What is my State doing with Exchanges, Medicaid under PPACA?
Source: United Benefit Advisors
States have two major decisions to make with respect to the Patient Protection and Affordable Care Act (PPACA) -- whether they will run the health exchange themselves, and whether they will expand Medicaid to cover most individuals whose income is below 133 percent of the federal poverty level.
Exchange Election
Beginning in 2014, all states will have a health exchange. If a state chooses not to run an exchange, the federal government will run the exchange for the state. An exchange run by the federal government for a state is called a federally facilitated exchange (FFE). States may also choose to share the operation of an exchange with the federal government - that is called a partnership exchange.
Medicaid Election
States also have to decide whether they will expand Medicaid coverage to most individuals who have an income below 133 percent of the federal poverty level (FPL). The FPL is $11,490 for a single person and $23,550 for a family of four in 2013. The federal government will pay most of the cost of expanded Medicaid coverage, but some states have concerns about the ultimate cost of the expansion to the states.
As of Feb. 1, 2013, the states had made the following choices. (The deadline for most exchange elections for 2014 has passed, although states may elect a partnership exchange for 2014 until Feb. 15, 2013. There is no deadline for the Medicaid election. It is expected that many states will make the Medicaid expansion decision as part of their 2013 budgeting process.)
Click Map to See results for your state
Medicaid Election
Source: United Benefit Advisors
Medicaid is a joint state-federal program. States are not required to participate in Medicaid, but all of the states currently do. The federal government pays 50 percent to 75 percent of the cost of Medicaid. In return, the states must follow a variety of rules, although they have the ability to make a number of choices. Currently, to obtain federal funding the states must provide Medicaid to pregnant women and children under age six with family incomes below 133 percent of FPL, to children aged six through 18 with family incomes below 100 percent of FPL, and to disabled and elderly adults who qualify for Supplemental Security Income based on low income and assets. Some states currently provide Medicaid to working parents and adults without dependents, but many do not, or do so only for those with incomes well below FPL.
In an effort to reduce the number of uninsured, PPACA would require Medicaid to cover virtually all adults with household incomes at or below 133 percent of FPL as of Jan.1, 2014. The federal government would pay 100 percent of the cost of coverage for the expanded coverage group during 2014 through 2016, and then gradually decrease its contribution to 90 percent of the cost for 2020 and later years. The Supreme Court ruled that Congress did not have the power to cut off all Medicaid funding if a state didn’t expand Medicaid to meet the expanded eligibility under PPACA, so states are now deciding whether expanding Medicaid eligibility makes sense for them.
Individuals who are eligible for Medicaid will not be eligible for premium subsidies. This means that employers in states that choose not to increase Medicaid eligibility may have to pay penalties on more employees than those in states that have chosen to expand Medicaid eligibility.
Click Map to See results for your state
Exchange Election
Source: United Benefit Advisors
The purpose of an exchange is to make it simpler for individuals and small businesses to obtain coverage. The exchanges will not provide insurance, but they will provide a way for people to compare the cost and coverage available from different insurers, provide resources to individuals to help them choose a plan, and oversee the insurance options available through the exchanges. Virtually all Americans will be able to buy coverage through an exchange, even if they have access to coverage through an employer. However, premium subsidies will not be available to people who have access to adequate coverage through their employer, no matter how large or small their employer is, but who choose to buy through the exchange instead. Recently, the government has begun calling the exchanges the “health insurance marketplace.”
Each state will choose its own “essential health benefits” package, although all insurance provided to individuals and small groups (generally, those with 100 or fewer employees) must provide certain types of “essential” coverage. (Self-funded and large employers are not required to provide the “essential health benefits.” Instead, these plans will need to cover “core” benefits (hospital and emergency care, physician and mid-level practitioner care, pharmacy, and laboratory and imaging) at a 60 percent actuarial value to avoid employer penalties.)
