The Affordable Care Act and New Health Insurance Marketplace

1. The Affordable Care Act and New Health Insurance Marketplace

2. Learning Objectives • Highlight the basics of the Affordable Care Act (ACA). • Define common health insurance literacy terms and concepts. • Deep dive: examine exemptions from the individual shared responsibility payment. • Discuss special enrollment periods, terminating health coverage plans, reenrollment, and appeal procedures.

3. Basics of the ACA • The Patient Protection and Affordable Care Act (ACA or “Obamacare”) was passed in March 2010 under the Obama administration • This created: • A new avenue to purchase health insurance coverage (Marketplace, or Exchange) • New requirements to maintain coverage • Tax subsidies to help individuals afford coverage • Tax penalties associated with not having health insurance • Restricted period of the year when coverage is available for purchase • Eliminated the ability for insurers to deny coverage based on health status • Coverage is guaranteed available and renewable • Changed requirements around cost-sharing and the comprehensiveness of offered benefits

4. Basics of the ACA • Eligible young adults can be covered under a parent’s plan until age 26 • Can be on parents’ coverage even if the dependent has access through an employer, lives in another location, is married, is not a financial dependent, or not a student • Individuals with pre-existing conditions are no longer excluded from coverage offers • Lifetime and annual maximums are eliminated • Preventive and wellness services are mandated benefits without any cost-sharing requirements

5. Health Insurance in Indiana • Two ways for individuals to purchase health insurance: • The federal Marketplace • Accessed through www.healthcare.gov • Administered by the federal Department of Health and Human Services (HHS) • Serves individuals and small groups • The commercial health insurance market • Overseen by the IDOI • Serves individuals, small groups and large groups

6. Health Insurance Markets

7. Health Insurance Cost

8. Open Enrollment Annual Open Enrollment Period: November 15th—February 15th

9. Purchasing Health Insurance • Individuals can select a plan based on: • Quality • Covered benefits • Covered providers • Expected cost-sharing level • To purchase coverage on the Marketplace, individuals must: • Be a United State citizen or legal resident • Reside or intend to reside in the state they are applying in • Not be incarcerated

10. Help Paying for Health Insurance • There are 2 programs to help qualified individuals afford health insurance and cost-sharing for health services • Advanced Payment of the Premium Tax Credit (APTC) • Based on the second lowest-cost plan (Silver) • Can be used to purchase any plan on the federal Marketplace • Cost-Sharing Reduction Program • Increase the Actuarial Value (AV) of health coverage plans for low-income consumers • Reduces out-of-pocket costs for consumers • Offered in addition to PTC • Qualifying individuals do not have to apply for CSR separately

11. Help Paying for Health Insurance • The amount of the premium tax credit (PTC) and the level of cost-sharing reductions (CSR) are based on the applicant’s income • For these programs income is expressed as a percentage of the federal poverty level (FPL). • Updated each year and published by HHS • 100% FPL or below is designated as living in poverty • For one person $11,670 • For two people: $15,730 • For three people: $19,790 • For four people: $23,850

12. Premium Tax Credit (PTC) PTC Eligibility: • Must be a citizen, national or legal resident of the U.S., Indiana resident and non-incarcerated • Household income between 100% and 400% of the FPL AND • No other Minimum Essential Coverage (MEC) (Including Medicaid and ESI is available) OR • Available MEC (such as through an employer) has an individual premium more than 9.5% of household income OR does not provide minimum value (at least 60% actuarial value)

13. Premium Tax Credit (PTC) • Three options for using the PTC: • Full Advanced Payment • Reduces premium costs • If income increases during the year, consumer may owe some or all of PTC back at tax filing • Partial Advanced Payment • Reduces premium costs & likelihood of PTC overpayment • Consumer bears more of the premium cost immediately than if full advancement payment is taken • Claim Later • Ensures that PTC is not overpaid and that consumer will not owe at tax filing • Consumer bears the full cost of the premium immediately

14. Premium Tax Credit (PTC) Reconciliation • Individuals that are eligible for APTC will reconcile these amounts when they file their 2014 taxes • Those that have received payments in excess of what they were eligible for will pay back this amount to the IRS; • Individuals that received less APTC will receive these payments as refunds on their tax return. • The amount that an individual may owe the IRS due to an over payment of the APTC is capped, so individuals between 100% and 400% FPL may owe no more than the below amounts due to excess APTC payments.

