Ready, Set, Let’s Go!
What Obamacare Means for
Individuals and Business
Owners
October 2013
AKR, Inc. – 2013
Health Care Funding by Source
Where do Americans get their health insurance?
•Government policy since World War II has enc...
The Patient Protection and
Affordable Care Act
On March 23, 2010, President Obama signed the Patient
Protection and Afford...
The Supreme Court Decision
On July 24, 2012, the Supreme Court upheld the Patient Protection and
Affordable Care Act with ...
Affordable Care Act
Provisions Already in Place
Insurance provisions of the Affordable Care Act (ACA) apply to new policie...
More ACA Provisions Already in Place
Community health
•Expansion of state Medicaid programs with Federal subsidies
•Incent...
TEN FACTS ABOUT OBAMACARE/ The ACA
1. No lifetime limit on coverage for 105 million Americans
2. Up to 17 million children...
Affordable Care Act
2014 Changes to Health Coverage
2014 Health Coverage Changes
•Insurance Market Reforms
•Health Insuran...
Essential Health Benefits
Effective January 1, 2014, all new health insurance plans must
include coverage for the followin...
The Affordable Care Act in California
California is cooperating fully with implementation of
the Affordable Care Act (ACA)...
January 1, 2014
Full Implementation Begins
• Insurance companies may neither deny coverage nor increase premiums
based on ...
State Exchanges - 2014
• All states must have exchanges/marketplaces for health insurance
policies. As of October 2013, 17...
The Affordable Care Act for
Business Owners
AKR, Inc. – 2013
2014 Requirements for Employers
• Employers with 25 or fewer employees
o Not required to provide health insurance
o Tax cr...
Full-Time, Part-Time and Full-time Equivalents
• Calculation of number of employees includes part-
time employees.
• Full-...
Affordable Coverage for Employees
• Coverage provided by employer-sponsored policies must be
affordable for employees.
• “...
When Coverage is not “Affordable”
• If employee share of the cost of an employer sponsored
health plan is not “affordable,...
Tax Credits for Small Employers
• Beginning in 2014, small business employers must purchase
coverage for their employees t...
Employers:
Different Sizes – Different Requirements
• Fast food franchisees are exempt from providing the same
types of co...
Will I Get a Tax Credit?
To qualify for a tax credit, an employer must:
•Purchase coverage for employees through the SHOP ...
I’m a Small Business Owner,
Where Do I Go to Buy Coverage?
Employers have options:
•Buy insurance on the private market. K...
Is There an Advantage if I Buy Coverage
for my Employees through SHOP?
Purchasing Employee Health Insurance Through SHOP o...
More Advantages
to Buying through SHOP
• A Larger Pool of Employees Covered: Employers are able to
purchase policies based...
What is Employee Choice?
Employee Choice is a feature of the Affordable Care Act that allows
employers select a level of c...
The Affordable Care Act for
Individuals and Families
AKR, Inc. – 2013
2014 Requirements for Individuals
• Individuals and families must have health insurance.
• Subsidies in the form of income...
2013 Annual Income for Subsidy by Household Size
*Add $4,020 for each additional family member to calculate 100% FPL for l...
2013 Monthly Income for Subsidy by Household Size
*Add $335 for each additional family member to calculate 100% FPL for la...
Tax Penalties
for Individuals Refusing to Buy Insurance
• Penalties will be incurred by persons who refuse to purchase a h...
Enforcement of the Penalty
• Premiums paid for purchase of insurance will be reported as part of normal
income tax filing....
The Affordable Care Act for
Everyone
AKR, Inc. – 2013
Bronze, Silver, Gold, Platinum?
Sounds Expensive! What’s this all about?
Health Insurance plans under the Affordable Care ...
Consumer Share of Cost
The consumer’s share of cost includes:
Deductible: A fixed amount that must be paid by the consumer...
Grandfathered Plans?
March 23, 2010 is the magic number here.
Any policy purchased before March 23, 2010 and not changed s...
Where Can I Get Coverage?
• Both Individual and Employer-based coverage are available through
Covered California. Consumer...
How will Off-exchange policies differ?
Each company offering policies on the Exchange will also be
offering policies equiv...
Can I Have an Agent?
Yes. Covered California encourages consumers to select agents with
whom to work.
Finding an agent:
•I...
Do I have to use an agent?
No one is required to use an agent in purchasing a policy
through the Exchange. In fact, comput...
When Can I Buy a Policy?
2013: Open enrollment begins October 1 and continues until March 31, 2014.
