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HealthCare Reform

The History of HealthCare Reform
Open Enrollment
Special Enrollment Periods
Key Provisions
Minimum Essential Coverage
Individual Mandate
Medical Loss Ratio (MLR)

The History of HealthCare Reform

The Patient Protection Act and Affordable Care Act (PPACA), commonly called the Affordable Care Act (ACA) or "Obamacare", is a United States federal statute signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act, it represents the most significant regulatory overhaul of the U.S. healthcare system since the passage of Medicare and Medicaid in 1965. The ACA was enacted with the goals of increasing the quality and affordability of health insurance, lowering the uninsured rate by expanding public and private insurance coverage, and reducing the costs of healthcare for individuals and the government. It introduced a number of mechanisms, including mandates, subsidies, and insurance exchanges meant to increase coverage and affordability. The law also requires insurance companies to cover all applicants within new minimum standards and offer the same rates regardless of pre-existing conditions or sex. Additional reforms aimed to reduce costs and improve healthcare outcomes by shifting the system towards quality over quantity through increased competition, regulation, and incentives to streamline the delivery of healthcare. In 2011 the Congressional Budget Office projected that the ACA would lower both future deficits and Medicare spending. On June 28, 2012, the United States Supreme Court upheld the constitutionality of the ACA's individual mandate as an exercise of Congress's taxing power in the case National Federation of Independent Business v. Sebelius. However, the Court held that states cannot be forced to participate in the ACA's Medicaid expansion under penalty of losing their current Medicaid funding. Since the ruling, the law and its implementation have continued to face challenges in Congress and federal courts, and from some state governments, conservative advocacy groups, labor unions, and small business organizations. As of May 2014, approximately 20 million Americans had gained health insurance coverage under the ACA, and the percentage of uninsured Americans dropped from 18% in 2013 to 13.4% in May 2014.

Open Enrollment

The period of time during which individuals who are eligible to enroll in a Qualified Health Plan can enroll in a plan in the Marketplace. For coverage starting in 2023, the Open Enrollment Period is November 1, 2022 through December 15, 2022. Coverage will start January 1, 2023.

Special Enrollment Periods

Under certain circumstances, individuals may enroll in a QHP or change QHPs outside of the annual open enrollment period. These SEPs are based on certain triggering events or special circumstances.

Events that permit an SEP include:

• Gaining or becoming a dependent through marriage, birth, adoption, placement for adoption, or placement in foster care

• Gaining status as a citizen, national, or lawfully present individual

• Loss of coverage (e.g., loss of Medicaid eligibility, QHP no longer available), except if enrollment is terminated based on failure to pay premiums, fraud, or enrollee initiated termination

• Determination that an individual is newly eligible or ineligible for advance payments of the premium tax credit or a change in eligibility for cost-sharing reductions • Permanent move to an area where different QHPs are available

• American Indian or Alaskan Native status

• Misconduct of a Navigator, consumer assister, agent or broker, or insurer customer service representative, or misconduct of a QHP while conducting direct enrollment

• Errors, contract violations, or other exceptional circumstances identified by the Marketplace

Most SEPs extend for 60 days from the date of the triggering event. The Marketplace permits consumers to access the SEP for loss of coverage up to 60 days before the anticipated loss date. In order to apply for an SEP, individuals use the same Marketplace application as for the open enrollment period.

As mentioned in triggering events, an SEP exists for marriage. This means that if a qualified individual gets married, the applicant has the chance to either enroll in a QHP for the first time, or make changes to an existing QHP enrollment without waiting for the open enrollment period. For marriage, Individual Marketplace coverage begins the 1st of the month following the consumer’s QHP selection (e.g., coverage effective date of July 1st if plan selection occurred June 28th).

The Individual Marketplace would need to be notified and plan selection needs to occur within 60 days of a marriage to enroll or change plans. If the 60-day deadline is missed, applicants must wait until the next open enrollment period, or another SEP, to enroll or change plans.

Another important SEP exists for the birth, adoption, placement for adoption, or placement in foster care of a child. The effective date of coverage can be the date of the birth, adoption, placement for adoption, or placement in foster care as long as the Individual Marketplace is notified in a timely manner. The Individual Marketplace would need to be notified within 60 days of a birth, adoption, placement for adoption, or placement in foster care to enroll applicants or change plans. If the 60-day deadline is missed, applicants must wait until the next open enrollment period, or another SEP, to enroll or change plans. Another important SEP exists for the birth, adoption, placement for adoption, or placement in foster care of a child. The effective date of coverage can be the date of the birth, adoption, placement for adoption, or placement in foster care as long as the Individual Marketplace is notified in a timely manner. The Individual Marketplace would need to be notified within 60 days of a birth, adoption, placement for adoption, or placement in foster care to enroll applicants or change plans. If the 60-day deadline is missed, applicants must wait until the next open enrollment period, or another SEP, to enroll or change plans.