15. Cost Sharing Reductions (CSRs) • CSRs increase the Actuarial Value (AV) of the individual’s health plan and reduce the expected cost sharing an individual may pay throughout the year. • Only applies if the individual selects at least a silver plan. • Must also be eligible for the PTC and have income below 250% FPL

16. Health Insurance Plans

17. Individual Mandate • Also called the Individual Shared Responsibility Requirement • ACA component requiring individuals to maintain Minimum Essential Coverage (MEC) for themselves and dependents • Failure to maintain MEC may result in a tax penalty • Individuals may apply for an exemption from the requirement to maintain MEC • What is Minimum Essential Coverage (MEC)? • The type of coverage needed to meet the individual responsibility requirement • It must be maintained throughout the year

18. Minimum Essential Coverage (MEC) • Coverage that is considered comprehensive health insurance under the ACA • Coverage for oneday in the month is considered to be coverage for the entire month

19. Minimum Essential Coverage (MEC)

20. Qualified Health Plans (QHPs) Standards • Plans sold on the federal Marketplace or SHOP must be certified as a QHP • Must meet the Essential Health Benefit (EHB) requirements • Must offer metal level plans that are indexed to Actuarial Value, including bronze, silver, gold or platinum plans • Must be accredited or in the process of gaining accreditation • Must meet network adequacy and standard related to providing coverage through a satisfactory number of providers • May not discriminate against individuals on any basis • May not change premium amounts during the year, provided nothing changes in the enrollee’s circumstances • Must offer provider lists and cost-sharing information

21. Essential Health Benefits (EHBs) What are Essential Health Benefits (EHBs)? • Comprehensive package of items and services within at least these 10categories.

22. Metal Tiers (Actuarial Value) • Plans in the Marketplace are primarily separated into 4 health plan categories arranged by actuarial value • Actuarial value– percentage of total average costs for covered benefits that a plan will cover Higher Premiums & Lower Consumer Cost-Sharing Lower Premiums & Higher Consumer Cost-Sharing

23. Metal Tiers (Actuarial Value)

24. Catastrophic Plans • QHP that covers 3 primary care visits per year before the deductible is met • Enrollees may expect to pay less for the policy, but bear a greater share of the expenses if they have a health event • May only be purchased by those under 30 or who have received a hardship exemption from maintaining MEC • May provide family coverage, but not available in Small Group • Not eligible for APTC

25. Grandfathered Plans • Health plans in existence prior to the passage of the ACA and do not have to comply with some provisions related to: • Benefits • Cost-sharing • Pre-existing condition exclusions • Annual maximum • Plans may only maintain grandfathered if they do no make substantial changes to their policies • Individuals offered grandfathered coverage through an employer may choose to not accept the coverage and purchase coverage that meets ACA requirements instead

26. Excepted Benefit Plans • Plans that cover a specific service or condition and do not provide comprehensive health coverage • Not subject to many of the ACA market reforms • Most common is stand-alone vision • Stand-alone dental plans are the only excepted benefit plans offered on the Marketplace • Not offered in the metal tier levels of QHP • Subject to a $700 maximum out of pocket amount for a single individual and $1,400 for family • May be purchased using the APTC • Not eligible for cost-sharing reductions

27. Student Health Insurance • Only self-funded student health coverage qualifies as MEC. • Effective May 12, 2014, student health plans are not required to be offered as a calendar year plan • Student health insurance is exempt from the requirement to establish open enrollment period and coverage effective dates based on a calendar policy year

28. Consolidated Omnibus Budget Reconciliation Act (COBRA)  • COBRA gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as: • Voluntary or involuntary job loss • Reduction in the hours worked • Transition between jobs • Death, divorce, and other life events • Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan

29. Exemptions from Maintaining MEC • Exemptions may be requested or applied for through the IRS or the Marketplace • These individuals will not face a shared responsibility tax penalty for not maintaining MEC • Eligibility exemptions can be categorical, based on income, or related to other circumstances • Individuals may apply for one or more of the 9 exemption types

