The Affordable Care Act (ACA) – What Would a Replacement Program Look Like – And Is One Needed?

Georgia Congressman Tom Price, a fierce critic of the ACA and a leading advocate of repealing and replacing the controversial 2010 health care law, recently was chosen by President-elect Donald Trump to lead the Department of Health and Human Services (HHS).  On track to be behind the wheel at HHS, Price may be the one who authors final rules implementing whatever legislation ultimately replaces the ACA (known informally as “ObamaCare”).

Congressman Price, a former orthopedic surgeon, personally introduced legislation to repeal and replace ObamaCare in the current Congress and previous sessions.  His 2015 proposal is called the Empowering Patients First Act and served as the basis for a subsequent health care proposal unveiled in June of this year by House Speaker Paul Ryan.

A key feature of ObamaCare is that it spreads out the costs of health insurance across generations, with subsidization of older sicker people who use more health care by healthier young people.  Prior to the ACA’s implementation, most states permitted an age band rating with a 5:1 ratio; meaning that insurers could charge insureds at the highest issue ages up to five times what the youngest insureds pay in premium.  The ACA compressed the permitted age band rating to a 3:1 ratio, forcing companies to subsidize older people with higher premium levels for younger people.  Price’s proposal would eliminate that, which might be viewed favorably even by ObamaCare's proponents who now recognize they are fighting an uphill battle trying to convince young adults to buy coverage at an exorbitant premium cost.

Price has spoken out against the ACA’s approach to insert the government in the middle of the doctor-patient relationship.  In June of this year Price stated, “They believe the government ought to be in control of health care” and continued with "we believe that patients and doctors should be in control of health care.  People have coverage, but they don't have care."  More recently, he declared “ObamaCare is failing” in a November 1st op-ed on the Townhall website.

Some of the key points from Prices' health care proposal are as follows:

• Fixed tax credits for people to use to buy insurance on the private market, with credits starting at $900 a year below age 18 and rising with age.  People on Medicaid, Medicare, Tricare or the Veterans Affairs (VA) program could opt for tax credits to buy private insurance.

• Expansion of health savings accounts, which allow people to save money for health care costs on a pre-tax basis.  People covered by existing government programs including Medicare and the VA could contribute to their health savings accounts to pay for premiums and copayments.

• No denying coverage to people with pre-existing medical conditions provided they had maintained continuous insurance for 18 months prior to selecting a new policy.  Otherwise, for people who had not maintained such continuous insurance, coverage of a pre-existing condition could be excluded for up to 18 months after enrolling in a new health plan.

• Companies can take a tax deduction of up to $20,000 for a family health plan and $8,000 for an individual.  The limit is intended to discourage overly generous employer health insurance plans.

• States would receive federal funds to create “high-risk pools”, which are government-run health plans for people with pre-existing medical conditions who cannot find affordable health insurance on the private market. 

Effective implementation of Price’s plan seemingly would require an initial open enrollment period that achieves broad success in covering Americans not already insured under employer-sponsored programs or government health care plans such as Medicare and Tricare.  Following the initial program enrollment, Price’s plan would make it difficult for people to try to game the new system by purchasing insurance only upon discovery of an illness.

Price concluded his op-ed with the following:

“We solve the insurance challenges of portability and pre-existing conditions by applying the same coverage rules that already exist in the employer-sponsored market – real, sustainable protections that mean no one can be priced out of the health insurance market if they have a bad diagnosis or injury.  And, for those on a government health care program, we offer reforms that will empower states with the flexibility to best serve their Medicaid populations while offering Medicare beneficiaries more choices that will help save, strengthen, and secure this vital program in the years to come.”

Let us hope that Price’s words do not prove to ring hollow, like President Obama’s statement from March 2010 in his Weekly Address: Health Reform Will Benefit American Families and Businesses This Year:  “What won’t change when this bill is signed this:  if you like the insurance plan you have now, you can keep it.  If you like your doctor, you can keep your doctor.  Because nothing should get in the way of the relationship between a family and their doctor.”

