|September 27, 2013|
Previously published on September 26, 2013
Open enrollment for the health care market place has finally arrived. Soon, qualified individuals and small businesses will be able to purchase Qualified Health Plans (QHPs) through the Health Insurance Marketplaces (also called health insurance exchanges). With the Marketplaces and Medicaid Expansion, the Patient Protection and Affordable Care Act (PPACA) mandate that all Americans have qualified health coverage begins to take shape.
Beginning with open enrollment on October 1, individuals can obtain health insurance coverage in three ways. First, individuals may be covered through their employer. The government estimates that 6 million people will get insurance through employer based insurance. Second, individuals can explore the individual marketplace where anyone between 139 percent and 400 percent of the federal poverty level (FPL) can obtain a monthly premium tax credit or a discount on out-of-pocket costs. Third, individuals can receive coverage as provided by the government, either through Medicare or Medicaid. In states that have accepted Medicaid expansion, the eligibility level has been increased to approximately138 percent below poverty level (FPL) (eligibility criteria for non expansion states varies state by state).
To encourage obtaining coverage and to share the costs of coverage, the PPACA includes an individual mandate for all individuals to have health insurance as well as an employer mandate to provide coverage. The individual mandate is a penalty for not having health insurance (called the "individual shared responsibility fee") as of January 1, 2014. Anyone without coverage must initially pay a tax penalty of the greater of $95 per person per year or 1 percent of income in 2014. This penalty rises to $695 per year up to a maximum of three times that amount ($2,085) per family or 2.5 percent of household income by 2016. The employer mandate requires a large employer to offer qualified health insurance to its employees or these employers will be subject to a tax penalty (called the "shared responsibility fee"). The mandate includes employers with 50 or more full-time employees. A full-time employee works 30 or more hours a week. Note that the employer mandate was scheduled to start January 1, 2014, but in July 2013, the government announced a delay in implementation until 2015.
The Health Insurance Marketplace will be where individuals go to purchase health insurance. HHS recently provided guidance on the marketplaces and provided that there are four types of marketplaces:
- State-based Exchanges where the state has established its own fully state-based exchange and will receive full government funding.
- A state-federal partnership exchange where the details and level of involvement varies state to state
- A plan management marketplace where the state only reviews the specific health plans offered
- The default Federally Facilitated Exchanges (FFEs) where HHS performs all functions of the exchange.
As a part of the Marketplace/Exchange, small businesses may participate in Small Business Exchanges called Small Business Health Options Programs (SHOPs). Similar to the structure of the marketplaces, states can choose whether to establish a state-based SHOP within the exchange or default to the Federally Facilitated (FF-SHOP). SHOPs enable small businesses to shop for and purchase coverage for their employees. Participation in a SHOP can give a small business owner the incentive to provide insurance through the exchange. In 2013, a small business will be considered 50 full-time employees with that number rising to 100 full-time employers or less as of 2017. The insurance exchanges for both individuals and small business employers are intended to create uniformity for enrollment into private health insurance plans.
A Qualified Health Plan, or QHP, offered on the marketplace must meet minimum coverage guidelines called essential health benefits. The 10 essential benefits include
- Outpatient services
- Emergency services
- Maternity and newborn care
- Mental health and substance abuse disorder services
- Prescription drugs
- Rehabilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services
There are four different levels of coverage (calculated by cost sharing percentages) that a consumer can select based upon their needs:
- Catastrophic for individuals under age 30 and/or some people with very low incomes.
Under PPACA, depending upon modified adjusted gross income, an individual or family may qualify for federal subsidies in the form of a monthly premium or a tax credit. The calculation of the subsidy is based upon the Silver level QHP. Individuals or families with incomes up to the 400 percent of FPL (approximately $46,000 per individual; $92,000 for family) will qualify for some amount of tax credit assistance and/or limit on premium costs.
As written, PPACA expanded Medicaid to cover nearly half of uninsured Americans. However, the Supreme Court overturned the Medicaid expansion requirement thereby allowing states to choose whether or not to accept expansion.