30. Religious Conscious Exemption

31. Hardship Exemption

32. Hardship Exemption There are 6different types of hardship exemptions: • Inability to purchase • Due to financial or domestic causes, or natural/ human-caused events • Lack of affordable coverage based on projected income • Cost of lowest cost option is > 8% of income • Below filing threshold • Medicaid expansion population • State (like Indiana) did not expand Medicaid • Employer-sponsored coverage exception: Combined coverage cost • Eligible for services through Indian health care provider • But not member of federally recognized tribe

33. Indian Tribe Exemption

34. Health Care Sharing Ministry

35. Incarceration Exemption

36. Household income Below Filing Limit Exemption

37. Inability to Afford Coverage Exemption

38. Not-lawfully Present Exemption

39. Short Coverage Gaps Exemption

40. Rating Rules • The ACA limits the factors that major medical plans can base the price of their plan on to age, location and tobacco use • Rating for Age • Limited to a 3 to 1 ratio—Older adults may be charged no more than 3 times the premium as younger adults

41. Rating Rules • Rating for Location • The ACA allows insurers to adjust their premiums depending on enrollee’s location • There are 17 rating areas in Indiana • Rating for tobacco • Up to 1.5 times the premium for individuals that use tobacco • Tobacco use defined as use of any tobacco product on average four or more times per week over the past 6 months • At no point may a rate increase for tobacco based on age contradict the 3 to 1 rating limit

42. Rating for Family Plans

43. Shared Responsibility Payment • For months when a non-exempt individual does not have at least one day of Minimum Essential Coverage (MEC), then a penalty (Shared Responsibility Payment) is owed through taxes • Calculated on a monthly basis = 1/12 of the annual penalty amounts, for each month without coverage

44. Shared Responsibility Payment

45. Special Enrollment Periods (SEPs) • Other than the open enrollment periods, individuals may only enroll in or change QHPs during a special enrollment period • Certain life events trigger SEPs which generally last 60 days from the event • Individuals losing coverage from an employer have 30 days after the event

46. Special Enrollment Periods (SEPs) • Loss of Minimum Essential Coverage (MEC) • Marriage, birth, adoption or placement of adoption or foster care • Citizenship status • Current QHP violated a material provision of its contract in relation to the enrollee • Enrolled individual is found newly eligible or ineligible for advance payments of the PTC, or change in eligibility for CSRs. This includes individuals who will lose employer-sponsored coverage within 60 days, or the coverage will become unaffordable or not provide minimum coverage. • Qualified individual or enrollee gains access to new QHPs as a result of a permanent move

47. Special Enrollment Periods (SEPs) • Individuals with Indian status may enroll in a QHP or change from one QHP to another one time per month. Indian status means the individual can be verified as a member of one of the 566 federally recognized tribes referenced at: http://www.gpo.gov/fdsys/pkg/FR-2012-08-10/pdf/2012-19588.pdf • SHOP specific special enrollment for individuals newly eligible or ineligible for Medicaid premium assistance for Employer-Sponsored Insurance

48. Limited Circumstance Special Enrollment Periods • Natural disaster, medical emergency, and planned system outages that occur on or around plan selection deadlines • Misinformation, misrepresentation or misconduct by individuals or entities providing formal enrollment assistance • Individual enrolled through the Marketplace, but the insurance company did not get their information • System errors related to immigration status • Display errors and other error messages prevent timely submission • Applications not transferred to the State Medicaid or CHIP agency from the Marketplace in time • Caseworker unable to complete application before deadline • Married and victim of domestic abuse

49. Reporting Changes • Individuals may report changes that impact their eligibility throughout the year such as: • Add or remove a dependent on policy, • Change location • Experience another significant event that qualifies them for a special enrollment period. • Some changes may allow individuals to change their QHP selection or modify their APTC or CSR amount • Reporting other changes ensures that the federal Marketplace has up-to-date information for completing annual redeterminations • The Marketplace will also conduct periodic data queries to see if enrollees are still eligible for QHP enrollment through the federal Marketplace

50. Terminating Plans • Individuals may terminate their enrollment in a Qualified Health Plan (QHP) at any time • To terminate enrollment in a QHP the individual should contact their qualified health plan directly. • QHPs may terminate enrollees for non-payment of premiums, enrollment in another QHP, or fraud. • Coverage under the QHP does not initiate until the first premium payment is received. • After the first payment, individuals enrolled in a QHP that do not receive APTC will have a 30-day grace period for subsequent premium payments. • After their initial premium payment, individuals that receive APTC will have a 90 day grace period to pay their premiums.