The Affordable Care Act: A Summary on Healthcare Reform

The Wyoming Department of Insurance

The ACA is a federal law that impacts Wyoming and its citizens. The State of Wyoming has filed a lawsuit against the federal government in opposition of the law and currently maintains that position. This information is solely for informational purposes and to let Wyoming citizens know how they will be impacted by federal law. It is not intended to provide legal advice, accounting advice or any opinions. This presentation is to provide only general, non-specific information and is only a general guide. It does not include all the details found in the Act and is not intended to express any opinions of the State of Wyoming as to the interpretation of the Act nor is it bound by its content. For the application of the Act to a particular situation, the reader is advised to consult the specific provisions of the Act and obtain advice from the appropriate source.

ACA Misunderstandings• It has been repealed• 45% of Americans believe this is true

• I am not required to buy health insurance• It is going to be more expensive • Maybe not for 100-400%

• Because of my health I cannot get insurance or it is far too expensive

• All employers must provide health insurance• There will be a government run insurance plan along with

private plans• Wyoming will not have an insurance (exchange) marketplace

(shop exchange)

Healthcare Reform – So Far

• September 23, 2010 Immediate reforms:

• No lifetime limits and restricted annual limits

• Elimination of denial for pre-existing conditions for children under age 19

• Adult Dependent Child coverage up to age 26

• Coverage of preventive benefits

• Rate Review Standards (rate increases 10%+ reviewed)

• Medical Loss Ratios with Rebates

2014 Market Reforms

For Small Group and Individual Coverage Sold or Renewed on or after January 1, 2014:• Guaranteed Issue (cannot be denied or rated because of any

health condition)

• No Pre-Existing Condition Exclusions

• Insurance Rating Guidelines (Can only charge a different rate for smoking, age, geographic area)

• Essential Health Benefits & Cost-Sharing Must Meet Established Value Levels

These apply inside and outside of a marketplace

Insurance Rating GuidelinesFor the Small Group and Individual Markets:•No rating based on health status•Maximum age variation of 3:1 (ages 21-64)•Maximum variation based on tobacco use of 1.5:1•Rates based on geographic areas •Family rates built up based on age and tobacco use of each member•A family premium is the sum of the individual premium for each adult and each child up to 3 under age 21.

Do I have to do anything?

Individual Mandate• Individuals required to have minimum qualified coverage beginning

January 1, 2014

Penalties

2014

2015

2016

$95 per adult up to $285 or 1% of household income, whichever is higher

$325 per adult up to $975 or 2% of household income, whichever is higher

$695 per adult up to $2,085 or 2.5% of household income, whichever is higher

Penalty for a child is ½ that of an adultPenalties indexed to the growth of CPI after 2016

Individual Mandate

Exemptions:

• Cost of coverage is more than 8% of household income

• Religious objection

• Financial hardship

• Tribal members

What is “Minimum Qualified Coverage”MedicareMedicaidCHIPTri-CareEmployer Sponsored CoverageIndividual Market CoverageGrandfathered Coverage

What will I do?

What will I do?

•Keep what I have•Purchase inside the marketplace•Purchase outside the marketplace•Do nothing

Grandfathered Plans• Coverage in which individuals were enrolled

prior to March 23, 2013 are exempt from most provisions of the bill.

Provisions that DO Apply:• Lifetime limits• Restrictions on rescissions• Extension of dependent coverage• Medical loss ratios• Annual limits (group only)• Preexisting condition exclusions (group only)

• Grandfather Status Can Be Lost• Grandfathered plans will satisfy individual

mandate• Check with insurance agent or company to see if

your current plan qualifies for grandfather status.

What is a marketplace (exchange)?

• Virtual marketplace • Qualifies individuals for Medicaid, CHIP or premium subsidies• Offers only qualified health plans and dental plans• Two marketplaces • 1 – Individuals• 1 – Small Groups

• Three types of marketplaces• State based• Partnership• Federally facilitated marketplace (Wyoming)

• On October 1, 2013 you can enroll for health insurance at: www.healthcare.gov

Marketplace

Product Portfolio• All plans must include essential health benefits.

• Ambulatory patient services

• Emergency services

• Hospitalization

• Maternity and newborn care

• Mental health and substance use disorder services, including behavioral health treatment

• Prescription drugs

• Rehabilitative and habilitative services and devices

• Laboratory services

• Preventative and wellness services and chronic disease management

• Pediatric services, including oral and vision care

• Benefit levels:

• Platinum = 90% value (Insurance should pay 90% of covered health care costs)

• Gold = 80% value

• Silver = 70% value

• Bronze = 60% value

• Catastrophic Plan (limited to young and those without affordable option in the market)

Plan Design• A child-only plan must be offered at the same metal tier as any

health plan that the issuer offers.• Limited to individuals who are under age 21 as of the beginning

of the plan year.• A catastrophic plan is available to individuals who are under

age 30 or who are exempt from the individual mandate due to a hardship or where cost of coverage, exceed 8% of income.

• Each issuer selling in the marketplace must offer at least one silver level, one gold level, and a child-only.

