The Affordable Care Act and Covered California El Dorado County Chamber of Commerce January 9, 2013
A word from the presenter I provide the following information solely on my own behalf as a community service and not as an official representative of my employer, Covered California.
Presentation Overview Affordable Care Act (ACA) insurance market reforms
Presentation Overview Covered California : California’s version of state health benefit exchanges created by the ACA to provide marketplaces for individuals and small employers to purchase health coverage
The Affordable Care Act • The Patient Protection and Affordable Care Act was passed by Congress and signed into law March 23, 2010. • On June 28, 2012 the U.S. Supreme Court rejected a constitutional challenge of the Act, leaving the law largely intact. • Most comprehensive reform of the U.S. health care system since the enactment of the Medicare Act in 1965. (Only some provisions to be covered today)
Market reforms currently in effect for all non ‐ grandfathered health plans • Must cover dependent adult children up to age 26 • No cost sharing for preventative health services • No rescissions of coverage, except in the case of fraud or intentional misrepresentation of material fact • No lifetime limits • Annual limits restricted (Fully prohibited 1/1/14)
Market reforms currently in effect for all non ‐ grandfathered health plans • Children age 19 and younger cannot be denied coverage due to pre ‐ existing conditions • Plans must provide uniform summary of benefits and coverage using terminology understandable to the average enrollee • Individual and small group plans subject to joint federal/state review of rate increases of 10 percent or more based on reasonableness standard • Health plan issuers must spend 80 percent (85 percent for large group plans) of premium dollars on medical care and health care quality improvement
Market reforms Individual and small group coverage effective 1/1/14 All health plans must include specified “Essential Health Benefit” categories effective 1/1/2014: • 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 • Pediatric services, including oral and vision care
Market reforms Individual and small group coverage effective 1/1/14 • Elimination of medical underwriting of individuals and risk rating of small groups • Individual mandate takes effect with penalties (deemed a tax in recent U.S. Supreme Court ruling) for “going bare” as medically uninsured (Must have coverage providing essential benefits) • Aggregation of risk: all individuals and small employers (50 or fewer employees) are grouped into single state risk pools • Modified community ‐ based rating: all insureds pay standardized basic rates • Modifiers: Premiums may be adjusted based on age, geographical location, family size and tobacco use • Age rating limited: premiums cannot vary by more than 3 to 1 ratio between oldest and youngest
Market reforms Individual and small group coverage effective 1/1/14 • Plans must provide minimum actuarial value (cover at least 60% of expected claims costs) • Limits on cost sharing (deductibles, co ‐ pays, co ‐ insurance) • Plan issuers must offer plans with coverage at five required metal actuarial value tier levels: – Bronze (Covers 60% of expected costs) – Silver (Covers 70% of expected costs) – Gold (Covers 80% of expected costs) – Platinum (Covers 90% of expected costs ) – Catastrophic (Limited “bare bones” coverage for those age 30 and under only)
Affordable Health Benefit Exchanges and Covered California Health benefit exchanges are an ACA ‐ mandated market intervention mechanism to restore the individual and small group markets from adverse ‐ selection driven market failure and make it easier to secure coverage.* • All states must have an exchange operating by January 1, 2014. • Health plans will continue to be licensed and regulated by states • Market parity: Plans that are marketed both inside and outside of the exchanges must cover essential health benefits and provide coverage on same terms and conditions in both
Affordable Health Benefit Exchanges and Covered California • California Health Benefit Exchange was first health benefit exchange in nation created by state legislation in 2010 • An independent state entity governed by 5 ‐ member board appointed by Governor and Legislature • Adopted business name of Covered California in October 2012 • Since 2011, Covered California has been developing capacities for – Eligibility and enrollment of individuals and small employers including development of web ‐ based portal – Selection of Qualified Health Plans (Currently engaged in plan selection and contracting to be completed mid ‐ 2013) – Marketing and outreach – Small Business Health Options Program (SHOP) serving employers of 50 or fewer workers
Affordable Health Benefit Exchanges and Covered California • Exchanges function as voluntary markets for participants – Plan issuers not mandated to sell products through exchanges – Individuals and small businesses not required to purchase coverage through exchanges
Affordable Health Benefit Exchanges and Covered California Incentives for Exchange participation • Subsidies (advance federal income tax credits) for individuals with income at 100 ‐ 400% of Federal Poverty Level (California may set lower limit at 138% of FPL under pending Medi ‐ Cal expansion legislation) • For small employers, purchasing power of large employers through single risk pooling/premium aggregation mechanisms and ability to choose among quality plans selected by the Small Business Health Options Program (SHOP) • Enhanced tax credit (50% of cost of coverage) for employer ‐ sponsored coverage purchased through the SHOP in 2014 and 2015 for employers of 25 or fewer workers with average FTE wage of $50,000 or less.
Affordable Health Benefit Exchanges and Covered California 100 ‐ 400% of Federal Poverty Level (2012) • $14,723 ‐ $44,680 (Single) • $30,656 ‐ $92,200 (Family of 4)
Affordable Health Benefit Exchanges and Covered California How tax credit is determined Tax credit based on cost of second lowest cost Silver plan (70% actuarial value), and limits maximum enrollee premium cost to the following maximums as a percent of Federal Poverty Level (FPL): 100 ‐ 133% FPL: 2.0% 133 ‐ 150% FPL: 3.0 ‐ 4.0% 150 ‐ 200% FPL: 4 ‐ 6.3% 200 ‐ 250% FPL: 6.3 ‐ 8.05% 250 ‐ 300% FPL: 8.05 ‐ 9.5% 300 ‐ 400% FPL: 9.5%
Affordable Health Benefit Exchanges and Covered California How the advance tax subsidies work 1.Amount of advance tax credit available to individuals (including self ‐ employed individuals without employees) determined by Covered California at time of enrollment. 2.Tax credit paid by Covered California to health plan selected by individual. 3.Individual billed by chosen plan for balance of premium due.
Affordable Health Benefit Exchanges and Covered California • The Kaiser Family Foundation provides a “Health Reform Subsidy Calculator” at its website to allow users to enter expected 2014 income and determine premium and subsidy amounts http://www.kff.org/ • The enrollment section of the new Covered California website (about to go online) will include a premium subsidy calculator
Affordable Health Benefit Exchanges and Covered California Enrolling in individual and SHOP coverage • Open enrollment begins October 1 for coverage effective January 2014. • Extended enrollment period for individuals through March 2014. • Continuous enrollment in SHOP
Affordable Health Benefit Exchanges and Covered California “SHOP Talk” • SHOP leverages large, single entity purchasing power to select and contract with health plans • Collects premiums on behalf of participating small employers and remits to plans • Agents and brokers eligible to sell SHOP plans once trained and certified by SHOP • Employers can select metal tier value of plan offered; employees choose among plans • Risk pool separate from individual exchange (option to merge with individual exchange in 2017)
Affordable Health Benefit Exchanges and Covered California Enrollment methods (Individual and SHOP exchanges) Covered California website Toll free telephone call to Service Center Mailed paper application to Service Center Insurance agents/brokers In person assisters
Affordable Health Benefit Exchanges and Covered California For more information on Covered California and to sign up for e ‐ mail updates: http://www.healthexchange.ca.gov
The presenter Fred Pilot Pilot Healthcare Strategies http://pilothealthstrategies.com/ fpilot@pilothealthstrategies.com 530 ‐ 295 ‐ 1473 Blog: http://healthinsurancecrisis.net/
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