One of the most significant pieces of the Affordable Care Act, the requirement that individuals be insured or pay a tax penalty, takes eff ect in January. To help people purchase coverage, the Centers for Medicare & Medicaid Services developed online health insurance marketplaces in each state. Open enrollment for 2014 through the marketplaces began on Oct. 1 and runs through March 31, 2014.
Because trustees serve as hospital representatives for their communities, they may be approached with questions or concerns about obtaining coverage under the ACA. Board members can use the following questions and answers as talking points when responding to patients and community members.
Health Insurance Marketplace
1 What is a health insurance marketplace?
A health insurance marketplace (also known as an exchange) is a way to shop for and compare plans and to get health coverage questions answered. Individuals, families who don’t have coverage or buy their own coverage, and small businesses can shop for coverage in these marketplaces and make side-by-side comparisons of diff erent plans. Th e marketplaces are not for people who already have such health coverage as Medicare, Medicaid, Children’s Health Insurance Program, TRICARE or VA.
The marketplaces also are not for people with employer coverage, except where the employer plan is considered “unaff ordable” or “inadequate.” A plan is considered aff ordable if the cost for employee-only coverage doesn’t exceed 9.5 percent of a worker’s income and adequate if it covers at least 60 percent of an employee’s covered medical expenses. (Sources: AARP Health Law Answers: Th e Health Care Law: More Choices, More Protections at healthlawanswers.aarp.org; Kaiser Health News: Insuring Your Health, June 4, 2013, at www.kaiserhealthnews.org).
2 What do marketplace plans cover and how do the plans differ?
All plans sold through the marketplaces must cover 10 so-called essential health benefi ts. Th ey are: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
For the most part, the plans diff er not in which benefi ts they cover, but in the proportion of costs that consumers are responsible for paying. Th ere are four basic types of plans: Platinum plans pay 90 percent of the cost of covered medical services, on average, while individuals are responsible for 10 percent; gold plans pay 80 percent; silver plans pay 70 percent; and bronze plans, 60 percent. Premiums will vary based on those percentages, so platinum plans generally will be pricier than bronze ones.
To apply for insurance, go to www.healthcare.gov/marketplace/individual. People who need assistance with this process can use the site’s online chat function, call 800-318-2596 or meet in person with trained navigators, certified application counselors or assistance personnel located within their communities. (HealthCare.gov; Kaiser Health News: Insuring Your Health, July 30, 2013; The Center for Consumer Information & Insurance Oversight at www.cms.gov/cciio)
Purchasing And Penalties
3 What subsidies are available to help people purchase a plan?
Two types are available: premium subsidies and cost-sharing subsidies.
Premium subsidies: Individuals and families with incomes up to 400 percent of the federal poverty level ($45,960 for an individual and $94,200 for a family of four in 2013) may be eligible for federal tax credits to help pay premiums. These subsidies may be used to purchase any plan. The subsidies come in the form of premium tax credits. If they qualify, people can opt to receive the tax credits in advance, and the marketplace will send the money directly to the insurer every month. This subsidy will reduce how much people owe up front. Individuals also can choose to receive their credit when they file their taxes the following year.
Cost-sharing subsidies: Cost-sharing subsidies can substantially reduce the deductibles, co-payments, coinsurance and total out-of-pocket spending limits for people with incomes up to 250 percent of the FPL ($58,875 for a family of four in 2013). Cost-sharing reductions will be applied automatically for people who qualify based on their income, but only if they buy a silver-level plan.
These subsidies essentially increase the insurance company’s share of covered benefits, resulting in reduced out-of-pocket spending for lower-income people.
A family of four whose income is between 100 and 150 percent of the FPL ($23,550 to $35,325) will be responsible for paying 6 percent of covered expenses out-of-pocket compared with the 30 percent that a family not getting subsidized coverage would owe in a silver plan. A family with an income between 150 and 200 percent of the FPL ($35,325 to $47,100) will be responsible for 13 percent of expenses, and one with an income between 200 and 250 percent of the FPL will be responsible for 27 percent ($47,100 to $58,875). In addition, people who earn 250 percent of the FPL or less will also have their maximum out-of-pocket spending capped at lower levels than will be the case for others who buy plans on the exchange. In 2014, the out-of-pocket limits for most plans will be $6,350 for an individual and $12,700 for a family. But people who qualify for cost-sharing subsidies will see their maximum out-of-pocket spending capped at $2,250 or $4,500 for single or family coverage, respectively, if their incomes are less than 200 percent of the FPL, and $5,200 or $10,400 if their incomes are between 200 and 250 percent of FPL. People should keep in mind, though, the cost-sharing subsidies apply to in-network expenses only. (Kaiser Health News: Insuring Your Health, July 9, July 30 and Aug. 27, 2013)