Key Provisions

The Affordable Care Act included many provisions designed to help ensure that consumers have access to effective health care coverage, and to limit their costs. Key provisions that you need to understand to best serve consumers include:

• Extension of parents’ health insurance coverage to children up to age 26

• Expansion of the “guaranteed issue” requirement to ensure that health insurance issuers offer group and individual market policies to any eligible individual in a state, regardless of health status

• Prohibition on charging consumers a higher premium based on health status or gender • Elimination of annual and lifetime coverage limits

• Prohibition on coverage limitations or exclusions based on pre-existing conditions

• Prohibition on precluding a qualified individual’s participation in an approved clinical trial, or discriminating against that individual based on such participation

• Introduction of an 80/20 MLR rule to ensure that at least 80 percent of the premium dollars paid to a health insurance issuer are spent on providing health care

Under the Affordable Care Act, health plans that cover children must make coverage available to children up to age 26. Young adults can join or remain on a parent’s plan even if they are:

• Married (coverage does not extend to married child’s spouse)

• Not living with a parent • Not attending school

• Not financially dependent on a parent

• Eligible to enroll in their employer’s plan

• The Affordable Care Act requires health insurance issuers to offer all of their individual market and group market plans to any applicant in the state. It also requires health insurance issuers to accept any individual who applies for those policies, as long as the applicant agrees to the terms and conditions of the policy, including the payment of premiums. This provision is called “guaranteed issue.”

• Coverage offered through and outside the Marketplaces may restrict guaranteed issue coverage to certain enrollment periods. Effective for all health plans with plan years beginning on or after January 1, 2014, the Affordable Care Act prohibits health insurance issuers from limiting or excluding coverage related to pre-existing health conditions, regardless of the age of the covered individual. For persons under age 19, this provision became effective for policy years beginning on or after September 23, 2010. Generally, a pre-existing condition is any health condition or illness that was present before the coverage effective date, regardless of whether medical advice or treatment was actually received or recommended.

The Affordable Care Act prohibits health insurance issuers from:

• Precluding participation of qualified individuals in an approved clinical trial

• Denying, limiting, or placing additional conditions on the coverage of routine patient costs for items and services furnished in connection with participation in an approved clinical trial

• Discriminating against qualified individuals on the basis of their participation in an approved clinical trial

Minimum Essential Coverage

The type of coverage you'll need to avoid the fee is called minimum essential coverage. Minimum essential coverage includes marketplace insurance, most private major medical plans off the marketplace, Medicare, Medicaid and CHIP, most employer based coverage, and more. Short term plans and other non-compliant plans purchased outside of open enrollment don't comply with ObamaCare's individual mandate! In most cases you can only obtain private insurance that counts as minimum essential coverage during each years open enrollment due to insurers unofficially adopting marketplace enrollment periods!

Individual Mandate

As of January 1, 2014, individuals not eligible for an exemption are required to demonstrate that they maintain minimum essential coverage or make a payment, called the “individual shared responsibility payment,” when filing their federal income tax returns. Minimum essential coverage is the type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. The following types of health insurance coverage meet the individual responsibility requirement:

• Coverage purchased in the individual market including a Federally-facilitated Marketplace;

• Government sponsored coverage, such as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and TRICARE (the Department of Defense heath care program); and

• Coverage under an employer-sponsored plan.

Individuals who are ineligible for an exemption and do not have coverage are required to make an individual shared responsibility payment.

• 2014: The annual individual shared responsibility payment is the greater of

o 1% of the taxpayer’s household income that is above the tax return filing threshold for the taxpayer’s filing status, or

o The taxpayer’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285.

• However the total payment amount is capped at the cost of the national average premium for a Bronze level health plan available through the Marketplaces in 2014.

• 2015: The annual individual responsibility payment is the greater of

o 2% of the taxpayer’s household income that is above the tax return filing threshold for the taxpayer’s filing status, or

o The taxpayer’s flat dollar amount, which is $325 per adult and $162.50 per child, limited to a family maximum of $975.

• However the total payment amount is capped at the cost of the national average premium for a Bronze level health plan available through the Marketplaces in 2015.

• The calculations above represent the amount of the payment for not having health insurance coverage for the entire year. Individuals will owe 1/12th of the annual payment for each month they (or their dependents) do not have coverage and are not exempt. Individuals without coverage for less than three consecutive months during the year may qualify for the short coverage gap exemption and will not have to make a payment for those months. The short coverage gap exemption only applies to the first coverage gap during a year.

• The same method of calculation is used in 2016 and later years. In 2016, the payment is the greater of 2.5% of income over the filing threshold, or $695 per person ($347.50 per child under 18). After 2016, the payment is adjusted for inflation.

