Overview of the Affordable Care Act Effective March 23 2010 Purpose was to decrease the number of uninsured Americans and to reduce the overall costs of health care Its provisions are intended to ID: 710945
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Slide1
A Discussion of
the Affordable Care ActSlide2
Overview of the Affordable Care Act
Effective March 23, 2010
Purpose was to decrease the number of uninsured Americans and to reduce the overall costs of health care. Its provisions are intended to:
Expand access to insurance
Increase consumer protections, and
Improve outcomes
First insurance reforms became effective 6 months after passage (September 23, 2010).
Most significant insurance reforms became effective January 1, 2014Slide3
Insurance Coverage ReformsSlide4
Scope of Health Insurance Reforms
The ACA reforms apply to
health insurance issuers
offering group or individual
health insurance coverage
.
"
Health insurance
issuer
"Health
insurance coverage
"
The ACA categorizes "health insurance coverage" into three markets:
the
individual
market
the
small group
market
the
large group market
.
Exceptions to ACA
Excepted
BenefitsSlide5
Guaranteed Availability and Renewability
Guaranteed Availability
Requires
issuers offering non-grandfathered health insurance coverage to accept every individual or employer who applies for coverage in the individual or small group market (Subject to certain exceptions such as limits on network capacity)
May restrict enrollment to open or special enrollment periods
Guaranteed Renewability
Requires any health insurance issuer offering coverage in the individual or group market to renew coverage at the option of the plan sponsor or
individual
.
Exceptions:
nonpayment
of premium,
fraud
,
violation
of participation/contribution rules,
movement
outside the service area,
membership
in association ceases,
discontinuing
a particular product, or
exiting
the market
Uniform modification of coverage is permittedSlide6
Insurance Coverage Reforms
Coverage of adult children to age
26
Internal and External appeal procedures
Prohibition on lifetime and annual limits on essential health benefits
Limits on ability to rescind coverage
Prohibition
on preexisting conditions exclusions
Coverage for Clinical trials
Access
to Providers:
Direct access to OB/GYN
Permit
pediatrician to be selected as a PCP
No prior authorization or increased cost sharing for out of network emergency services
Coverage for Preventive Services without cost
sharing
Limits on Cost Sharing
Actuarial Level of Coverage – Bronze, Silver, Gold or Platinum
Coverage for Essential Health Benefits Slide7
Essential Health Benefits
Ambulatory Patient Services
Emergency Services
Hospitalization
Maternity and Newborn Care
Mental Health and Substance Use
Prescription Drugs
Rehabilitation and
H
abilitative services
Laboratory Services
Preventive ServicePediatric Services (dental and vision)Slide8
Grandfathered and Transitional Plans
Many of the mandates of the ACA do not apply to grandfathered or transitional plans.
Grandfathered Plans
Group
or individual health insurance coverage that was in place prior to
March 23, 2010
, and continues to maintain its grandfathered
status
A plan may lose grandfathered status
Transitional Plans
Non-grandfathered group or individual plans that were in existence on October 1, 2013 and may be renewed through October 1, 2016
Notice must be provided to the affected individuals
Annual increases in premium rates are permissibleSlide9
Grandfathered Plans
Reform
Application of Provision to Grandfathered Plan/Policy
Rescissions
X
Lifetime limits
X
Preventive care
Age 26 adult children
X*
Appeals and External Reviews
Access to Providers
Medical loss ratio
X
Summary of Benefits & Coverage ("SBC") and Uniform Glossary
X
Modified community rating
Essential health benefits
Actuarial value
Limits on cost sharing
Clinical trials coverage Slide10
Mandates to PurchaseSlide11
The Individual Mandate
Individual Mandate
Individuals (with limited exceptions) are required to maintain minimum essential coverage each month or pay an individual shared responsibility payment with their federal tax return
Coverage is reported by the Insurer or Employer. Transitional Relief was granted so that first information returns are not due until 2016 (for coverage provided in 2015)
Individual Shared Responsibility Payment
The
fee for not having coverage in
2015
If
you don’t have coverage in 2015, you’ll pay the
higher
of these two
amounts:
2
% of your yearly household income.
(Only the amount of income above the tax filing threshold, about $10,150 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a Bronze plan
.
$
325 per person for the year ($162.50 per child under 18).
The maximum penalty per family using this method is $975.Slide12
Minimum Essential Coverage
Employer
Sponsored
Coverage
Coverage in
Individual
Market
Coverage for Peace Corps Volunteers
VA/TRICARE
Medicaid and CHIP
Medicare Pt A and Advantage
Self-funded Student
H
ealth
C
overage
Refugee Medical Assistance Program
MECSlide13
The Employer Mandate
Employer Mandate
The ACA does not specifically require
employers (large or small) to
provide coverage to employees.
