Massachusetts Patient Protection and Affordable Care Act (PPACA)

1. Patient Protection and
Affordable Care Act (PPACA)

2. A Timeline of PPACA Provisions
That Could Affect You
2010 2018
2014

3. 2010
Insurance plans prohibited
Insurance plans required to Insurance plans required to
from imposing lifetime
carry dependents up to the cover preventive services
benefit limits and restricted
age of 26. without cost sharing.
annual limits.
Temporary (until 2014) high
Insurance plans prohibited
risk pools established for
from denying coverage to Insurance plans prohibited
individuals (older than 19)
individuals under the age of from rescinding coverage
who are denied coverage
19 based on pre-existing except in cases of fraud.
based on pre-existing
conditions.
conditions.

4. 2010 Cont’d
First Phase of Small Business Tax Credit:
Small businesses with less than 25 employees
and average annual wages of less than
Establish an internet website
$50,000 are eligible for tax credits of up to (www.healthcare.gov) to help
35% of the employer’s contribution toward residents identify health coverage
the employee’s health insurance premium. options (effective July 1) and develop
Employers must subsidize at least 50% of a standard format for presenting
their employees’ premiums in order to be information on coverage options.
eligible for the tax credit. Credit only
available through 2013.
Create the Consumer Operated and
Oriented Plan (Co-Op) program to States begin reviewing premium
foster the creation of non-profit, trends and companies must justify
member-run health insurance increases over certain thresholds.
companies in all 50 states. $6 billion is There is no new power to block rate
appropriated to finance the program increases but plans may be excluded
and award loans and grants to from exchanges.
establish Co-Ops by July 1, 2013.

5. 2011
Insurance plans required to comply
with new medical loss ratios (MLR):
80% for individual and small group Funding available for states to begin
plans and 85% for large group plans. establishing Exchanges until January
Companies required to provide 1, 2015.
rebates to consumers if they fail to
comply with the MLRs.
Medicare Part D beneficiaries that fall Over-the-counter drugs not
into the “donut hole” will receive a prescribed by a doctor may not be
50% discount on covered brand-name reimbursed through an FSA or HRA
prescriptions. This will grow to a 75% nor on a tax free basis through an
discount by 2020. Archer MSA or HSA.

6. 2013
3.8% tax increase on investment income for
Increase Medicare tax rate on wages taxpayers making $200,000 per year
($250,000 for joint filers); however in real
by 0.9% (from 1.45% to 2.35%) on
estate transactions there is an exemption in
earnings over $200,000 for individual current law for $250,000 on the sale of a
taxpayers ($250,000 for joint filers). principal residence ($500,000 for joint
filers).
(IMPLEMENTATION OF THIS PROGRAM
HALTED INDEFINITELY BY HHS) CLASS Act:
A national long term care assistance/disability
insurance plan is established. The benefit is tied
Contributions to FSAs limited to to one’s inability to perform two or three
Activities of Daily Living (ADLs) and the
$2,500 per year. benefit amount is varied based on the “scale of
functional ability” with a $50-7/day cash
benefit. All working adults will be
automatically enrolled in the program unless
they choose to opt-out.

7. 2014
Exchanges are created and open to Premium tax credits (subsidies for
individuals and small businesses purchase of health insurance)
(2-100 employees). Exchanges will available via exchanges for
include four tiers of private individuals/families with incomes
plans(Bronze- 60% actuarial value, between 100% and 400% of federal
Silver-70%, Gold-80%, Platinum- poverty level who do not receive
90%, and Catastrophic coverage). employer based coverage.
Employers with more than 200
Insurance plans required to abide
employees would be required to
by guaranteed issue, minimum
automatically enroll employees
benefit standards, revised rate
into health insurance plans offered
bands for individual and small
by employer (employees may opt-
group market (2-100 employees).
out).

8. 2014 Cont’d
Individual Mandate: Individuals required to
Employer Mandate: Employers with more
purchase health insurance or face a tax
than 50 employees who do not offer their
penalty of up to $95 per year (or 1.0% of
employees health insurance will be subject to
income, whichever is greater). In 2015 the
a $2,000 tax penalty/per full-time employee
penalty is $325 per adult (or 2.0% of income)
(per year) if one of their employees is eligible
and in 2016 the penalty is $695/year (or of
for a tax credit subsidy (first 30 employees
2.5% of income). After 2016, penalty amounts
exempted from calculation).
are indexed to inflation.
Phase II of Small Business Tax Credit: Small
businesses with less than 25 employees and New tax is levied on insurance
average annual wages of less than $50,000 are companies based on net premiums
eligible for tax credits of up to 50% of the
employer’s contribution toward the
written. This tax will raise an
employee’s health insurance premium. estimated $8 billion in 2014,
Employers must subsidize at least 50% of their reaching $14.3 billion by 2018. The
employees’ premiums in order to be eligible tax does not sunset and is indexed
for the tax credit. Credit only available for two
thereafter.
years.

