Health Insurance Exchanges

This presentation is a high-level summary and for general informational purposes only. The information in this presentation is not comprehensive and does not constitute legal, tax, compliance or other advice or guidance.

Health Insurance Exchanges

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Exchange Overview Topics

Definitions, Functions & Models

Plans & Benefits

Credits and subsidies

SHOP Timeline

Definitions, Functions & Models

Exchanges Defined

The Affordable Care Act authorizes states to create and operate exchanges, also known as health insurance marketplaces, for individuals and for small business employers by 2014. A federal exchange will be available if a state does not have its own exchange.

•Designed to be competitive and centralized online sites for individuals to purchase health insurance plans.

•Meant to help people meet ACA’s minimum coverage requirement (also called the individual mandate).

•Intended to provide unbiased, “non-marketing” information to help consumers better understand the options available to them and choose a plan.

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What are Exchanges?

Health insurance exchanges are the online sites where individuals and small business owners can shop health care plans offered by various insurance carriers.

Think Catalog Shopping Online

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Exchange Functions

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Provide toll-free hotline for

assistance & other avenues for customer service

Help eligible individuals get

federal tax credits & subsidies

Inform consumers about

individual mandate exemptions

Determine eligibility for a QHP, Medicaid, CHIP & enroll if

eligible

PublicExchanges

Perform Risk Adjustment

Run websites that allow consumers

to shop for qualified health plans

Help consumers and

employers choose & enroll

in coverage

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Consumer Support

PublicExchange

Consumers

NavigatorsNavigators BrokersBrokers DirectDirect

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Exchange Models

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• A state may choose to establish and operate its exchange, which is called a STATE-BASED model.

• A state may decide to implement an exchange operated by both the state and Health and Human Services (HHS), also called a STATE PARTNERSHIP model.

• If a state does not submit an exchange blueprint to HHS, or if HHS finds the state is not exchange-ready, then HHS will operate a FEDERALLY FACILITATED model for that state.

Plans & Benefits

Four Benefit Levels of Coverage

The key difference between the “metallic” plans is the expected percentage of medical expenses shared between the health plan and the member.

Platinum

Gold

Silver

Bronze

Expected Percentage of Medical Expenses Covered by the Health Plan

Expected Percentage of Medical Expenses Covered by the Member

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Qualified Health Plans

A Qualified Health Plan (QHP) is a health insurance plan that has been certified to be allowed for purchase on an individual exchange and SHOP.

•Only certified QHPs are allowed on an individual exchange and SHOP.

•HHS established the criteria for how to certify a QHP. Several things must happen. The product must:

• Get certified by the exchange (QHP certification).

• Provide essential health benefits (EHB) that meet state and federal guidelines.

• Follow established limits on cost-sharing (such as deductibles and copayments).

• Meet provider network adequacy rules.

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Essential Health Benefits

In 2014, individual and small group plans on and off the exchange must include Essential Health Benefits, which are generally services and items in the following 10 benefit categories:

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Ambulatory patient services

Emergency services

Hospitalization Maternity and newborn care

Mental health, substance abuse disorder services,

behavioral health treatment

Prescription drugs

Habilitative and rehabilitative services and

devices

Laboratory services

Preventive and wellness services and chronic disease management

Pediatric services, including oral and

vision care

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Benchmark Plans

EHBs and Benchmark Plans

• A benchmark plan serves as a state’s reference health plan of essential health benefits (EHB).

• Each state needed to select a health insurance plan currently operating within the state to act as the benchmark plan.

Default Benchmark

• If a state did not select a benchmark, HHS determined that the EHB benchmark defaulted to the largest (by enrollment) small-group plan in the state.

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EHB Benchmark for Illinois*

• ACA tasked HHS to define EHB details• HHS proposed a state-specific benchmark approach• Each state was asked to select a benchmark plan• States had until Dec. 26, 2012 to submit a plan to

represent the state’s version of EHBs for 2014 and 2015 plan years

• Default choice for states that did not select a plan: The state’s largest small group health plan

• HHS released a proposed rule on EHBs, Actuarial Value (AV) and Accreditation in late November 2012. It was open for comment until Dec. 2012.

• HHS released final rule on Feb. 20, 2013 along with FAQs on ACA Implementation about cost-sharing limits related to EHBs.

Filling in the 10 EHB CategoriesPlan Type Plan from largest small group product, Preferred Provider Organization

Issuer Name Blue Cross and Blue Shield of Illinois

Product Name BlueAdvantage Entrepreneur PPO

Plan Name BlueCross BlueShield of Illinois BlueAdvantage

Supplemented Categories (Supplementary Plan Type)

Pediatric Oral (State CHIP) Pediatric Vision (FEDVIP)

• HHS final rule: http://www.gpo.gov/fdsys/pkg/FR-2013-02-25/pdf/2013-04084.pdf• Center for Consumer Information & Insurance Oversight http://cciio.cms.gov/resources/factsheets/ehb-2-20-2013.html• EHB benchmark plans for 50 states http://cciio.cms.gov/resources/data/ehb.html

*Source: http://cciio.cms.gov/resources/EHBBenchmark/illinois-ehb-benchmark-plan.pdf

Resources

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EHB Benchmark for New Mexico*







Issuer Name Lovelace Insurance Company

Product Name Classic PPO

Plan Name Lovelace Classic PPO


Pediatric Oral (State CHIP) Pediatric Vision (State CHIP)


*Source: http://cciio.cms.gov/resources/EHBBenchmark/new-mexico-ehb-benchmark-plan.pdf

Resources

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EHB Benchmark for Oklahoma*







Issuer Name Blue Cross and Blue Shield of Oklahoma

Product Name BlueOptions PPO

Plan Name RYB05


Pediatric Oral (State CHIP) Pediatric Vision (FEDVIP)


