What Will Health Reform Look Like in Tennessee?

What Will Health Reform Look Like in Tennessee?

Christopher ColemanTennessee Justice [email protected]

Cumulative Changes in Health Insurance Premiums, Inflation, and Workers’ Earnings, 1999-2012

The Massachusetts Plan

guaranteed coverage

personalresponsibility

actualaffordability

The three-legged stool

Consumer Protections

Consumer ProtectionsToday 2014

Medical Underwriting Denials for pre-existing conditions

Guaranteed Issue No denials based on health status

Exclusions and Riders Pre-existing conditions are not covered

Full Coverage All conditions covered on day one

Rating Factors Premiums adjusted for age, tobacco, gender, health status, etc.

Modified Community rating Premiums adjusted for age, tobacco, and geography only

Rescission Plans can drop enrollees if they get sick

No Rescission Plans can only drop coverage for deliberate misrepresentation

Benefit Limits Plans can impose annual and lifetime dollar limits

No Annual or Lifetime Limits

No Wrong Door

Marketplace Phone Number

1-800-318-2596

Marketplace Plans – Metal LevelsPlan Level Actuarial

Value

Platinum 90%

Gold 80%

Silver 70%

Bronze 60%

Lower enrollee cost-sharing

Higher enrollee cost-sharing

If your CLIENT falls between 100-250% of FPL,

she should pick a SILVER plan.

Individual Responsibility Requirement

Individual Responsibility Requirement

2014 – Greater of$95 per adult family member without coverage ($47.50 per child); or 1% of taxable income (family maximum of $285).

2016 – Greater of$695 per adult family member without coverage ($347.50 per child); or 2.5 % of taxable income (family maximum of $2,085).

Individual Responsibility RequirementExemptions:• People with low incomes not required to file taxes• Certain religious groups• Incarcerated people• Undocumented residents• Members of Indian tribes• People who go without coverage for less than 3 months• People who do not have an affordable offer of coverage

What is “affordable” coverage?

Monthly premium < 8 % of household income

Premium Tax Credits

Who is Eligible?Individuals and families with income between 100% and 400% FPL

• Must be lawfully present in the U.S.

• Must not be eligible for other “minimum essential coverage”

FPL and EligibilityFPL Affordability

ProgramAnnual Income by Household Size

1 2 3 4

100% FPL Medicaid (?) $ 11,490 $ 15,510 $ 19,530 $ 23,550

138% FPL Medicaid (?) $ 15,856 $ 21,404 $ 26,951 $ 32,499

150% FPL PTC & CSR1 $ 17,235 $ 23,265 $ 29,295 $ 35,325

200% FPL PTC & CSR2 $ 22,980 $ 31,020 $ 39,060 $ 47,100

250% FPL PTC & CSR3 $ 28,725 $ 38,775 $ 48,825 $ 58,875

300% FPL PTC $ 34,470 $ 46,530 $ 58,590 $ 70,650

400% FPL PTC $ 45,960 $ 62,040 $ 78,120 $ 94,200

How is the Amount of the Tax Credit Determined?

Credit amount=

Cost of benchmark plan-

Expected premium contribution

Benchmark PlanPlan Level Actuarial Value

Platinum 90%

Gold 80%

Silver 70%

Bronze 60%

The benchmark plan is the second-lowest cost silver level plan.

How is the Amount of the Tax Credit Determined?

Credit amount=

Cost of benchmark plan-

Expected premium contribution

Expected Premium Contribution (for an individual)

Annual Household Income Expected Premium Contribution

% of FPL Income Amount % of Income Annual Dollar Amount

100-150% $11,490 - $16,755 2 - 4% $230 - $670

150-200% $16,755 - $22,340 4 - 6.3% $670 - $1,407

200-250% $22,340 - $27,925 6.3 – 8.05% $1,407 - $2,262

250-300% $27,925 - $33,510 8.05 – 9.5% $2,262 – $3,183

300-400% $33,510 - $44,680 9.5% $3,183 - $4,245

> 400% > $44,680 n/a n/a

Gunnar

25 years old

Income of $22,340 (200% FPL)

Expected contribution: 6.3% or $1,448

3 Lowest Cost Silver Plans for Gunnar•Plan A: $4,800•Plan B: $5,000 Benchmark•Plan C: $5,200

Premium Credit$5,000 - $1,448 = $3,552

GunnarPremium Credit$5,000 - $1,448 = $3,552

3 Lowest Cost Silver Plans for Gunnar•Plan A: $4,800•Plan B: $5,000 Benchmark•Plan C: $5,200•Bronze Plan: $3,500

If Gunnar purchases the Bronze Plan, he would not have to pay any premiums because the tax credit ($3,552) would cover

the cost of the entire premium ($3,500).