For additional information on each state’s EHB, go here: Additional Information on Proposed State Essential Health Benefits Benchmark Plans | cciio.cms.gov
Employers should understand that even if they offer coverage to their employees, they will have some interaction with the exchanges. If any employee chooses to purchase coverage through the exchange and requests a premium subsidy, the exchange will need information about the coverage offered to employees from the employer.
Currently there is debate about whether people in a federally-facilitated exchange will be eligible for the premium tax subsidy. The federal government’s position is that these people will be eligible for the subsidy, as it was not Congress’ intent to treat people differently based upon where they live. Employers hoping to avoid the play or pay penalty have an interest in this question because penalties are triggered by the employee’s receipt of a premium tax subsidy through the exchange. If subsidies are not available through the federally facilitated exchanges, employers in those states would not be subject to penalties. This issue likely will be settled by the courts (Oklahoma has filed a lawsuit), but in the meantime, employers in states that will have FFEs should not assume the penalties will not apply to them. Also, note that those who obtain coverage through private exchanges will not be eligible for the premium tax subsidies.
Whether a state runs its own exchange is a year by year decision, so, for example, a state that has an FFE or a partnership exchange for 2014 could run its own exchange in 2015.
Click Map to See results for your state
The States: Where They Stand
| State | Type of Exchange | Medicaid Expansion |
| Alabama | Federal | No |
| Alaska | Federal | Undecided |
| Arizona | Federal | Yes |
| Arkansas | Partnership | Yes |
| California | State | Yes |
| Colorado | State | Yes |
| Connecticut | State | Yes |
| Delaware | Partnership | Yes |
| Florida | State | Yes |
| Georgia | Federal | Undecided |
| Hawaii | Federal | No |
| Idaho | State | Yes |
| Illinois | State | No |
| Indiana | Federal | Undecided |
| Iowa | Partnership | Undecided |
| Kansas | Federal | Undecided |
| Kentucky | State | Undecided |
| Louisiana | Federal | No |
| Maine | Federal | No |
| Maryland | State | Yes |
| Massachusetts | State | Yes |
| Michigan | Partnership | Undecided |
| Minnesota | State | Yes |
| Mississippi | Federal | No |
| Missouri | Federal | Yes |
| Montana | Federal | Yes |
| Nebraska | Federal | Undecided |
| Nevada | State | Yes |
| New Hampshire | Federal | Undecided |
| New Jersey | Federal | Undecided |
| New Mexico | State | Yes |
| New York | State | Undecided |
| North Carolina | Federal | No |
| North Dakota | Federal | Undecided |
| Ohio | Federal | Yes |
| Oklahoma | Federal | No |
| Oregon | State | Undecided |
| Pennsylvania | Federal | Undecided |
| Rhode Island | State | Yes |
| South Carolina | Federal | No |
| South Dakota | Federal | No |
| Tennessee | Federal | Undecided |
| Texas | Federal | No |
| Utah | State | Undecided |
| Vermont | State | Yes |
| Virginia | Federal | Undecided |
| Washington | State | Yes |
| West Virginia | Partnership | Undecided |
| Wisconsin | Federal | Undecided |
| Wyoming | Federal | Undecided |
Source for exchange elections: Kaiser Family Foundation
Source for Medicaid expansion: The Advisory Board Co.
Additional proposed regulations addressing open issues under PPACA
The Department of Health and Human Services (HHS), the Internal Revenue Service (IRS) and the Department of Labor (DOL) have recently issued more FAQs and proposed rules that address several employer obligations under the Patient Protection and Affordable Care Act (PPACA).
Notice of Exchange Has Been Delayed
On Jan. 24, 2013, the DOL issued a FAQ that delays the due date for providing employees with a notice about the affordable health exchanges. The notice had been due March 1, 2013 but the due date has been delayed until late summer or early fall of 2013. The delay will result in the notice being provided closer to the start of open enrollment for the exchanges, which will begin Oct. 1, 2013, for a Jan. 1, 2014, effective date.
