation Timeline 2013 Insurance Reforms (CO-OP; enhanced use of e-filing) Employer Notice Requirements –(03-01-13) Requires employers to provide written notice informing employees about the Exchange and potential eligibility for premium credits. (Released 06/2013 – one for coverage / one for no coverage) This info is NOT in your outline: Very important … please make a note at the bottom of page 14.
15 Health Reform Implementation Timeline 2013 Insurance Reforms (CO-OP; enhanced use of e-filing) Employer Notice Requirements –(03-01-13) Requires employers to provide written notice informing employees about the Exchange and potential eligibility for premium credits. (Released 06/2013 – one for coverage / one for no coverage) Medicare (Phase-in federal subsidies for brand named prescriptions – Part D) Tax Change
15 Key Provisions of Tax Changes (2013) New or revised taxes to help pay for NHCR -Increase threshold for the itemized deduction for un-reimbursed medical expenses from 7½% to 10% of AGI -Increase the Medicare Part A tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over $200K (individual) and $250K (married/ filing jointly). 3.8% assessment on unearned income (high income tax payers) -Max ‘EE contribution to FSA for medical - $2,500 per year -Excise tax (2.3%) on medical devices (hip replacement, x- ray machine, etc. – numerous exceptions exists) -Eliminated ‘ER deduction for retiree Medicare Part D
15 Health Reform Implementation Timeline 2014 Individual and Employer Requirements
15 Individual and Employer Requirements (2014) Require U.S. citizens and legal immigrants to have qualified health coverage -For Individuals: Phased-in tax penalty -For Large Employers: Possible penalties to “Large ‘ER” (50 or more FTEs – 30 hrs) -Complex rules and variables exist This was the “individual mandate” litigation ruled upon by the SCOTUS in June of 2012
16 Individual Non-Compliance - ACA (2014) • Those who fall under the “requirement” but fail to carry at least the “Bronze” plans will be subject to a penalty: (the greater of…) • $95 per year in 2014, $325 in 2015, $695 in 2016 (half that amount for children under age 18), up to maximum of three times those penalty amounts per family, OR, • 1% of income above the tax filing threshold in 2014, 2% in 2015, and 2½% in 2016
16 Individual Non-Compliance - ACA (2014) What are the Potential Financial Penalties to Individuals who do NOT carry insurance? - Family of Four (includes 2 children under age 18) $100K Taxable -
Individual Non-Compliance - ACA (2014) The penalty is pro-rated for the number of months without coverage. However, the rules state there is no penalty for a single gap of less than 3 months for the entire calendar year. EXAMPLE: The family in the prior slide had no coverage for 4 months (1/3 of the calendar year). The penalty in 2014 would be the greater of $86 ($285 ÷ .333), or $333 ($1,000 ÷ .333) for the entire year.
Individual and Employer Requirements (2014) So… individuals (and their tax-dependents) will have to prove they have purchased a QHP in 2014? How does it appear this will happen? When you file your taxes you will have to attach documentation from your health insurance carrier, employer, or Exchange / Marketplace If you are a W-2 employee and your employer does provides a QHP they will have to provide that information on your W-2 (or similar documentation)