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Health Care Reform-Does It Affect You?

In a nutshell, YES the law in some way, shape or form will have an impact on you.

We are here for you, your family and your business to help you sort through how the law will apply to you or your business.

We are licensed to do business with Assurant, Blue Cross Blue Shield of MN, Health Partners, Medica, Preferred One and several other health carriers for our  out of state clients.

We will be going through the State required training / certification which will allow us to sell health insurance products through the new State Exchange (MNSure).

Health Care Reform-Does It Affect You?

Effective January 1, 2014 MOST individuals and dependents must have and maintain minimum essential coverage or be subject to a penalty (tax).

Individuals that are exempt from the penalty or may apply for an exemption include:

• If un-insured for 3 months or less

• Taxable income is less than 100% of the federal poverty level

• American Indian• Individuals in prison

• Members of religious groups that object to coverage because of religious principles• Members of  health care sharing ministries

• Individuals who are not US citizens

• If premium is not affordable

Essential Health Benefits

What It Is

Essential health benefits are a set of health care service categories that must be covered by health plans offered in the individual and small group markets. The law requires the Essential Health Benefit Package (EHB) to provide:

• ten (10) coverage sets,

• limits cost-sharing and

• provides bronze, silver, gold or platinum levels of coverage, also referred to as Metal Levels.

The EHB applies to ALL non-grandfathered individual and small group products offered inside or outside of the State Exchange.

Coverage Sets

The ten categories of coverage that must be offered by health plans starting January 1, 2014 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

• Pediatric services, including oral and vision care

Limit Cost Sharing

Out of pocket maximum limits, (expected to be indexed yearly) for 2014 are expected late Summer of 2013.  The current limit is indexed to the IRS limits for health savings accounts.

• 2013 Single limit is $6,250

• 2013 Family limit is $12,500

Deductible limit for Small Group health plans will be limited to:

• $2,000 for Single Coverage

• $4,000 for Family Coverage

Coverage Levels

Plans must offer four levels of coverage (Metal Levels).  The Actuarial Values for the levels must fall between 60% and 90%   The Actuarial Value is the percentage the health plan must pay out including co-payments, deductibles and co-insurance.Levels:

• Bronze with actuarial value of 60%

• Silver with actuarial value of 70%• Gold with actuarial value of 80%

• Platinum with actuarial value of 90%

Health Insurance Exchange

The State of MN has elected to create their own health insurance exchange (HIX) and legislation has passed and been signed into law by Governor Dayton.  The State exchange will go by the name of MNSure.

The exchange is to be up and running by October 1, 2013.

For 2014, if an insurance carrier meets the Qualified Health Plan (QHP) and any other exchange requirements, they will be allowed to sell plans through the exchange.

Starting in 2015 the seven member governor appointed board that oversees the exchange will have the power to select health benefit plans from participating carriers that the board believes offer optimal choice, value, quality and services.

The long term funding source for MNSure will be provided by a 1.5% premium fee in 2014 and will rise to 3.5% premium fee the  following year.  The fee will apply to all fully insured individual and group products sold inside or outside of the exchange.

Individuals who qualify for a subsidy will need to purchase their coverage through the exchange.

The exchange will hold annual open enrollment periods for individuals to purchase coverage or to make plan changes. The initial enrollment period will run from October 1, 2013 through March 31, 2014.

Ongoing annual enrollment periods will run from October 15 through December 7.

Special enrollment periods will be available for individuals who have qualifying events throughout the year.  We do not have available a full list of the qualifying events but expect them to be similar to COBRA qualifying events (loss of group coverage, birth, adoption, death or loss of group eligibility).

Health Premium for Qualified Health Plans (QHP) sold inside or outside the exchange will be the same.

Small Businesses who employ less than 50 total employees may purchase coverage for their employees through the Small Employer Health Options Program (SHOP).

Small Employer tax credits are available only through the exchange.  This is the same tax credit that has been available to small employers since 2010 and if eligible the tax credit may be received for a total of two years.

U.S. Department of Health & Human Services  (HHS) announced that the Federal SHOP employee choice model exchange will be delayed until January 1, 2015 due to operational issues.  MNSure is still planning to offer the employee choice model with an effective date of January 1, 2014, despite the delays at the federal level.

Small Business Impacts

Employers with less than 50 full-time or full-time equivalent employees ARE NOT subject to the law.  These employers may continue to offer coverage to their employees, and if they don’t, WILL NOT be subject to any penalties.

Plans offered cannot apply a waiting period longer than 90 days.  This applies to all plans, including grandfathered plans.

Small group health plans will need to provide the mandated coverage’s.