To read the FAQ, click here: https://www.dol.gov/ebsa/faqs/faq-aca11.html
HRA Restrictions
Because PPACA prohibits annual dollar limits on essential health benefits, HRAs that are not integrated with other group health coverage (usually a major medical plan) will not be permitted after Jan. 1, 2014.
The Jan. 24, 2013, DOL FAQ also addresses HRAs, and states that an employer-provided HRA will not be considered integrated (and therefore will not be allowed) if it:
- Provides coverage through individual policies or individual market coverage; or
- Credits amounts to an individual when the individual is not enrolled in the other, major medical coverage
Existing HRAs that cannot meet the 2014 requirements generally will be allowed to reimburse expenses incurred after 2014, in accordance with the terms of the plan.
Premium Tax Credit/Subsidy
On Feb. 1, 2013, the IRS issued a final regulation that provides the long awaited answer of whether family members of an employee who has access to affordable self-only coverage are eligible for a premium tax credit/subsidy. The answer is that they are not – if the employee has access to affordable self-only coverage, the spouse and children are also considered to have access to affordable employer-sponsored coverage, and therefore the spouse and children are not eligible for premium tax credits/subsidies. To read the final IRS rule, click here:
https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02136.pdf
Minimum Essential Coverage
On Feb. 1, 2013, HHS and the IRS issued two proposed regulations that provide details on the individual shared responsibility requirement.
PPACA requires that non-exempt individuals obtain “minimum essential coverage” or pay a penalty. Minimum essential coverage includes individual insurance, Medicare, Medicaid, CHIP, TRICARE, VA and similar government programs, and employer-sponsored coverage. The proposed IRS rule defines minimum essential “employer-sponsored” coverage as an insured or self-funded governmental or ERISA welfare benefit plan that provides medical care directly or through insurance or reimbursement. (An HMO is considered an insured plan.)
Generally, any policy offered in the small or large group market that meets the above requirements will be minimum essential coverage. The proposed IRS regulation states that these types of coverage will not qualify as minimum essential employer-sponsored coverage:
- Accident only
- Disability income: Liability, including general, automobile, and supplemental liability;
- Workers compensation
- Automobile medical payment
- Credit only
- On-site medical clinics
- Limited scope dental or vision
- Long-term care, nursing home care, home health care, community-based care or any combination of these
- Specified diseases or illness
- Hospital indemnity or other fixed indemnity insurance
- Medicare supplement
- Similar limited coverage
Public comments are due March 18, 2013. To read the proposed IRS rule, click here: https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02141.pdf
The HHS proposed rule provides details on how an individual can claim an exemption from the individual shared responsibility penalty.
Public comments on this rule also are due March 18, 2013. To read the proposed HHS rule, click here: https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02139.pdf
Women’s Preventive Care Services
Proposed rules that would make it simpler for religious organizations and religious-affiliated not-for-profit organizations like hospitals and schools that have a religious objection to providing contraceptive services were released by the DOL on Feb. 1, 2013. These employers would notify their insurer of their objection, and the insurer automatically would be required to notify the employees that it will provide the coverage without cost sharing or other charges through separate individual health insurance policies.
For religious-affiliated workplaces that self-insure, the third party administrator would be expected to work with an insurer to arrange no-cost contraceptive coverage through separate individual health insurance policies.
The administration believes the cost of free contraceptive coverage will be offset by fewer maternity claims, but is exploring allowing an offset of the cost against federally facilitated exchange user fees.
The proposed rule offers no exemption for private employers that object to covering contraceptive services on religious or moral grounds.
The proposed rule is here: https://www.ofr.gov/OFRUpload/OFRData/2013-02420_PI.pdf
Important: Some of these rules are still in the “proposed” stage, which means that there may be changes when the final rule is issued. Employers should view the proposed rules as an indication of how plans will be regulated beginning in 2014, but need to understand that changes are entirely possible.
