1.7. Affordable Care Act Implications - Effective 10/1/13
What is the Affordable Care Act?
The Affordable Care Act (ACA) refers to the Patient Protection & Affordable Care Act (ACA) that became law in March 2010. On June 28, 2012, the United States Supreme Court upheld the constitutionality of most of the ACA in National Federation of Independent Business v. Sebelius. However, the Court's opinion was that states cannot be forced to participate in the ACA's Medicaid expansion under penalty of losing their current Medicaid funding. For those states that have chosen to expand Medicaid under the ACA, beginning in 2014 coverage for the newly eligible adults will be fully funded by the federal government for three years. Federal funding to the states will go down to 90% by 2020.
Coverage through the healthcare marketplaces will begin in every state on January 1, 2014, with enrollment beginning October 1, 2013 through March 31, 2014. States can choose one of three options:
- build either a fully state-based marketplace
- enter into a state-federal partnership marketplace
- or default into a federally-facilitated marketplace
The Affordable Care Act (ACA) directs the Secretary of Health and Human Services (HHS) to establish and operate a federally-facilitated marketplace in any state that is not able or willing to establish a state-based marketplace. States entering into a state-federal partnership marketplace may administer plan management functions, in-person consumer assistance functions, or both, and HHS will perform the remaining exchange functions. In a federally-facilitated marketplace, HHS will perform all marketplace functions. It is important to note that per CMS guidance, there is no deadline for states to implement the Medicaid expansion. Requirements for legislation to implement the Medicaid expansion vary across states; some states require authorizing language and/or budgetary authority to implement the expansion while others do not. Go to the Medicaid Expansion versus traditional Medicaid section to see whether your state agreed to expand Medicaid with Affordable Care Act funding or has decided to continue to offer traditional Medicaid.
The ACA aims to increase the quality and affordability of health insurance, lower the uninsured rate by expanding public and private insurance coverage, and reduce the costs of health care for individuals and the government. It provides a number of mechanismsincluding mandates, subsidies, and insurance exchangesto increase coverage and affordability.
What is good about the Affordable Care Act?
- available coverage for Americans with pre-existing conditions - Also, health plans can no longer limit or deny benefits to children under 19 due to a pre-existing condition. View latest information on pre-existing condition insurance plans.
- individuals under age 26 may be eligible to be covered under their parent's health plan
- ends lifetime limits on coverage on most benefits
- ends arbitrary withdrawals of insurance coverage due to mistakes on insurance applications
- insurance companies must now publicly justify any unreasonable increases in premiums
- beneficiaries' premium dollars must be spent primarily on health care not administrative costs
- restricts annual dollar limits on coverage - annual limits on health benefits will be phased out by 2014
- Changes Medicare prescription drug coverage to reduce the out-of pocket cost impacts of the "doughnut hole" coverage gap. Medicare will gradually phase in additional subsidies in the coverage gap for brand-name drugs (2013) and generic drugs (2011), reducing the beneficiary payment in the gap from 100 percent to 25 percent by 2020. Between 2014 and 2019, the law reduces the out-of-pocket amount that qualifies an enrollee for catastrophic coverage, further reducing out-of-pocket costs for those with relatively high prescription drug expenses.
What is still not fixed under the ACA?
Your access to wheelchairs and related medical equipment, assistive technologies, prescription drugs and medical supplies is still at risk. Pay close attention to what rehab and hab visits are available under each plan and what medical equipment, prescription drugs and medical supplies are available.
Who can help me enroll in the right program?
States vary on what type of assistance is available to help you enroll in a health insurance program. Here is a list of the different programs in different states:
Consumer assistance programs (CAPs) - now
CAPs serve all consumers at different income levels and with varying health coverage, including private insurance, Medicare, Medicaid and low-income programs such as the Children's Health Insurance Program (CHIP) and the Healthy Families Program.
CAPs provide on-on-one education about public and private healthcare options; assist with eligibility, enrollment and plan selection; help navigate the healthcare system; troubleshoot problems; assist with consumer appeals; capture information on successes and failures to share with government agencies and improve programs. CAPs can be found at non-profit organizations contracting with a state and state ombudsman programs. CAPs funding is provided to states from the federal government.
Navigators start date October 1, 2013
Navigators provide assistance to people enrolling in the healthcare marketplaces and provide services and referrals to individuals not enrolling in the healthcare marketplaces.
Navigators educate consumers on healthcare options and assist with eligibility, enrollment and plan selection. Healthcare marketplaces must create a navigator grant program.
Navigators are not permitted to receive funding from insurers but marketplace operating funds for a navigator program must be made available, Medicaid funds may be made available.
In-person assisters start date October 1, 2013
In-person assisters provide assistance to people enrolling in the healthcare marketplaces and provide services and referrals to individuals not enrolling in the healthcare marketplaces.