4 What are the penalties for not having insurance and how are they collected?
If an individual doesn’t have health coverage that meets the minimum requirements, he or she may have to pay a penalty. When filing 2014 taxes in 2015, people must indicate on their returns if they have health insurance coverage and, if not, pay a fine. The individual penalty is the greater of $95 or 1 percent of income, rising to the greater of $695 or 2.5 percent of income, in 2016.
The Congressional Budget Office estimates that less than 2 percent of Americans who don’t have health insurance will pay a penalty. Certain people may not have to pay a fine, including: those for whom the premiums are more than 8 percent of their income; those with income so low they don’t have to file taxes; those living in the United States illegally (undocumented immigrants); those who have a gap in coverage of three months or less; those who are exempt because of their religious beliefs; American Indians and Alaska Natives; Americans living abroad for at least one year; those who have experienced a hardship (considered on a case-by-case basis); and those in prison. Individuals must apply for waivers through their health insurance marketplace. (Kaiser Health News: Capsules August 2013; AARP Health Law Answers: FAQs — Health Law Basics)
5 What options are available to low-income people who live in a state that is not expanding Medicaid?
Even if the state is not expanding Medicaid, an individual should still apply for coverage to see if he or she qualifies. An individual’s medical needs or unique circumstances might mean he or she qualifies.
If someone doesn’t qualify for Medicaid under a state’s current rules, one of two situations applies.
If the individual’s income is more than about $11,500 a year as a single person (about $23,500 for a family of four, or 100 percent of the FPL), he or she will be able to buy health insurance in the marketplace and get lower costs based on household size and income. If the individual makes less than the FPL, he or she will still be able to get insurance in the marketplace, but won’t be able to get lower costs based on income. If the individual does not purchase coverage, he or she is eligible for an exemption from the tax penalty, available when applying for coverage in the marketplace.
Finally, the health care law has expanded funding to community health centers, which provide primary care for millions of Americans. These centers provide services either for free or on a sliding scale based on the individual’s income. (HealthCare.gov)
Employers And Employees
6 If employers stop offering coverage and employees purchase insurance on or off the exchanges, can they still make pre-tax contributions to health savings accounts?
Yes. People are able to make pretax contributions as long as they buy a policy that meets federal standards for plans that can be linked to health savings accounts. This means a highdeductible policy. In 2013, HSA-qualified plans must have a deductible of at least $1,250 for individual coverage and $2,500 for a family plan, among other requirements.
The amount that individuals and their employers can contribute to the accounts is limited to $3,250 and $6,450 for individual and family coverage, respectively. (The IRS makes cost-of-living adjustments to these and other limits annually.) Even if a person’s employer no longer offers health insurance in 2014, the money in the HSA is available to use for medical expenses. (Kaiser Health News: Insuring Your Health, April 2, 2013)
7 Can an individual who works for a company that provides insurance drop that coverage and buy it through the marketplace instead?
Most people in 2014 will be able to choose to buy a health plan through the marketplace, and individuals whose income is less than 400 percent of the FPL may be eligible for a subsidy. This can make buying a policy through the marketplace an attractive option. However, individuals aren’t eligible for a subsidized marketplace plan unless their job-based coverage is considered unaffordable or inadequate. (Kaiser Health News: Insuring Your Health, April 2, 2013)
8 Are employers required to provide health insurance?
The health care law puts in place protections for employer-sponsored coverage. Beginning in 2015, large employers, those with more than 50 full-time employees, must either provide coverage that is both adequate and affordable for their full-time workers, or pay a penalty if their workers buy health insurance through the marketplace with a subsidy. Large employers are required to offer coverage to dependents (not including spouses), but there is no requirement that they help to subsidize that coverage. So the test for “affordable” coverage is based on premiums for employee-only coverage, not the cost of a family plan.