Health Care Reform and the Benefits Renewal Process
Source: United Benefit Advisors
By Mick Constantinou
The Supreme Court decision last June removed the remaining obstacles blocking implementation of health care reform. Prior to the ruling, many employers took a “wait and see” approach and were left scrambling to qualify and quantify how those aspects of the Patient Protection and Affordable Care Act (PPACA) of 2010 that went into effect January 2013 would impact their business and their employees.
Beginning in 2014, the requirements of PPACA will change the way employers plan and execute their benefits renewal process. The difference is that the impacts forthcoming, both financially and in terms of access to health care, will be far greater than those elements of health care reform that have been implemented to date.
Employers and employees will be left scrambling again if the age-old, “I worry about our benefits during the last three months of our plan year,” paradigm continues. There are decisions that should be made between now and 2014 because the changes are far greater in scope. Mishandling or delaying the question of health benefits now can carry a big price tag in dollars, reputation, competitiveness, retention, employee engagement or a combination of all of the above.
In its current form and implementation schedule, PPACA will forever alter how health care is purchased, delivered and funded by employers. The complexities of the law will touch all employers, regardless of their size, and all employees in a variety of ways and to varying degrees. The impact, often referred to as “play or pay” or “the mandate”, is different for groups with under 50 or more than 50 full-time employees.
Employers that currently offer group benefits or are thinking about offering group benefits, regardless of the number of full-time equivalent employees, should include the following as part of their planning process during 2013:
Minimum Value - Determine the actuarial value (AV) of their current plan design as well as calculate the AV of plans under consideration for 2013 to ensure the designs comply with the minimum requirement to cover an estimated 60 percent (the bronze standard) of covered health care expenses.
Affordability – Confirm your current employee contributions satisfy the affordability test of costing no more than 9.5 percent of an employee’s earnings.
Tax Subsidies – Identify which employees may qualify for subsidized health care through the exchanges and therefore subject you to a $3,000 annualized penalty.
Penalties – If you decide to pay the $2,000-per-employee penalty rather than continue to offer employer-sponsored group coverage, you should calculate which of your employees would be better off and which would be worse off with such a decision.
Medicaid – Quantify how the expansion of Medicaid will impact your costs and which employees will qualify under the new rules and Medicaid tables.
Eligibility – Review how your current benefits eligibility will be altered by the new regulations on eligibility.
Enforcement – Understand when and how the new rules are expected to be enforced, and be aware of the new requirements placed on employers and employees to ensure compliance with the provisions of the health care reform law.
The capabilities, expertise and analytical tools available to benefit advisors that support employers are key value-adds. Employer groups should consider these as part of their checklist when vetting the advisory firm that can best support them through 2013 in preparation for 2014 and beyond. Employers require compliance programs, solutions and services designed to help them stay informed, manage changes in benefits compliance and labor laws, and be prepared for the impacts in 2014 with sound analytics.
Employers will have a number of obligations and opportunities related to health care reform. This law is complicated, and each employer will need to base its decisions on its particular situation, which will require an advisor with the analytical tools to model a variety of scenarios specific to your company.
Health insurance methods to shift in post-PPACA world
By Brian M. Kalish
Source: eba.benefitnews.com
With health reform moving full steam ahead, most employers will continue to offer employee coverage, but will make alterations to how they provide it, said a speaker at the Workplace Benefits Transitions conference Tuesday.
An overwhelming majority of employers plan to stay in the health care business, said Cheryl Larson, vice president of the Midwest Business Group on Health, whose members represent senior HR benefits professionals who annually spend more than $4 billion on health care. Her group’s research shows that only 4% of members plan to drop health coverage. They will stay in the game for three main reasons, she said, as they:
- Don’t want to deal with the penalty for not offering coverage;
- Don’t want to “gross up” employer salaries to allow them to buy coverage on their own; and
- Need to stay competitive.
