Affordable Care Act

1. OREGON DEPARTMENT OF CONSUMER AND BUSINESS SERVICES INSURANCE DIVISION Affordable Care Act

2. Affordable Care Act – Primary Goal • Reduce the number of uninsured: It is estimated that that Affordable Care Act (ACA) will provide health insurance to 32 million uninsured when fully implemented • It is hoped ACA will reduce health insurance costs through: • Reduction in cost-shifting • Increase in preventative care • Increase in access to health care • Increase in size and health of insured pool • Most people will be required to have insurance in 2014 • Insurance made affordable with additional funding: • Significant expansion of Medicaid • Subsidies/tax credits to buy insurance in exchanges

3. Affordable Care Act Oregon Insurance Division Role • Regulate commercial insurance • Ensure health policies include new consumer protections/benefits • Review and approve small group/individual rates and reject unreasonable rates • Provide technical insurance expertise to federal and state officials as they plan/implement reforms • Consumer advocates to help people understand changes and file complaints/appeals

4. Immediate Consumer Benefits Dependent Coverage to Age 26 • Under the new law, young adults will be allowed to stay on their parent’s plan until they turn 26 year old • An adult child • can be married or unmarried • does not have to be a dependent on parent’s tax return • does not have to be a student • For plan years beginning prior to January 1, 2014, grandfathered group plans need only extend coverage to an adult child on his or her parent’s plan if the child is not eligible to enroll for coverage under his or her own employment-sponsored plan.

5. Immediate Consumer BenefitsPre-X and Children Under Age 19 • Children under age 19 can’t be denied coverage if they apply during open enrollment periods • Once enrolled, preexisting conditions must be covered immediately • Oregon rules establish two annual open enrollment periods – • Months of February and August • Initial enrollment – Nov 1 – Dec. 31, 2010

6. Immediate Consumer ProtectionsPre-x and Children Under Age 19 Employer plans already prohibited from denying coverage to employees or dependents based on health However, employer plans can no longer impose pre-existing condition waiting periods for children under age 19 No one can be denied insurance because of pre-existing condition beginning Jan. 1, 2014 6

7. Immediate Consumer BenefitsLifetime/Annual Limits • Lifetime Dollar Limits - Eliminated for essential benefits • Annual Dollar Limits –Phased out over three year-period. Must be at least: • $750,000 in 2011 • $1.25 million in 2012 • $2 million in 2013 • No annual dollar limits on essential benefits for plan years beginning on or after January 1, 2014

8. Immediate Consumer Benefits Preventive Care • Providing Preventative Care With No Cost Sharing • Effective for new health plans sold on or after September 23, 2010 • You must still pay your health insurance premium • All new plans must cover certain preventative services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance: • Immunizations; • Chronic disease screenings (heart disease, cancer, diabetes, etc.); and • Pediatric care

9. Immediate Consumer ProtectionsRescissions ACA Prohibits Insurance Companies from Rescinding Coverage Unless: An enrollee commits fraudormakes an intentional misrepresentation of material facton an application. Effective for all health plans on or after September 23, 2010 9

10. Immediate Consumer ProtectionsAppeals/Grievances • Oregon already has a strong external review process for people whose claims are denied • However, federal law will now give enrollees in self-insured plans these same appeal rights – through the federal government • One area where Oregon will need to comply: IRO decisions must be binding • To file a complaint: Consumers can call the Insurance Division’s Consumer Advocacy Unit at 1-888-877-4894 or visit: www.insurance.oregon.gov

11. Immediate Consumer Benefits Emergency Services • Plans that provide emergency department coverage must cover emergency services: • Without prior authorization and • Cover nonparticipating providers at essentially the same level (percentage) as they cover participating providers • What this means? Cost sharing for out-of-network emergency services cannot exceed cost sharing for in-network emergency services, but for out-of-network services, the insurer may require the insured to pay the difference between the amount billed by the provider and the amount paid by the insurer and insured (coinsurance and copayment).

12. Immediate Consumer ProtectionsMedical Loss Ratios • Medical loss ratio: amount insurers spend on medical care vs. admin costs • Insurers must provide annual rebate to enrollees if spending on covered benefits/quality improvement is less than: • 85 cents of every premium dollar (large group) • 80 cents (small group/individual) • First rebates to be issued in 2011

13. Immediate Consumer Protections Rate Review • What does the bill say about rapid growth of premiums? • Requires “unreasonable” increases to be reviewed by federal officials • If a request is found to be unjustified, HHS can recommend exclusion from a state’s exchange • However, no new federal authority to reject rates • NAIC is working with HHS to develop process for reviewing “unreasonable” increases

14. Other Reforms Already in Effect Early retirees: Temporary re-insurance program to help offset the costs of expensive premiums for employers and retirees age 55-64. High-risk pool for Oregonians who are denied coverage because of health conditions. 14

15. Individual Responsibility • In 2014 most Americans will be required to have (minimum essential) coverage • Penalty: The greater of • 1% of gross income or$95 in 2014 • 2 % of gross income or $325 in 2015 • 2.5% of gross income or $695 in 2016. • Exceptions: • Religious (health care sharing ministry, adherent of a recognized religious sect) • Income (cost of coverage exceeds 8% of household income; income is below filing threshold). • Lawfully present non-citizens • Incarcerated individuals • Hardship

16. Individual Tax Credits (2014) Federal tax credits for individuals who: purchase through the Exchange with no access to employer-sponsored insurance earn between 133% and 400% federal poverty level (about $88,200/yr. for a family of four). For those that earn 133% and less, Medicaid and SCHIP programs are available. 16

17. Small Employer Tax Credits • 2010 – 2013: Eligible for a small business tax credit up to 35% of its contribution amount if: • Employs fewer than 25 full-time equivalent employees, • Has average annual wages of less than $50,000 , and • Contributes at least 50% of the health insurance (including dental and vision) premium cost for employees • 2014: small employers who buy coverage through an exchange are eligible for a tax credit for two years of up to 50%percent of their contribution.

18. Employer Responsibility (2014) In 2014 Large Employers (50 +) must offer health insurance coverage Annual penalty: If no coverage offered an employee receives subsidy Amount: $2,000 per fulltime employee excluding the first 30 Example: Employer with 70 employees would pay penalty of $80,000 ($2,000 x 70-30) If coverage offered but An employee’s share of premium exceeds 9.5% of household income, and The employee obtains a tax subsidy, Employer pays annual penalty of the lesser of $3,000 per employee that receives subsidy $2,000 per fulltime employee beyond the first 30 18

19. Small Employers: 2014 Employers with fewer than 50 employees are not required to provide health insurance 19

20. Cost Impact Short-term: The benefits now in place will increase costs somewhat But other factors – ongoing increase in cost and use of medical care, new technology, new Rx continue to produce the more significant increases Long-term: Federal reform intends to reduce health insurance costs through: Better health (with focus on preventive care/access to care) Less cost-shifting (since more people are insured) New innovations to bring down costs by eliminating waste 20

21. Affordable Care Act – Web Portal www.healthcare.gov Identifies affordable insurance options by state

22. Affordable Care Act – Questions http://www.insurance.oregon.gov/ • http://www.cbs.state.or.us/ins/FAQs/fedrealhealthreform-oregon.html • http://www.irs.gov/newsroom/article/0,,id=223666,00.html • http://www.sba.gov/healthcarereform/index.html