Tag Archives: Exchanges

Exchanges are Open!

For those of you who don’t know – the PPACA Exchanges are open for business!

Check here to see if you qualify: https://www.healthcare.gov/
Check here to see if your premiums would go down: http://kff.org/interactive/subsidy-calculator/

Good luck!

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For those of you who don’t know – Medicaid is joint program between the federal government and the state to assist specific lower income populations pay for medical care. It was established in 1965 along with Medicare (a social insurance program for those over 65, fully funded by the federal government).

During the debate over the details of the PPACA in Congress, there was some suggestion of creating a national, single-payer, health care system by expanding Medicaid coverage to all people in the U.S. This was immediately denounced as “socialism” and therefore anathema. Instead, the PPACA expanded the coverage for some people.

Up until the passage of the Act, Medicaid eligibility was incomes at or below the poverty line. Section 2001 expands this coverage, starting in 2014, to those with incomes up to 133% of the poverty line. Additionally, whereas before childless or non-pregnant adults under 65 were not eligible unless they were disabled, those restrictions will be removed. The Congressional Budget Office estimates that this will be 16 million additional people. This increase is fully funded by the federal government for 3 years, decreasing each year after that until its final funding level of 90% starting in 20201.

You can’t enroll yourself, if you don’t enroll your children, or have them covered in some other way.

The states can’t limit enrollment until they have operating Exchanges.

Medicaid must offer the minimum essential coverage that is required by the PPACA in general.

Mental health services must be offered in the same manner as other medical services – known as mental health parity.

Reports shall be made!

Section 2002 says that adjusted gross income will be used, and you can’t leave out any income, but you can’t have an asset test. This doesn’t apply if you are getting other aid that makes you eligible, you are over 65, you are blind, or disabled. Current enrollees are grandfathered in.

Section 2003 says that if you are eligible for Medicaid, you, and your children, don’t lose that eligibility if you don’t apply for insurance through an employer.

Section 2004 increases the age limit for eligibility for Medicaid for former foster children, who wouldn’t have the opportunity, then, to be on a parent’s insurance.

Section 2005 gives more money to the US territories. Quick! Who can name them?? Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Island and American Samoa.

Section 2006 gives more money, for two years, to areas hit by natural disasters.

Section 2007 rescinds money due to the Medicaid Improvement Fund for years 2014 through 2018, if it isn’t spent. On a fascinating side note, go to this page http://www.ssa.gov/OP_Home/ssact/title19/1941.htm and read the foot notes about all the changes that have taken place in just this one section. Oh Congress.

1 it should be noted that Texas, or rather its governor, among other states, has already stated that it will not enact this portion of the PPACA. While we haven’t gotten to the portion that is the stick to this carrot, the Supreme Court struck down the portion of the PPACA that stated that if a state didn’t increase eligibility, that ALL of its Medicaid funding would be rescinded. Instead, only the portion for the increase will not be given. I leave it to the Legislatures of the various states to explain why they aren’t insuring their citizens.


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Best laid plans

So, we have come to this at last. The new section of the PPACA we are looking into is Subtitle F – Shared Responsibility for Health Care. Part I addresses individual responsibility. Specifically, the responsibility to maintain a minimum essential coverage of insurance, section 1501.

Section 1501 starts out with a long discussion of why insurance is interstate commerce, talking about how expensive it is, and how this will insure almost all Americans. It notes that in Massachusetts, this same type of requirement actually increased the number of employers who offered employer-based coverage. It doesn’t mention who was governor when that happened – anyone remember? It talks about the economic impact of disease and shortened lifespan, the cost of providing care to those without coverage, and reminds us that the Supreme
Court already said that insurance was subject to regulation under the interstate commerce class.

All of that was, of course, intended to be part of the argument before the Supreme Court (because, again of course, this issue would appear before the Court) that this Act was constitutional because of the interstate commerce clause. Which the Supreme Court promptly said “NOPE” to when it made it there before it was even fully enacted. However, you shouldn’t fear – because Congress chose the IRS to be the people in charge of handling all of the penalties for not following the mandate, the Act, or at least most of it, was declared constitutional under the seemingly endless power of the Federal government to tax and spend. Which, if you think about it, is all they are really supposed to do.