In-person assisters conduct outreach and education; assist with eligibility, enrollment and health insurance plan selection. Optional program.
The marketplace or an entity contracting with the marketplace can provide IPAs.
IPAs are funded by federal marketplace grants. States can apply for marketplace grants. State-based and Consumer Assistance Partnership marketplaces can obtain federal funds to create and operate these programs.
Insurance Agents and Brokers
Brokers act on behalf of the consumer. They can be compensated by the consumer or receive compensation from an insurance company. Agents are loyal to an insurance company and sell, solicit, or negotiate insurance on
behalf of the insurer. They are compensated by the company (or companies) only. An "independent agent" is affiliated with more than one company. A "captive agent" works for or on behalf of one insurance company. (When you buy a policy directly
from an insurance company, you are probably going through an in-house agent.) Producer is a broader term that encompasses both agents and brokers. A producer is defined as someone who sells, solicits, or negotiates insurance.
Medicaid Expansion vs. Traditional Medicaid
State coverage of benefits and services varies from state to state. Medicaid Expansion vs. Traditional Medicaid.
- 26 states Medicaid expansion under the Affordable Care Act
- 22 states Traditional Medicaid
- 3 states states are debating what to do
Traditional Medicaid coverage is available for the following populations:
- Individuals with disabilities
- Individuals who are eligible for Medicare and Medicaid (dual-eligibles)
- Women who are pregnant, income eligible
- Terminally ill hospice patients
- Individuals who qualify for long term services and supports
- 'Medically frail/special medical needs' individuals
- Temporary Assistance for Needy Families (TANF)
- Some foster care and adopted children
What is a healthcare marketplace?
A healthcare marketplace (formerly called healthcare exchanges) allows individuals and employers to easily compare and evaluate health insurance plans: compare quality and affordable health insurance options; apply for tax credits; and, receive enrollment support.
- Federal marketplace - 27 states
- Partnership marketplace - 7 states
- State-based marketplace - 16 states plus the District of Columbia
Small Business Health Options Program (SHOP)
The Small Business Health Options Program (SHOP) is a new program that simplifies the process of buying health insurance for your small business.
For 2014, the SHOP Marketplace is open to employers with 50 or fewer full-time employees. The advantages of using SHOP include:
- You control the coverage you offer and how much you pay toward employee premiums.
- You can compare health plans online on an apples-to-apples basis, which helps you make a decision that's right for your business.
- You may qualify for a small business health care tax credit worth up to 50% of your premium costs. You can still deduct from your taxes the rest of your premium costs not covered by the tax credit. Beginning 2014 the tax credit is available only for plans purchased through SHOP.
- You don't need to offer coverage to your part-time employees or to dependents. Starting in 2014, the tax credit is worth up to 50% of your contribution toward employees' premium costs (up to 35% for tax-exempt employers). The small business tax credit is only available if you obtain coverage through the Small Business Health Options Program (SHOP) Marketplace.
- The tax credit is highest for companies with fewer than 10 employees who are paid an average of $25,000 or less. The smaller the business, the bigger the credit.
Tax credits and other help with costs will make coverage more affordable for individuals, families and small businesses, see Small Business Health Options Program (SHOP) listed above.
If your income falls between 100% and 250% of the federal poverty level ($11,490 to $28,725 for an individual), you may be eligible for a Cost-Sharing Reduction subsidy, which can help lower your deductibles, co-payments and coinsurance. In order to receive Cost-Sharing Reductions, you must purchase a Silver plan on the Marketplace. You will still have a variety of plans from which to choose, but it must be Silver to be able to take advantage of the Cost-Sharing Reduction subsidy.
Many people will qualify for Advanced Premium Tax Credits, a type of subsidy that lowers your monthly premium. You may be eligible for this subsidy if your income falls between 100% and 400% of the federal poverty level ($11,490 to $45,960 for an individual).
Tip: The Cost-Sharing Reduction and Advanced Premium Tax Credits subsidies are not automatic: you must apply for them on the Health Insurance Marketplace. For individuals and families
What is a Qualified Health Plan?
Under the Affordable Care Act, starting in 2014, an insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts). A qualified health plan will be certified by each Marketplace in which it is sold. Plans are categorized under 4 different levels known as metal levels: bronze, silver, gold and platinum. The four levels of health plans are differentiated based on their actuarial value that is, the average percentage of health care expenses that will be paid by the plan. The higher the actuarial value (i.e. gold and platinum), the more the plan will pay towards your health care expenses and, therefore, the lower your out-of-pocket costs for things such as:
- Deductibles the amount you owe for covered services before insurance kicks in.
- Co-payments a fixed amount you pay for a covered health care service.
- Coinsurance your share of the costs of a covered health care service.
