Health Care Cost by Age
Source: Fischbeck, Paul. “US-Europe Comparisons of Health Risk for Specific Gender-Age
Groups.” Carnegie Mellon University; September, 2009.
The Affordable Care Act (ACA) provided for the creation of online
marketplaces where individuals and small employers (up to 50
FTEs) can purchase “Qualified Health Plans.” Indiana deferred to
the Federal Government’s Marketplace (www.healthcare.gov)
which has had difficulties.
• Recent data from the Individual Marketplace suggest an improved
– 137,000 enrolled in October and November; and
– 1,059,000 enrolled in December.
• Enrollment through the SHOP has been delayed completely until
November (for coverage effective January 1, 2015).
• In 2016, groups with up to 100 FTE’s are considered Small Groups,
and must comply with ACA Small Group provisions.
Individual Marketplace Overview
Indiana - 30,443 enrolled as of December 28, 2013:
• 25,877 (85%) received government subsidies
• 17,048 (56%) female – 13,395 (44%) male
• 6,393 (21%) between the ages of 18 and 34
• QHPs must offer “EHB package” with four levels of coverage.
Nearly two of three bought “Silver” plans.
Individual Marketplace Subsidies
Subsidies from the Federal Government come in two forms:
• Advance Premium Tax Credit – Apply toward monthly premiums for
any plan (except catastrophic or SADP) on a sliding scaled based on
income level (100% to 400% of the federal poverty level).
• Cost-Sharing Reductions – Reduce deductibles, copays and other
cost-sharing associated with QHPs for those with income between
100% and 250%. To utilize, individuals must purchase a modified
version of a Silver-level plan.
Eligibility for coverage through an employer disqualifies a
Marketplace applicant for subsidies. Such coverage must
be “affordable” and provide “minimum value.”
Open Enrollment Periods
In the Individual Market, inside or outside the Marketplace, the
open enrollment period (OEP) for the next few years are:
• 2014 – October 1, 2013 through March 31, 2014. However, CMS
has orally stated that the OEP ends for those who have paid their
initial premiums once their effective dates pass.
• 2015 – November 15, 2014 through January 15, 2015; and
• Thereafter – October 15 through December 7.
In the Small Group Market:
• Continuous OEP except for groups that fail to meet participation
and/or contribution requirements. Then, the OEP is November 15
through December 15.
Special Enrollment Periods
Special enrollment periods (SEP) permit individuals to alter their
health coverage decisions, potentially, following certain “life
events.” In the Marketplace, life events resulting in SEP
eligibility, and which include a 60-day window to elect coverage,
Adding a member (birth, marriage);
Relocation to a new ZIP Code, county or state;
Losing access to other coverage (employer coverage);
Release from incarceration; or
Changes to citizenship or immigration status.
Special Enrollment Periods
Life events not resulting in SEP eligibility are:
• Removing a member (death, divorce);
• Gaining access to other coverage (employer coverage);
• Becoming pregnant;
• Change in tax-filing status/tax household composition;
• Change in status as an American Indian/Alaskan Native or
• Change in disability status;
• Corrections to date of birth or SSN; or
• Increase or decrease in income that does not result in a SEP.
SHOP Marketplace Overview
Online enrollment in the SHOP was delayed until 2014. Until
then, small groups can enroll via the Direct Enrollment Process:
• Issuers enroll small groups using existing processes subject to SHOP
• Small groups and employees are never redirected to the SHOP
website. Instead, small groups must complete paper applications to
be mailed to the SHOP.
• SHOP will determine SHOP eligibility for coverage for small groups
and employees. The IRS determines Tax Credit eligibility.
• This eligibility determination is a pre-requisite for the Small Business
Health Care Tax Credit.
• Working owners may enroll in SHOP coverage assuming the small
group employs at least one common law employee (and offers health
coverage to all full-time employees), but they don’t “count” towards
the Tax Credit qualifications.
Small Business Health Care Tax Credit
To qualify for the tax credit, a small group must:
• Pay at least 50% of premium costs for full-time employees (30
• Acquire the SHOP’s eligibility determination before 12/31/14;
• Purchase a SHOP-certified QHP, for PHP - is a SHOP-certified QHP
offered outside the SHOP; and
• Claim the tax credit as part of its 2014 tax returns.
Small Business Health Care Tax Credit
The Small Business Health Care Tax Credit is:
• Worth up to 50% of a small group’s contributions toward premium
costs, but varies based on the number and salaries of employees.
• At its highest for small groups with fewer than 10 employees who
are paid an average of $25,000 or less.
– Working owners are not included in this calculation.
• Only available to an employer for two (2) years.
Insurance issuers may not charge discriminatory premium rates
in the individual and small group markets. Rates may vary only
by whether a plan covers:
• An individual or family;
• Rating area;
• Actuarial Value;
• Age (3:1); and
• Tobacco Use (no more than 1.5:1).
All Small Groups are priced via Community Age Rating – no
Tier Rating (single/family). The use of medical underwriting
has stopped in the insured markets.
Premium Rates & Smoking Surcharge
With respect to the surcharge an issuer can charge an employer:
• An employer cannot require an employee to pay a contribution that
is greater than the contribution for a similarly situated employee
based on any health factor (such as tobacco use) unless the group
health plan is associated with a wellness program satisfying the
requirements of PHSA § 2705 and regulations at 45 CFR 146.121.
• To assess this surcharge in the small-group market, an employee
must be given the opportunity to avoid the surcharge by joining a
smoking cessation/wellness program.
– If an employee has the option to join the program at open enrollment,
but declines, he will next have the opportunity to avoid the surcharge
upon renewal or reenrollment for subsequent coverage at next year’s
annual open enrollment.
2014 Rate Example
New Age Rate
$384 - $893
$1,498 - $1,994
$1,161 - $1,546
$1,293 - $1,624
Group with 13 employees covered.
2014 Example Detail
Assumption is that all employees are non-tobacco users.
Disclaimer: This presentation is meant to
be informative, not to be relied on as
legal and/or tax advice. Please consult
your legal or tax professionals for advice
specific to your business.