OVERVIEW OF THE AFFORDABLE CARE ACT September 23, 2013 Outline - - PowerPoint PPT Presentation

OVERVIEW OF THE AFFORDABLE CARE ACT

September 23, 2013

Outline

• The New Continuum of Coverage
• Medicaid and CHIP Are Changing
• The New Marketplaces
• Insurance Affordability Programs
• Shared Responsibility Requirement

The New Continuum

• f Coverage

Key Elements of the New Coverage Continuum

Medicaid & CHIP Expansion and Improvements

• Expands eligibility to 133%*

FPL for low-income adults

• As a result of the Supreme

Court decision, some states may elect not to expand Medicaid

• In all states, makes major

changes to simplify enrollment and allow for coordination with the Marketplaces. *138% FPL Health Insurance Marketplaces for Individuals and Small Businesses

• Launches in fall of 2013 with

coverage effective 1/1/14

• Will offer Qualified Health Plans

(QHPs) with comprehensive benefits

• Individuals with incomes 100%-

400% FPL are eligible for premium tax credits and with incomes 100-250% FPL are eligible for cost-sharing reductions to help subsidize the cost of coverage.

• Guaranteed issue &

renewability

• No annual or lifetime limits
• Health status may not be

considered in setting premiums

• Must cover preventive health

services at no-cost

• Young adults may remain on

parent’s plan until age 26. Private Insurance Market Reforms

Snapshot of Coverage in 2014

The type of health coverage a person receives is based on their income (measured as percent of the FPL) and other factors.

0% 100% 138% Federal Poverty Level 200% 300% 400% Children’s Health Insurance Program (CHIP)

eligibility levels vary by state

Qualified Health Plans

Employer-Sponsored Coverage

Premium Tax Credits and Cost Sharing Reductions for Qualified Health Plans

Medicaid

eligibility levels vary by state

Medicaid is Changing

Enhanced FMAP for Newly Eligible Adults ≤ 133% FPL

Year State Share Federal Share

2014 0 % 100% 2015 0 % 100% 2016 0 % 100% 2017 5 % 95% 2018 6 % 94% 2019 7 % 93% 2020 10 % 90%

• Covers adults <65 with incomes up to

133% FPL* who do not fall into an existing coverage category

• Provides “benchmark” benefits to the

new adult coverage group

• Enhanced federal funding
• All other Medicaid rules apply to new

adult group

• About half the states will expand in

2014

• *138% FPL

Medicaid Expansion

• Single Streamlined Application: Provides new, simple way to apply for

coverage for Medicaid and CHIP and other insurance affordability programs (tax credits and cost sharing reductions).

• Simplified Eligibility and Enrollment Rules: Changes the way eligibility is

determined (“MAGI-based rules”), simplifies Medicaid eligibility groups, and requires coordination across Medicaid, CHIP and other insurance affordability programs.

• Modernized Eligibility Systems: Increases reliance on electronic data

sources, minimizes paper documentation, and makes renewal more

• automatic. Eligibility workers no longer will have to touch every case.
• Children’s Coverage Improvements: Holds children’s coverage steady

through 2019 and applies Medicaid improvements to CHIP.

• Coverage Expansion: Expands eligibility for low-income adults

The New Vision for Medicaid

In-person Online Mail Phone

New Ways to Apply

Individuals will have new ways to submit an application for coverage for Medicaid, CHIP and tax credits. They can apply online, in- person, by mail, or by phone.

Help From Assisters is Available

Various kinds of entities will help people apply for coverage.

Navigators Non- Navigator Assisters Certified Application Counselors Agents/ Brokers/ Producers State Agency (e.g., Depts. Of Health / Social Services) Marketplaces will establish new “Navigator” programs to help people applying for coverage. They will assist with QHP enrollment, but also be knowledgeable about Medicaid and CHIP. Sometimes also known as “in-person assisters,” they will provide the same services as Navigators but be funded by federal grants. Your state may already have groups, such as hospitals, clinics, and non- profit organizations, that help individuals apply for Medicaid and CHIP. They can continue to do so as “certified application counselor” if they undergo training and meet other requirements. State eligibility workers will continue to help people apply for coverage. They may see an increase in volume as people hear about new coverage

• ptions.