The downside to the plans that provide more coverage is that you will pay a higher premium each month. On average, a bronze plan will cover 60% of covered medical expenses, and your share will be the remaining 40%. Bronze plan is valued at 60%, Lilver is valued at 70%, Gold is valued at 80% and Platinum is valued at 90%.
For example, Silver Plan A (which generally pays 70% of your health care expenses) offers a high $2,000 deductible and a low 15% coinsurance. Silver Plan B, on the other hand, has a low $250 deductible but a higher 30% coinsurance.
Your monthly health insurance premium will be higher if you choose a higher level plan, such as Gold or Platinum. But you will also pay less each time you visit a health care provider or get a prescription filled. Conversely, your monthly premium will be lower if you choose a Bronze or Silver plan, but you will pay more for each doctor visit, prescription or health care service that you use. Your share of costs might come in the form of a large deductible with low coinsurance once you've met your deductible. Another plan might offer a low deductible with higher coinsurance.
Essential Health Benefits (EHB) Package
What is an Essential Health Benefits package or EHB?
Essential Health Benefits or EHB refers to health plans that have not been 'grandfathered in' to be included in individual and small group markets both inside and outside of the healthcare marketplaces and must cover EHB beginning January 1, 2014. EHB includes items and services within the following 10 benefit categories:
(1) ambulatory patient services
(2) emergency services
(4) maternity and newborn care
(5) mental health and substance use disorder services, including behavioral health treatment
(6) prescription drugs
(7) rehabilitative and habilitative services and devices
(8) laboratory services
(9) preventive and wellness services and chronic disease management, and
(10) pediatric services, including oral and vision care
Under State Medicaid expansion, individuals generally are enrolled in a state's Alternative Benefit Plan (ABP) and specific populations such as individuals with disabilities and other specific populations are enrolled in traditional Medicaid. Specific populations include pregnant women, individuals on Medicare and Medicaid (dually-eligible), terminally ill hospice patients, beneficiaries qualifying for long-term care services and supports, medically frail and special medical needs individuals, Temporary Assistance for Needy Families and section 1931 (determining eligibility for individuals to be on welfare) as well as some children who are in foster care or are adopted.
Summary of benefits and coverage
Individuals need to check to see whether their medical equipment and supplies are adequately covered under the rehabilitative and habilitative services and devices benefit within the EHB package. Click this link to see each state's list of state required benefits, summary of benefits along with a guide to reviewing each states' essential health benefits plans. Check to see that you are getting the right benefits and services for your needs
Employer Mandate in the Affordable Care Act
Under the employer mandate, employers with at least 50 full-time workers must provide affordable health coverage or face a $2,000 fine per worker after the first 30 employees. The employer mandate will be delayed for one year -- until 2015 -- to address employers' and business groups' concerns and to give them more time to comply with the reporting requirements. The employer mandate has been delayed for one year until January 1, 2015.
Individual Mandate in the Affordable Care Act
All individuals must carry some form of health insurance coverage or pay a tax through state healthcare marketplaces or subsidies.
If individuals choose not to carry insurance, they are subject to a penalty, starting at $95 per person per year or 1 percent of income in 2014, whichever is greater, and eventually reaching $695 per person or 2.5 percent of income by 2016. The individual mandate begins January 2014.
State Children's Health Insurance Program (SCHIP)
State Children's Health Insurance Program (SCHIP) or Children's Health Insurance Program (CHIP), signed into law in 1997, is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to families with children. The program covers nearly 8 million children in families with incomes that are too high to qualify for Medicaid but cannot afford private coverage.
What about the Affordable Care Act and CHIP?
The Affordable Care Act of 2010 maintains the CHIP eligibility standards in place as of enactment through 2019. The law extends CHIP funding until October 1, 2015, when the CHIP federal matching rate will be increased by 23%, bringing the average federal matching rate for CHIP to 93%. The Affordable Care Act also provided an additional $40 million in federal funding to continue efforts to promote enrollment in Medicaid and CHIP.
Consumer Questions and Helpful Resources
State Health Insurance Assistance Program (SHIP)
- State Health Insurance Assistance Programs (SHIPs) provide personalized counseling and assistance to 45 million Medicare beneficiaries and their caregivers who need help navigating the complex healthcare system, including the Medicare program.
- Residents of nursing homes, board and care homes and assisted living facilities can contact a long-term care ombudsman program located in every state, the District of Columbia and Puerto Rico.
Learn more information about the new law at Health Care.Gov
 Children's Health Insurance Program medical coverage of pregnant women and their infants. CHIP provides low-cost insurance to women and newborns whose family is not eligible for Medicaid.
 Self-insured group health plans, health insurance coverage offered in the large group market, and grandfathered health plans are not required to cover the essential health benefits.