For coverage to begin ...
Why Should I Buy
Through the Exchange?
• Only policies purchased through the Exchange allow the consumer
or employer to cl...
Please Remember …
• The individual mandate is effective in 2014, even for people who should
be getting their insurance thr...
Recertification?
• Consumers who are eligible for the advance tax credit premium
subsidies are expected and encouraged to ...
Women’s Preventive Health Services
• Preventive health services for women include specific
coverage for cancer screening e...
Tax changes in 2013
• Increased Medicare payroll tax for high-income earners
and a new tax on their net investment income
...
Administrative changes in 2013
• FSA (Flexible Spending Account) limitations
• Nationwide bundled payment pilot begins in
...
So Everyone Will Be Able to Get Insurance Who Wants It?
In the best of all possible worlds, no one in the United States wo...
Basic Definitions
Actuarial Value: a technical term that describes how much of
the cost for health care an insurer will pa...
More Basic Definitions
MAGI: Modified Adjusted Gross Income – used to establish
eligibility for advance premium tax credit...
Online Resources for the Affordable Care Act
General Information
•http://www.healthcare.gov
•http://www.healthcare.gov/law...
Online Resources for the Affordable Care Act
California-specific information
•CoveredCA.com
•http://www.healthexchange.ca....
This presentation has been brought to you courtesy
of Advanced Knowledge Resources in cooperation
with Pozos Insurance Ser...
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What The Affordable Care Act -Obama Care - Means for Individuals and Businesses in California

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The Patient Protection and Affordable Care Act (Obama Care) provides opportunities for individuals and very small businesses to obtain affordable health insurance. More people will be covered in states like California which are expanding Medicaid (Medi-Cal) coverage. It is a complicated law but we hope that this presentation can give a suitable overview for the way the law is being implemented in the State of California.

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What The Affordable Care Act -Obama Care - Means for Individuals and Businesses in California

  1. 1. Ready, Set, Let’s Go! What Obamacare Means for Individuals and Business Owners October 2013 AKR, Inc. – 2013
  2. 2. Health Care Funding by Source Where do Americans get their health insurance? •Government policy since World War II has encouraged use of health insurance benefits as a way of increasing wages without increasing taxation. Employer contributions are tax deductible for the employer and not taxed as income for the employee. •Government-paid health care benefits are not taxed as income to beneficiaries. •In 2014, the playing field will be leveled for those who must buy their own insurance – advance tax credits may be used to help pay insurance premiums. AKR, Inc. – 2013 Source Percentage Employer-sponsored 58% Government: Medicare, Medicaid, Veterans Administration, Military, Other 32% Individual purchase or Uninsured 15%
  3. 3. The Patient Protection and Affordable Care Act On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act into law. The first provisions of the law became effective September 23, 2010. Complete implementation of the new law was planned to occur over a five year period. Insurance Exchanges or Marketplaces for individuals and small businesses open for business January 1, 2014. AKR, Inc. – 2013
  4. 4. The Supreme Court Decision On July 24, 2012, the Supreme Court upheld the Patient Protection and Affordable Care Act with its requirement that individuals buy insurance (the “individual mandate”). The Court ruled that the mandate falls within Congress’ ability to impose taxes. The Court also ruled that the penalty for States that refuse to expand Medicaid coverage for low income people was excessive and could not be enforced. The penalty as written would have eliminated the entire existing Federal contribution to Medicaid for non-compliant states. The option remains to change the terms of the penalty for States that do not participate to make it reasonable and therefore acceptable. (Medicaid is known as “Medi-Cal” in California.) While many states opted not to expand Medicaid, the Patient Protection and Affordable Care Act was upheld as constitutional and is the law of the land. AKR, Inc. – 2013
  5. 5. Affordable Care Act Provisions Already in Place Insurance provisions of the Affordable Care Act (ACA) apply to new policies written after September 23, 2010. Effective dates of other provisions will phased in through 2015, with most becoming effective January 1, 2014. Insurance Policy Changes: 1.No lifetime limit on coverage. 2.Annual coverage limits restricted – None allowed after 2014. 3.No denial of coverage for children with pre-existing conditions. 4.Young adults, up to age 26, may obtain health insurance through their parents’ plan. 5.Insurers cannot drop coverage when an insured becomes ill. 6.Free coverage for comprehensive preventive services for women began August 2012. 7.Preventive exams and care in policies are not subject to deductibles or copays. 8.Premium rebates from health insurance companies that did not spend at least 80-85% of premiums received to provide benefits for their policyholders began to be sent to consumers during Summer 2012. AKR, Inc. – 2013