Speaking in the opening keynote at the conference co-sponsored by Employee Benefit Adviser in Chicago, Larson noted, however, that there will be some key differences come 2014, including an exit strategy of dropping coverage for retirees (53%) and part-time employees (33%), according to a National Business Group on Health survey.
In practice, it will be interesting to see what employers actually do, Larson said. While they say publically they are not walking away from providing health care, privately “in the boardroom they will say, ‘If so and so goes, so will we.’ That’s scary,” she said.
Larson also predicted an increased focus on consumerism and wellness. “Ten years ago, that was not important to employers,” she said. “I’ve been a real passionate person about engaging employees and their families with knowledge and information. We’ve forgotten about teaching people how to deal with navigating the health care system.”
An MBGH survey further found that employers of all sizes plan to offer consumer-directed health plans, such as an HSA/HRA option. Of those surveyed, among small group employers – 200 or fewer employees – 50% plan to offer a form of CDHP, for large groups – more than 5,000 — that increases to 100%. Further, employers of all sizes will be shifting their dental and vision coverage to a voluntary offering by 2017-2018. Specifically, 59% of small and 49% of large employers plan to do so.
States given more time to work on health exchanges
By David Morgan and Alina Selyukh
WASHINGTON | Fri Nov 9, 2012
(Reuters) - The Obama administration gave states extra time to work toward setting up new health insurance exchanges on Friday, three days after President Barack Obama's re-election ensured the survival of his healthcare reform law.
The move is seen as a concession to dozens of states that delayed compliance with the Patient Protection and Affordable Care Act until after the November 6 election. Republican governors in some states had hoped to see a victory for the party's presidential challenger Mitt Romney, who had vowed to repeal the law.
But with a November 16 deadline to declare their plans looming, many need more time to prepare for the exchanges, which are complex marketplaces designed to allow working families the chance to purchase private insurance at subsidized rates beginning in 2014.
In cases where states decide not to participate at all, the federal government says it will go in and build an exchange on its own. Since Tuesday's election, governors in seven states - including Texas, Kansas, Virginia and Florida - have said they will refuse to proceed with an exchange.
"The administration would like to do whatever it can to bring states in," said Larry Levitt, a healthcare policy expert with the nonpartisan Kaiser Family Foundation, which tracks health issues.
"It's always been expected that if the president got reelected, a lot of states sitting on the sidelines would realize they don't want the federal government building a state health insurance system. That's what we're seeing happening."
U.S. Health and Human Services Secretary Kathleen Sebelius said in a November 9 letter to governors that the administration still expects states to declare whether they intend to operate their own exchanges by next Friday. But they now have until December 14 to file blueprints showing how they would operate the marketplaces. So far, about 13 states are well on their way to setting up their own exchanges.
States can also choose to develop their exchange in partnership with the federal government, and as many as 30 could go that route.
Sebelius said states preferring a partnership now have until February 15, 2013, to declare their intentions and prepare the appropriate paperwork. She said states can still apply to run exchanges in subsequent years but emphasized that the start date for coverage has not changed.
"Consumers in all 50 states and the District of Columbia will have access to insurance through these new marketplaces on January 1, 2014, as scheduled, with no delays," she said in the letter.
The reform law, the most sweeping health legislation since the mid-1960s, would extend health coverage to more than 30 million uninsured Americans. About half would receive coverage through a planned expansion of the Medicaid program for the poor, and the other half through the exchanges.
The list of states that say they will not participate in the healthcare exchanges grew this week when Virginia and Kansas said they would not cooperate with the federal reform.
Texas, South Dakota, South Carolina, Alaska and Florida confirmed to Reuters on Friday that they will not participate in exchanges. Louisiana had also opposed the plan before the election, but officials there did not respond to inquiries about their plans under Obama's second term.