Under certain circumstances, an individual may be exempt from the individual responsibility requirement. These circumstances include the following:

• The individual is uninsured for less than three months of the year

• The lowest-priced coverage available to the consumer would cost more than 8% of the consumer's household income

• The individual does not have to file a tax return because his or her income is too low

• The individual is a member of a federally recognized tribe or eligible for services through an Indian health care provider

• The individual is a member of a health care sharing ministry

• The individual is a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare

• The individual is incarcerated, and is not awaiting the disposition of charges

• The individual is not lawfully present in the United States

• The individual has experienced a hardship

There are certain circumstances that affect an individual’s ability to purchase health insurance coverage and which may qualify an individual for a hardship exemption. To make the determination, the Marketplace considers whether an individual has experienced one of the following events:

1. Becomes homeless

2. Has been evicted in the past six months, or is facing eviction or foreclosure

3. Has received a shut-off notice from a utility company

4. Recently experienced domestic violence

5. Recently experienced the death of a close family member

6. Recently experienced a fire, flood, or other natural or human-caused disaster resulting in substantial damage to individual property

7. Filed for bankruptcy in the last six months

8. Incurred medical expenses in the last 24 months that resulted in substantial debt

9. Experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member

10. Expects to claim a child as a tax dependent who has been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, the individual would not have to make a payment for the child

11. As a result of an eligibility appeals decision, is determined eligible for enrollment in a QHP through a Marketplace, the premium tax credit, or cost-sharing reductions for a period of time during which he or she was not enrolled in a QHP through a Marketplace

12. Was determined ineligible for Medicaid because his or her state did not expand eligibility for Medicaid under the Affordable Care Act

13. Lost insurance coverage because his or her individual plan was cancelled and believes other available coverage options are unaffordable

14. Experiences another hardship in obtaining health insurance

Medical Loss Ratio (MLR)

• The Affordable Care Act helps keep costs down by limiting the proportion of premiums that a health insurance issuer can spend on things other than providing health insurance coverage and improving the quality of the health care of its enrollees.

• Medical Loss Ratio (MLR) is a basic financial measurement that shows how much of the premium dollars a health insurance issuer spends on health care expenses, as opposed to profits or administrative costs. As of 2011, a health insurance issuer that does not spend enough of its premium dollars on health care services must provide rebates to insured individuals or policyholders.

• In general, if a health insurance issuer uses an average of 80 cents out of every premium dollar to pay customers’ medical claims and to conduct activities that improve the quality of care, the company has an MLR of 80 percent. MLR is not calculated at the individual policy level but at the state level for each issuer separately for the small group, large group, and individual markets.

• An MLR of 80 percent indicates that the health insurance issuer is using the remaining 20 cents of each premium dollar for profits and administrative costs, including salaries and other expenses. As of 2011, a health insurance issuer is generally required to spend at least 80 percent of premium dollars on medical care. • The Affordable Care Act sets minimum MLR standards for different markets, as do some state laws.

Tax Credits and Cost Sharing Discounts

The Marketplace uses Modified Adjusted Gross Income (MAGI) to determine a consumer’s eligibility for advance payments of the premium tax credit and cost-sharing reductions. The MAGI calculation for advance payments of the premium tax credit and cost-sharing reductions equals adjusted gross income as defined by the Internal Revenue Service (IRS), plus any excluded foreign income, tax-exempt interest received or accrued during the taxable year, and non-taxable Social Security benefits. Assets are not considered in determining eligibility.

• The premium tax credit is based on projected annual household income, family size, and the cost of the second lowest cost Silver level (actuarial value (AV) 70%) benchmark plan for that individual or family. The Marketplace uses this information to compute a maximum premium tax credit, which can then be applied in part, or in full, to reduce the monthly premiums of one or more QHPs.

• The amount of the premium tax credit depends on the QHP that the individual or family selects. If the monthly premium for the selected QHP is greater than the monthly advance payments of the maximum premium tax credit, the individual or family will pay the difference in the monthly premium cost. If the premium for the selected QHP is less than the maximum advance payments, the individual or family may elect to receive the maximum advance payments of the premium tax credit, and have no additional monthly premium cost.

The income tax return for the plan year will reconcile any advance payments of the premium tax credit with the premium tax credit allowed on the return. The Marketplace provides documentation to the tax filer and to the Internal Revenue Service (IRS) that supports the reconciliation process in the same way that an employer or bank provides a Form W-2 or Form 1099. The amount of the premium tax credit or an individual’s change in circumstances may impact the individual’s refund or tax liability:

• If the actual premium tax credit amount is greater than the total advance payments made to the QHP issuer, either a refund is increased or a tax liability is reduced.

• If the actual premium tax credit amount is less than the total advance credit payments made to the QHP issuer, either a refund is reduced or a tax liability is increased.

• Changes in circumstances (e.g., income, family size) must be reported to the Marketplace in order to avoid the payment of excess advance payments of the premium tax credit that will need to be repaid with the tax return.

Cost-sharing reductions limit the out-of-pocket costs for essential health benefits (EHB) for individuals and families with MAGI between 100-250% of the FPL, and certain American Indians/Alaska Natives enrolled in a Silver level QHP through the Individual Marketplaces. Federal regulations set the reduced maximum annual limitation on cost sharing for individuals and families eligible for cost-sharing reductions based on income, however, reductions on cost-sharing for specific benefits and services may vary based on a QHP issuer’s specific plan design.

Under federal regulations, a family can only enroll in the most generous plan for which all members of the family are eligible. For families that want to maximize each family member's ability to access cost-sharing reductions, the Marketplace provides separate initial enrollment groups for each family member(s) eligible for different levels of cost-sharing reduction.