Patient Protection andAffordable Care Act (PPACA)
A Timeline of PPACA Provisions That Could Affect You 2010 2018 2014
2010Insurance plans prohibited Insurance plans required to Insurance plans required to from imposing lifetime carry dependents up to the cover preventive servicesbenefit limits and restricted age of 26. without cost sharing. annual limits. Temporary (until 2014) high Insurance plans prohibited risk pools established for from denying coverage to Insurance plans prohibited individuals (older than 19)individuals under the age of from rescinding coverage who are denied coverage 19 based on pre-existing except in cases of fraud. based on pre-existing conditions. conditions.
2010 Cont’d First Phase of Small Business Tax Credit:Small businesses with less than 25 employees and average annual wages of less than Establish an internet website $50,000 are eligible for tax credits of up to (www.healthcare.gov) to help 35% of the employer’s contribution toward residents identify health coverage the employee’s health insurance premium. options (effective July 1) and develop Employers must subsidize at least 50% of a standard format for presenting their employees’ premiums in order to be information on coverage options. eligible for the tax credit. Credit only available through 2013. Create the Consumer Operated and Oriented Plan (Co-Op) program to States begin reviewing premium foster the creation of non-profit, trends and companies must justify member-run health insurance increases over certain thresholds.companies in all 50 states. $6 billion is There is no new power to block rate appropriated to finance the program increases but plans may be excluded and award loans and grants to from exchanges. establish Co-Ops by July 1, 2013.
2011Insurance plans required to complywith new medical loss ratios (MLR):80% for individual and small group Funding available for states to beginplans and 85% for large group plans. establishing Exchanges until January Companies required to provide 1, 2015. rebates to consumers if they fail to comply with the MLRs.Medicare Part D beneficiaries that fall Over-the-counter drugs not into the “donut hole” will receive a prescribed by a doctor may not be50% discount on covered brand-name reimbursed through an FSA or HRAprescriptions. This will grow to a 75% nor on a tax free basis through an discount by 2020. Archer MSA or HSA.
2013 3.8% tax increase on investment income forIncrease Medicare tax rate on wages taxpayers making $200,000 per year ($250,000 for joint filers); however in real by 0.9% (from 1.45% to 2.35%) on estate transactions there is an exemption inearnings over $200,000 for individual current law for $250,000 on the sale of a taxpayers ($250,000 for joint filers). principal residence ($500,000 for joint filers). (IMPLEMENTATION OF THIS PROGRAM HALTED INDEFINITELY BY HHS) CLASS Act: A national long term care assistance/disability insurance plan is established. The benefit is tiedContributions to FSAs limited to to one’s inability to perform two or three Activities of Daily Living (ADLs) and the $2,500 per year. benefit amount is varied based on the “scale of functional ability” with a $50-7/day cash benefit. All working adults will be automatically enrolled in the program unless they choose to opt-out.
2014Exchanges are created and open to Premium tax credits (subsidies for individuals and small businesses purchase of health insurance)(2-100 employees). Exchanges will available via exchanges for include four tiers of private individuals/families with incomesplans(Bronze- 60% actuarial value, between 100% and 400% of federal Silver-70%, Gold-80%, Platinum- poverty level who do not receive 90%, and Catastrophic coverage). employer based coverage. Employers with more than 200Insurance plans required to abide employees would be required to by guaranteed issue, minimum automatically enroll employees benefit standards, revised rate into health insurance plans offered bands for individual and small by employer (employees may opt-group market (2-100 employees). out).
2014 Cont’dIndividual Mandate: Individuals required to Employer Mandate: Employers with more purchase health insurance or face a tax than 50 employees who do not offer their penalty of up to $95 per year (or 1.0% of employees health insurance will be subject to income, whichever is greater). In 2015 the a $2,000 tax penalty/per full-time employeepenalty is $325 per adult (or 2.0% of income) (per year) if one of their employees is eligible and in 2016 the penalty is $695/year (or of for a tax credit subsidy (first 30 employees2.5% of income). After 2016, penalty amounts exempted from calculation). are indexed to inflation. Phase II of Small Business Tax Credit: Small businesses with less than 25 employees and New tax is levied on insurance average annual wages of less than $50,000 are companies based on net premiums eligible for tax credits of up to 50% of the employer’s contribution toward the written. This tax will raise an employee’s health insurance premium. estimated $8 billion in 2014,Employers must subsidize at least 50% of their reaching $14.3 billion by 2018. The employees’ premiums in order to be eligible tax does not sunset and is indexedfor the tax credit. Credit only available for two thereafter. years.
