Healthcare Reform

Important changes through Healthcare Reform

Changes through Healthcare Reform

Generally prohibits plans and insurers from imposing annual limits on the dollar value of essential health benefits.

Health insurance issuers in the individual and small group market can only rate on the following factors:

  • Age rating
  • Geographic area
  • Family size
  • Tobacco use

Requires health plans to make coverage for dependent children available until they reach age 26.

Applicable large employers face a potential penalty if they do not provide minimum essential coverage to full-time employees that has both minimum value (60% AV) and is affordable (lowest-cost, self-only coverage is no more than 9.5% of household income).

Certain health benefits that are deemed “essential” must be offered by non-grandfathered individual and non-grandfathered small group plans without any annual or lifetime dollar limits. Other types of limits may be put in place, including visit limits, day limits, or occurrence limits. EHBs must include items and services within at least the following 10 categories:

  • Ambulatory patient services
  • Emergency Services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services
  • Prescription drugs
  • Rehabilitative and habilitative services
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

A health plan that was written prior to March 23, 2010 is a grandfathered plan under the Affordable Care Act. Grandfathered health plans are not subject to some of the provisions of the ACA. The ACA regulations permit plans to make only certain limited changes and still remain grandfathered. Among other changes, a plan will lose its grandfathered status if any of the following changes are made after March 23, 2010:

  • Elimination of Benefits. The elimination of all or substantially all benefits to diagnose or treat a particular condition or any necessary element to diagnose or treat a condition.
  • Coinsurance Changes. Any increase in a percentage cost sharing requirement. For example, if a plan’s coinsurance percentage is increased from 10% to 20%.
  • Copayment Changes. An increase in a fixed amount copayment if the total increase in the copayment exceeds the greater of $5 (increased by medical inflation) or a percentage equal to medical inflation plus 15%. For example, if a plan increases its fixed-dollar $10 copayment amount for a doctor’s visit by more than the greater of the two amounts, a plan would lose its grandfathered status.
  • Deductible Increases. An increase in a fixed amount, cost-sharing requirement other than a copayment if the total percentage increases in the cost sharing requirement exceeds medical inflation plus 15%.
  • Decrease in Employer Contributions. A decrease in the rate of employer contributions by more than 5% for any coverage tier. For example, an employer changes its contribution rate for employee only coverage from 65% to 50%.
  • Zero Enrollment. A plan has to have continuously covered someone since March 23, 2010. If a plan falls to zero members after March 23, 2010, the plan will lose grandfathered status.
  • Disclosure Requirements. To maintain grandfathered status, the ACA regulations require that a group health plan include a statement in any plan materials provided to a participant or beneficiary that describes the benefits provided under the plan, that the plan or coverage believes it is a grandfathered plan, and provide contact information for questions and complaints.

The ACA requires most individuals to maintain minimum essential coverage. Individuals who do not maintain minimum essential coverage and are not exempt from the mandate will have to pay a tax penalty for each month of noncompliance.

2014: Penalty will be $95 per adult, $47.50 per child up to a max of $285 per family OR 1% of household income (household defined as the amount by which an individual’s household income exceeds the applicable filing threshold for the tax year); whichever is greater.

2015: Penalty will be $325 per adult, $162.50 per child up to a max of $975 per family OR 2% of household income (household defined as the amount by which an individual’s household income exceeds the applicable filing threshold for the tax year); whichever is greater.

2016: Penalty will be $695 per adult, $347.50 per child up to a max of $2,085 OR 2.5% of household income (household defined as the amount by which an individual’s household income exceeds the applicable filing threshold for the tax year); whichever is greater.

The penalty for noncompliance cannot exceed the national average premium for bronze-level-qualified health plans offered through exchanges (for the relevant family size). Any penalty that taxpayers are required to pay must be included in their return for the taxable year.

Some people qualify for an exemption from the fine, based on income or other factors. For more information, visit www.healthcare.gov/exemptions

Prohibits plans and insurers from imposing lifetime limits on the dollar value of essential health benefits.

All non-grandfathered plans that cover EHBs must limit out-of-pocket member expenses for in-network EHBs. In 2014, a plan’s charges cannot exceed $6,350 for self-only coverage and $12,700 for family coverage. In 2015, a plan’s charges cannot exceed $6,600 for self-only coverage and $13,200 for family coverage.

A group health plan cannot apply any waiting period that exceeds 90 days.

Prohibits plans from imposing a pre-existing condition exclusion on enrollees.

Requires plans to provide certain preventive health services without cost sharing, such as copay, coinsurance or deductibles, when delivered by a network provider.

Small businesses may be eligible to participate in the SHOP Marketplace. In order to qualify, a business must be located in a SHOP service area, have at least one eligible employee on payroll, have no more than 50 FTE on payroll, and offer coverage to all full-time employees (based on 30-hour work week). For more information visit https://www.healthcare.gov/how-do-i-apply-for-coverage-in-the-shop-marketplace/

Small businesses may be eligible for a tax credit up to 50% of group plan premium paid. In order to qualify, the small business must have an average of fewer than 25 FTEs (based on a 40-hour work week), have average annual employee wages below $50,000, pay at least 50% of the cost of each employee’s health insurance, and must purchase coverage through the SHOP. A business may claim the tax credit for two consecutive tax years beginning 2014.

The tax credit is phased out based on the size and annual salary of its employees. For example, a business with an average of 10 FTEs with annual salary of $25,000 will be eligible for a greater portion of tax credit than a business with an average of 24 FTEs with annual salary of $40,000. For more information visit https://www.healthcare.gov/small-business-tax-credit-calculator/

Requires insurers and health plans to provide members with a uniform summary of benefits outlining coverage. Generally, the SBC must include what is covered by the plan, what is not covered by the plan, cost-sharing provisions and exclusions, and coverage examples. An SBC represents an overview of coverage; it is not an exhaustive list of what is covered or what is excluded. The full terms of coverage are located in the insurance policy.

SBCs must be provided to members at specific times, including at enrollment, at renewal, at special enrollment, prior to an off-renewal plan change, and upon member request.

Expands coverage pertaining to women’s preventive services, contraceptives and breastfeeding. Under the ACA, certain preventive health services are covered without patient cost share when using a network provider.