Plans Available in the Marketplace • Qualified Health Plans

• Stand-Alone Dental Plans

• CO-OP Plans (not available in Wyoming)

• Multi-State Plans (not available in Wyoming)

2013 Federal Poverty Level Table

Updated annually—usually in late January

Subsidies: Premium Tax Credit• Available from

100% - 400% FPL.• Covers the difference between

premium for the second-lowest-cost Silver plan and a percentage of income.

• Advanced to insurer.• Must purchase coverage in the

individual marketplace• Calculated based upon estimated

income recipients may have to repay excess credits if actual income is higher.

Premium Tax Credits

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

100% 133% 150% 200% 250% 300% 400%

Household Income as % of FPL

Pre

miu

m C

ap

as

% o

f In

co

me

Premium Tax Credit Calculation• Example: Family of Four with Income of $50,000, Purchases

Benchmark Plan• The Premium Tax credit is generally based on the benchmark

plan. The family’s expected contribution is a percentage of the family’s household income.• Income as a Percentage of FPL: 224%• Premium cap as a percent of income 7.14%• Expected Family Contribution: $3,570• Premium for Benchmark Plan: $9,000• Premium Tax Credit: $5,430 ($9,000 - $3,570)• Premium for Plan Family Chooses: $9,000• Actual Family Contribution: $3,570

Cost-Sharing Reductions Lowers the out-of-pocket costs at the point of service and has the

effect of increasing the actuarial value of a plan. Only available to individuals enrolled in a silver-level qualified health

plan. The amount varies with income:

There will be no cost-sharing for a Tribal member with household income below 300% FPL.

There will be no cost-sharing for any Tribal member who receives care from Indian Health Services or related provider.

Due to mid-year income fluctuations, reconciliation will occur annually.

Individual Coverage and Enrollment

Initial open enrollment period will be October 1, 2013 – March 31, 2014.

Annual enrollment will occur between October 15 – December 7.

Special enrollment period of 60 days from the triggering event. In the marketplace special enrollment period will be 60 days

from the triggering event.

Effective Date For Coverage Purchased:

January 1, 2014 On or before December 14, 2013

February 1, 2014 Between 12/15/2013 – 1/15/2014

March 1, 2014 Between 1/16/2014 – 2/15/2014

April 1, 2014 Between 2/16/2014 – 3/15/2014

May 1, 2014 Between 3/16/2014 -3/31/2014

Marketplace Responsibility• The Marketplace is responsible for determining the date the

special enrollment period begins. Special enrollment triggers include:

• An individual or dependent losing minimum qualified coverage;

• An individual gaining or becoming a dependent through marriage, birth, adoption, or placement of adoption;

• An individual experiencing an error in enrollment;• When a plan or issuer substantially violates a material

provision of the contract in which the individual is enrolled;• An individual becomes newly eligible or newly ineligible for

subsidies or a change in cost-sharing reductions; or• When new coverage becomes available as a result of a

permanent move.

How Do I Enroll?

• www.healthcare.gov • Toll free number 1-800-318-2596• Navigators• Potential Consumer’s Assistors across the State• Potentially Agents/Brokers

Outside the Marketplace• An issuer can offer only in the Marketplace, only outside the

Marketplace, or a combination of both.• No subsidy or cost sharing reduction outside the marketplace• Outside the marketplace companies may have products that will

not qualify as minimum qualified health coverage (Tax penalty)• Limited benefit plans• Specific illness plans (cancer policy)• Need to check with agent/company to see if plan satisfies the

Federal mandate• Contact agents/brokers/companies to purchase

• Insurers may restrict sales of new policies in the individual market to open enrollment periods that align with those for marketplaces.

What Size of a Group Do I Have?

How to determine Full Time Equivalents (FTE)?• ACA refers to FTE rather than actual number of

employees.• To calculate total FTEs, add the following:• All employees who work at least 30 hours per

week (full time); PLUS• Total number of hours worked in a month by

part-time employees (<30 hours per week) divided by 120.

FTE Calculation Example

• Employer has 35 employees regularly working at least 30 hours per week and 16 employees regularly working 24 hours per week (total of 96 hours per month).• Full time = 35• Part time = [16 employees X 96 hours] = 12.8

120• Total FTE = 47.8 • Federal government guidelines specify to round

down to the nearest whole number

Seasonal Employee:

• Definition: Performs labor or services exclusively during certain seasons or periods of the year which, from its nature, is not continuous or carried on throughout the year.• Includes retail workers employed exclusively during

holiday seasons.• If employer’s workforce exceeds 50 FTE for no more than

120 days during the calendar year and the employees in excess of 50 were seasonal workers, then the employer is not considered to have more than 50 employees.

New Employees:

• If the new employee is reasonably expected to consistently work at least 30 hours per week, then consider the employee as full time.

Small Employers

• 1-49 full-time or full-time equivalent employees during the preceding calendar year. The full-time equivalent employee count includes seasonal employees (if they work more than 120 days per year).• There is NO penalty for small employers who do

not offer health insurance to their employees.