The
ACA does require a large employer to pay a shared responsibility fee if one or more of its full-time employee(s) enroll in subsidized coverage in
an Exchange
Employer Shared Responsibility Payment
Applies to large employers that do
not offer coverage or
offer
coverage to fewer than 95% of its full-time employees (and their dependents
)
Payment is the
number of full-time employees the employer employed for the year (minus up to 30) multiplied by $2,000, as long as at least one full-time employee receives the premium tax credit. Slide14
Indiana Federally Facilitated Marketplace
Indiana has a
F
ederally
F
acilitated Marketplace (“FFM”)
Indiana is an Effective Rate Review State
The IDOI maintains jurisdiction over all QHPs and non-QHPs sold in Indiana in the following areas:
Licensing
Rate and form review
Financial solvency
EHB benchmark reviewA
QHP
issuer
must offer at least one QHP
at the
silver
level
and
at least one QHP
at the
gold
levelSlide15
Affordability ProgramsSlide16
Federal Subsidies – Premium Tax Credit
Premium Tax Credit
Only available through the Individual FFM
For citizens and legal residents that
are between 100% - 400% of the federal poverty
level.
Determined on a sliding scale; individuals and families with lower incomes receive more assistance. Slide17
Federal Subsidies – Cost Sharing
Cost Sharing Subsidy
Only available
if purchased an individual silver plan through the FFM and are below 250% of FPL*
Subsidy
will reduce
all of the
person’s
cost-sharing, including deductibles, coinsurance, copayments and out
of pocket
maximums
Amount of subsidy
is based upon
the person’s income. Slide18
Federal Subsidies – Small Employer Credit
Small Employer Credit:
No more than 25 employees
Average annual wages of less than $50,000
Pay at least 50% of the employee’s premium
Purchase insurance
through
the SHOP
Tax credit up to 50% of the employer’s
contribution
Limited to no more than 2 consecutive taxable yearsSlide19
Premium Stabilization ProgramsSlide20
Risk Adjustment, Reinsurance and Risk Corridors
Risk Adjustment Program
Permanent
program
intended to
normalize the individual risks
of health insurance issuers to ensure premiums remain stable
Payments
transfer from issuers with low risk persons to issuers with high
risk
persons
.
All non-grandfathered plans in the individual and small group markets are subject to the risk adjustment
program
Indiana carriers received approximately $122 million for 2014
Transitional Reinsurance Program
3 year program ending in 2017
Intended to stabilize premium for coverage in the individual market due to higher cost individuals gaining insurance during the first 3 years of guaranteed availability of coverage
Transitional
Risk Corridor
Program
3 year program ending in 2017
that provides additional protection for health insurance issuers on the FFM. Slide21
Medical Loss Ratios (“MLR”) and Rebates
MLR requires insurance companies to spend at least 80% or 85% of premium dollars on medical
care
Rebates are calculated based on the type of market
Individual/Small
G
roup Formula: (80% - MLR) x Total Premium
Large
G
roup Formula: (85% - MLR) x Total Premium
This change promotes a level playing field for issuers within each
State
In 2014, Indiana carriers paid approximately $12 million in rebates for 2013
The rebate amounts for 2014 will be available September 30, 2015Slide22
Taxes/Fees on Health Insurance Issuers and Group Health Plans
Tax/Fee
Paid By
Purpose
Health Insurer Provider Fee
Health insurance issuers and certain self-insured plans
Non-profit issuers that receive more than 80% of their net premium from government programs are
exempt – approximately $8 billion for 2014 and $11 billion for 2015
To help cover the premium subsidies
Marketplace User
Fees
Health insurance issuers offering coverage on the
Marketplace – currently 3.5% of premium
To cover administrative costs of the Exchange
Transitional Reinsurance
Fee
Health insurance issuers and self-insured
plans -
$63
for 2014 and
$44
for 2015 and
$27
for 2016
To fund the Transitional Reinsurance Program
Risk Adjustment User Fee
Health insurance issuers that participate in the individual or small group market – approximately $0.15 per member per monthTo fund the Risk Adjustment ProgramPatient-Centered Outcomes Research Institute (“PCORI”) FeeHealth insurance issuers and self-insured plans – approximately $0.17 per policy per year
To fund research to assess health outcomesHigh Value Plan Tax (“Cadillac Fee”) Health insurance issuers and self-insured plans – approximately 40% on the premium in excess of thresholdsTo offset costs of the ACASlide23
Risk Pools
Generally require health insurance issuers to treat all of their non-grandfathered business in the individual and small group market, inside and outside the exchange, as a single risk pool
A state would have the authority to choose to direct issuers to merge their non-grandfathered individual and small group pools into a combined pool
Indiana did not merge its individual and small group poolsSlide24
Rating Factors
Age Rating
3:1 ratio
Age Curve
Uniform age curve
Family Tiers
Premiums are limited to 3 for those dependents under age 21
Tobacco Rating
Limitation goes away in 2015
Geographic Rating Areas
IDOI Bulletin 197
Slide25
Impact on State LawSlide26
Preemption of State Law
The Affordable Care Act does not preempt all state laws that regulate health insurance
State laws that interfere with the ACA provisions are preempted
State are permitted to adopt and enforce laws and regulations that afford greater consumer protections Slide27
Case law and RegulationsSlide28
Recent Case law – King v. Burwell
King v. Burwell,
135
S.Ct
. 2480 (June 24, 2015)
Facts:
HHS
provides
subsidies
on
state and federally-facilitated Exchanges; Plaintiffs claim it can’t do this for federally-facilitated Exchanges. If
subsidies are not available in a State, the individual
coverage
mandate would not apply to many people and the employer mandate would not apply at all
.