  6. 6. More ACA Provisions Already in Place Community health •Expansion of state Medicaid programs with Federal subsidies •Incentives for health care professionals to become primary care providers. •Increased access to home-based and community center-based care. •Programs in place to: o Improve access to health care information, o Expand community health center programs, o Support rural health programs, o Improve record-keeping and health care quality Medicare •Closure of the “donut hole” in Medicare Prescription Drug plans has begun – will occur in increments through 2020 •Steps to reduce waste and fraud in Medicare programs •Expanded coverage for early retirees •Strengthening of Medicare Advantage programs while eliminating overpayments to private insurers for such plans. •Improved follow-up care for Medicare patients Businesses •Small Business Health Care Tax Credit for businesses with 25 or fewer employees. AKR, Inc. – 2013
  7. 7. TEN FACTS ABOUT OBAMACARE/ The ACA 1. No lifetime limit on coverage for 105 million Americans 2. Up to 17 million children with pre-existing conditions can no longer be denied coverage by insurers. 3. 6.6 million young adults up to age 26 have taken advantage of the law to obtain health insurance through their parents’ plan. 4. Free coverage for comprehensive preventive services for millions of women started in August 2012. 5. 86 million Americans, including 32 million seniors in Medicare, have already received free preventive services. 6. 5.3 million seniors have already saved $3.7 billion on their prescriptions drugs. 7. Since the health care law was enacted in March 2010, 4.2 million private sector jobs have been created – many of them in the health care industry. 8. The Small Business Health Care Tax Credit has already been used by 360,000 small businesses to help insure 2 million workers. 9. Approximately $1.1 billion in rebates from health insurance companies in 2012 benefited nearly 13 million Americans. 10. The health care law is projected to reduce the deficit by $124 billion over the next 10 years and over $1 trillion over the following decade. Source: DCCC.ORG/Obamacare Benefits already received by Americans by mid-2012 AKR, Inc. – 2013
  8. 8. Affordable Care Act 2014 Changes to Health Coverage 2014 Health Coverage Changes •Insurance Market Reforms •Health Insurance Requirement – The Individual Mandate •Affordable Coverage and Financial Support •Health Insurance Marketplace – The Exchanges •New Coverage Options for Small Businesses – SHOP •Expansion of Medicaid (Medi-Cal in California) •Essential Health Benefits •Use of Standard Health Plan Options – Metallic Tiers •Basic Coverage Plan – Catastrophic care policy for those under age 30 •Child Only Plans AKR, Inc. – 2013
  9. 9. Essential Health Benefits Effective January 1, 2014, all new health insurance plans must include coverage for the following Essential Health Benefits: 1.Ambulatory patient services 2.Emergency services 3.Hospitalization 4.Maternity and newborn care 5.Mental health & substance abuse disorder services, including behavioral health treatment 6.Prescription drugs 7.Rehabilitative and habilitative services and devices 8.Laboratory services 9.Preventive and wellness services & chronic disease management 10.Pediatric services AKR, Inc. – 2013
  10. 10. The Affordable Care Act in California California is cooperating fully with implementation of the Affordable Care Act (ACA). •All of the provisions on the prior slides have been implemented in California. •Additionally, California was the first state in the nation to enact legislation creating a health benefit exchange under federal health care reform. •In advance of ACA requirements to offer maternity care as an Essential Health Benefit by 2014, all newly written policies in California as of July 1, 2012 include maternity care. AKR, Inc. – 2013
  11. 11. January 1, 2014 Full Implementation Begins • Insurance companies may neither deny coverage nor increase premiums based on pre-existing conditions or development of illness or injury. • Individuals and families are required to have health insurance unless exemptions apply. • Insurance may be obtained through new or existing employer group policies, individual policies, state exchanges, or governmental programs including Medicare, Medicaid, Veterans Administration, military plans, or TriCare plans. • Exempt individuals include but are not limited to: o Persons with religious objections o Persons for whom purchase of a policy would be a hardship o People not required to file income tax reports o Persons permanently incarcerated o Members of Native American tribes and Alaska Natives AKR, Inc. – 2013