Subsidies: Small Business Tax Credit

• Businesses with 25 or fewer employees.• Average wages less than $50,000.• Contribute at least 50% of premium.• Phases out as size and wages of business increase.

• 2010-2013: Up to 35% of total employer contribution.• 2014 and later: Up to 50% of contribution.

The Marketplaces (exchanges)

• Small Group (SHOP) Marketplace:• For small employers 1-49 (“1” defined as employer and one

employee) – 70% participation rate allowed in federal SHOP.• Employer may choose coverage level and allow employees to

choose from insurers offering at that level beginning in 2015.• Marketplace collects and combines premiums and sends to

insurers beginning in 2015.

Small Group Coverage and Enrollment• Initial open enrollment period will be October 1, 2013 –

March 31, 2014.• Enrollment may occur at any time if that small employer

has a 70% minimum participation rate (the level of participation of the employees). • Annual enrollment period will occur between November

15 – December 15.• Special enrollment period of 30 days (60 days for those

losing Medicaid or CHIP coverage) from triggering event.• Enrollment periods will be the same inside and outside

the Marketplace.

Large Employers• 50+ full-time or full-time equivalent employees during the

preceding calendar year. The full-time equivalent employee count includes seasonal employees (if they work more than 120 days per year)

• Large employers MUST provide minimum qualified and affordable health insurance or pay a penalty.• Minimum qualified coverage means that insurance pays for at

least 60% of covered healthcare expenses.• Affordable means it cannot cost the employee more than 9.5% of

that employee’s income.

Employer Penalties• The penalty for large groups (50+ FTE) not providing health insurance, if at

least one employee receives a subsidy from the Marketplace, will be $2,000 per each full-time employee above the first 30 workers.• Example: A business employs 55 full-time employees; 2 receive a subsidy.

The employer would pay a penalty of $50,000. ($2,000 x (55-30) = penalty).

• The penalty for not providing affordable coverage will be $3,000 annually for each full-time employee who receives a subsidy from the Marketplace, with a maximum of $2,000 times the number of full-time employees above the first 30 workers.• Example: A business with 55 full-time employees; 2 receive a subsidy.

The employer would pay a penalty of $6,000. ($3,000 x 2) = penalty. The maximum penalty for this business would be $50,000.

Employer Notification Responsibilities • The Affordable Care Act § 1512 created the Fair Labor Standards Act

which requires an employer subject to the Fair Labor Standards Act (the usual test is not less than $500,000 in annual dollar volume of business) to provide written notice on insurance coverage.

• Information on the marketplace services and how to contact the marketplace.

• If employer provided insurance pays for at least 60% of covered healthcare expenses for a typical population.• If less than 60%, tell employees that they may be eligible for cost

assistance through the marketplace.• If the employee purchases insurance in the marketplace, they may

lose the employer contribution (if any) and that all or a portion of the contribution may be excludable from income for tax purposes.

• The Department of Labor has provided model notice forms. http://www.dol.gov/ebsa/healthreform/

Employer Notification Deadlines

• New employees—at the time of hiring beginning October 1, 2013.• Within 14 days of an employee’s start date.

• Current employees—no later than October 1, 2013.

Self-Insured Groups

• Self-insured groups are not required to:• Cover essential health benefits• Limit deductibles• Justify large rate increases• Extend health insurance to anyone who applies (but

they cannot discriminate based on a pre-existing condition)

• Guarantee to renew coverage• Standardize cost-sharing tiers based on actuarial value• Prohibit higher premiums based on health status

Penalties for Employers not offering affordable coverage

START HERE Does the employer have at

least 50 full-time equivalent employees?

No Penalties do not apply to small

employers

If the employer has 25 fewer employees and average wage up to $50,000.00, it may be eligible for a health insurance tax credit.

Does the employer offer coverage to its workers?

Yes

No Did at least one employee

receive a premium tax credit or cost sharing

subsidy in an Exchange?

Yes The employer must pay a penalty for not

offering coverage

The penalty is $2,000 annually times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums..

Yes

Does the insurance pay for at least 60% of covered health care

expenses for a typical population?

No Employees can choose to

buy coverage in an Exchange and receive a

premium tax credit. The employer must

pay a penalty for not offering affordable

coverage

The penalty is $3,000 annually for each full-time employee receiving a tax credit, up to a maximum of $2,000 times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums.

Yes

Do any employees have to pay more than 9.5% of family income for the employer coverage?

Yes Those employees can choose to buy coverage in an Exchange and receive a

premium tax credit.

No

There is no penalty payment required of the employer since it

offers affordable coverage.

Additional Resources• Wyoming Insurance Department: http://doi.wyo.gov/ or toll

free at 1-(800)-438-5768• Information on the Federal Healthcare Reform:

www.healthcare.gov • Internal Revenue Service—Information on the Penalty: For Employers: http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act For Individuals: http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision• The Henry J. Kaiser Family Foundation—General Information

on Health Insurance and Health Care Reform: http://healthreform.kff.org/