Issue:
May a federal agency promulgate
regulations to extend tax-credit subsidies to coverage
purchases
through
federally-facilitated Exchanges?
Lower Courts:
District Court: Granted defendants’ motion to dismiss; held subsidies available everywhere
4th Circuit: Affirmed; found ACA ambiguous on this point and deferred to the agency’s
interpretationHolding: Tax credits authorized under the ACA are available to individuals who purchase insurance through a federal exchange in their stateSlide29
Case law - King v Burwell
No
Chevron deference
Principles
of statutory interpretation:
The
meaning of “established by a State” was ambiguous when read in context of the “overall statutory scheme”
Giving
the phrase “established by the State” its most natural meaning would render other parts of the ACA meaningless or nonsensical
Other
parts of the ACA assumed tax credits would be made available on both State and Federal
exchanges:
Broader structure of the ACA
Structure
of the ACA was designed to expand individual health insurance coverage while controlling costs
The
Virginia residents’ reading “would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very ‘death spirals’ that Congress designed the Act to avoid”
87
% of people bought insurance on a Federal Exchange with tax creditsSlide30
Case law -
National Federation of Independent Business v.
Sebelius
:
National Federation of Independent Business v.
Sebelius
,
132
S.Ct
.
2566 (June 28, 2012)
Issues: Constitutionality of:Individual Mandate
Medicaid Expansion
Holding:
T
he
individual mandate is a constitutional exercise of Congress’ power to levy taxes
.
The
Medicaid expansion provision of the ACA violates the Constitution by threatening states with the loss of their existing Medicaid funding if they decline to comply with the expansion.Slide31
2015 Developments - Administrative Rulemaking
Agency Information Collection Activities: Proposed Collection; Comment
[Transparency reporting by
QHP
Issuers],
80 FR
48320-01 (August 12, 2015)
IRS Notice
2015-52
: Excise Tax on High Cost Employer-Sponsored Health Coverage,
www.irs.gov/pub/irs-drop/n-15-52.pdf (July 30, 2015)
Final Rule: Coverage
of Certain Preventive Services Under the Affordable Care
Act. Coverage
of Certain Preventive Services Under the Affordable Care Act, 80 FR
41318-01 (July 14, 2015)
Final
Rule: Summary of Benefits and Coverage and Uniform
Glossary,
80 FR
34292-01 (June 16, 2015)Slide32
2015 Developments Continued
Temporary Final Rule: Health Insurance Providers Fee, 80 FR 10333-01 (February 26, 2015)
Final Rule: Application for Recognition as a 501(c)(29) Organization [Consumer Operated and Oriented Plan (COOP)], 80 FR 4791-01 (January 25, 2015)
Proposed Rule: To amend the regulations and interpretive guidance implementing Title I of the Americans with Disabilities Act as they relate to employer wellness programs; 80 FR 21659-01 (April 20, 2015
)
Small Group Definition
Beginning January 1, 2016, the definition of small group will change from 1-50 employees to 1-100 employees
H.R. 1624 was proposed to keep the current definition of 1-50 employeesSlide33
ACA Impact on IndianaSlide34
Impact on Market Size by 2019Slide35
References
Annual Letter to Issuers in the Federally Facilitated Marketplace
Annual
HHS
Notice of Benefit and Payment Parameters
Annual Instructions Medical Loss Ratio Reporting
IDOI
Company Compliance
Rate/Forms including reference documents available
at www.in.gov/idoi/2588.htm
CMS regulations and guidance available at www.cms.gov/cciio/resources/regulations-and-guidance/ and www.regtap.info
QHP
Application, Instructions, Templates and Materials available at
www.cms.gov/cciio/programs-and-initiatives/health-insurance-marketplaces/qhp.html Slide36