For the record, as a licensed sales agent I have assisted dozens of Americans in obtaining insurance through the ACA’s Health Insurance Marketplace.  I have been authorized to conduct Marketplace business since the fall of 2013 when agents initially were certified.  Since that time, my existing individual policy was canceled, and the premium for the lowest cost (non-subsidized) ACA compliant plan for sale in my area is more than double what I had paid prior to 2014.  Further, my 2017 plan (I chose the lowest cost) does not include coverage for the orthopedic surgeon who successfully repaired a torn labrum for me more than a decade ago; nor does my plan include coverage for any physician I have visited in nearly 20 years living in Florida.  To add insult to injury, today I often work harder for an individual or family to assist with a health insurance plan enrollment; yet my compensation is less than a third of what I received for similar work performed prior to ObamaCare.  I do not believe that insurance company executives are making less money now, and I definitely do not recall hearing President Obama admit that his proclamation noted above turned out to be totally false.  It is disappointing to me that accountability only applies to regular people, and not to those at the highest positions in our country.

After having conducted a thorough examination of the issues, I would say that a program to replace ObamaCare indeed is needed.

Until next time,

Andrew Herman

Do I Have to Pay an ACA Tax Penalty for 2014?

Were you covered under Affordable Care Act (ACA) or Grandfathered Health Insurance during 2014?  If not, you may have to make an individual shared responsibility payment (SRP) on your 2014 federal tax return.

The annual penalty for not having health insurance in 2014 is $95 or 1% of your 2014 income, whichever is greater.  This amount is for each person - if you have a family, you must pay this amount for you, for your spouse, and for each child ($47.50 per child under 18), up to the maximum annual penalty shown in the chart below. The penalty amount increases in future years:

From Kaiser Health News

The penalty amount each year is capped at the national average premium for a Bronze-level plan.  For 2014, the annual national average premium is $2,448 per individual ($204/month per individual) or $12,240 for a family of five or more members ($1,020/month).

If you are uninsured for a portion of a year, 1/12 of the yearly penalty applies to each month that you are uninsured.  If you are uninsured for less than three months of the year, you do not have to make an SRP.

How does the federal government count income for purposes of calculating the SRP?

- Start with all gross income reported on your 2014 return that is not exempt from tax

- Include any income from the sale of your main home in 2014

- Include only the taxable part of any social security benefits

- Include any gains (but not losses) from Form 8949 or Schedules C, D or F

- Then subtract the filing threshold amount (see table below for your filing status)

 

For example, a single person under age 65 with 2014 taxable income of $100,000 would subtract $10,150 to arrive at an adjusted income amount of $89,850.  Without any health insurance in place during 2014, that person must pay an SRP of $898.50 (this amount equals the greater of $95 or $89,850 x 1%).

Click here for a handy ACA Tax Penalty Calculator

Who qualifies for an exemption from the SRP?

If you did not have minimum essential coverage in 2014 required by ACA, review the following list to see if you can qualify for an exemption from the SRP:

• You’re uninsured for only 1 or 2 consecutive months of the year
• You enrolled in a health plan that started no later than May 1, 2014, but were uninsured any number of months before that in 2014
• The lowest-priced coverage available to you, through either an individual or job-based plan, would cost more than 8% of your household income
• You don’t have to file a tax return because your income is below the level that requires you to
• You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
• You’re a member of a recognized health care sharing ministry
• You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
• You’re incarcerated (serving a term in prison or jail), and not being held pending disposition of charges
• You’re not lawfully present in the U.S.
• You’re a U.S. citizen living abroad, or one of certain types of non-citizens
• You qualify for a hardship exemption.

To learn more about how to apply for any of the exemptions shown above, visit the official government website at the following link:

https://www.healthcare.gov/fees-exemptions/exemptions-from-the-fee/

Until next time,

Andrew Herman

The Continuity of Delay- Updates in Obamacare

In the past month, the federal government has further delayed implementation of certain parts of the Patient Protection and Affordable Care Act (PPACA), more commonly referred to as Obamacare. The delays in implementation regard three main topics- non-grandfathered individual health insurance, the health insurance mandates regarding businesses, and the implementation of insurance bought through health insurance exchanges (HIXs).

The provisions of the PPACA require all individual health care plans to include the ten essential health benefits. Initially, this requirement was to take effect on January 1, 2014. However, on November 14, 2013, President Obama said that states could decide whether to allow individuals to renew non-compliant plans through 2014. Hence, implementation of the provisions requiring plans to include the essential health benefits was delayed for a year. Yet more recently, on March 5, 2014, this implementation was delayed by a further two years. States can now choose to let individuals buy insurance policies that do not provide Obamacare’s benefit standards through October 2016 and to let individuals keep such policies through a year after that (through September 2017). About half of the states have decided to adopt these delays; an estimated 500,000 people have decided to renew their pre-Obamacare policies into 2014.