9. 2014 Cont’d
States must expand Medicaid to 133% of federal
poverty level. States will receive 100% federal
financing from 2014-2016, 95% financing in 2017,
94% financing in 2018, 93% financing in 2019, and Allow states the option of merging
90% financing in 2020 and beyond. However, the the individual and small group
Supreme Court struck down the ability of the
markets in Exchanges.
federal government to withhold their portion of
current Medicaid funds to force states to comply
with the expansion.
Waiting periods for coverage cannot
exceed 90 days.

10. 2017
States are permitted to allow businesses with
more than 100 employees to purchase
coverage in SHOP Exchanges.

11. 2018
“Cadillac Tax” takes effect. A 40% excise tax is levied
on insurers of employer-sponsored health plans with
aggregate values that exceed $10,200 for individual
and $27,500 for family. The tax is applied to the
amounts that exceed the threshold and it will be
indexed for inflation.

12. Closer Look at Medical
Loss Ratios
“Other non-claims costs,” such as administrative costs, cannot be more
than 15% of the premium in the large group market or 20% in the small
group/individual markets.
In January 2011, HHS deemed that agent commissions must fit within
that 15%/20%, leading to a squeeze on agent compensation.
The Big “I” is focused on congressional legislation that would
statutorily exclude agent compensation from the MLR formula. In the
House Mike Rogers (R-MI) and John Barrow (D-GA) introduced H.R.
1206, which has over 200 bipartisan cosponsors.
Senators Mary Landrieu (D-LA) and Johnny Isakson (R-GA) have
introduced S.2288, the “Access to Professional Health Insurance
Advisors Act of 2012”, which is a companion to the House bill.

13. Closer Look at
Individual Mandate
Beginning in 2014, virtually every U.S. citizen and legal resident will be required to
purchase health insurance or face a tax penalty.
There are certain exemptions from the individual mandate including: those who
choose not to buy a policy for religious reasons, undocumented immigrants,
incarcerated citizens, members of Native American tribes, those with family income
below the threshold requiring a tax return.
To satisfy the mandate, individuals must obtain health insurance for the entire year
through one of the following sources: Medicare, Medicaid, CHIP, veteran’s health
programs, a plan offered by an employer, insurance purchased on your own that is
at least at the Bronze level (60% actuarial value).
The penalty for non-compliance will be phased-in according to the following
schedule: $95 (or 1% of income, whichever is higher) in 2014, $325 (or 2% of income)
in 2015, and $695 (or 2.5% of income) in 2016. After 2016, the penalty will be
increased annually by the cost-of-living adjustment.

14. Closer Look at Employer
Mandate
Beginning in 2014, employers with 50 or more full-time employees that
do not offer coverage and have at least one full-time employee who
receives a premium tax credit will be assessed a fee of $2,000 per full-
time employee, excluding the first 30 employees from the assessment.
Employers with 50 or more full-time employees that offer coverage but
have at least one full-time employee receiving a premium tax credit,
will pay the lesser of $3,000 for each employee receiving a premium
credit or $2,000 for each full-time employee, excluding the first 30
employees from the assessment. (Effective January 1, 2014).
Employers with 200-plus full-time employees must automatically
enroll their employees into health insurance plans.

15. Closer Look at Exchanges
Exchanges are a government created platform for the sale of health insurance,
intended to bring all “qualified” plans into one forum by establishing common rules
regarding the offering and pricing of insurance, and providing information on these
plans to consumers.
Also through the exchanges, consumers may sign up for government programs
such as Medicaid and Children’s Health Insurance Program (CHIP).
In addition, through the exchanges qualified consumers (up to 400% of the poverty
level) will receive government assistance to purchase private insurance through the
use of premium tax credits.
States face a Jan. 1, 2013 deadline for certification of their exchanges by HHS, initial
enrollment on Oct. 1, 2013 and a “go live” date of Jan. 1, 2014. If they do not meet
these deadlines, the federal government will step in. At this point, with the lack of
progress in the majority of states, some level of federal involvement in the majority
of exchanges is likely.