What does the Individual
Mandate actually do? Well, it amends the Tax Code, specifically section 5000A, to say that every person, in every month starting January 1, 2014, has to maintain minimum essential coverage for their health expenditures. If they don’t, they are subject to a penalty on their tax return. I guess this means we get to learn new tax forms. Oh boy. The penalty is either calculated by a formula given in this section, or by the amount they would have had to pay for bronze level coverage (remember the colors!) in an Exchange, whichever is LOWER.

The penalty formula is per month, per person, and can be a flat dollar amount or percentage of income, whichever is GREATER. The flat dollar amount is $695, although there is a phase in period where it is $95 in 2014, and $325 in 2015. The flat amount is capped at 300% of total dollar amount, and is subject to cost-of-living increases. The percentage of income is also phased in – 1% in 2014, 2% in 2015, and 2.5% thereafter.

Let’s do an example.

Assume you are the sole income, and you make $50,000 a year, with 2 adults and 2 kids. If you didn’t have any insurance, then the most you would be required to pay, in 2016, would be $2085. If there were a plan that insured you for less, then you would be charged that amount, instead. But then, if there were a plan that would cover you for that – why didn’t you buy it?


This doesn’t apply at all to people that are members of a recognized religious sect; a member of a health care sharing ministry (remember those?); the Not Lawfully Present (you know who you are); and people in jail. It also doesn’t apply if you can’t afford coverage, which is defined as being charged more than 8% of your income per month (also alterable with changing conditions) for health insurance, whether offered through an employer, or through the Exchange (after accounting for the credit); people who make so little they don’t have to file taxes at all; members of Indian tribes; any month where you weren’t covered, but the total number of months you weren’t covered was less than 3 consecutive (think changing jobs); or anyone who gets a hardship exemption through HHS.

Minimum Essential Coverage is defined as: Medicare, Medicaid, CHIP, TRICARE, the VA, Peace Corps health insurance, eligible employer-sponsored plans, individual plans, grandfathered plans, and other plans, such as the plan of being outside the US (no really – that counts!). So – that’s a lot of plans.

They can’t criminally charge you for not paying the penalty, and they can’t take your property either. I suppose they will write you sternly worded letters.

I haven’t yet noted that we are now required to purchase broccoli. I always wondered – do they mean we have to consume it too, when we are required to purchase it, or just buy it? Clarity, people, clarity.

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Can I, Can I?

We’ve talked a bunch about the Exchanges, or the place where you go to buy health insurance if you can’t, or choose not, to buy it from your employer. However, there are rules governing who is actually allowed to purchase insurance on these Exchanges. There are also guidelines for who can receive premium assistance, whose employer based insurance in unaffordable, and who is exempt from tax penalty if they don’t have insurance.

Most of these requirements were laid out in previous sections, but the next 6 sections, including this one, 1411, explicitly state that the Secretary of Health and Human Services has to come up with a program to assess the eligibility of people for these various items. So, yes, they said previously that you have to meet these requirements, and now they are saying that the government has to make sure they determine whether you meet these requirements. I suppose that is better than the alternatives – either saying you have to do something and then not caring if you do it, or worse, making requirements that you have no possible way to prove you meet. That last one sounds like something the Vogons would do.

So the Secretary of HHS has to make this program. Then what? You have to give them information, name, date of birth, SSN, etc. If you are claiming a tax credit because your employer doesn’t provide minimum coverage, then you have to include a lot of details about your employment status, and the cost of the coverage, and the cost-sharing. I hope there is a form. I’m sure there will be a form. J

The thing you really need to understand about the PPACA is that is references a lot of other sections of the PPACA and many other laws. For instance, if you wanted to claim an exemption from having to hold insurance, which is allowed in section 1311, subpart d, subsubpart 4, subsubsubpart H, in order to be exempt from the tax penalty as laid out in section 5000A of the tax code, then section 1411 tells you how to do that.