  12. 12. State Exchanges - 2014 • All states must have exchanges/marketplaces for health insurance policies. As of October 2013, 17 states and the District of Columbia, have developed their own marketplaces. The others have a partnership arrangement with the federal government or federally- facilitated marketplaces. California operates its own marketplace. • Many major health insurance providers are offering policies through Covered California. o Policies offered through the exchange must include the federally specified Essential Health Benefits. o Policy premiums must be no higher than those for a healthy person of the same age as the insured, regardless of sex of the insured. o Tax credits will be used to provide a subsidy for middle and lower income purchasers of insurance through the exchanges.  Much of the increased staffing of the IRS will be put in place to ensure people know about and get the credits for which they qualify. AKR, Inc. – 2013
  13. 13. The Affordable Care Act for Business Owners AKR, Inc. – 2013
  14. 14. 2014 Requirements for Employers • Employers with 25 or fewer employees o Not required to provide health insurance o Tax credits available to help with the cost of insuring employees • Employers with 50 or fewer FTE employees o Not required to provide health insurance • Employers with 51 or more FTE employees o Must sponsor affordable health insurance plans for their employees o Penalties of $2,000 per employee annually apply for those who do not provide affordable coverage o Penalty provision excludes the first 30 employees o If coverage is too expensive, employees may purchase coverage through the state exchanges. Employer will be required to pay a penalty to reimburse some of the administrative costs of the policy. AKR, Inc. – 2013
  15. 15. Full-Time, Part-Time and Full-time Equivalents • Calculation of number of employees includes part- time employees. • Full-time refers to employees who work 30 hours per week or more. • Part-time employees are those who work 20-29 hours per week. Their hours are combined and then divided by 30 to determine the number of full-time equivalent employees of a business. • Businesses are not required to offer coverage to part- time employees, but they must count employee hours in determining their requirement to provide employee health care. AKR, Inc. – 2013
  16. 16. Affordable Coverage for Employees • Coverage provided by employer-sponsored policies must be affordable for employees. • “Affordable” policies are those for which employee contributions cost 9% of their income or less when coverage contributions are made by employers for employees only. • Minimum employer contribution is 50%, but employers may choose to contribute any amount in excess of 50%. • Employers are not required to contribute towards coverage for employee dependents. • When dependent coverage is offered, total employee cost must be 8% or less of employee wages to be deemed “affordable.” AKR, Inc. – 2013
  17. 17. When Coverage is not “Affordable” • If employee share of the cost of an employer sponsored health plan is not “affordable,” the employee is eligible to purchase a plan from the exchange marketplace, with possible subsidy. The employer may pay a penalty for failure to provide affordable insurance. • Employees who work fewer than 20 hours weekly are not included among those whose insurance employers must sponsor. Such employees may purchase insurance from the exchange marketplace. Many will qualify for expanded Medi- Cal. • If dependent care is not offered by an employer, employees may be able to purchase subsidized insurance for their dependents through the exchange marketplace. AKR, Inc. – 2013
  18. 18. Tax Credits for Small Employers • Beginning in 2014, small business employers must purchase coverage for their employees through their state exchange in order to receive a tax credit for their contributions to the cost of the premiums. • Percentage of the premium covered by the tax credit will be increased in 2014. • Small group policies may be purchased during Open Enrollment from October to December or throughout the year, when business plans would normally be renewed. Employees will have open-enrollment periods at renewal as they do now. As always, if you are a business owner, consult your tax adviser for information and advice specific to your business situation. AKR, Inc. – 2013
  19. 19. Employers: Different Sizes – Different Requirements • Fast food franchisees are exempt from providing the same types of coverage other employers must offer. Many are also exempt because they have fewer than 50 FTE employees • In 2015, businesses with up to 100 employees will be able to purchase insurance through the Small Business Health Option Program (SHOP). For 2014, the limit is 50 employees. • Companies with 200 or more employees are classified as “large groups” in the insurance market. They must provide coverage.  99% of companies with 200 or more employees already provide coverage. They’ve found that keeping employees healthy improves their “bottom line.” AKR, Inc. – 2013
  20. 20. Will I Get a Tax Credit? To qualify for a tax credit, an employer must: •Purchase coverage for employees through the SHOP marketplace beginning in 2014. •Have fewer than 25 FTE employees for the tax year. •Pay combined average annual wages that don’t exceed $50,000 per employee. •Contribute at least 50% of employee premium costs. Add-on coverage contributions must also be funded at the same minimum level. Employers with under 10 FTE employees whose wages average under $25,000 annually may qualify for the maximum tax credit if they contribute at least 50% towards employee premium costs. A tax credit calculator is available on www.coveredca.com to help business owners estimate tax credit amounts. Consult your tax advisor regarding your specific case. AKR, Inc. – 2013