Medicaid eligibility requirements vary state to state and typically, certain criteria would have to be met to be considered eligible (for example, childless adults would not meet criteria). Under PPACA, in states that choose expansion, the only eligibility requirement is that a person makes less than 133% of the FPL. The eligibility requirement is set at 133 percent FPL (with a special deduction to income equal to five percentage points of poverty level raising the actual eligibility to 138 percent). The federal government will pay 100 percent of costs in the first year and 90 percent of the costs thereafter.
The state opt-out allowance presents problems for poor individuals obtaining insurance. These individuals will not be eligible for Medicaid. Two thirds of low-income uninsured individuals that would qualify for Medicaid under the health care law will not qualify in states that do not expand Medicaid. Without Medicaid expansion, uninsured individuals will have to turn to the individual marketplace and many will not be able to afford purchasing insurance even with monthly premiums and subsidies. This will create a gap in coverage resulting in high out of pocket costs, delay of care, not getting care or ending up in the emergency room. In states that do not expand, hospitals may have to absorb this cost which could cause increased strain for a hospital system.
Ready or not, health care reform marches on and the Marketplaces are here. Providers and some businesses will be looked to for assistance and guidance on whether or not an individual is covered and how. The following is an update on both the marketplaces and Medicaid expansion in Delaware, New Jersey and Pennsylvania. As the marketplaces open and with Medicaid expansion as a piece of the puzzle, it is essential for providers large and small to keep up with the changes.
Delaware has approved a state-federal marketplace partnership which will allow the state to maintain control of plan management and consumer assistance functions. The Delaware marketplace must go live by January 1, 2014. In addition, Delaware employers that employ one or more employees and produce goods or are engaged in interstate commerce that have at least $500,000 in annual dollar volume business must provide notice to its employees of coverage options by October 1, 2013. Delaware's marketplace is expected to enroll up to 35,000 people. To assist with the large volume of anticipated enrollees, Delaware will utilize "marketplace assisters" who will provide consumer assistance services to help navigate the options available through the marketplace. Delaware is also planning business workshops, informational webinars and other organization specific meetings to educate its business community on the marketplace. Updates regarding the Delaware marketplace are available on the Delaware Health Care Commission's website at dhss.delaware.gov/dhss/dhcc/.
Delaware Governor Jack Markell has committed to participating in Medicaid expansion. On July 1, 2013, Governor Markell signed a FY2014 budget plan that includes $29.8 million to fund Delaware's Medicaid commitment. From 2014 to 2016, the Federal government will pay 100 percent of the cost of Medicaid expansion. Beginning in 2017, Delaware will be responsible for 5 percent of the cost. It is estimated that Delaware could save $1.1 billion over a decade by participating in Medicaid expansion. This is because Delaware expanded its eligibility requirements for participation in Medicaid years ago. For example, under current Medicaid programs in Delaware, the state provides coverage to both parents of dependent children and adults without dependent children, up to at least 100 percent of the poverty level.
Governor Chris Christie declined to establish a state-based marketplace, but did accept Medicaid expansion in New Jersey. In 2011, there were 993,185 uninsured individuals with family incomes from 0 to 400 percent FPG (Family Poverty Guideline). Under PPACA, most of these uninsured will be eligible for either subsidized coverage in the marketplace or coverage under Medicaid expansion.
New Jersey has not chosen to establish its own marketplace or SHOP. Therefore, the state will provide insurance through the FFE and an FF-SHOP.
There will be three options for insurance companies in New Jersey including Horizon Blue Cross Blue Shield, AmeriHealth New Jersey and Health Republic Insurance of New Jersey. Most of New Jersey's uninsured population will qualify for federal subsidies to assist with purchasing insurance through the exchange.
In May, the Legislature passed a resolution which created the "Joint Task force on Health Insurance Exchange Implementation." On September 17, 2013, these lawmakers announced the goals and some of the members of the Task Force including oversight of the marketplace.