Just as aside, this is the first mention of WHO might be eligible for such an exemption. These include religious exemptions, people who are members of health care sharing ministries (oh, you’ve never heard of those – well – are you in for a treat! See the footnote.), Indian, or eligible for a hardship exemption.

There are then pages, and pages, and pages about exactly how the Secretary can develop this system, what happens if there are problems, liability for false information, confidentiality of information….and so on for six pages. We’ll assume that the Secretary has read them too.

Remember – there are 5 more sections about eligibility. We’ll finish those out this week.

Footnote: A Health Care Sharing Ministry is a group of people who pay money into the system, and then when they need health care services, they receive money from the pool, after meeting some basic level of out-of-pocket expense. They are typically not-for-profit. They are faith-based, being predominately Christian, and usually expect their members to live a “Christian lifestyle”. The members have no guarantee of payment. But they aren’t health insurance. No siree-Bob. Even though Washington State shut one such organization down, for not registering as an insurer.


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Affordable Coverage Choices for All Americans

That’s the title of Subtitle E.

And, because this is the Federal Government, affordable coverage choices start with taxes and subsidies. This shouldn’t surprise anyone that has taken any economics, as the primary tool of a government has to affect actions in the economy is through taxes and spending.

This particular section – 1401 – discusses a tax credit, given against a tax, for premium assistance. What the heck?!?

First – this implies that there is premium assistance for those who are unable to afford their health insurance premiums. And there is. Since insurance is mandated, the Act recognizes that not all people will be able to afford the premiums, so it gives some people money back. This applies if your household makes over 133% of the poverty level. If it makes less – you are probably (at least under the Act) eligible for Medicaid. There is some chance that your particular state will decide not to expand Medicaid coverage to people who make between 100% and 133% of the poverty line, or who don’t have dependent children. If your state doesn’t expand this coverage, I suggest you think about why, and possibly, how to move to state that does.

The premiums in the Exchanges, which are what the rebates are for, are also related to the color of the plan (remember the colors of the plans back in this post?) – with the amounts tied into the second lowest cost for a silver plan. Confused yet?

If you choose to buy insurance from your employer, rather than through an Exchange, and that health care is deemed to be meeting the essential minimal coverage guidelines, and to be affordable, or you receive health care under a free choice voucher (a later section) then you aren’t eligible for the premium assistance. It is up to you to decide if your health insurance would be cheaper through your employer, or through an Exchange.

So – because you received money, that’s considered income. To avoid having people taxed on this “income” the IRS gives you a tax credit. That’s the Feds for you – if there is a complicated way to do something – that’s what they choose.

There are provisions in this section to review this tax credit, and the insurance plans in general, after 5 years, to see if it met the purported goals of increasing health insurance coverage without being too burdensome on the populous. If the history of the US is any indication, it will be unlikely that a tax credit will get eliminated, but it’s possible.

You might be asking yourself, why all of this complicated tax credit, premium assistance, etc, is part of a Reform Act intended to make getting health care easier? Well – that’s because it isn’t precisely intended to make getting health care easier. If that were the goal, it would have set up a single payer system. Single payer systems, which have been referred to as socialist, the work of the devil, and sensible, are present in the US, but only if you are old, or a veteran. Otherwise, you get insurance. So the PPACA is there to make getting insurance easier. It’s also good, if you like the PPACA, that they picked a taxation system, rather than trying to implement a mandate strictly through the use of the Commerce Clause of the Constitution. The Opinion that supported the constitutionality of the individual mandate made it clear that they wouldn’t have done so had it not been a tax matter.

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Back in the Saddle

So, the holidays are over, the Supremes have spoken and the backlash is started. So, I guess I should finish this thing.

Section 1323 of the PPACA gives money to the territories to help them enact the provisions of the PPACA. Puerto Rico (remember them) gets $925,000,000; and all the other territories get to split $75,000,000.

Section 1324 is entitled “Level Playing Field“. I don’t think they are talking about baseball, or cricket though. What is does say is that if a state offered plan is exempted from a law, then the privately offered plans in that state must also be exempted from the law. These exemptions are mostly in the areas of renewals, ratings, preexisting conditions, non-discrimination, etc. