David John, Senior Senior Strategic Policy Adviser at AARP’s Public Policy In...
ACA 201
1. Tennessee Health Care
The Affordable Care Act
201
Shared Responsibility, Premium Tax
Credits, and Enrollment, OH MY!
2. Tennessee Health Care
Shared Responsibility
• Individual responsibility
– Must have minimum essential coverage, obtain
exemption, or face penalty
• Employer responsibility
– Applies to “large” employers
– Must offer “affordable” and “adequate” coverage
to employee
3. Tennessee Health Care
Employer Definitions
for shared responsibility
Average of at least 50
full-time equivalent
employees during
preceding calendar year.
Less than 50 full-time
equivalent employees
during preceding
calendar year.
4. Tennessee Health Care
Defining Types of Workers
• Full-time = 30 hours per week
• Part-time = less than 30 hours per week
• Full-time equivalent (FTE) = combined hours
of part-time workers that add up to the
equivalent of a full-time worker
5. Tennessee Health Care
Example: Calculation of FTEs
Inez owns a floral & garden centers
Full-time: 35
Part-time: 16, each working 100 hours/month
Is Inez a large employer?
Calculate PT hours
(16 PT employees x 100 hrs/mo) / 120
hrs = 13.33 = 13 (round down)
Add FT and PT
35 FT + 13 PT = 48 FTEs
Inez is not a large employer.
6. Tennessee Health Care
Employer Coverage Requirements
• An offer must be extended to full-time
employees (and their dependents)
– Full-time defined as average of at least 30 hours a
week
– Special rules for variable hour and seasonal
employees
• Dependent includes children to age 26
• Dependent does NOT include spouse
7. Tennessee Health Care
Employer Coverage Requirements
• An offer must be extended to full-time
employees (and their dependents)
– Full-time defined as average of at least 30 hours a
week
– Special rules for variable hour and seasonal
employees
• Dependent includes children to age 26
• Dependent does NOT include spouse
9. Tennessee Health Care
Affordable?
Coverage is considered affordable if employee
contribution for self-only coverage is less than
9.5% of household income.
Employee contribution for self-only coverage is
used to determine affordability for both
employee and dependents.
10. Tennessee Health Care
Affordability of Employee-Only Coverage
Example 1
Income: $40,000/yr
John’s share of the
premium: $200/month
Is the plan affordable?
Cost: $2,400
Share of income: 6%
The plan is affordable.
Example 2
Income: $25,000/yr
John’s share of the
premium: $200/month
Is the plan affordable?
Cost: $2,400
Share of income: 10.4%
The plan is not
affordable.
John
11. Tennessee Health Care
Affordability of Family Coverage (Reyes Family)
Mom works at Acme. She earns $35,000/yr. Dad is an
entrepreneur and earns about $12,000.
Family income: $47,000
Premium cost to employee for employee-only
plan: $196/mo ($2,350/yr) = 5% income
Premium cost to employee for family plan:
$509/mo ($6,110/yr) = 13% of income
Bottom Line
Coverage is considered
affordable.
15. Tennessee Health Care
What are premium credits?
• Assistance with the cost of coverage for
people purchasing coverage in the new Health
Insurance Marketplaces (aka Exchanges)
• Available starting Jan 1, 2014
• Administered through the tax system and the
Marketplaces
17. Tennessee Health Care
Income and Household Size
Income: Modified Adjusted Gross Income (MAGI)
Adjusted Gross Income (1040, Line 37)
+ Foreign Income
+ Tax exempt interest
+ Non-taxable Social Security benefits
MAGI
Household size: Household unit equals tax unit
- “Household” may or may not be the same as
who is in the insurance plan.
18. Tennessee Health Care
Tax credit determination
Cost of benchmark plan
- expected premium
contribution
Credit Amount
Credit amount affected by:
• Individual or family’s expected contribution
based on their income
• Premium cost for benchmark plan
20. Tennessee Health Care
Expected Contributions & Income
1 for a household of one (i.e., an individual)
2 based on second-lowest priced SILVER health plan in the Marketplace
3 residents that would be eligible for Medicaid are ineligible for tax credits
21. Tennessee Health Care
John
Plan cost: $5,000
Example 1: 200%
Income: $22,980
Expected Contribution:
• Share of income: 6.3%
• Amount: $1,448
Premium Credit: $3,552
Example 2: 300%
Income: $34,470
Expected Contribution:
• Share of income: 69.5%
• Amount: $3,275
Premium Credit: $1,725
22. Tennessee Health Care
What is the Benchmark Plan?
• Second-lowest cost silver plan available to
each eligible household member
23. Tennessee Health Care
Example: Single Individual
John
• 24 years old
• Income: $22,980 (200% FPL)
• Expected contribution: 6.3% or $1,448
3 Lowest Cost Silver Plans for John
• Plan A: $4,800
• Plan B: $5,000
• Plan C: $5,200
Benchmark
Premium Credit
$5,000 - $1,448 = $3,552
24. Tennessee Health Care
Family of four (Reyes Family)
Income: $52,988 (225% FPL)
Expected contribution: 7.18% or
$3,802
3 Lowest Cost Silver Plans that Cover
Entire Family
• Plan A: $14,800
• Plan B: $15,000
• Plan C: $15,200
Benchmark
Premium Credit
$15,000 - $3,802 =
25. Tennessee Health Care
Rating Factors
• Age
– Limited to no more than 3 to 1 variation
– Each family member rated separately
• Family size
– Total premium for family = sum of premiums for each
family member
– Exception: In families with > 3 members under 21,
count only 3 oldest children
• Geographic area
• Tobacco Use
– Limit to no more than 1.5 to 1 variation
– Doesn’t affect premium credit
31. Tennessee Health Care
Enrollment isn’t a snap
Program
Percent of Eligible People
Enrolled
Adult Medicaid, national average 62%
Subsidized Medicare for low-income seniors 33%
Medicare Rx benefit low-income subsidy, 2009* 40%
Unemployment benefits 72-83%
Earned income tax credit 80-86%
SNAP (food stamps) 54-71%
* Does not include populations automatically enrolled in the low-income subsidy.
Take-up in optional public benefit programs
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35. Tennessee Health Care
New Systems Can Support Consumer Self-Service
• Easy-to-use online applications
• Pop-up help boxes
• E-chat
• Personal “MyAccount”
• Upload documents
• Electronic notices
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36. Tennessee Health Care
But….
75% want in-person assistance
Source: Enroll America Research, November 2012
78% don’t know what’s coming
83% don’t know they’re eligible
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39. Tennessee Health Care
Potential Community Partners
• Community health clinics
• Family resource centers
• Tax preparation sites
• Literacy councils
• Local non-profit organizations
• Child/family-focused direct service agencies
• Churches and congregational networks
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