*Source: http://cciio.cms.gov/resources/EHBBenchmark/oklahoma-ehb-benchmark-plan.pdf

Resources

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EHB Benchmark for Texas*







Issuer Name Blue Cross and Blue Shield of Texas

Product Name BestChoice PPO

Plan Name RS26


Pediatric Oral (FEDVIP) Pediatric Vision (FEDVIP)


*Source: http://cciio.cms.gov/resources/EHBBenchmark/texas-ehb-benchmark-plan.pdf

Resources

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Credits, Subsidies & Penalties for Individuals

Understanding FPL

Those with household incomes of 100-400% of FPL may be eligible to receive tax credits and subsidies. A family of 4 with a household income of $94,200 or less may be eligible to receive premium tax credits.

2013 poverty guidelines for 48 contiguous states and the District of Columbia

Federal Poverty Levels

Size of Family Unit 100% FPL 150% FPL 200% FPL 250% FPL 300% FPL 400% FPL

1 $11,490 $17,235 $22,980 $28,725 $34,470 $45,960

2 $15,510 $23,265 $31,020 $38,775 $46,530 $62,040

3 $19,530 $29,295 $39,060 $48,825 $58,590 $78,120

4 $23,550 $35,325 $47,100 $58,875 $70,650 $94,200

SOURCE:2013 HHS Poverty Guidelines published by the U.S. Department of Health and Human Services at http://aspe.hhs.gov/poverty/13poverty.cfm

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Tax Credits & Subsidies for Individuals

Premium Tax Credits

•A tax credit is available based on a household income of 100-400% of the federal poverty level (FPL). The tax credit can be applied to a plan at any metallic level. It is advanceable. Note that premium tax credits are on a sliding scale.

Out-of-Pocket Maximum Subsidy

•An out-of-pocket maximum subsidy is available to those who select a silver plan and have an income of 100-400% of the FPL.

Cost-Sharing Subsidy

•A cost-sharing subsidy is available to those who select a silver plan and have an income of 100-250% of the FPL.

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Penalties for the Uninsured

Beginning in 2014, citizens and legal residents must have and maintain a minimum level of health coverage or pay a federal tax. Taxes are assessed according to percentage of income or flat fee, whichever is greater, and will be applied on federal income tax returns.

Year Percent of Income or Flat Fee

2014 1.0% of taxable income or $95



after 2016the tax will increase annually by the cost-of-living adjustment

the tax will increase annually by the cost-of-living adjustment

Some individuals may qualify for an exemption from the requirement to carry insurance coverage.

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SHOP

States will have the flexibility to determine who selects the coverage States will have the flexibility to determine who selects the coverage

Employer may be permitted to select one or more specific

plan on behalf of employees, or self

Employee can select any plan offered, as long as it meets SHOP benefit plan design

requirements

Employer can select metallic level and then employee can

select any plan (from any carrier) within that level

Employer ChoiceEmployer Choice

SHOP is an online exchange where small employers (1-50 employees in 2014, 1-100 beginning 2016) can obtain health coverage for their employees, and possibly take advantage of tax credits.

Small Business Health Options Program (SHOP)

Small Business Health Options Program

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Tax Credits for Small Businesses

The Affordable Care Act also establishes a Small Business Tax Credit that will help make offering health coverage more affordable for qualified small businesses.

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• Available to employers with fewer than 25 full time employees, with average annual wages less than $50,000

• Employers must contribute a uniform percentage of at least 50% toward their employee's insurance

• Worth up to 35% of employer contributions to employees' health insurance plan (25% for nonprofit organizations.

NowNow

• Available to qualified employers that provide coverage to their employees on SHOP

• Credits increase to up to 50% of the employer's contributions (35% for non-profit organizations)

Beginning 2014Beginning 2014

Individual and SHOP Comparison

Differences between individual exchanges and SHOP:

Individual Exchange SHOP

Benefit Package

Plans include those with cost-sharing values of 60/40, 70/30, 80/20 and 90/10 (insurer/insured). Catastrophic plans also available.

Same as Individual, but no catastrophic.

Premium Tax Credits

Premium tax credits are available based on household income from 100-400% of the FPL. Tax credits can be used at any metallic benefit level.

Not applicable.

Employer Tax Credit

Not applicable. Small groups eligible if buying coverage via SHOP.

Cost-sharing Subsidy

Cost-sharing subsidies may be available for eligible individuals with income from 100-250% of the FPL

Not applicable.

Out-of-pocket Maximum Subsidy

Out-of-pocket maximum reductions may be available for eligible individuals with income from 100-400% of the FPL

Not applicable.

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Timeline

Expected Timeline

Deadline Milestone

01-01-2013

January 1, 2013 was the deadline for HHS to assess each state’s blueprint for a state-based model and to either fully or conditionally certify the individual exchange/SHOP or assume operational responsibility. The following states are conditionally approved to operate state-based models: California, Colorado, Connecticut, District of Columbia, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont and Washington.

02-15-2013

February 15, 2013 was the deadline for states to tell federal regulators if they plan to implement a state-partnership exchange model.

The following states are conditionally approved to operate state-partnership models: Arkansas, Delaware, Illinois, Iowa, Michigan, New Hampshire and West Virginia.

10-01-2013Exchanges must be fully operational and enrollment begins on October 1, 2013. Initial open enrollment lasts until March 31, 2014. (In subsequent years, open enrollment will begin on October 1 and end on December 7.)

01-01-2014 Coverage begins for plans purchased on exchanges (effective date).

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Questions?

Documents

Health Insurance Exchanges