Patient Protection & Affordable Care Act (PPACA)

PPACA

(Patient Protection & Affordable Care Act)

("Obamacare")

2010 federal law that resulted in a major regulatory overhaul of the private health insurance industry and public health insurance programs in an effort to expand access to insurance coverage. Key components of the PPACA include:

- Health benefit exchanges (e.g. Covered CA)

- Coverage for minor and adult children

- Required coverage for pre-existing conditions

- Medical Loss Ratios (MLR)

- Various public coverage programs

Health Benefit Exchanges

Entity intended to create a more organized and competitive market by offering a choice of plans made available by commercial insurers, establishing common rules regarding offerings and pricing, and providing information to help consumers better understand the options available to them.

- Covered California is the name of CA’s Health Benefit Exchange

Individual Mandate

Under the PPACA, the individual mandate requires U.S. citizens and legal residents to have health insurance coverage OR pay a tax penalty (shared responsibility payment).

(Note: Beginning in 2019, Congress eliminated the tax penalty for not having health insurance.. While there is no longer a federal tax penalty for being uninsured, some states, including CA, have enacted individual mandates and may apply a state tax penalty if an individual does not have health coverage for the year.)

Modified Adjusted Gross Income

(MAGI)

A definition of income created by the PPACA used in evaluating eligibility for Medicaid (Medi-Cal) and Cost Sharing Reductions (CSRs).

The term “household income” will often be used in place of MAGI.

Federal Poverty Level

(FPL)

A measure of income level issued annually by the Department of Health and Human Services used to determine eligibility for certain programs and benefits.

MAGI Eligibility for Medi-Cal

ADULTS (AGES 19 – 64)

< 138% of Federal Poverty Level

CHILDREN (UNDER 19)

< 266% of Federal Poverty Level

Cost Sharing Reductions

Lower out-of-pocket health care costs, such as coinsurance, copays and deductibles in Enhanced Silver Plans for individuals who meet certain income requirements.

MAGI ELIGIBILITY: 138% - 250% of Federal Poverty Level

Not available with Bronze, Gold or Platinum plans, only Enhanced Silver

Guaranteed Issue Requirement

PPACA rule that prohibits individual and group health insurers from denying issuing coverage or renewing an existing policy because of the insured's health status (pre-existing conditions) , age, gender or other factors.

Guaranteed issue must be made available during Open Enrollment Period (and Special Enrollment Period for those with a Qualifying Life Event)

Open Enrollment Period

The period of time each year during which an individual can enroll in a health plan, change plans or apply for premium subsidies.

Open Enrollment Period typically runs from November 1 – December 15 with new coverage being effective January 1st of the following year.

Special Enrollment Period

A 60-day period following a Qualifying Life Event during which an individual can enroll in a health plan, change plans, or apply for premium subsidies even though it's outside the normal Open Enrollment Period.

Qualifying Life Events

(for Special Enrollment Period)

A life event under PPACA involving a change in family status, loss of other health coverage, or change in income that permits use of the Special Enrollment Period outside Open Enrollment.

Examples: Getting married or divorced, losing coverage through job, change in residency, birth of a child, losing coverage under parent’s plan upon turning 26.

Advanced Premium Tax Credits

(Premium Tax Credit)

(Premium Assistance)

(Premium Subsidy)

Tax credits available under PPACA to help eligible individuals and families with low or moderate incomes afford health coverage. (aka Premium Tax Credit or Premium Assistance or Premium Subsidy)

MAGI ELIGIBILITY: MAGI < 400% of FPL

Must purchase QHP through Covered California to obtain Premium Tax Credits

Essential Health Benefits

A comprehensive package of 10 items and services that must be included with ALL health insurance plans offered in the individual and small group markets, both inside and outside of the Marketplace, as a result of the PPACA

The 10 Essential Health Benefits

1) Ambulatory patient services

2) Emergency services

3) Hospitalization

4) Maternity and newborn care

5) Mental health and substance use disorder services

6) Prescription drugs

7) Rehabilitative and habilitative services and devices

8) Laboratory services

9) Preventive & Wellness services

10) Pediatric services (incl Dental & Vision)

Qualified Health Plan

(QHP)

A health plan that meets specific guidelines as defined by the PPACA to ensure a standard level of quality

> All plans offered through State and Federal Health Benefit Exchanges must be QHPs

> A QHP must be certified by each Exchange in which it is offered and must provide Essential Health Benefits

Pediatric (18 & under) -

Dental & Vision Benefits

As a result of the PPACA all health plans offered through Covered California must include embedded coverage for pediatric (18 & younger) DENTAL (Oral) and VISION benefits

Minimum Essential Coverage Requirement

The type of coverage an individual needs to have in order to satisfy the individual mandate requirement under PPACA.

Failure to maintain Minimum Essential Coverage (assuming no exemptions apply) will result in tax penalty (shared responsibility payment)

Minimum Essential Coverage Examples

Coverage under any of the following satisfies the Minimum Essential Coverage (MEC) requirement . . .- Original Medicare (Part A) or Part C (Note: Part B by itself does not qualify)

- Employer-sponsored plans

- Qualified Health Plan (QHP) purchased through Covered California

- Student health plans

- Grandfathered health plans

- Most state high-risk pools

Metal Tiers

PPACA establishes four different metal tiers of coverage which represent the share of health care expenses (actuarial value) the plan covers. (Applies to individual and small group plans.)

- Bronze: 40% / 60%

- Silver: 30% / 70%

- Gold: 20% / 80%

- Platinum: 10% / 90%

Covered California for Small Business

(Previously SHOP -

Small Business

Health

Options

Program)

A Covered California program that offers small group health and dental plans for small businesses with 1 – 100 eligible full-time employees

> MUST be offered to all FULL-TIME employees

> MAY be offered to PART-TIME employees

> Employer must contribute at least 50% of cost towards lowest premium available for employee coverage

> 70% participation requirement

Employer Mandate

Requirement that employers with 50+ FTEs provide health insurance to FULL-TIME EMPLOYEES and their dependents OR pay a penalty (Employer Shared Responsibility Payment)

Does NOT apply to employers with 49 or less FT employees

Certified Insurance Agent

(Covered California)

Agents wanting to submit applications for Qualified Health Plans through Covered California must first complete all Covered California agent agreements and certification requirements

- Recertification is required every 5 years following initial certification

Coverage for Children

Children can be covered under parent’s health plan (individual or group) through age 25 (last required coverage date is the day BEFORE child’s 26th birthday)

Children 26+ eligible for continued coverage if BOTH:

- incapable of self-sustaining employment by reason of a physically or mentally disabling injury, illness, or condition; AND

- Chiefly dependent upon the employee or member for support and maintenance

COBRA Coverage for Children who "age out"

COBRA permits a child who “ages out” of a group health plan (i.e. turns 26) to continue coverage under the group plan for up to 36 months

Medical Loss Ratio

(MLR)

MLR = Total Claims / Total Premiums

MLR Requirements under PPACA:

- Large group = 85%

- Small group & individual = 80%

If insurer fails MLR test in a calendar year, it must refund excess premiums to consumers