Similar delays have been made regarding businesses. The initial draft of the PPACA mandated that starting January 1, 2014, businesses with more than 50 full time equivalent workers (medium sized businesses) must offer insurance to full-time employees. As of February 10, 2014, this mandate was postponed until January 1, 2016. Although the employer mandate is taking effect for large businesses (100 or more full time equivalent employees) only one year late (January 1, 2015), it is being implemented in a more staged manner than was initially planned. Large businesses must, in 2015, only offer insurance to 70% of full time employees, and must then provide insurance to 95% of full time employees from 2016 on.

Some argue that these recent decisions to push back effective dates for the employer mandate and the individual health insurance mandate are purely political moves. Everyone from Congressmen to ordinary citizens have argued that the decision to delay the full effects of Obamacare until after the mid-term elections is a plot to maintain Democratic political control and to simultaneously hide the inability of politicians to actually implement these mandates in a sustainable manner.

Meanwhile, efforts have been made to enroll as many people as possible in insurance through the exchanges before the March 31 deadline rolls around. The federal government announced recently that those who were unable to sign up for a marketplace plan due to technical difficulties can receive retroactive coverage, retroactive premium tax credits, and cost-sharing subsidies to the date that they originally applied. Even those who chose to buy insurance off-exchange due to the difficulties have the option to switch to a marketplace plan and receive retroactive subsidies. The federal exchange is honoring these offers; the fourteen states and the District of Columbia, which decided to establish their own exchanges, can choose whether or not to honor these options. Regardless, it is still unclear how the exchanges will determine who qualifies for these options and what documentation is necessary for qualification. The federal exchange is also attempting to deal with other glitches; in early February, the government announced that if enrollees have encountered benefit display errors, insurers are encouraged to honor the displayed information. If the insurers do not honor the information, consumers will be allowed to pick another plan of the same metal coverage level offered by the insurer. If they cannot find a good substitute with the insurer, consumers will have 60 days to choose a new on-exchange plan.

Consumers must sign up for health insurance- either on-exchange or off-exchange- prior to March 31, 2014 in order to not be charged the penalty for 2014. The next Open Enrollment Period will begin in November, 2014 for 2015 coverage. Until the next Open Enrollment Period, one cannot, with a few exceptions, purchase or change health insurance policies. However, there are a few circumstances that will trigger a Special Enrollment Period. This Special Enrollment Period is a period of 30 days following the following life events during which you are able to obtain new coverage:

·         Moving to a new state

·         Changes in income

·         Ceasing of prior pre-Obamacare coverage

·         Loss of job-based health coverage

·         Changes in family size

o   Marriage

o   Divorce

o   Having a baby

Under the aforementioned circumstances, one will be able to switch insurance policies. If a pre-Obamacare plan ends during the course of the year, one might be able to renew it according to the delay of implementation of the essential health benefits until 2016. Under other circumstances, one may be able to purchase insurance- either on or off-exchange- up to 30 days prior to the life event.

Some changes are approaching for the continuity of the HIX system into 2015. Currently 14 states and the District of Columbia operate their own exchanges; other states will now have until June 15, 2014 to determine whether they want to begin to operate their own exchanges. States that choose not to can still operate under the federal exchange. Also, the Open Enrollment Period for 2015 coverage on the exchange has been extended by a month; it will range from November 15, 2014 to February 15, 2015.

It is imperative to be aware of the changes in health insurance, and to stay on top of relevant dates.

Until next time,

Andrew Herman

Approaching 2014 and ACA's Individual Mandate

Starting on January 1, 2014, the Affordable Care Act (ACA) will require nearly all United States citizens to have health insurance coverage or pay a penalty.  If you are purchasing insurance as an individual or small business owner, you must ensure that your new plan complies with the ACA by having the following ten essential health benefits:

1. Ambulatory patient services

2. Emergency services

3. Hospitalization

4. Maternity and newborn care

5. Mental health and substance use disorder substances, including behavioral health treatment

6. Prescription drugs

7. Rehabilitative and habilitative services and devices

8. Laboratory services

9. Preventive and wellness services and chronic disease management

10. Pediatric services, including oral and vision care

Health insurance plans may differ to the extent in which these ten essential health benefits are offered, but in all cases must have benefits that are “substantially equal” to the essential health benefits outlined above.