Will help people and small businesses apply for Marketplace coverage.

The New Marketplaces

Marketplaces Will Open For Enrollment on October 1, 2013

Coverage is Effective January 1, 2014

Think: A simple way to shop for health insurance

Find out your eligibility for QHPs Compare your plan options Choose a plan and enroll Find out your eligibility for Medicaid, CHIP, and subsidies

The Marketplace

Marketplaces are a major new entryway to Medicaid.

Individual Marketplace

Consumers shopping for themselves will use the Individual Marketplace

SHOP Marketplace

Small businesses shopping for their employees will use the Small Business Health Options Program (SHOP) Marketplace

Residents of All States Will Have Access to Marketplaces

Three Marketplace Options for States:

State Partnership Marketplace

State takes on some responsibility for running Marketplace, such as providing consumer assistance or managing which QHPs are offered. However, the Federal government remains ultimately responsible.

Federally-Facilitated Marketplace

HHS operates all functions.

State-Based Marketplace

State operates all marketplace functions; state may use federal government services for certain activities.

• Resident of the state
• Lawfully present
• Not incarcerated

Who is Eligible for a Qualified Health Plan in the Marketplace?

Catastrophic

High Deductible Health Plan for individuals up to age 30 or individuals exempted from mandate

Bronze

60% actuarial value

Silver

70% actuarial value

Gold

80% actuarial value

Platinum

90% actuarial value

Benchmark

Premium Costs Lower Premium Costs Higher

Types of Qualified Health Plans Offered in the Marketplace

What is actuarial value? The percentage of an enrollee’s medical costs that a plan will cover on average. The balance will be covered by the enrollee though co-pays and deductibles.

Laboratory Services Emergency Services Hospitalization Maternity and Newborn Care Mental Health and Substance Use Disorder Services, including Behavioral Health Treatment Prescription Drugs Rehabilitative & Habilitative Services & Devices Ambulatory Patient Services Preventive & Wellness Services & Chronic Disease Management Pediatric Services, Including Oral & Vision Care

QHPs Cover 10 Essential Health Benefits

Insurance Affordability Programs

Insurance Affordability Programs

• The law includes several programs that help low- and moderate-income people

purchase health insurance coverage. Together, they are known as “insurance affordability programs”.

• The Affordable Care Act creates new coverage options by expanding Medicaid and

creating Health Insurance Marketplaces that offer Qualified Health Plans (QHPs).

Medicaid Advance Premium Tax Credits (APTC) Cost- Sharing Reductions (CSR) Children’s Health Insurance Program (CHIP)

• Existing federal-state health

insurance program for low income people.

• Expanded to more low-income

adults by the ACA. States can

• pt out of expansion.
• Provides comprehensive

health care benefits

• Minimal out-of-pocket costs.
• NEW federal program that uses tax

credits to reduce premium costs for QHP enrollees.

• For people who meet financial criteria

and don’t have access to other coverage.

• Can be paid in “advance” to provide

immediate help in paying premiums.

• IRS reconciles over/under payments
• f advance premium tax credits when

people file taxes.

• NEW federal program
• Helps reduce out-of-

pocket costs for enrollees in QHPs.

• Payments are made

directly to issuers to reduce deductibles, co-insurance and/or copayments (out of pocket) costs.

• Existing federal-state

health insurance program for low- and moderate-income children.

• Provides

comprehensive health care benefits

• Modest out-of-pocket

costs.

Insurance Affordability Programs 19

Two Types of Financial Assistance for QHPs

Premium Tax Credit: 100% - 400% FPL

New federal tax credit that will help subsidize the cost of purchasing a QHP on the Marketplace for individuals without access to other coverage.

Cost Sharing Reductions: 100% - 250% FPL

New federal financial assistance that will help reduce out-of-pocket costs after payment of premiums. Individuals can receive both a premium tax credit and a cost sharing reduction.