  21. 21. I’m a Small Business Owner, Where Do I Go to Buy Coverage? Employers have options: •Buy insurance on the private market. Keeping current “grandfathered” insurance policies in force is an option. New policies will also be available on the private market. •Buy insurance through private exchanges. •Buy insurance through Covered California’s SHOP (Small Business Health Option Program). •Contribute a fixed amount to employees and allow them to shop for their own coverage. Caution: This option applies only to those with fewer than 50 FTE employees. – If under 50 FTE employees, employers are not required to provide health insurance coverage for their employees. Employees may go to the Individual Marketplace for coverage and find more affordable options •Go to the Individual Marketplace: “Mom & Pop” enterprises with no W-2 employees may qualify for subsidies on the Individual Marketplace. No business tax credits are applicable for these business owners. AKR, Inc. – 2013
  22. 22. Is There an Advantage if I Buy Coverage for my Employees through SHOP? Purchasing Employee Health Insurance Through SHOP offers many advantages to employers. •Greater potential selection of policies for employees: Employees can purchase a policy from any company offering one in the Tier selected by their employer. If they prefer a more expensive policy, they can pay the difference in price themselves. •Greater predictability and control of costs: Employers choose a Tier of policies and select the percentage of employee premium cost they will pay. Employer contribution is set at the employer’s chosen percentage of the premium for the lowest cost policy in that Tier. AKR, Inc. – 2013
  23. 23. More Advantages to Buying through SHOP • A Larger Pool of Employees Covered: Employers are able to purchase policies based on a larger risk pool. This larger pool and more competition among insurers for your business leads to the potential for lower prices. No more price uprating for being a smaller business. • Potential tax credits: Small employers who are not required to offer coverage but do so anyway may qualify for credits on their income tax return to help them cover the cost of insuring their employees. • Happier, healthier employees: Employees who get preventive care and can afford to consult a doctor when they are not feeling well are more likely to remain healthy, recover more quickly from illness or injury, and be more loyal to their employers. If this were not the case, large employers would not offer this benefit to their employees! AKR, Inc. – 2013
  24. 24. What is Employee Choice? Employee Choice is a feature of the Affordable Care Act that allows employers select a level of coverage from the metal tiers and identify the total amount of money they will contribute to pay for insurance for each full time employee. This type of arrangement is known as a defined contribution and provides advantages both to employers and to employees. If an employee chooses a policy that is more expensive than the least expensive policy available on that tier, the employee will pay an extra share of the premium. Through Employee Choice, employers can predict more closely their total cost for health insurance benefits. Employees can select a policy that more closely meets their needs from among a larger selection of companies and policies. Employee Choice is not required nationally by federal law until 2015. However, California has chosen to implement this provision in 2014 to help make it more affordable for employers to offer health insurance to employees. AKR, Inc. – 2013
  25. 25. The Affordable Care Act for Individuals and Families AKR, Inc. – 2013
  26. 26. 2014 Requirements for Individuals • Individuals and families must have health insurance. • Subsidies in the form of income tax credits begin for middle-income Americans. o If no affordable employer policy available o Plans may be purchased through the exchanges o Household income between 138-400% of the federal poverty level (FPL) – qualify for federal subsidies to pay for premiums and/or cost sharing obligations – estimated based on 2013 income projections o Individuals and families at 100% to 138% FPL will qualify for Medicaid (Medi-Cal in California), which will be expanded to include adults with no children at home and low-income Medicare beneficiaries. Premium Subsidies 138% of FPL 400% of FPL Individual $15,852 $45,960 Family of 4 $32,496 $94,200 AKR, Inc. – 2013
  27. 27. 2013 Annual Income for Subsidy by Household Size *Add $4,020 for each additional family member to calculate 100% FPL for larger families. The Federal Poverty Level (FPL) is adjusted annually. Figures on this chart are for the 48 contiguous states. FPL for Alaska and Hawaii is higher. Most recent figures are available at: http:// www.familiesusa.org/resources/tools-for-advocates/guides/federal-poverty-guidelines.html AKR, Inc. – 2013 Household Size 138% FPL 250% FPL 400% FPL One $15,852 $28,725 $45,960 Two $21,408 $38,775 $62,040 Three $26,952 $48,825 $78,120 Four $32,496 $58,875 $94,200 Five $38,052 $68,925 $110,280 Six $43,596 $78,975 $126,360 Seven $49,140 $89,025 $142,440 Eight* $54,684 $99,075 $158,520
