Patient Protection and Affordable Care Act - Series II
I hope you found our first installment of the PPACA Snap Shot for Small Businesses, helpful.
This week marks the 3 year anniversary of the Affordable Care Act.
Below you will find the second installment that I hope sheds some light on a few areas that are actively discussed in the industry right now.
Topics covered in PPACA Series II:
- Small Business Exchange aka “The SHOP” (Small Business Health Options Program)
- Individual Exchange
- Glossary of Frequently Used Terms & Resources
Topics that will be covered in PPACA Series III:
- Employers obligation to notify employees of affordable option in the marketplace
- Important information that comes to the front line (TBD)
Did you know?
- Common Ownership/Controlled Group rules may change the way your company is categorized. It may appear as though the company falls below the 50 employee threshold, however, through Common Ownership/Controlled Group classification, the company actually employs over 50 employees and may be subject to fees and penalties for failing to meet the Employer Responsibility requirements as per PPACA
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Small Business Exchange aka “The SHOP” (Small Business Health Options Program)
- Covered California has two separate programs: the Individual Marketplace and the Small Business Health Options Program (SHOP). Think of the SHOP as a hub that aggregates plans and acts as your “Agent”. (see chart below for a visual). In many ways it will work in a similar way as Cal Choice plans work already in the market place. Offering employers the ability to offer a variety of carrier options within their selected level of benefits (I will get in to the level of benefits shortly).
- In 2014 the SHOP will serve businesses with 2-50 employees and potentially up to 100 employees, depending on actions by the Legislature. In 2017 all employers with 100 or fewer employees may join. States may allow businesses with more than 100 employees to participate after 2017.
- Small businesses with 25 or fewer employees and an average annual wage of less than $50,000 will be eligible to receive a 50% federal small-business tax credit for coverage purchased through the SHOP. An estimated 375,000 small employers in California qualify for the tax credit. In my opinion, this tax credit for participating in the SHOP may be the min initial deciding factor for small employers.
- Under the Affordable Care Act (ACA), insurers will be required to offer plans that fit within four levels of benefits: bronze, silver, gold and platinum. Insurers don't have to offer plans in all four levels, but within the health insurance Exchanges, all insurers must offer at least one silver and one gold plan.
- Each plan level must cover the same set of minimum essential health benefits - greater detail on these benefits will be determined by the Department of Health and Human Services (HHS). But while the scope of benefits will be the same among the plans, the value of those benefits will vary across the bronze, silver, gold and platinum levels. This means the amount of cost-sharing required will differ in those tiers. Bronze plans will have the least generous coverage with more out-of-pocket costs for enrollees, and platinum plans will have the most generous benefits.
- Bottom line is that in and out of the SHOP, health plans will become a lot more standardized allowing consumers to compare options in more of an “Apples to Apples” comparison.
- The role of the Broker/Agent will be more valuable than ever as these next phases of ACA are implemented. It is my prediction that the personnel hired within the SHOP/Exchange will not have the capacity to personalize the Employer’s and/or the Individual’s needs compared to the options available.
- The Affordable Care Act (ACA) requires as of January 1 2014, all citizens and legal residents to have qualifying health coverage or pay a tax penalty. The individual responsibility requirement makes it possible for everyone - including people with pre-existing conditions like diabetes, asthma or cancer - to get health insurance.
- California has developed the Individual Exchange which has been named Covered California. Just like the Small Business Tax Credits mentioned above, Individuals may be eligible for advanced tax credits called subsidies based on income levels. Below in the simple FAQ, you can find an example of a family of 4 and how the subsidy applies. Individuals can compare plans within the exchange or with private carriers as they do now. Individuals who are covered by what is called a “Grandfathered” plan, will be able to keep their current plan benefits. Otherwise all plans will roll over to standardized plan benefits known as Bronze, Silver, Gold and Platinum. Much like the Small Business plans discussed, Individual plans will become much more efficient for comparison and predictability for cost planning. Medical conditions will no longer be a problem when enrolling in a plan.
