Impact of Affordable Care
Act on Alaska
Carolyn Heyman-Layne
October 2, 2013
Presentation Overview
• Patient Protection and Affordable Care Act (PPACA)
– Health Reform Overview
– Current Status of PPACA in Alaska
– Employer Side of PPACA
– Grandfathering Plans
– Compliance Issues in PPACA
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Health Reform: Acts I, II, III…
• Patient Protection and Affordable Care Act (P.L. 111-148)
– Original legislation, enacted March 23, 2010
• Health Care and Education Reconciliation Act (P.L. 111-152)
– Changes by House, enacted March 30, 2010
• TRICARE Affirmation Act
• Potential for:
– Additional Federal Laws
– Corresponding State Laws
• Over 100 Pages of regulations and
guidance expected per page of
legislation
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Main Topics Covered by Legislation
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Titles I & II: Health Care and Insurance Coverage
Title III: Delivery of Health Care
Title IV: Prevention and Public Health
Title V: Health Care Workforce
Title VI: Fraud and Abuse
Title VII: Health Technology
Title VIII: CLASS Act (Already Eliminated)
Title IX: Taxes and Fees (How are we paying for this?)
Title X: Amendments
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Results of Supreme Court Decision for
Alaska
• Supreme Court said individual mandate legal as a tax, but states
not required to expand Medicaid
• State of Alaska is currently taking the position that it will not
expand Medicaid to cover up to 133% of the Federal poverty
level.
• State has chosen not to develop a state Health Insurance
Marketplace, leaving that responsibility to the Federal
government.
• State could change its position at any time, as there is no
deadline for determining participation in the Medicaid expansion.
However, it is currently expected to maintain the same position at
least until there is a change in administration.
• Strong lobby for expansion currently taking place
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Effects on Coverage in Alaska
Federal Poverty Level
Pre-Reform Status
Full
Implementation Status Under Current
Status
State Position
0-100% FPL
Not covered unless
eligible for Denali
KidCare, Alaska Native
Healthcare or VA
Covered by Medicaid
100-133% FPL
Not covered unless
eligible for Denali
KidCare, Alaska Native
Healthcare or VA
Covered by Medicaid or
eligible for significant
subsidies in Health
Insurance Marketplace
133-400% FPL
Not covered unless
eligible for Denali
KidCare, Alaska Native
Healthcare or VA, but
may be able to afford
insurance
>400% FPL
Not covered unless
eligible for Denali
KidCare, Alaska Native
Healthcare or VA, but
may be able to afford
insurance
Not covered unless
eligible for Denali
KidCare, Alaska Native
Healthcare or VA
Eligible for significant
subsidies in Health
Insurance Marketplace,
but not otherwise
covered
Eligible for subsidies in
Eligible for subsidies in
Health Insurance
Health Insurance
Marketplace with amount Marketplace with amount
of subsidy decreasing as of subsidy decreasing as
income increases
income increases
Not covered unless
eligible for Denali
KidCare, Alaska Native
Healthcare or VA, but
may be able to afford
insurance
Not covered unless
eligible for Denali
KidCare, Alaska Native
Healthcare or VA, but
may be able to afford
insurance
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Health Reform: Employer Timeline
• In effect now:
– Patient’s Bill of Rights
– Children cannot be denied coverage for pre-existing conditions
(extended in 2014)
– Rescission prohibited except for fraud
– Dependent coverage extended to age 26
– Annual limits restricted (prohibited for essential benefits in
2014)
– Lifetime limits not allowed for essential benefits
– Small business tax credits
– Policy and renewal guaranteed
– Increased Medicaid payments for primary care
– Extending funding for Children’s Health Insurance Programs
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Timeline (con’t)
• 2014
– State exchanges available for individuals and small
businesses
• Small business tax credit increase
– Limits on insurers: cannot charge more based on health or
gender; limits on premium variations based on age
• 2015: Employer obligation to provide “qualified health insurance
coverage” (over 50 employees) or pay penalty
• 2017: Large employers allowed to participate in Exchange
• 2018: Cadillac tax in effect
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Health Insurance Marketplace
(Exchange)
• Health Insurance Marketplace for individuals and small
businesses
– Less than 100 employees until 2017
– Administered by government agency or non-profit
• Benefits:
– Competitive market
– Common rules on pricing and offering
– Supposed to provide more information for consumers
– Makes changing employment easier
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Essential Health Benefits
• Ambulatory patient services (outpatient care you get without being
admitted to a hospital)
• Emergency services
• Hospitalization (such as surgery)
• Maternity and newborn care (care before and after your baby is born)
• Mental health and substance use disorder services, including behavioral
health treatment (this includes counseling and psychotherapy)
• Prescription drugs
• Rehabilitative and habilitative services and devices (services and
devices to help people with injuries, disabilities, or chronic conditions
gain or recover mental and physical skills)
• Laboratory services
• Preventive and wellness services and chronic disease management
• Pediatric services
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Alaska Marketplace Options & Assistance
• Marketplace:
– Premera Blue Cross Blue Shield
– ODS
• Assistance:
– Navigators
– Enroll Alaska
• Available Plans:
– Platinum – covers 90% of costs
– Gold – covers 80% of costs
– Silver – covers 70% of costs
– Bronze – covers 60% of costs
– Catastrophic
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Costs in the Marketplace for Alaska
Family of Four with Income of $100,000 (340% FPL):
$974/$792/$609
http://kff.org/interactive/subsidy-calculator/
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The Rules for Employers
• Employers not required to provide health insurance
• Employer provided “qualified” health insurance must:
– Pay for at least 60% of covered health care expenses for a
typical population; and
– No employee should have to pay more than 9.5% of family
income for the employer plan.