Employers with 50 or fewer fulltime employees are not required to offer health coverage. These individuals are eligible to buy coverage through an insurance marketplace. Employers who wish to provide coverage can use the Small Business Health Options Program, or SHOP. SHOP enables side-by-side coverage and cost comparisons, and tax credits are available for coverage bought through a SHOP for small businesses with up to 25 employees and average wages of $50,000 or less. All plans offer the same essential health benefits. The tax credits cover up to one-half of the employer contribution (35 percent for nonprofits) toward premiums. Beginning in 2016, the SHOP will be extended to cover small businesses with up to 100 employees. (AARP Health Law Answers: FAQs — Health Law Basics, What the Health Care Law Means for Small Businesses, What the Health Care Law Means for Employees of Small Businesses)
9 What coverage for children is available through the marketplace?
All marketplace health plans must cover a standard list of preventive screenings, immunizations, supplements and medications for children without charging a copayment or coinsurance, even if the yearly deductible hasn’t been met. The ACA also requires that individual and small-group health plans sold through health insurance marketplaces cover pediatric dental services. Specific coverage requirements will be determined by each state within federally set guidelines. Under the health care law, pediatric dental health coverage sold on the exchanges cannot have annual or lifetime limits on coverage.
The health law also allows parents to keep their children on their health insurance policy until they are age 26, even if the children don’t live with their parents, aren’t in school or are married. (HealthCare.gov; Kaiser Health News: Insuring Your Health, Jan. 14, 2013; AARP: What the Health Care Law Means for Young Adults, August 2013, at www.aarp.org)
10 What is a grandfathered plan and what rules does it have to follow?
ost health insurance plans that existed on March 23, 2010, are eligible for grandfathered status and, therefore, do not have to meet all the requirements of the health care law. But if an insurer or employer makes significant changes to a plan’s benefits or how much members pay through premiums, co-pays or deductibles, then the plan loses that status. Government regulations spell out how much plans can change the amount paid by workers or employers before losing their status. Both individual plans and group plans can be grandfathered.
A grandfathered plan has to follow some of the same rules as other plans under the ACA. For example, the plans cannot impose lifetime limits on how much health care coverage people may receive, and they must offer dependent coverage for young adults until age 26 (although until 2014, a grandfathered group plan does not have to offer such coverage if a young adult is eligible for coverage elsewhere). A plan also cannot retroactively cancel coverage because of a mistake made when the individual applied for it, a practice known as a rescission.
However, there are many rules grandfathered plans do not have to follow. For example, they are not required to provide preventive care without cost-sharing. In addition, they do not have to offer the package of essential health benefits that individual and small group plans must offer beginning in 2014. Furthermore, grandfathered individual plans still can impose annual dollar limits, such as capping key benefits at $750,000 in a given year. Grandfathered individual policies also can still lock out children younger than 19 if they have a pre-existing condition. (Kaiser Health News: FAQ — Grandfathered Health Plans, Aug. 28, 2013)
Free Prevention Services
All marketplace plans and many other plans must cover the following list of preventive services without charging a co-payment or coinsurance. This applies only when these services are delivered by a network provider.
- abdominal aortic aneurysm one-time screening for men of specified ages who have ever smoked
- alcohol misuse screening and counseling
- aspirin use to prevent cardiovascular disease for men and women of certain ages
- blood pressure screening for all adults
- cholesterol screening for adults of certain ages or at higher risk
- colorectal cancer screening for adults older than 50
- depression screening for adults
- diabetes (type 2) screening for adults with high blood pressure
- diet counseling for adults at higher risk for chronic disease
- HIV screening for everyone ages 15 to 65, and other ages at increased risk
- immunization vaccines for adults. Doses, recommended ages and recommended populations vary: hepatitis A; hepatitis B; herpes zoster; human papillomavirus; influenza (flu shot); measles, mumps, rubella; meningococcal; pneumococcal; tetanus, diphtheria, pertussis; varicella
- obesity screening and counseling for all adults
- sexually transmitted infection prevention counseling for adults at higher risk
- syphilis screening for all adults at higher risk
- tobacco use screening for all adults and cessation interventions for tobacco users
Essential Health Benefits
All private health insurance plans offered in the marketplace will offer the same set of essential health benefits. These include at least the following items and services:
- ambulatory patient services
- emergency services
- maternity and newborn care
- mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- prescription drugs
- rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions to gain or recover mental and physical skills)
- laboratory services
- preventive and wellness services and chronic disease management
- pediatric services, including dental and vision
More assistance is available to hospitals and systems on the American Hospital Association’s Get Enrolled website, www.aha. org/getenrolled. It provides the latest news from the Centers for Medicare & Medicaid Services, national resources and state-specific information about insurance commissioners, marketplaces and Medicaid and CHIP enrollment.