Employers must offer coverage to an employee’s dependents (law does not specify spouse).  The employer IS NOT required to pay any portion of the dependents monthly premium.

Small Employer Tax credit is available, to access; coverage must be purchased through the exchange (SHOP).

Transitional Reinsurance Program Fees will start in 2014 and runs through 2016 for all non-grandfathered products.  The fee will be paid by the Health carrier and the fee is expected to be passed on in the health premium.

Health Insurance Exchange (MNSure) funding will also impact the premiums by 3.5% in 2015.

The law classifies a full-time employee as an employee who regularly works 30 or more hours per week – this definition is used to determine if you are a small or large employer and subject to penalties.

Small employers not subject to the law will still have the flexibility to define the eligibility requirements for their employees to be able to enroll in the groups’ health plan.

Maximum deductible limit for a small group plan starting in 2014 is $2,000 for Single coverage and $4,000 for Family Coverage.

SHOP expanded at the federal level by 2016 for employers with 100 or less employees.  MNSure may make the employer change to 100 in 2015.

Health Insurance coverage reporting is mandated and Insurers that provide minimum essential coverage must report to the IRS.  Insurance carriers that provide small employer plans (employs less than 50 full time or full time equivalent employees) will report this information for the group.  Information requested includes coverage the plan provides and the premium contribution by the employer.

Employers offering coverage must provide notices to current employees and new hires of the existance of the exchange and their health plan options.  This reporting requirement was to have gone into effect  March 1, 2013, but has been delayed until October 1, 2013.

Rating Rules

Carriers will no longer be able to charge premiums based on medical history of individuals or the group.

All plans will be required to accept every individual who applies for coverage on a guarantee issue basis and cannot apply any pre-existing condition limitations.

All plans will be community rated.Premiums  will only be permitted to vary based on four factors:

• Family Size

• Age*

• Geographic rating area

• Tobacco usage**

*no more than a 3:1 variance will be allowed between the highest age rate and the lowest age rate for individuals who are age 21 and older

** the rate for tobacco users may not be more than 1.5 times the rate for non-tobacco users.

The carriers are currently working on plan designs to conform to the Metal Levels and Community Rating.

Carriers who are planning on selling products in the Health Insurance Exchange in MN are to have their plan design and rating information turned in by the end of May 2013 for the State to review and approve.

We have not been given any definite information as to what will be happening to the rates in 2014.

It is expected that in the small group market that the current groups that are on the lower rating tables (healthier groups)  will see a larger increase in their rates compared to groups on the highest rating tables (un-healthier groups).  This is due in part to the new rating structure that the carriers have to abide by.

In the Individual market the addition of mandated coverage’s (maternity, mental health and substance use disorder); revised rating structures along with the guarantee issue will have a large impact on the rates.   It is expected that the younger, healthier segment will see larger increases in their premium.

Health insurance companies will be required to report all rate increases to the applicable rate review program and increases greater than 10% will be subject to review and approval.

Individual Mandate

Effective January 1, 2014, MOST individuals and dependents must have and maintain minimum essential coverage.  A penalty (tax) will be applied on those individual who do not have qualifying coverage.

Advance Premium Tax Credits (APTC) (subsidy) will be available to individuals who qualify based on income and family size.  Coverage will need to be purchased through the State run exchange (MNSure) to obtain the subsidy.

Three government departments (IRS, Homeland Security and Health and Human Services) will work together to determine if you are eligible for a subsidy.

Individuals/families whose income level falls between 100% – 400% of the Federal Poverty Guidelines (FPG) may be eligible for a subsidy.

Additional Cost Sharing Reductions (CSR) are available for individuals whose income is between 100% – 250% of the FPG. If coverage is purchased at the Silver level, CSR will reduce the amount of cost-sharing for essential health benefits based on the household income level.

In addition to the APTC and the CSR there are separate Subsidies available for eligible American Indians and Alaskan Natives in the exchange.

A penalty (tax) will be imposed on those individuals without qualifying coverage equal to 1/12 of the annual penalty amount for any month without coverage during the taxable year.

The penalty starts in 2014 and will increase each year, but will never be more than your cost for the bronze level of coverage.

Penalty Amounts:

• 2014 – $95 or 1% of income (greater of)

• 2015 – $325 or 2% of income (greater of)

• 2015 – $695 or 2.5% of income (greater of)

If an individual has access to an affordable qualified employer plan and applies for coverage in the exchange, the individual will not be able to receive a subsidy.

Subsidizes received are reconciled annually and if an individual or family eligibility for the subsidy has changed during the year and too much of a subsidy was received, the over payment will need to be re-paid.  If the subsidy was under-calculated there is not a provision to reimburse for the shortage.