The Affordable Care Act

What It Means for YouMarcia H. SalkinManaging Director, Legislative PolicyNAR Government Affairs

The Affordable Care Act

• The Patient Protection and Affordable Care Act

• Commonly referred to as the Affordable Care Act (ACA) or “Obamacare”

• Signed into law in 2010.

• Phased implementation with some provisions already in effect.

• Largest changes coming in 2014.

Why the Focus on Health Reform?

• Dysfunctional individual/small business insurance markets

• Rising cost of health services and health coverage

• 47+ million Americans uninsured each yearo Unemployedo Work for businesses with no employer benefitso Self-employed o Uninsurable with pre-existing conditions

• Roughly 28-33% of REALTORS® are uninsured

Five Critical Parts of the ACA

• Underwriting and Pricing Reforms: Significant changes to rules governing how insurers decide who to cover and how much to charge.

• The Exchanges: New marketplaces to shop for health insurance.

• Individual Mandate: Requires most Americans to have health insurance.

• Employer Mandate: Requires most employers to offer health insurance benefits to full-time employees and their dependents.

• Reducing Cost/Increasing Access: Premium assistance and tax credits will be available to some households and small businesses to help pay for health insurance.

Underwriting & Rating Reforms

• National Set Of Underwriting and Rating Rules For Insurers

o Guaranteed Issue Policieso No Preexisting Condition Exclusionso No Annual or Lifetime Limitso Limits on Out-of Pocket Paymentso Policy Pricing Factors Limited to 4 Variables

LocationAgeType of Plan PurchasedTobacco Usage

Exchanges - The New Insurance Marketplaces

• Individual ExchangesHealth insurance marketplaces for individuals shopping for coverage.

• Small Business Health Options Program (SHOP) ExchangesHealth insurance marketplaces for small employers with less than 50 full time employees.

• Exchanges are created and administered by the states or the federal government.

• Insurance policies on the Exchanges and SHOPs are plans offered by private insurance companies.

Individual Mandate

• Individuals are Required to Have Health Insurance Coverage.

• Exceptions to the Requirement: • Affordability• Religious• Federally-Recognized Native American Tribes• Uninsured for less than 3 months of the year• Eligible for expanded Medicaid, but living in a state

that has chosen not to expand Medicaid eligibility

• Incentives – Penalty and Premium Assistance

What Plans Satisfy the Individual Mandate?

• Any individual insurance plan you already have• Any employer plan (including COBRA and retiree plans)• Any plan offered by the new state Individual and SHOP

Exchanges• Medicare• Medicaid• Children’s Health Insurance Program (CHIP)• TRICARE (for veterans and veteran families)• Veterans health care programs• Peace Corps Volunteer plans• Self-funded university student health plans approved by HHS• State high risk pool coverage approved by HHS

Assistance for Individuals Without Employer Coverage

• Advance Premium Tax CreditsDesigned to make health insurance more affordable for middle income households, these credits are only available for policies purchased from the state Exchanges.

• Premium credit eligibility and amount depend on family income and sizeThe lower the household income, the higher the premium credits. As an example using 2013 numbers, households eligible for the premium credit would include those with incomes:

o Up to $45,960 for individualso Up to $62,040 for a family of 2o Up to $78,120 for a family of 3o Up to $94,200 for a family of 4

Penalty for Individuals Who Fail to Obtain Coverate

• Penalties for Failing to Obtain Insurance Coverage: The penalty is the greater of either 1) a flat-dollar amount based on the number of uninsured people in your household; or 2) a percentage of your income. The amount of the flat-dollar penalty is capped for families regardless of the number of children; the percentage penalty approach is also capped.

• Given the formula, calculating a penalty is dependent upon a household’s characteristics:To calculate the penalty for your household, it is best to use a calculator on one of a number of credible health reform websites. Healthinsurance.org is one such site: http://www.healthinsurance.org/learn/obamacare-penalty-calculator/

The Employer Mandate

• Requires an Offer of Affordable Coverage With “Minimal Essential Benefits” to Full-Time Employees and Their Dependents.

• Exceptions – Firms with fewer than 50 FTE employees.

• Treatment of Independent Contractors – Employee or Non-employee?

• Incentives to Comply – Penalty and Tax Credits for Very Small Firms

Assistance for Very Small Employers

• Small Employer Tax Credit Available to Firms with:o Less than 25 employees, o Average annual income less than $50,000, ando Contributes at least 50 percent of the total premium cost.

• Amount Of Tax Credit Varies With Firm Size:o Maximum credit available to firms with less than 10

employeeso Credit available for up to 50 percent of the employer

contribution for two years.

Penalties for Failing to Meet the Employer Mandate

• If a firm has 50 or more full-time equivalent (FTE) employees, it may have to make this payment if:

o at least 1 full-time employee purchases insurance on the Individual Exchange and qualifies for the premium assistance available to some households.

• A firm’s employees won't be eligible for the Exchange premium assistance if the coverage offered by their employer is

o “affordable”and the plan pays at 60% of total costs of covered services.

What Constitutes Affordable Coverage?

• How to know if a firm’s coverage is “affordable”?If an employee's share of the premium for employee-only coverage is more than 9.5% of their yearly household income, the coverage is not considered affordable.

• But what if the firm doesn’t know its employee's household income? A firm can generally avoid a penalty for an employee if the employee's share of the premium for employee-only coverage doesn't exceed 9.5% of their wages for that year as reported on the employee’s W-2 form.

How Much Is the Employer Penalty?

• The Amount Of An Annual Penalty Is Based In Part On Whether A Firm Offers Insurance.

o If a firm doesn’t offer insurance, the annual payment is $2000 per full-time employee (excluding the first 30 employees).

o If a firm does offer insurance, but the insurance isn’t affordable or pay at least 60% of costs, the annual payment is $3000 per full-time employee who qualifies for premium savings in the Individual Exchange. This penalty will never exceed the penalty that would have been assessed if the firm simply failed to offer insurance.

Key Dates

• October 1, 2013Open enrollment for health insurance starts in the online exchanges.

• January 1, 2014New exchange healthcare insurance coverage begin.

• March 31, 2014Final day for 2014 open enrollment in health insurance plans offered through the exchanges.

• January 1, 2015Employer mandate takes effect .

Where To Go for More Info

• Federal Healthcare.org websitehttps://www.healthcare.gov/

• NAR’s Health Reform Q&Ahttp://www.realtor.org/topics/health-care-reform/background#FAQ

• Kaiser Family Foundation FAQShttp://kff.org/health-reform/faq/health-reform-frequently-asked-questions/

• Kaiser Health News – Insure Your Healthhttp://www.kaiserhealthnews.org/Topics/Insuring-Your-Health.aspx

IRS FAQ’s on ACA Mandates

• IRS FAQ on the Individual Mandatehttp://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision

• IRS FAQ on Employer Mandatehttp://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act

Useful Online FAQ’s

• Healthinsurance .org FAQShttp://www.healthinsurance.org/faqs/

• ACA Implementation Timeline - Kaiser Family Foundation http://kff.org/interactive/implementation-timeline/

 • State-by-State Exchange Profiles - Kaiser Family

Foundation  http://kff.org/state-health-exchange-profiles/