Presentation on theme: "Obamacare: Impact on Individual/Group Markets Independent Insurance Agents of Nebraska Lincoln, Nebraska October 16, 2013 Jesse A Patton LUTCF, HIA, MHP,"— Presentation transcript:
Obamacare: Impact on Individual/Group Markets Independent Insurance Agents of Nebraska Lincoln, Nebraska October 16, 2013 Jesse A Patton LUTCF, HIA, MHP, FAHM, HIPAAA, EHBA, PHIAS
Avik S. A. Roy 2 U.S. System is Mix of Private & Single Payer The U.S., in reality has not one, but six distinct health-care systems: Private, tax-subsidized, employer-sponsored insurance (158MM Americans in 2013, 162MM in 2023, CBO projects) Private, unsubsidized, individually-purchased health insurance and other (17MM in 2013, 14MM in 2023) Medicare, a government-run single-payer system for the elderly (50MM in 2013, 66MM in 2023) Medicaid and CHIP, government-run single-payer systems for poor Americans (36MM in 2013, 47MM in 2023) ACA exchanges, government-subsidized private insurance for lower- and middle-income Americans (0 in 2013, 24MM in 2023) Uninsured/self-pay, eligible for government-mandated emergency care (55MM in 2013, 31MM in 2023)
Avik S. A. Roy 3 Who Gets Subsidized Health Care? You The vast majority of Americans receive federally subsidized health insurance –Medicare (everyone over 65, certain disabled people) $600 billion a year –Medicaid (pre-ACA, certain poor people) $450 billion a year –ACA (everyone below 400% of the federal poverty level) $200 billion a year (when fully implemented) –People with insurance through their employers $300 billion a year
Avik S. A. Roy 4 The Myth of ‘Free-Market’ U.S. Health Care Source: OECD, WHO In 2010, U.S. government (federal, state, local) spent more per person on health care than all but three other countries in the world Post-ACA, U.S will likely become #1
Current System: Uneducated patients No understanding of cost No understanding of quality No understanding of alternatives No guidance
Coverage expansions to reduce number of uninsured Health insurance reform to improve affordability of coverage Delivery system changes to contain costs and improve quality The Patient Protection & Affordable Care Act
Current Status On March 21, the House passed HR 3590, the bill passed by the Senate on December 24, 2009, with a 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.
Current Status of Regulations We now have 25,000 pages of Regulations issued by Government Stands 8’0” tall Weighs over 300 lbs.
PPACA Cost more than Anticipated Estimates released by the Congressional Budget Office: 10 year cost Estimates 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.”
Grandfathered Plans Essentially all plans in effect on date of PPACA enactment (March 23, 2010) are “grandfathered” Very few changes are permitted if a plan wants to retain grandfathered status – Plans must provide a statement to participant that it believes it is a “grandfathered” plan Plans that made changes between March 23 and June 14 had an opportunity to reverse any significant changes made without losing grandfathering status. – This must have been done by the plan year following September 23, 2010
The “Why” of Grandfathered Plans PPACA requirements that are waived if a plan remains “grandfathered – The requirement that emergency services must be provided without pre- authorization and treated as in-network – The rating limits, guaranteed issue, guaranteed renewability, and essential benefits packages that begin in 2014 – The cost-sharing and deductible limits, non-discrimination for clinical trial participants, non-discrimination on providers acting within scope of license – No cost sharing for preventive care – The requirement that pediatricians must be an allowable primary care physician choice – The requirement that females can go to an OB/GYN without a referral – The requirement that plans must provide an internal and external appeals process
What Grandfathered Plans Can’t Do Can’t increase Co-insurance rate Can’t increase Co-pay more than the greater of $5 (adjusted annually for medical inflation) or medical inflation plus 15% Can’t reduce employer contribution more than 5% Can’t increase deductible more than 15% plus medical inflation
What Grandfathered Plans Can Do Add family members or new employees Disenroll employees Make changes as a result of state or federal regulations Make changes to voluntarily adopt some or all of the law’s requirements Change third party administrator if you are self- funded Amended to allow Reinsurance change Increase premiums
Young Adult Coverage Under the Affordable Care Act, health plans that cover children must make coverage available to children up to age 26. Young adults can join or remain on a parent’s plan even if they are: Married (coverage does not extend to married child’s spouse) Not living with a parent Not attending school Not financially dependent on a parent Eligible to enroll in their employer’s plan (starting in 2014 Grandfathered Plans must add)
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 ► 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: 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 ► Employer tax penalties will apply beginning January ► 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
AFL-CIO Increasing Pressure On Administration The union “approved a strongly worded resolution” that says the ACA “will drive up the costs of union-sponsored health plans to the point that workers and employers are forced to abandon them.” LIUNA general president Terry O’Sullivan saying, “If the Affordable Care Act is not fixed and it destroys the health and welfare funds that we have all fought for and stand for, then I believe it needs to be repealed. We can’t have the unintended consequences for the proud men and women that we represent to be collateral damage in the health care fight in this country.”
Key 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, Tricare, 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 Exchange Model Notice for Employers Who Do Not Offer a Health Plan (must be distributed to current employees no later than October 1, 2013) Exchange Model Notice Revised Model COBRA Election Notice (provided to eligible employees and dependents when a qualifying event occurs) Revised Model COBRA Election Notice
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 Partnership Marketplace (7 states) State-based Marketplace (16 states and DC) 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.
Consumer Assistance Options Available for Getting People Enrolled into Exchange Coverage Navigator Program In-person Assister Program (optional) Website management Education and outreach Call center operations Written correspondence with consumers to support eligibility and enrollment State-based Exchange: States assumes all functions Federally – Facilitated Exchange: HHS assumes all functions State Functions Outreach & Education In-person Assister Program HHS Functions Website Call center Written correspondence Navigator Program
Automated Eligibility Processes Facilitate Enrollment into Coverage Through the Exchange or Public 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 Plan A Plan BPlan C John Doe 123 Main Street Health Coverage Medicaid/CHIP Unsubsidized Exchange Coverage Premium Tax Credits
2014 Marketplaces The ACA Streamlines Enrollment Processes, Making it Easier to Obtain Coverage Dear ______, You are eligible for… Data Hub $ # Multiple Ways to Enroll Use of Electronic Data to Verify Eligibility Single Application for Multiple Programs Real-Time Eligibility Determinations Medicaid CHIP Exchange HEALTH INSURANCE
Designed to evolve throughout the year as we near Open Enrollment Went live in June Will be re-designed again in September Eventually will have a calculator to show actual cost of each policy, including discounts on premiums and co-pays Links to key questions consumers have about health insurance, eligibility & enrollment Offers Web chat capability to answer users’ questions Integrates social media and includes sharable content Directs users to appropriate destination based on geography Re-designed Healthcare.gov
Call Center launched in June TTY/TDD line for hearing-impaired callers: Helps with wide range of questions, including: 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: Filling out the application Plan selection Assistance is Available 24/7 in English and Spanish Help in 150 other languages is available Marketplace Call Center
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
With Medicaid ExpansionWithout Medicaid Expansion Up to 100% of povertyMedicaidUnsubsidized % of poverty*MedicaidExchange % of povertyExchange >400% of povertyUnsubsidized 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 How People Get Covered
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 The ACA Medicaid Expansion Fills Current Gaps in Coverage Adults Elderly & Persons with Disabilities Parents Pregnant Women Children Extends to Adults ≤138% FPL* Medicaid Eligibility Today Medicaid Eligibility in 2014 Limited to Specific Low-Income Groups Extends to Adults ≤138% FPL*
Annual premium amount paid by policy holder and premium tax credit Annual Premium Amount and Tax Credits for a Family of Four Under the Affordable Care Act, 2014 Notes: For an family of four, policy holder age 40, in a medium-cost area in Premium estimates are based on an actuarial value of 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, Required premium payment by policy holder Premium tax credit Contri- bution capped at 3.3% of income Contri- bution capped at 4.0% of income Contri- bution capped at 6.3% of income Contri- bution capped at 8.05% of income Contri- bution capped at 9.5% of income $32,326$35,137$46,850$58,562$70,275$117,125 Full premium = $12,130
Affordable Health Plans Expected contribution to insurance premiums, silver-level plan For an individual: Reduction in Consumer’s Expected Approximate Out-of-Pocket Portion of Annual Income % of FPL Contribution Monthly Premium Maximum Total costs $13, * 2% of income $23 2/3 6% $16, % $47 2/3 6% $20, % $86 2/313% $25, % $155 1/227% $31, % $ % $40, % $ % Incomes below 250% of the poverty level qualify for lower co-pays and deductibles * This level of income would be eligible for Medicaid in states that expand their programs in accordance with the Affordable Care Act
Affordable Health Plans Expected contribution to insurance premiums, silver-level plan For a family of 4: Reduction in Consumer’s Expected Approximate Out-of-Pocket Portion of Annual Income % of FPL Contribution Monthly Premium Maximum Total costs $28, * 2% of income $47 2/3 6% $33, % $97 2/3 6% $41, % $177 2/313% $52, % $317 1/227% $64, % $ % $82, % $ % Incomes below 250% of the poverty level qualify for lower co-pays and deductibles * This level of income would be eligible for Medicaid in states that expand their programs in accordance with the Affordable Care Act
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 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
Licensed health Insurance agents and brokers Paid by insurers Must undergo training on: 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 Sources of enrollment help
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
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. 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 Nebraska-Iowa has the only multi-state CO-OP. CoOportunity Health.
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.
Patient Protection and Affordable Care Act 2010 Eligible small businesses are eligible for phase one of the small business premium tax credit. – Small employers will receive a maximum credit, based on number of employees, of up to 35% of premiums for up to 2 years if the employer contributes at least 50% of the total premium cost. 50% starting 2014 to qualify for credit have to purchase coverage through Exchange – Businesses do not have to have a tax liability to be eligible – Non-profits are eligible – Average salary must be $50,000 or less
Small Business Tax Credits-Small Business Majority Our report: More than 4 million businesses are eligible (83.7% of all businesses); 1.2 million businesses eligible for the maximum credit
IRS Rules The credit is calculated as follows: (1) Initial amount of credit determined before any reduction: (35% x $96,000) = $33,600 (2) Credit reduction for FTEs in excess of 10: ($33,600 x 2/15) = $4,480 (3) Credit reduction for average annual wages in excess of $25,000: ($33,600 x $5,000/$25,000) = $6,720 (4) Total credit reduction: ($4,480 + $6,720) = $11,200 (5) Total 2010 tax credit: ($33,600 – $11,200) = $22,400. Maximum premium amounts by state for tax credit Iowa Premium $4,652 Single $10,503 Family Nebraska $4,715 Single $11,169 Family
Small Business Tax Credit The credit is claimed on the employer’s annual income tax return The credit can be reflected in determining estimated tax payments for the year to which the credit applies in accordance with regular estimated tax rule In determining the employer’s deduction for health insurance premiums, the amount of premiums that can be deducted is reduced by the amount of the credit
Exhibit 7. Small Business Tax Credit as a Percent (Maximum of 50%) of Employer Contribution to Premiums, For-Profit Firms (2014+) Average Wage Firm SizeUp to $25,000$30,000$35,000$40,000$45,000 Up to 1050%40%30%20%10% 1147%37%27%17%7% 1243%33%23%13%3% 1340%30%20%10%0% 1437%27%17%7%0% 1533%23%13%3%0% 1630%20%10%0% 1727%17%7%0% 1823%13%3%0% 1920%10%0% 2017%7%0% 2113%3%0% 2210%0% 237%0% 243%0% 250% Source: C. L. Peterson and H. Chaikind, Summary of Small Business Health Insurance Tax Credit Under the Patient Protection and Affordable Care Act (PPACA), Congressional Research Service, April 20, 2010.
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: 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
TierActuarial Value DeductiblePatient Coinsurance Out-of-Pocket Limit Bronze 160%$4,37520%$6,350 Bronze 260%$3,47540%$6,350 Silver 170%$2,05020%$6,350 Silver 270%$65040%$6,350 NOTES: SOURCE: Kaiser Family Foundation Illustrative Plan Designs for Single Coverage
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.Physician and mid-level practitioner care; 2.Hospital and emergency room services; 3.Pharmacy benefits 4.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: A plan with a $3,500 integrated medical and drug deductible, 80 percent plan cost- sharing, 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 cost- sharing, 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.