There are a number of different ways that the individual mandate may be satisfied:

1.        Medicare meets the minimum essential coverage requirement. Both Original Medicare (Parts A and B) and Medicare Advantage (Part C) plans qualify.
2.        If you are covered by a grandfathered health plan (qualifying health insurance coverage in which an individual was enrolled on or before March 23, 2010), you can stay in your plan as long as you continue to pay premiums and do not make any changes that would defeat the plan’s grandfathered status.
3.       If you are covered by a non-grandfathered individual health insurance plan, you will not have to pay a penalty provided that the plan complies with requirements set by the ACA (including the ten essential health benefits).
4.       Employer plans (including retiree plans), with or without grandfathered status, are deemed sufficient coverage. If the employer is a small business, and it does not provide a grandfathered health insurance plan, it must provide the ten essential health benefits. Non-grandfathered large group plans are only expected to provide hospitalization, emergency services, physician and midlevel practitioner care, pharmacy benefits, and laboratory and imaging services in order to comply with the ACA.
5.      Medicaid beneficiaries are also covered, and do not need to pay the penalty. This includes individuals and families up to 138% of the federal poverty level in states that have chosen to expand Medicaid (Florida not included). 
6.       The Children’s Health Insurance Program (CHIP).
7.       TRICARE (for veterans and their families).
8.       Other veterans health care programs.
9.       Peace Corps Volunteer plans.
10.       Any health insurance plan purchased on the new health insurance exchanges will be sufficient coverage. The health insurance exchanges (HIXs) are scheduled to open on October 1, 2013 for purchase of health plans with an effective date on or after January 1, 2014. Health insurance plans on the exchange will be rated by the “metal system”, based on their benefits:

•      Bronze Level – The plan must cover 60% of expected costs for the average individual
•      Silver Level – The plan must cover 70% of expected costs for the average individual
•      Gold Level – The plan must cover 80% of expected costs for the average individual
•      Platinum Level – The plan must cover 90% of expected costs for the average individual

            It is important to look at your HIX (state or federal) to start researching plans as soon as possible, in particular if you may be eligible to receive a premium subsidy (available at 100% - 400% of the Federal Poverty Level) and/or a cost-sharing subsidy (available at 100% - 250% of the Federal Poverty Level).  While health insurance will continue to be sold off the exchanges in 2014, you must purchase coverage on the exchanges in order to receive any premium and cost-sharing subsidies.

The consequences for not purchasing health insurance in 2014 are modest; however, penalties will continue to rise until 2016.  In 2014, the penalty will be $95 or 1% of the family’s annual income- whichever is greater- per adult ($47.50 per child) or a maximum of $285 per family.  However, by 2016, this will have increased to $695 or 2.5% of the family’s annual income- again whichever is greater- per adult, or a maximum of $2,085 per family.

 There are a few groups who are exempted from the penalty, including those with income so low that coverage is considered unaffordable, those who qualify for expanded Medicaid but who live in a state that has chosen not to expand its Medicaid program, members of federally-recognized Indian tribes, and members of recognized religious sects with religious objections to health insurance.  For those who do not fit these exemptions and do not already have sufficient coverage, it is almost time to get the ball rolling if you wish to avoid paying the ACA’s financial penalty.

Until next time,

 

Andrew Herman

 

Feds Say Health Exchanges to Open on Time, but SHOP Program Hits a Snag

Last week, U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius assured yet another congressional panel that the Patient Protection and Affordable Care Act (PPACA) exchanges will be opening on schedule.

"We are moving ahead," Sebelius stated April 18^th at a House Energy & Commerce health subcommittee hearing on the HHS fiscal year 2014 budget request.  "We are definitely going to be open for open enrollment starting Oct. 1 of 2013."

State Health Insurance Exchange (HIX) programs are mandated under PPACA to provide competitive marketplaces in which individuals and small businesses can choose among private insurance plans; it is meant to be a “one-stop shopping” experience.  The HIX programs also are designed to assess individual financial need and determine federal compensation.  Health insurance plans offered in the insurance exchanges must reach certain levels of coverage and include PPACA-mandated options that other private, grandfathered health plans may be exempt from.

HIX programs can be set up in a few different ways.  First, states can run their own HIX programs; if so, they are eligible to receive federal grants.  States had until December 14, 2012 to submit plans for state-run HIX programs to HHS for approval.  Second, states can run HIX programs in conjunction with the federal government; plans for such programs had to be submitted to HHS by February 15, 2013.  Third, all states who either chose not to submit plans for health insurance exchanges or whose plans were not approved will have programs set up and run by HHS.  All HIX programs are meant to be fully operational by January 1, 2014; states that have declined responsibility or partnership can still choose to implement state HIX programs past that date.