  28. 28. 2013 Monthly Income for Subsidy by Household Size *Add $335 for each additional family member to calculate 100% FPL for larger families. The Federal Poverty Level (FPL) is adjusted annually. Figures on this chart are for the 48 contiguous states. FPL for Alaska and Hawaii is higher. Most recent figures are available at: http://www.familiesusa.org/resources/tools-for-advocates/guides/federal-poverty-guidelines.html AKR, Inc. – 2013 Household Size 138% FPL 250% FPL 400% FPL One $1,321 $2,393.75 $3,830 Two $1,784 $3,231.25 $5,170 Three $2,246 $4,068.75 $6,510 Four $2,708 $4,906.25 $7,850 Five $3,171 $5,743.75 $9,190 Six $3,633 $6,581.25 $10,530 Seven $4,095 $7,418.75 $11,870 Eight* $4,557 $8,256.25 $13,210
  29. 29. Tax Penalties for Individuals Refusing to Buy Insurance • Penalties will be incurred by persons who refuse to purchase a health insurance policy in violation of the Individual Mandate. • Penalties will be phased in from 2014 -2016, then indexed based on the annual increase in cost of living. • The penalty tax will be assessed through the individual income tax filing process. • The penalty tax is assessed per individual for whom the tax filer is responsible, with a maximum cap of 300% of the individual tax. 2014 2015 2016 Per Individual $95 $325 $695 Max. per Family $285 $975 $2,085 or % of Household Income 1.0% 2.0% 2.5% AKR, Inc. – 2013
  30. 30. Enforcement of the Penalty • Premiums paid for purchase of insurance will be reported as part of normal income tax filing. • The tax for failure to have a health insurance policy is a penalty tax rather than a normal income tax. The IRS cannot go after the assets or pursue normal collection activities if a taxpayer does not pay it. However, the IRS can and will collect the penalty from taxpayer refunds and will send demand letters for payment to those who are not owed a refund. • Individuals covered by Medicare, Veterans benefits, Tri-Care, employer group policy, or other source of insurance that offers benefits equal to the Minimum Essential Benefits at an affordable premium are not subject to the penalty • Low income persons who are covered by Medicaid (Medi-Cal) are not subject to the penalty. • Individuals exempted from the requirement to have insurance are not subject to the penalty. AKR, Inc. – 2013
  31. 31. The Affordable Care Act for Everyone AKR, Inc. – 2013
  32. 32. Bronze, Silver, Gold, Platinum? Sounds Expensive! What’s this all about? Health Insurance plans under the Affordable Care Act are classified by “actuarial value.” Actuarial value is a technical term that describes how much of the cost for health care an insurer will pay and how much a plan member will pay. Bronze, Silver, Gold and Platinum are the terms selected to distinguish four levels of actuarial value for policies offered by insurers on the exchange marketplaces. Within each level, a slight variation may exist in the actual share paid by insurer versus consumer. Insurance companies may offer one or more policies at each level of actuarial value. AKR, Inc. – 2013 Bronze Silver Gold Platinum Plan Pays 60% 70% 80% 90% Consumer Pays 40% 30% 20% 10%
  33. 33. Consumer Share of Cost The consumer’s share of cost includes: Deductible: A fixed amount that must be paid by the consumer for health care costs before the insurance company begins to pay a portion of the cost. Co-payment: A fixed amount paid for a covered health service, generally at time of service. This amount may vary based on the type and location of service received. Co-insurance: A percentage of the cost of health care services paid by the consumer. The insurer pays the balance. Premium payments and excess charges paid because care was purchased outside of plan networks are not included in the calculation of consumer share of cost. As a general rule, larger consumer share of cost results in lower policy premiums. AKR, Inc. – 2013
  34. 34. Grandfathered Plans? March 23, 2010 is the magic number here. Any policy purchased before March 23, 2010 and not changed substantially since that time is considered “grandfathered” and not subject to many of the new coverage and eligibility requirements of the Affordable Care Act. Moving from a lower to a higher deductible level of the same policy is one type of change that does not end a “grandfathered” status. This is good, right? –Maybe, maybe not. Many grandfathered policies do not provide all of the Essential Health Benefits found in ACA-compliant policies. For example, prior to July 2012, many policies in California did not include Maternity care. This requirement was not changed by passage of the Affordable Care Act. –As the number of businesses and individuals with these policies is reduced over time, the risk pool on which premiums are calculated will also be reduced. The price of these policies can be expected to rise faster than that of non- grandfathered policies available on the private market or through the exchange marketplace. AKR, Inc. – 2013