Financial Assistance for the Cost of Insurance Premiums

Individuals and families with incomes from 100-400% of the FPL who are ineligible for Medicaid and legal immigrants with incomes less than 100% FPL who but for their immigration status would be eligible for Medicaid are eligible for premium tax credits.

Premium Tax Credits

Income Expected Family Contribution

Income Level Annual Dollar Amount (2013) Premium Contribution as a Percentage of Income Monthly Premium Contribution Individual 100 – 133% FPL $11,490-$15,282 2% $19-$25 133 – 150% FPL $15,282-$17,235 3-4% $38-$57 150 – 200% FPL $17,235-$22,980 4-6.3% $57-$121 200 – 250% FPL $22,980-$28,725 6.3-8.1% $121-$193 250 – 300% FPL $28,725-$34,470 8.1-9.5% $193-$272 300 – 400% FPL $34,470-$45,960 9.5% $272-$364 Family of Four 100 – 133% FPL $23,550-$31,322 2% $39-$52 133 – 150% FPL $31,322-$35,325 3-4% $78-$118 150 – 200% FPL $35,325-$47,100 4-6.3% $118-$247 200 – 250% FPL $47,100-$58,875 6.3-8.1% $247-$395 250 – 300% FPL $58,875-$70,650 8.1-9.5% $395-$559 300 – 400% FPL $70,650-$94,200 9.5% $559-$745

Premium Tax Credits at Work

Estimated monthly premium costs of a silver plan for an individual in California making $25,000 per year (218% FPL).

• Mr. Jones

$144 $144 $144 $369 $150 $87 25 40 55 Age $231 $294 $513 Out of Pocket Amount = 6.9% of Income Tax Credit Monthly Premium

• Families are eligible to receive cost-sharing reductions (CSR) to help with out-of-pocket costs

(not premiums) if their income is below 250% FPL and they enroll in a silver level plan.

• The amount of help provided by a CSR depends on a person’s income – more substantial help is

available to people at lower income levels.

• People who apply for insurance affordability programs are automatically assessed for CSR.

Cost-Sharing Reductions

Silver Marketplace Plan New York

Premium & Cost Sharing from Patient’s Perspective

Inpatient Facility/ SNF/ Hospice Outpatient Facility PCP

100-150% FPL $11,490 -$17,235 CSR Version

$100

Per admission

$25 $10

150-200% FPL $17,235 -$22,980 CSR Version

$250

Per admission

$75 $15

200-250% FPL $22,980 -$28,725 CSR Version

$1500

Per admission

$100 $30

>250% FPL >$28,725

$1500

Per admission

$100 $30

Source: New York Standard Benefit Design Description Chart * Premium Tax Credits only available under 400% FPL Max Monthly Premium

$19-$57 $57-$121 $121-$193 $193-$364*

Shared Responsibility Requirements

Beginning in 2014, individuals with access to affordable coverage will be required to have health insurance that meets minimum standards or will be assessed a shared responsibility payment. Reason for New Requirement: The new requirement is designed to support the private market insurance reforms included in the ACA, such as the ban on denying coverage to people with a pre-existing health condition. In the absence of this requirement, individuals might wait until they got sick to purchase insurance, making it impossible to sustain the private insurance market reforms.

Individual and Shared Responsibility Requirement

per adult per child per family

$95 $325 $695 $47.50 $162.50 $347.50 $285

max

$975

max

$2085

max

• r

family income

1% 2%

family income

2.5%

family income % of family income above tax filing threshold

whichever is greater

Individual Shared Responsibility Payment Grows Over Time

1.

Individuals who cannot afford coverage

2.

Individuals with household income below the federal tax filing threshold

3.

Members of federally- recognized Indian tribes

4.

Individuals who experience a hardship, including individuals deemed ineligible for Medicaid solely because their state did not expand

5.

Individuals who experience a short coverage gap of < 3 months

6.

Members of certain religious sects

7.

Members of a health care sharing ministry

8.

Incarcerated individuals

9.

Individuals who are not lawfully present

MEDICAID IMPACT Low-income adults below 133% FPL are exempt from the shared responsibility payment if they reside in a state that has failed to implement the Medicaid expansion.