Follow this link for a current map of state decisions regarding HIX programs

While implementation of the HIX programs may still be on schedule, exchanges will not be giving small businesses a full choice of plans in 2014.  At the April 18^th subcommittee hearing, Sebelius explained that HHS has decided to let the Small Business Health Options Program (SHOP) small-group exchanges put off giving employers a chance to offer employees a multi-carrier coverage option.

Each SHOP exchange will still offer the employers themselves a chance to choose from a menu that includes plans from all of the carriers that have agreed to sell plans through that exchange, Sebelius said.

Will the new health exchanges open on time, as Ms. Sebelius assured us last week?  We’ll all know for sure later this year; and by this time next year we’ll have a better idea whether these exchanges ultimately will be a success or a failure.

 

Until next time,

 

Andrew Herman, President

AH Insurance Services, Inc.

Changes to Grandfathered Group Health Care Plans

Group Health Plans Got New Grandfathering Guidelines


On June 17, 2010, the Departments of Health and Human Services, Labor and Treasury (the “Departments”) released interim final regulations relating to the status of grandfathered health plans under the Patient Protection and Affordable Care Act (PPACA). These regulations set forth rules (outlined in a previous blog post) for determining whether or not a plan qualifies as grandfathered, how that status is maintained, and how a grandfathered plan loses the coveted status. One such rule provided that a group health plan would lose its grandfathered status if the plan entered into a new policy, certificate or contract of insurance after March 23, 2010.

Five months later, on November 15, 2010 the Departments issued an amendment generally allowing group health plans to switch insurance companies without forfeiting grandfathered status, as long as the plan is not changed in a manner that violates any of the other rules for maintaining grandfathered status. There are a few major circumstances through which this change protects the health care recipient:

• An insurer may stop selling a certain type of plan
• A company may change hands
• An employer may find a plan offering similar healthcare coverage at a lower cost
• Insurance carriers are less likely to impose unfair renewal rate increases on group plans that are clinging to their grandfathered plan status
• Third-party administrators may now be changed for all grandfathered health care plans (including individual)

The November 15th amendment does seem to make the grandfathering process easier and more consumer-friendly. However, it is important to note that this applies to grandfathered group plans only; individual health insurance policyholders who change their insurance carrier still will lose grandfathered status. Also, the amendment isn’t retroactive, as plans that lost grandfathered status between March 23, 2010 and November 15, 2010 cannot regain get their status back.

Is this good? We think so, except for the fact that the Departments chose not to make the amendment retroactive to March 23rd, which in our viewpoint would have been more consistent.

Does this mark the beginning of many changes to PPACA? We think it’s possible, but of course only time will tell.

Until next time,



Andrew Herman

Grandfathered Health Care Plans

Grandfathered Versus Non-Grandfathered


Certain terms are being constantly thrown around, including “grandfathered” and “non-grandfathered” when discussing health care plans. What does each mean? What are the main differences between the two?

A “grandfathered” health care plan is one that has not had to change to fit all the requirements set by the Patient Protection and Affordable Care Act (PPACA), having existed in its current form since before March 23, 2010. Grandfathered plans must always have at least one person being covered at all times past March 23, 2010, although the person need not be the same constantly. On the other hand, “non-grandfathered” health care plans are those that have been created, bought, or changed since March 23, 2010. Non-grandfathered health care plans are subject to all of the new provisions of the PPACA.

Although grandfathered plans are guaranteed to be almost the same as they were before the PPACA was pushed through Congress, they must follow a few aspects of the PPACA. These requirements may vary slightly based on whether or not the grandfathered plan is for an individual or a group.

The following are parts of the PPACA that must be followed by grandfathered health care plans:

• There must be a lack of prohibition of coverage based on health discrimination starting for dependents under19 on September 23, 2010, and for everyone on January 1, 2014. (This is applicable to only grandfathered group health care plans.)

• There is a prohibition on excessive waiting periods.

• There can be no lifetime limits, and there may only be applicable annual limits on grandfathered individual plans.

• Rescissions are prohibited, except in the case of premeditated fraud, starting September 23, 2010.

• Those under the age of 26 must be available for coverage by their parents’ grandfathered plans unless their current employer offers health insurance coverage.

• Grandfathered health care plans must cover preventive care services without extra cost to the consumer.

Find out what can make a previously-grandfathered health care plan change into a non-grandfathered plan.

Check back soon to learn about coming changes to the Medicare program.