2014 Cont’d States must expand Medicaid to 133% of federal poverty level. States will receive 100% federalfinancing from 2014-2016, 95% financing in 2017,94% financing in 2018, 93% financing in 2019, and Allow states the option of merging90% financing in 2020 and beyond. However, the the individual and small group Supreme Court struck down the ability of the markets in Exchanges. federal government to withhold their portion of current Medicaid funds to force states to comply with the expansion. Waiting periods for coverage cannot exceed 90 days.
2017States are permitted to allow businesses with more than 100 employees to purchase coverage in SHOP Exchanges.
2018“Cadillac Tax” takes effect. A 40% excise tax is leviedon insurers of employer-sponsored health plans with aggregate values that exceed $10,200 for individual and $27,500 for family. The tax is applied to the amounts that exceed the threshold and it will be indexed for inflation.
Closer Look at Medical Loss Ratios“Other non-claims costs,” such as administrative costs, cannot be morethan 15% of the premium in the large group market or 20% in the small group/individual markets.In January 2011, HHS deemed that agent commissions must fit within that 15%/20%, leading to a squeeze on agent compensation. The Big “I” is focused on congressional legislation that wouldstatutorily exclude agent compensation from the MLR formula. In theHouse Mike Rogers (R-MI) and John Barrow (D-GA) introduced H.R. 1206, which has over 200 bipartisan cosponsors. Senators Mary Landrieu (D-LA) and Johnny Isakson (R-GA) have introduced S.2288, the “Access to Professional Health Insurance Advisors Act of 2012”, which is a companion to the House bill.
Closer Look at Individual MandateBeginning in 2014, virtually every U.S. citizen and legal resident will be required to purchase health insurance or face a tax penalty. There are certain exemptions from the individual mandate including: those who choose not to buy a policy for religious reasons, undocumented immigrants,incarcerated citizens, members of Native American tribes, those with family income below the threshold requiring a tax return.To satisfy the mandate, individuals must obtain health insurance for the entire year through one of the following sources: Medicare, Medicaid, CHIP, veteran’s healthprograms, a plan offered by an employer, insurance purchased on your own that is at least at the Bronze level (60% actuarial value). The penalty for non-compliance will be phased-in according to the followingschedule: $95 (or 1% of income, whichever is higher) in 2014, $325 (or 2% of income) in 2015, and $695 (or 2.5% of income) in 2016. After 2016, the penalty will be increased annually by the cost-of-living adjustment.
Closer Look at Employer MandateBeginning in 2014, employers with 50 or more full-time employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will be assessed a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment.Employers with 50 or more full-time employees that offer coverage but have at least one full-time employee receiving a premium tax credit, will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee, excluding the first 30 employees from the assessment. (Effective January 1, 2014). Employers with 200-plus full-time employees must automatically enroll their employees into health insurance plans.
Closer Look at Exchanges Exchanges are a government created platform for the sale of health insurance,intended to bring all “qualified” plans into one forum by establishing common rulesregarding the offering and pricing of insurance, and providing information on these plans to consumers. Also through the exchanges, consumers may sign up for government programs such as Medicaid and Children’s Health Insurance Program (CHIP).In addition, through the exchanges qualified consumers (up to 400% of the povertylevel) will receive government assistance to purchase private insurance through the use of premium tax credits.States face a Jan. 1, 2013 deadline for certification of their exchanges by HHS, initial enrollment on Oct. 1, 2013 and a “go live” date of Jan. 1, 2014. If they do not meetthese deadlines, the federal government will step in. At this point, with the lack ofprogress in the majority of states, some level of federal involvement in the majority of exchanges is likely.