  35. 35. Where Can I Get Coverage? • Both Individual and Employer-based coverage are available through Covered California. Consumers and employers who purchase policies through the Exchange Marketplace may receive tax credits to help make them more affordable. Only policies purchased through the Exchange qualify for tax credits as of 2014. • Anyone can buy insurance through the Exchange, even those who do not qualify for a tax credit. • Consumers who prefer to purchase coverage directly from private insurers off the Exchange may do so. No tax credits may be claimed for purchase of these off-Exchange policies. – Policies will be available that are identical in benefits and pricing to those offered on the Exchange. – Other policies may be offered outside the Exchange that provide more coverage or broader provider networks, but at a higher price. AKR, Inc. – 2013
  36. 36. How will Off-exchange policies differ? Each company offering policies on the Exchange will also be offering policies equivalent in benefits and price on the private, off-Exchange market. Companies may also offer more expensive policies that may have larger networks or coverage for non-essential health care benefits. AKR, Inc. – 2013
  37. 37. Can I Have an Agent? Yes. Covered California encourages consumers to select agents with whom to work. Finding an agent: •Insurance agents must complete a certification program and be appointed with Covered California in order to sell policies through the Exchange Marketplace. •Once an agent becomes a Certified Insurance Agent, the agent’s name will appear on the Covered California website in a drop-down box. •Selecting the name of an agent begins the process of designating/selecting an agent with whom to work. •Agents accept designation as an individual or employer’s agent and will contact the new client to establish a working relationship. AKR, Inc. – 2013
  38. 38. Do I have to use an agent? No one is required to use an agent in purchasing a policy through the Exchange. In fact, computer-savvy customers may prefer not to use an agent. Never-the-less, a policy does not cost less without an agent than one purchased in consultation with an agent. If questions arise, a Certified Insurance Agent is trained and prepared to explain the pros and cons of different policy options and work on behalf of a client when questions or claims arise. Additionally, Certified Agents can help business clients manage their employee census and submit necessary verification documents. AKR, Inc. – 2013
  39. 39. When Can I Buy a Policy? 2013: Open enrollment begins October 1 and continues until March 31, 2014. For coverage to begin on January 1, 2014, a policy must be purchased by December 15, 2013. 2014: Open enrollment begins October 15 and continues until December 7, 2014 Special Enrollment Periods: Occur when specific life changes occur, including marriage, birth of a child, loss of a job, etc. Consumers are allowed to purchase a new policy or change policies during these periods. Note: Outside of these open enrollment or special enrollment periods, individuals may not purchase a policy, regardless of need. Small Business group policies: May be purchased during Open Enrollment or when the group’s plan would normally renew. Employees are enrolled or removed from the policy as they normally would be during the course of the year. AKR, Inc. – 2013
  40. 40. Why Should I Buy Through the Exchange? • Only policies purchased through the Exchange allow the consumer or employer to claim a tax credit. • Tax credits are estimated at time of purchase for individuals. Consumers select how much credit they wish to apply to their premium payments. This amount can be adjusted during the course of the year if income or other circumstances change. • Persons with income from 138-250% FPL may receive a Cost Share Reduction that changes a Silver policy into and “Enhanced Silver” policy, with cost-sharing benefits nearing those of Gold Tier benefits. These are an excellent value. • Purchasing through the Exchange gives an extra degree of assurance that whatever happens with regard to one’s employment or other sources of income in the course of a year, the possibility of receiving help to pay for coverage is not forfeited. AKR, Inc. – 2013
  41. 41. Please Remember … • The individual mandate is effective in 2014, even for people who should be getting their insurance through their employer. • Penalties for employers who are required to offer affordable insurance to their full-time employees but do not do so will not go into effect until 2015. Never-the-less, the employees must still have such insurance or be penalized. • If an employer does not offer a policy, employees should check directly with Covered California’s Exchange Marketplace to confirm eligibility to purchase insurance directly and potentially receive a tax credit to help pay for it. • If you are an employer with 50 FTE employees or more, your full-time employees will be counting on you to help them comply with the law. AKR, Inc. – 2013