Individuals will use www.HealthCare.gov for enrollment and more information.
Governor Christie has chosen to expand Medicaid. On June 28, 2013, he signed a state budget that includes $227 million for Medicaid expansion. He also later vetoed legislation that would have made expansion permanent in the state.
Medicaid expansion will raise the qualifying income for General Assistance to $15,000 a year. The expansion will provide aid to residents with incomes between 26 percent and 138 percent of the federal FPL, approximately single residents with incomes between $2,987 and $15,856, and couples with incomes between $4,033 and $21,430. New Jersey anticipates approximately 300,000 people becoming newly insured under the expansion.
Governor Tom Corbett declined to establish a state-based marketplace for Pennsylvania. Until recently, it seemed likely that Governor Corbett would refuse Medicaid expansion as well. However, recent events have pointed toward a possible compromise between the Governor and HHS which would use Medicaid expansion dollars in the state. In a proposal to HHS, Governor Corbett indicates that reforming Pennsylvania Medicaid will increase access to health care coverage to approximately 520,000 uninsured adults up to 133 percent of federal FPL through the federal health insurance exchange.
In December 2012, Governor Corbett informed HHS that Pennsylvania would not establish a State-based Exchange or SHOP and instead would default to an FFE with an FF-SHOP.
The Pennsylvania State Insurance Department released a list on August 1, 2013, of eight insurance companies who are interested in participating in the exchange. Final approval is still needed by HHS. The companies include:
- Highmark (state's largest health insurer)
- Three other nonprofit blues (Capital Blue Cross - central part of the state; Independence Blue Cross - Philadelphia; Blue Cross of Northeastern PA)
- The UPMC Hospital System
- The Geisinger Health System
- Health America - a subsidiary of Coventry Health Care that was acquired by Aetna in May
In Pennsylvania, a business is considered a small business if it has two to 50 employees. As of 2016, a company will be considered small if it has one to 100 employees.
Individuals will use www.HealthCare.gov for enrollment and more information.
Until recently, Governor Corbett refused Medicaid expansion for the state of Pennsylvania. Such a refusal could result in thousands of uninsured Pennsylvanians. However, on September 16, 2013, Governor Corbett submitted a proposal to the Secretary of HHS, Secretary Kathleen Sebelius, called "Healthy Pennsylvania: Reforming Medicaid." The proposal outlines Governor Corbett's priorities of "Improving Access; Ensuring Quality; and Providing Affordability."
Governor Corbett proposes to reform Pennsylvania Medicaid, not technically expand Medicaid. Specifically, he will take the federal expansion money and put it into a private marketplace as opposed to actually expanding Medicaid. He proposes implementation of a "private option program" for uninsured individuals currently not available for Medicaid with incomes between the 0 and 133 percent FPL. Governor Corbett suggests that this would provide health insurance coverage to 520,000 uninsured adults up to the 133 percent of FPL. The private option includes a cost-sharing requirement. Individuals would pay a monthly premium based on their income, and would have the opportunity to reduce their monthly premium when they participate in health and wellness appointments and actively engage in job search and training programs. Healthy Pennsylvania would also include the use of competitive and value-based purchasing, a commitment to sustain existing federal funding streams, and an emphasis on reduction of waste, fraud and abuse.
Under the PPACA, all children with family incomes below 133 percent of the FPL must transition from Children's Health Insurance Program (CHIP) to Medicaid. Governor Corbett has requested on numerous occasions flexibility in this requirement as well as the flexibility to maintain the program outside of Medicaid. Secretary Sebelius has continued to insist that all PA CHIP recipients be transitioned to Medicaid in accordance with the PPACA. As of September 13, 2013, Governor Corbett asked for continued flexibility in transitioning including clarification that Pennsylvania can continue to cover all kids including those above the 300 percent FPL, as well as an agreement that the transition from PA CHIP to Medicaid could not occur by January 1, 2014.