Exemptions from the Individual Payment

Individuals who decide to pay penalty are uninsured and thus responsible for all healthcare costs.

Implications for Community Providers and Small Employers

Opportunities & Challenges for Community Providers

• Fewer uninsured
• Patients will be covered through QHPs and Medicaid
• Providers will need to contract with QHPs and

Medicaid managed care plans

• Providers will need claims processing systems
• Government grants and funding pools will decrease

Opportunities & Challenges for Small Employers

• Eligible to purchase insurance through the SHOP

Marketplace, which may provide more choices/options

• Ability to access small business tax credit, if eligible

(sliding scale based on < 25 FTEs and avg. wages of < $50,000)

• Some employers may drop coverage; refer

employees to the individual Marketplace/subsidies

• Some employers may hire part-time workers to stay

below the 50 threshold for 2015 penalties

• The new Marketplaces may become a major new gateway to

Medicaid and CHIP coverage

• As a result of the Supreme Court decision, some states may

not expand Medicaid, creating a coverage gap and logistic and communications challenges in those states

• Medicaid and CHIP are a key part of the continuum of health

coverage under the ACA

• In all states, however, sweeping improvements are coming in

the way that people sign up for and renew their Medicaid and CHIP coverage

• The outreach and education accompanying ACA will foster

greater awareness and interest in Medicaid and CHIP

Conclusion

Questions? Deborah Bachrach, Esq

Partner, Manatt Health Solutions (212) 790-4594 DBachrach@manatt.com

Appendix

ACA Glossary

Marketplace: Qualified Health Plan (QHP): Metal Levels: Insurance Affordability Programs (IAPs): Premiums: Cost-Sharing: An online portal where people can shop for health coverage, compare plans, and see if they qualify for financial assistance. Private health plans offered on the

• Marketplace. They must cover a core

package of benefits, known as essential health benefits, like prescription drugs and mental health. Type of QHPs offered on the Marketplace that vary in their Actuarial Value. They include Platinum, Gold, Silver, and Bronze. Programs designed to make it more affordable to enroll in a QHP and to use health care services. Includes premium tax credits, cost-sharing reductions, Medicaid and CHIP. What a person must pay in order to enroll in health coverage. Premiums are usually paid monthly to the insurer. What a person must pay when they use health services, such as doctors or hospital visits. They are

• ften called “out-of-pocket” costs.

Modified Adjusted Gross Income (MAGI): The way income is defined when evaluating people’s eligibility for insurance affordability programs. Based on IRS rules about what counts as income. MAGI-based Medicaid: MAGI is used to determine Medicaid eligibility for children, pregnant women, parents, and other non-disabled adults. Seniors, people with disabilities, and some other populations are evaluated based on current rules. 35

ACA Timeline: Key Examples of Early Changes

Early Changes Young Adult Coverage -- Young adults up to the age of 26 can be covered under a parent’s plan Preventive Care -- All new health plans must cover specific preventive services, such as mammograms, colonoscopies, and recommended immunizations No Lifetime Limits -- Health plans no longer can impose a lifetime dollar limit on essential health benefits a consumer receives. Scrutiny of Rate Increases -- States have new federal funding to review proposed health insurance rate increases. Ensuring Premium Dollars are Used for Health Coverage (“Medical Loss Ratio”) -- Health plans must provide rebates to consumers if they spend too much of their premium dollars on profit, marketing and other administrative expenses Ban on Pre-Existing Condition Exclusion for Children -- Health plans are banned from imposing a pre-existing condition exclusion on children under age 19.

ACA Timeline: Key Examples of Early Changes

2013/2014 Changes New “Marketplaces” open to allow people to begin shopping for a health plan October 1, 2013 (with coverage effective January 1, 2014) and to apply for insurance affordability programs Medicaid expansion for low-income adults goes into effect January 1, 2014 for participating states Major private insurance market reforms

• Ban on pre-existing condition exclusions
• Guaranteed issue and renewal
• No annual dollar limits on coverage
• New fair premium pricing policies

New shared responsibility requirement is effective for 2014 Improvements to the application and renewal process for Medicaid, CHIP and

• ther insurance affordability programs.