  42. 42. Recertification? • Consumers who are eligible for the advance tax credit premium subsidies are expected and encouraged to report changes in income or other circumstances at least twice a year. Doing so will help them avoid the need to repay the tax credit if its final total is lower than the amount credited as insurance premium subsidies in the course of the year. • At other times of the year, if income rises or falls by 10% or so, it is good to revisit the calculator and adjust the amount of premium paid out-of-pocket. • During Open Enrollment each year, consumers may make changes to their policies and/or the amount of monthly payment they make, based on revisions to the total premium credit subsidy. AKR, Inc. – 2013
  43. 43. Women’s Preventive Health Services • Preventive health services for women include specific coverage for cancer screening exams, prenatal care, HPV and HIV screening, contraceptives and other gender-specific care. As of August 2012, these benefits must be provided without deductibles or copays. • Currently and under the ACA, no Federal payment is allowed for abortions or abortifacients, including RU 483. Health insurers are not required to offer these benefits, though in fact most already do as a result of customer demand. –“Ella” and “Plan B” are not classified as abortifacients because they act to delay ovulation rather than prevent implantation. As a result, they are covered under the ACA as emergency contraceptives. AKR, Inc. – 2013
  44. 44. Tax changes in 2013 • Increased Medicare payroll tax for high-income earners and a new tax on their net investment income (currently untaxed for Medicare or Social Security) • Excise tax on medical device manufacturers and importers • Cap on deductions for insurance company executive pay ($500,000 maximum deduction) • Elimination of employer deduction for Medicare Part D subsidy • Medical expense 1040 income tax deduction floor increases to 10% AKR, Inc. – 2013
  45. 45. Administrative changes in 2013 • FSA (Flexible Spending Account) limitations • Nationwide bundled payment pilot begins in Medicare • Reductions in Medicare payments for select hospital readmissions • Medicare physician comparison data available to the public • Increased Medicaid reimbursement for primary care providers • Expanded coverage of preventive services by Medicaid AKR, Inc. – 2013
  46. 46. So Everyone Will Be Able to Get Insurance Who Wants It? In the best of all possible worlds, no one in the United States would ever be left without health insurance and the access to care it brings. Unfortunately, this is not the best of all possible worlds. Undocumented residents may not purchase health insurance under the Affordable Care Act, nor are they eligible in most cases to receive coverage through programs for low income residents (Medicaid/Medi- Cal). In California, this means that of a population of approximately 38 million people, 1.6 million will remain uninsured – a total of 4.2% of our total population. AKR, Inc. – 2013
  47. 47. Basic Definitions Actuarial Value: a technical term that describes how much of the cost for health care an insurer will pay and how much a plan member will pay Co-insurance: A percentage of the cost of health care services paid by the consumer. The insurer pays the balance. Co-payment: A fixed amount paid for a covered health service, generally at time of service. This amount may vary based on the type and location of service received. Deductible: A fixed amount that must be paid by the consumer for health care costs before the insurance company begins to pay a portion of the cost. In Network: Providers who have contracted with the insurer to provide services at pre-established discounted prices AKR, Inc. – 2013
  48. 48. More Basic Definitions MAGI: Modified Adjusted Gross Income – used to establish eligibility for advance premium tax credits (premium subsidies) Medicaid/Medi-Cal: Federally supported health care for low income Americans Modified Adjusted Gross Income: Adjusted Gross Income from Form 1040 minus expenses for additional costs such as housing payments, alimony, child support, etc. Out of Network: Providers who do not accept the discounted prices paid by the insurers as payment in full Tier or Metallic Tier: A group of policies from various companies that have roughly equivalent actuarial values – referred to as Bronze, Silver, Gold or Platinum tiers AKR, Inc. – 2013
  49. 49. Online Resources for the Affordable Care Act General Information •http://www.healthcare.gov •http://www.healthcare.gov/law/features/index.html •http://kff.org/health-reform/state-indicator/health-insurance-exchanges/ Timeline – This is an excellent source of information! •http://www.healthcare.gov/law/timeline/index.html Preventive Services – What’s covered as preventive care? •http://www.healthcare.gov/law/features/rights/preventive-care/index.html •http://www.healthcare.gov/news/factsheets/2010/07/preventive-services- list.html •http://www.hrsa.gov/womensguidelines/ AKR, Inc. – 2012
  50. 50. Online Resources for the Affordable Care Act California-specific information •CoveredCA.com •http://www.healthexchange.ca.gov/Pages/Default.aspx •http://www.healthexchange.ca.gov/Pages/HBEXVisionMissionValues.aspx AKR, Inc. – 2013
  51. 51. This presentation has been brought to you courtesy of Advanced Knowledge Resources in cooperation with Pozos Insurance Services. For more information, please contact: Kathleen Brewer de Pozos, PhD CA License Number: 0D49354 kathy@pozosinsuranceservices.net 831-713-6438 AKR, Inc. – 2013

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