- As things stand at this point, October is said to be the first “Open Enrollment” window, lasting until March of 2014, for individuals to obtain coverage. Expected premiums are said to be released sometime after May 2013.
- http://www.coveredca.com/ is the official website for people to calculate subsidies and get further details as they are released.
Glossary of Frequently Used Terms & Resources
Here are just a few commonly used terms to familiarize yourself with:
- Affordable Coverage: Coverage is affordable if the employee’s required contribution for self-only coverage does not exceed 9.5 percent of the employee’s modified adjusted gross household income for the taxable year. Affordability depends entirely upon the cost of individual health insurance for the employee, “self-only coverage,” and does not extend to affordable insurance for an employee’s children or spouse.
- Children’s Health Insurance Program (CHIP): Insurance program jointly funded by state and Federal government that provides health insurance to low-income children and, in some states, pregnant women in families who earn too much income to qualify for Medicaid but cannot afford to purchase private health insurance coverage.
- Essential Health Benefits: A set of health care service categories that must be covered by certain plans, starting in 2014. The Affordable Care Act defines essential health benefits to “include at least the following general categories and the items and services covered within the categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.” Insurance policies must cover these benefits in order to be certified and offered in Marketplaces, and all Medicaid State plans must cover these services by 2014. Starting with plan years or policy years that began on or after September 23, 2010, health plans can no longer impose a lifetime dollar limit on spending for these services. All plans, except grandfathered individual health insurance policies, must phase out annual dollar spending limits for these services by 2014. The Department of Health and Human Services is working with a number of partners to develop the essential health benefits package. In the fall of 2011, HHS launched an effort to collect public comments and heard directly from many Americans who were interested in sharing their thoughts on this important issue.
- Full-Time Employee: An employee who is employed an average of at least 30 “hours of service” per week.
- Grandfathered Health Plan: As used in connection with the Affordable Care Act: A group health plan that was created—or an individual health insurance policy that was purchased—on or before March 23, 2010. Grandfathered plans are exempt from many changes required under the Affordable Care Act. (Note: If you are in a group health plan, the date you joined may not reflect the date the plan was created. New employees and new family members may be added to grandfathered group plans after March 23, 2010).
- HIPAA Eligible Individual: Your status once you have had 18 months of continuous creditable health coverage. To be HIPAA eligible, at least the last day of your creditable coverage must have been under a group health plan; you also must have used up any COBRA or state continuation coverage; you must not be eligible for Medicare or Medicaid; you must not have other health insurance; and you must apply for individual health insurance within 63 days of losing your prior creditable coverage. When you’re buying individual health insurance, HIPAA eligibility gives you greater protections than you would otherwise have under state law.
- Minimum Essential Coverage: The type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. This includes individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage. Minimum essential coverage refers to health insurance coverage under an insured or self-insured group health plan, which does not include “excepted benefit” coverage. Coverage provides “minimum value” if it covers at least 60 percent of the total allowed cost of benefits provided under the plan as determined using the HHS and IRS minimum value calculator.
- Patient Protection and Affordable Care Act: In March 2010, Congress passed and the President signed into law the Patient Protection and Affordable Care Act (PPACA), making sweeping changes to the U.S. health care system. These changes put in place comprehensive health insurance reforms that aim to hold insurance companies accountable, lower health care costs, create more choice and flexibility and enhance the quality of care for you and your employees.
Links and Resources:
- HealthCare.gov A federal government website dedicated to explaining the Affordable Care Act and managed by the U.S. Department of Health & Human Services
- The Center for Consumer Information & Insurance Oversight (CCIIO) Fact Sheets & Frequently Asked Questions on the Affordable Care Act
- Center for Disease Control Healthier Workplace Health Programs Easy-to-use toolkit to help you launch a workplace health program
- Jolene Bibian
Leon Rousso and Associates