Kentucky Health Benefit Exchange

FRYSCKy Fall Institute October 30, 2012

Miriam Fordham, Division DirectorMelea Rivera, Insurance Program Manger

Office of the Kentucky Health Benefit Exchange (KHBE)

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Health Insurance Reforms that are Affecting You Now

• Temporary High Risk Pool (PCIP)• New coverage options for young adults• No lifetime limits on health benefits• Coverage for children with pre-existing conditions• Affordable prescription drugs for seniors

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Health Insurance Reforms that are Affecting You Now

• Preventive services with no deductible or co-pay• Rate Review and MLR Rebates• Rescissions• Uniform Explanation of Coverage and Standard

definitions• Appeals

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Kentucky Health BenefitExchange

Executive Order (2012- 587) signed by Governor Beshear July 17, 2012 created the Exchange and administrative structure:• Organized Office of KHBE under CHFS with 4

divisions (with up to 30 employees); • Established an Advisory Board; and • Authorized Board to create sub-committees.

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Kentucky Health Benefit Exchange Advisory Board

• First meeting held September 27, 2012• Six subcommittees formed:

– Behavioral Health– Dental and Vision– Education and Outreach– Navigator/Agent– Qualified Health Plans– Small Employer Health Options Program (SHOP)

• Navigator/Agent, Qualified Health Plans, and SHOP subcommittees have met.

• Meeting schedules and materials posted on the KHBE website (healthbenefitexchange.ky.gov).

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A health benefit exchange is an organized marketplace for individuals and employees

of small businesses to shop for health insurance offered by insurers (insurance companies, CO-OPs, and OPM) based on price and quality. Individuals will also be

able to apply for Medicaid coverage through the Exchange.

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When must the Exchange be operational?

Fully Operational - January 1, 2014Open Enrollment - Begins October 1, 2013

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Exchange Options for States

Federal exchanges include both a state partnership and federally-facilitated exchanges

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Why is Kentucky pursuing a State-Based Exchange instead of a Federal

Exchange?

• Support from interested stakeholders;• Prevent dual regulation of health insurance market;• Determine benefits provided in Kentucky’s Exchange;• Allow Kentucky to have flexibility, including

determinations of Medicaid eligibility; and• Consider Kentucky’s unique regional and economics

needs.

Will Qualified Health Plans (QHPs) in the Exchange be different compared to the insurance plans you have now?

•A New Way to Shop•Consumer Protections•Essential Health Benefits•Health Care Quality Ratings•Levels of Coverage•Navigator Program

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What are Essential Health Benefits?

Must be defined by Secretary of Health and Human Services. Sec.1302 of the ACA; and

Must include items and services within the following categories:

Ambulatory Patient Services;Emergency Services;Hospitalization;Maternity and Newborn Care;Mental Health and Substance Use Disorder Services;Prescription Drugs;Rehabilitative and Habilitative Services and Devices;Laboratory Services;Preventive/Wellness Services/Chronic Disease

Management; andPediatric Services, including Oral and Vision Care.

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Kentucky’s Navigator Program

Navigators - Individuals or Entities that:

May include: Community/consumer-focused nonprofit groups, Chambers of commerce, resource partners of Small Business Administration, Health Care Providers, etc.

Maintain expertise in eligibility, enrollment and programs;

Provide information/services in fair, accurate, impartial way;

Facilitate selection of QHPs;

Provide referrals to any applicable office, health insurance consumer assistance or ombudsman, or State agency for grievances, complaints, or questions about health plan; and

May not be compensated with funds from Federal government or health insurers.

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Small Business Health Options Program (SHOP)

Through an Exchange, states are required to have a SHOP to provide health insurance options to Small Businesses (Small Group Employers).

SHOP will ease administrative burden on employers than now administer their group health plans ( e.g., collect employee premium payments).

Each State has the option of operating a stand-alone SHOP Exchange or merging the SHOP with individual market Exchange.

Kentucky’s SHOP Exchange will be merged with the individual market Exchange for administrative and financial simplification.

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Eligibility Standards for SHOP

Employers may purchase coverage through the SHOP, if the employer:

Is a small group employer (2 to 50 employees);

Elects to offer, to all full time employees, coverage under a QHP purchased through the SHOP;

Has a principal business address in the SHOP service area or the employer offers coverage to employees through the SHOP, serving the employees’ primary worksite; and

Employees are eligible to enroll in SHOP if the employee receives an offer of coverage from the employer.

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Who will qualify for Premium Assistance and Tax Credits?

Individuals with a household incomes (for the taxable year) between 133% and up to 400% of the federal poverty level (FPL); and

Small Businesses may qualify for tax credits if:

The Employer has fewer than 25 full-time equivalent employees for the taxable year;

The average annual wage of Employee in group is less than $50,000; and

The Employer pays at least 50% of the premium for each employee.

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Example of Premium Assistance Amounts for family of four at different income levels

Percent of FPL

Annual Income

Annual PremiumBefore

Premium Assistance

Annual Premium

Assistance Amount

Annual Premium

After Premium

Assistance

Monthly PremiumBefore

Premium Assistance

Monthly Premium

Assistance Amount

Monthly Premium

After Premium

Assistance

133% $30,657

$12,000 $11,080 $920 $1,000 $923 $77

150% $34,575

$12,000 $10,617 $1,383 $1,000 $885 $115

200% $46,100

$12,000 $9,096 $2,904 $1,000 $758 $242

300% $69,150

$12,000 $6,122 $5,878 $1,000 $510 $490

Up to 400%

$92,200

$12,000 $3,241 $8,759 $1,000 $270 $730

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IRS Tax Credit Example

Auto Repair Shop with 10 Employees Gets $24,500 Credit for 2012

Main Street Mechanic:

Employees: 10

Wages: $250,000 total, or $25,000 per worker

Employee Health Care Costs: $70,000

2012 Tax Credit: $24,500 (35% credit)

2014 Tax Credit: $35,000 (50% credit)

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KHBE Implementation Update2012

July & August – Public Forums in Erlanger, Louisville, Owensboro, Paducah, Prestonsburg, and Somerset. More scheduled for 2013.

August – Request for Quote (RFQ) for Marketing/Outreach vendor issued.

September – Advisory Board members (19) appointed.

October 1 – EHB benchmark submitted to HHS.

Sept/October– Contract signed with IT vendor.

October– Website healthbenefitexchange.ky.gov launched.

November 16 – Application (Blueprint) must be filed with HHS.

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