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THE PATIENT PROTECTION AND AFFORDABLE CARE ACT. Affordable Care Act Basics. Signed into law by President Obama on March 23, 2010. The Supreme Court rendered a final decision to uphold the law on June 28, 2012.
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Affordable Care Act Basics • Signed into law by President Obama on March 23, 2010. • The Supreme Court rendered a final decision to uphold the law on June 28, 2012. • Aims to increase the quality and affordability of health insurance, lower the uninsured rate by expanding public and private insurance coverage, and reduce the costs of healthcare for individuals and the government.
Affordable Care Act Basics • There are ten Titles or Sections of the Affordable Care Act. • The official, certified, full text of the law can be found at: http://www.hhs.gov/healthcare/rights/law/patient-protection.pdf
Affordable Care Act Timeline2010 • Patient Bill of Rights in goes into affect: • Prohibits Denying Coverage of Children Based on Pre-Existing Conditions. • Prohibits Insurance Companies from Rescinding Coverage. • Eliminating Lifetime Limits on Insurance Coverage. • Extending Coverage for Young Adults: Adult children allowed to stay on parent’s plan until 26 years old.
Affordable Care Act Timeline2011 • Tax on Prescription Drug Manufacturers: Brand name prescription drug manufacturers must pay an annual fee based on their prescription drug sales. • Comparative Effectiveness Research Fee: Plan sponsors of self-funded health plans must pay a fee to help fund the Patient-Centered Outcomes Research Institute based on the average number of lives covered in the plan. The fee is $1 per individual for the first plan or policy year ending after September 30, 2012 and $2 per plan participant for the next plan or policy year. Fee increases every plan year thereafter until 2019.
Affordable Care Act Timeline2012 • W-2 Reporting of Employer Sponsored Health Coverage: Employers must report the cost of employer-provided health coverage on employees' W-2 Forms. The reporting does not make the coverage taxable to employees. • Summary of Benefits and Coverage and Uniform Glossary: Plan sponsors for self-funded plans and insurers for fully insured plans must provide a Summary of Benefits and Coverage (SBC) and Uniform Glossary to plan participants.
Affordable Care Act Timeline2013 • Additional Medicare Tax: Employers must withhold additional 0.9% Medicare tax on wages paid to employees in excess of $200,000. No employer matching. • First Comparative Effectiveness Research Fee Due: The fee applies for plan years ending after 9/29/2012 until expiring 9/20/2019. Form 720 is due by 7/31 following the end of the plan year for which a fee is due. • Department of Labor Exchange Notice: Employers required to provide notice to all employees by October 1, 2013, and upon hire for new employees after October 1, 2013.
Affordable Care Act Timeline2014 • Exchange Coverage for Individuals and Small Employers. • Individual Mandate to Obtain Health Coverage: Effective January 1, 2014, all individuals must obtain minimum essential coverage or pay a tax. The penalty is applied for each month during which an individual does not have minimum essential coverage. The penalty for any month is 1/12th the greater of a flat dollar amount ($95 in 2014 phased up to $695 in 2016). • Federal Premium Tax Credit to Purchase Exchange Coverage.
Affordable Care Act Timeline2014 • Free Rider Penalty: An employer with 50+ full-time equivalent employees that does not offer health coverage to substantially all full-time employees (30+ hours per week) and their dependent children, or offers coverage that is either unaffordable (the premium contribution to receive employee-only health coverage from the employer costs the employee more than 9.5% of household income) or inadequate (the coverage has an actuarial value of less than 60%). The employer will only owe a Free Rider Penalty if at least one employee enrolls in Exchange coverage and qualifies for a premium tax credit.
Affordable Care Act Timeline2014 • Health Insurance Company Annual Fee: Insurance companies must pay an annual fee based on the amount of premiums they receive. Costs are likely to be passed on to plan sponsors in the form of increased premiums. • Automatic Enrollment: Plan sponsors with 200+ full-time employees must automatically enroll their full-time employees in employer-sponsored health coverage. If an employee wants different or no health coverage, they will be able to change or opt out of the employer's plan. The employer will be required to send notices to employees regarding the automatic enrollment process.
Affordable Care Act Timeline2014 • Exchange Reinsurance Fee: For three years beginning in 2014, health insurers of fully-insured and plan sponsors of self-funded non-grandfathered group health plans will be required pay reinsurance fees to United States Department of Health and Human Services. • The reinsurance fee will be as high as $63 per covered life (plan sponsors and issuers must report covered life information by November 15, 2014; HHS will send invoices by December 15, 2014; and invoices will be payable in 30 days).
Affordable Care Act Timeline2015 • *Free Rider Penalty. • *Automatic Enrollment.
Affordable Care Act Timeline2018 • Cadillac Tax: 40% nondeductible excise tax will be imposed to the extent the aggregate value of specified employer-sponsored health coverage exceeds certain threshold amounts – generally, $10,200 for individual coverage and $27,500 for family coverage. Although the excise tax generally will be paid by insurers and/or third party administrators, the amount of the tax is expected to be passed through to the employer sponsoring the high cost plan(s).