• If both conditions not met and one employee goes to exchange or
gets tax credit, then employer pays penalty.
• Or employer may provide a non-compliant health insurance plan,
which would result in a reduced penalty amount, but not eliminate
the penalties altogether.
• Or employer may choose to pay penalties rather than sponsor
health insurance – “pay and walk away” option.
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Determining How the Rules Apply
#
Description
Penalties
Cost
1.
Provide PPACA compliant
health coverage for all
employees.
Provide limited health plan to
employees.
None
Cost of health insurance plan that pays for at least
60% of covered health care expenses, with employee
cost limited to 9.5% of family income or less.
Cost of limited health insurance plan for those
employees who choose the plan + Penalty A.
2.
Penalty A = $3,000/yr. x (# of full-time
equivalent employees receiving the tax
credit - 30)
Penalty A Example 1: If Employer has 100 full-time
equivalents and 80 select the employer plan and 20
select the tax credit for alternate coverage, then there
would be no penalty because the number of
employees receiving tax credit does not exceed 30.
Penalty A Example 2: If Employer has 100 full-time
equivalents and 50 select the employer plan and 50
select the tax credit for alternate coverage, then the
penalty would equal $3,000 x (50-30) = $60,000.
Penalty A Example 3: If Employer has 100 full-time
equivalents and 10 select the employer plan and 90
select the tax credit for alternate coverage, then the
penalty would exceed the total for Penalty B below
($3,000 x 90-30 = $180,000) and so Penalty A would
equal Penalty B: $140,000. Employer would pay this
penalty in addition to the cost for the ten employees
who selected the plan.
3.
Continue to provide no
insurance for employees.
Penalty B = $2,000/yr. x (# of full-time
equivalent employees – 30)
Penalty B
Penalty B Example: If Employer has 100 full-time
equivalents, it would pay $2,000 x (100-30) =
$140,000
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Guessing game…
• Cost of fully ACA compliant health plan < Penalty B =
Implement compliant plan.
• Cost of fully ACA compliant health plan > Penalty B =
Conduct additional analysis of limited health plan costs.
– Estimated cost of limited plan + Penalty A < Penalty B =
Offer limited plan.
– Estimated cost of limited plan + Penalty A > Penalty B =
Offer nothing.
????????????????
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In other words…
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Other Employer Challenges
• Employers with < 50 employees are exempt – to hire or not to
hire?
• Employers with more than 200 employees must automatically
enroll employees in health insurance plan and allow employees to
opt out.
• Employers offering “Cadillac” plans pay 40% excise tax on excess
premiums starting in 2018
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Other Employer Challenges
• Challenges:
– Grandfathering plans: In 2011, approximately 72% of small
businesses had at least one grandfathered plan.
• Not required to cover preventive services without cost
sharing
• Not required to cover Essential Health Benefits
• Not required to provide appeals process for contesting
coverage decisions
• Not required to allow direct access to OB/GYN without
referral
– Had to be in place before March 23, 2010 – does it remain
grandfathered? Yes, if benefits and costs to employees stay
largely the same.
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Grandfathered vs. Non-Grandfathered
All
Non-Grandfathered (New)
• Guarantee coverage
regardless of health status
• Allow children up to 26
• Not allowed to impose
exclusions for pre-existing
conditions (2010 for under
19; 2014 for adults)
• Report proportion of income
from premiums that are
used on medical care – less
than 80% and enrolled
small businesses get rebate
• Premium rating based on
health status not allowed as
of 2014
• Must cover Essential Health
Benefits beginning in 2014
(decided by State)
• Labeled as bronze, silver,
gold and platinum
demonstrating percentage
of costs covered for typical
population
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How do you stay “grandfathered”?
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•
•
•
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Do not increase cost-sharing above the rate of medical inflation
Do not decrease annual limits
Do not institute new limits
Do not decrease employer contributions by more than 5%
Do not eliminate coverage for specific conditions currently
covered
• It is ok to:
– Enroll new employees
– Change Insurance carriers
– Make slight changes in coverage and costs
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ACA Compliance Provisions
• Requires Compliance Program as a Condition of
Participation in Medicare
– All providers must certify that they have an effective
compliance program
– Regulations expected for various provider types, nursing
home regulations already issued
– Enforcement activity increased
– Flexibility for varying size providers
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Health Reform Resources
• The law: http://www.hss.state.ak.us/fedhealth/docs/ppacaconsolidated_003_xml.pdf
• Federal Guidance –
http://www.healthcare.gov/law/introduction/index.html
http://www.healthreform.gov/reports/statehealthreform/alaska.html
• Kaiser Family Foundation - http://healthreform.kff.org/
• State Guidance - http://www.hss.state.ak.us/fedhealth/
http://www.hss.state.ak.us/healthcommission/nhcr/default.htm
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Questions?
[email protected]
(907) 677-3600
Sedor, Wendlandt, Evans & Filippi, LLC
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