Decision regarding thePatient Protection and Affordable Care Act June 29, 2012 1:00 p.m.
Individual and Employer Responsibilities Medicaid and CHIP Expansion Premium Subsidies for Lower Income Health Insurance Exchanges Insurance Market Reforms Quality and Delivery System Reforms
In a 5 – 4 decision the Supreme Court upheld the Constitutionality of the Patient Protection and Affordable Care Act. The Court ruled that the Individual Mandate is a tax and that Congress therefore has the authority. The Court limited, but did not invalidate, the pieces that expand Medicaid.
"Our precedent demonstrates that Congress had the power toimpose the exaction in Section 5000A under the taxingpower, and that Section 5000A need not be read to do more thanimpose a tax. This is sufficient to sustain it." The Court holdsthat the mandate violates the Commerce Clause, but it becomesirrelevant because five Justices find the mandate to beconstitutional under the taxing power.On the Medicaid issue, the Medicaid expansion isconstitutional, but it is unconstitutional for the federalgovernment to withhold Medicaid funds for non-compliance withthe expansion provisions. "Nothing in our opinion precludesCongress from offering funds under the ACA to expand theavailability of health care, and requiring that states acceptingsuch funds comply with the conditions on their use. WhatCongress is not free to do is to penalize States that choose notto participate in that new program by taking away their existingMedicaid funding."
Michigan Attorney General National Small Business Association Vice President and General Counsel, David Burton Small Business Association of Michigan President and CEO, Rob Fowler Vice President, Small Business Services, Scott Lyon Clark Hill, PLC Kristi Gauthier, Esq.
For Small Businesses and Individuals Individual Mandate Employer ―Mandate‖/Play or Pay Individual Subsidies and Small Business Tax Credit Health Insurance Exchanges Expansion of Medicaid and CHIP Dependent Coverage to age 26 Summary of Benefits and Coverage (not an SPD)
New Fees Pharmaceutical Companies - $16 billion between now and 2019 and then $2.8 billion/year thereafter Insurance Carriers - $47.5 billion between 2014 and 2018 and then indexed to inflation Medical Devices taxed at 2.9% Changes to FSAs for over-the-counter drugs Contributions to FSAs limited to $2,500 Medicare Part A tax increase for individuals earning $200,000+ and couples earning $250,000+ Cadillac Tax - 2018
Insurance Carrier Related Changes Loss ratios hold at 80% for individuals and 85% for small businesses Guarantee issue and renewability (no recession) No lifetime limits Modified community rating ―Precious Metals‖ - Platinum, Gold, etc. and Essential Benefits Deductibles limited to - $2,000/$4,000 Waiting periods limited to 90 days Children with medical conditions – No pre-ex Preventive Services - Immunizations for children and cancer screenings for women No salary discrimination for eligibility CO-OPs in market
Michigan Senate Passed - Still Needs Action in Michigan House Orbitz for Health Insurance Spreadsheet comparison of products from various insurers Uniform enrollment Assign a rating based upon relative quality and price to each qualified health benefits plan Inform individuals of eligibility requirements for the states Medicaid program, CHIP program and any applicable state or local public program and screen and enroll eligible individuals in these programs Establish a navigator program Assist qualified employers in facilitating the enrollment of employees in small group qualified health benefits plans
Premium assistance based on Federal Poverty Level (FPL) ◦ Those earning under 133% of FPL generally eligible for Medicaid ◦ Premium assistance to those from 133% to 400% of FPL Cap on individual premium cost for 2nd-Lowest Cost Silver Plan – 70-%/30% In addition, those with lower incomes get better benefits (Cost Sharing) ◦ 100-150% of FPL 70% value raised to 94% ◦ 150-200% of FPL 70% value raised to 87% ◦ 200-250% of FPL 70% value raised to 73%
Small Business Tax Credit (Part 2) – Tax credit equal to 50% of the employer’s health insurance costs, if: ◦ 10 or fewer full-time equivalent employees ◦ Average annual wages of less that $25,000 (not including owner’s or owner’s family member wages) ◦ Employer pays 50% or more of the premium Companies with between 11 and 25 workers and an average wage of less than $50,000 are eligible for partial credits Credit only available for two years Credit only available if small employer purchases coverage from the SHOP Exchange
Individual Mandate - Requires all U.S. citizens and legal residents to have qualifying health coverage or face a penalty/tax if they do not. Those under FPL or those that do not file a tax return – no penaltyThe percentage will be 1.0% in 2014, 2.0% in 2015, and 2.5% thereafter, or a flat dollar amount assessed on each taxpayer and any dependents (e.g., family)The annual flat dollar amount phased in—$95 in 2014, $325 in 2015, and $695 in 2016 and beyond (adjusted for inflation), assessed for each taxpayer and any dependents.The amount is reduced by one-half for dependents under the age of 18.The total family penalty is capped at 300% of the annual flat dollar amount.Percentage of the ―applicable income,‖ defined as the amount by which an individual’s household income exceeds the applicable filing threshold for the applicable tax year. The filing threshold comprises the personal exemption amount (doubled for those married filing jointly) plus the standard deduction amount.
Employer ―Mandate‖/Free Rider - Employers with more than 50 FTE must offer either ―affordable‖ coverage or potentially be subject to a ―free rider‖ penaltyThe Penalty $2,000/FTE after the first 30 employeesThe Calculation Employees scheduled to work at least 30 hours per week in a typical month, plus For all those under 30 hours a week, the aggregate of all hours worked in a typical month divided by 120, (do not include any seasonal employees that work fewer than 120 days in the prior year). Take the total number of full-time employees in Step 1 and add that to the number of Full time equivalents that results from the calculation in Step 2 above. If the number is 50 or below then there is no ―free-rider‖ penalty. ◦ Employers with more than 200 employees will be required to auto enroll employees into the health plans offered.
In 2018An excise tax on insurers or employer health insurance plans with aggregate values that exceed $10,200 for an individual and $27,500 for a family takes effect.Tax is indexed to the CPI-U beginning in 2020.Cadillac Tax is 40% of the value above the threshold.