Coleman

62 years old

Income of $22,980 (200% FPL)

Expected contribution: 6.3% or $1,448

3 Lowest Cost Silver Plans for Coleman•Plan A: $14,800•Plan B: $15,000 Benchmark•Plan C: $15,200

Premium Credit$15,000 - $1,448 = $13,552

Benchmark Premium, $5,000

Gunnar, Age 26 Coleman, Age 62$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$1,448 $1,448

$3,552

$13,552 Tax CreditContribution

Benchmark Premium, $15,000

Who is Eligible?Individuals and families with income between 100% and 400% FPL

• Must be lawfully present in the U.S.

• Must not be eligible for other “minimum essential coverage”

Minimum Essential Coverage

• Most employer sponsored coverage is MEC

• An offer of coverage - even if it’s not taken - can make someone ineligible for premium tax credits

BUT Wait…

Exception

An individual may be eligible for premium tax credits if the employer plan is • unaffordable or • inadequate.

Is it Affordable?

Affordable = employee contribution for self-only coverage is less than 9.5% of household income

Affordability of Employee-Only Coverage

Example 1:

Income: $40,000Juliette’s share of the premium: $200/month

Is the plan affordable?Cost: $2,400Share of income: 6%

Example 2:

Income: $25,000Juliette’s share of the premium: $200/month

Is the plan affordable?Cost: $2,400Share of income: 10.4%

Juliette

Affordability of Family Coverage (Conrad-James Family)

Rayna works at Edgehill Records and earns $35,000.Edgehill offers health insurance. Teddy is a politician and earns about $12,000.Teddy does not have an offer of coverage from his employer.

Household Income: $47,000

Premium Cost for Employer-Sponsored Plan Covering Just Rayna: $2,350/year (5% of household income for a family of 4)

Premium Cost for Employer-Sponsored Plan Covering the Whole Family: $6,110/year (13% of household income for a family of 4)

Affordability of Family Coverage (Conrad-James Family) Household Income: $47,000

Premium Cost for Employer-Sponsored Plan Covering Just Rayna: 5% of household income

Premium Cost for Employer-Sponsored Plan Covering the Whole Family: 13% of household income

Employee Only Family0%2%4%6%8%

10%12%14%

Axis Title

5% 5%

13%9.5% - - - - - - - - - - - - - - - - - - - - -

Bottom Line:No one is eligible for premium tax creditsbecause family coverageis considered affordable.

Affordability of Family Coverage (Conrad-James Family) Household Income: $47,000

Premium Cost for Employer-Sponsored Plan Covering Just Rayna: $2,350/year (5% of household income for a family of 4)

Premium Cost for Employer-Sponsored Plan Covering Rayna and kids: $4,700/year (10% of household income for a family of 4)

Employee-Only Employee + Kids0%2%4%6%8%

10%12%

5%5%

10%

9.5% - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Rayna and Kids-Rayna + kids plan is considered affordable because employee-only plan is affordable.-Rayna and kids are not eligible for premium tax credits.

Teddy-Teddy has no offer of coverage.-He may be eligible for premium tax credits.

When is Coverage Adequate?

Coverage is adequate if it has a minimum value (MV) of 60% • This generally means that the plan pays at

least 60% of spending for coverage of essential health benefits for a typical population, after accounting for cost-sharing charges required under the plan.

Part-Time JobCost: $85/month6% of incomeMV: 40%

Marketplace-$150% FPLCost: $57/month after premium tax creditsMV: 94% after cost-sharing reduction

Dad’s PlanCost: $0 to Juliette(Dad pays for family coverage)

Juliette could accept this offer, BUTbecause the planhas MV under 60%, the offer doesn’t preclude premium tax crediteligibility.

Coverage Choices for Young AdultsJuliette is 24 years old. She holds two part-time jobs.One of the jobs offers coverage. Income: $17,000

Juliette can apply forpremium tax credits & cost-sharing reductions

Juliette can join herDad’s family plan because she is under age 26. Offer does not make her ineligible for a premium tax credit.

How Will an Employee Know if Her Offer is Affordable or Adequate?

• Application has an appendix to be completed by the applicant (with help from his employer to indicate value and cost of the plan)

Verification of Employer Offer

• Final rules issued 7/5• In most cases marketplaces will rely on

information presented in the application• Federally facilitated marketplace (FFM) will

check a sample of cases by contacting employers• State marketplaces can rely on information

provided in the application until 2015

TJC is a non-profit, public interest law and advocacy firm serving Tennessee families.

We focus on policies and cases where the basic necessities of life are at stake,

and where our advocacy can benefit families statewide.

301 Charlotte Avenue, Nashville, TN 37201(615) 255-0331 or toll free: 877-608-1009

[email protected]