(Writing by David Morgan; Editing by Michele Gershberg, Eric Walsh and Claudia Parsons)
IRS Issues Three Proposed Regulations Addressing Open Issues Under PPACA
On Nov. 20, 2012, the Department of Health and Human Services issued three sets of proposed rules that provide some of the needed details on how PPACA will probably unfold. The proposed rules address:
- Wellness programs under PPACA
- Essential health benefits and determining actuarial value
- Health insurance market reforms
The proposed rule largely carries forward the rules that have been in effect since 2006. There still would not be limits on the incentives that may be provided in a program that simply rewards participation, such as a program that pays for flu shots or reimburses the cost of a tobacco cessation program, regardless whether the employee actually quits smoking. Programs that are results-based (which will be called "health-contingent wellness programs") still would need to meet several conditions, including a limit on the size of the available reward or penalty. Beginning in 2014, the maximum reward/penalty would increase to 50 percent for tobacco nonuse/use and to 30 percent for other health-related standards.
The proposed rule confirms that nongrandfathered plans in the exchanges and the small-group market will be required to cover the 10 essential health benefits and provide a benefit expected to pay 60, 70, 80 or 90 percent of expected allowed claims. The proposed rule also says that self-funded plans and those in the large employer market would not need to provide the 10 EHBs; instead, they would need to provide a benefit of at least 60 percent of expected allowed claims and provide coverage for certain core benefits. The proposed rule would consider current year employer contributions to a health savings account (HSA) or a health reimbursement arrangement (HRA) as part of the benefit value calculation.
The proposed rule confirms that nongrandfathered health insurers (whether operating through or outside of an exchange) would be prohibited from denying coverage to someone because of a pre-existing condition or other health factor. The proposed rule also provides that premiums for policies in the exchanges and individual and small-group markets could only vary based upon age, tobacco use, geographic location, and family size and sets out details on how premiums could be calculated.
Court orders new look at health care challenge
BY MARK SHERMAN
Source: https://www.benefitspro.com
WASHINGTON (AP) — The Supreme Court has revived a Christian college's challenge to President Barack Obama's healthcare overhaul, with the acquiescence of the Obama administration.
The court on Monday ordered the federal appeals court in Richmond, Va., to consider the claim by Liberty University in Lynchburg, Va., that Obama's health care law violates the school's religious freedoms.
The court's action at this point means only that the 4th U.S. Circuit Court of Appeals must now pass judgment on issues it previously declined to rule on.
A federal district judge rejected Liberty's claims, and a three-judge panel of the 4th Circuit voted 2-1 that the lawsuit was premature and never dealt with the substance of the school's arguments. The Supreme Court upheld the health care law in June.
The justices used lawsuits filed by 26 states and the National Federation of Independent Business to uphold the health care law by a 5-4 vote, then rejected all other pending appeals, including Liberty's.
The school made a new filing with the court over the summer to argue that its claims should be fully evaluated in light of the high court decision. The administration said it did not oppose Liberty's request.
Liberty is challenging both the requirement that most individuals obtain health insurance or pay a penalty, and a separate provision requiring many employers to offer health insurance to their workers.
Liberty law school dean Mathew Staver said, "This case now will go back to the federal court of appeals where we will address the undecided issues that the Supreme Court did not address."
When Liberty's case was in front of the 4th Circuit, Judge Andre Davis broke with his colleagues who thought the challenge was premature. Davis said of Liberty's claims, "I would further hold that each of appellants' challenges to the act lacks merit."
The appeals court could ask the government and the college for new legal briefs to assess the effect of the Supreme Court ruling on Liberty's claims before rendering a decision.
Liberty's case joins dozens of other pending lawsuits over health reform, many involving the requirement that employer insurance plans cover contraception. These cases are working their way through the federal court system.
The case is Liberty University v. Geithner, 11-438.
Associated Press writer Brock Vergakis in Norfolk, Va., contributed to this report.