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PPACA Brief Overview

PPACA Brief Overview. Salient Points for Metropolitan Fire Chiefs. How it Works. ACA aims to reform US healthcare system through: “Guaranteed issue ” limiting insurance companies’ pricing, even with pre-existing conditions Price based only on community rating and age

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PPACA Brief Overview

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  1. PPACA Brief Overview Salient Points for Metropolitan Fire Chiefs

  2. How it Works ACA aims to reform US healthcare system through: • “Guaranteed issue” limiting insurance companies’ pricing, • even with pre-existing conditions • Price based only on community rating and age • “Individual mandate” – all must have insurance – effort to get larger number into the insurance pool • Tax subsidiesto help pay premiums for people who are not eligible for Medicaid/Medicare but not wealthy enough to afford full cost of coverage

  3. Individual Mandate • Requires citizens and legal residents to have qualifying health coverage beginning in 2014 or pay a tax penalty of the greater of a dollar amount or a percentage of household income • Penalty phase in: • $95/person (up to a max of 3) OR 1% of household income in 2014; • $325 or 2% in 2015; • $695 or 2.5% in 2016 • Exemptions granted for: • religious objections, • American Indians, • those without coverage for less than 3 months, • those for whom the lowest cost plan option exceeds 8% of the individual’s income, • those with incomes below the tax filing threshold, etc.

  4. Employer Mandate • The Shared Responsibility for Employers Regarding Health Coverage (employer mandate) requires large employers to offer affordable coverage to their employees or pay a tax penalty • Obama administration delayed the employer mandate by a year, so large employers are not required to pay the tax penalty until 2015 • Starting January 2015, “large” employers with any employees receiving a subsidy to buy coverage on the exchange will pay tax penalties based on number of employees receiving subsidies • Large employers for these purposes are those with 50+ full-time employees or equivalents, with full-time meaning 30+ hours a week • Employer mandate does not require employers to offer coverage to their retirees

  5. Essential Health Benefits (EHBs)

  6. ACA Metal Levels

  7. Exchanges • Designed to enable consumers to compare qualified health plans to find the ones that best meet their needs and budget • Some states run their own exchange; others defer to the federal government • Set standards for EHBs, oversee pricing, and set rules insurers must follow to participate

  8. Exchanges - Subsidies • ACA provides a tax credit to subsidize the insurance premiums • Premium tax credit is available to a taxpayer whose income is 100-400% of the federal poverty level (FPL) ANDwho is not offered “affordable” employer-based coverage • Coverage under an employer-sponsored plan is affordableif the employee’s required contribution for self-only coverage does not exceed 9.5% of the employee’s household income for the taxable year • Persons eligible for Medicare are not eligible for premium tax credit; • Retirees under 65 may be eligible for the credit • In addition to the premium tax credit, taxpayers with income 100-250% of FPL may be eligible for cost-sharing assistance to help with co-pays and deductibles

  9. State Decisions as of August 2013

  10. “Cadillac” Tax • Effective 2018 • Tax will apply to trusts and retirees • Health insurance issuers pay 40% tax on premium amount above the threshold • Threshold in 2018 is $27,500 (family) and $10,250 (individual); indexed to inflation in subsequent years

  11. Grandfathered Plans & CBAs • Grandfathered plans: ACA exempts most plans that existed on March 23, 2010 from some of the law’s consumer protections, even for enrollees who joined such plans after that date • Certain protections under ACA do not applyto grandfathered plans, such as requiring the plan to provide certain preventive services at no charge • Other protections doapplyto grandfathered plans, such as the prohibition on applying lifetime dollar limits on EHBs • Collectively bargained plans • Fully-insured plans pursuant a CBA are grandfathered until expiration date of a CBA related to that coverage • Multi-employer plans (MEPs) are grandfathered until expiration date of CBA related to plan regardless of employer

  12. Going Forward • Gather Data early • Assess current costs of plans • Assess current benefit use • Question customary HC Plan providers • don’t just accept any plan you are handed. • Be prepared to select benefits • Work with labor to select benefits to be included in the plan and then negotiate costs with plan providers

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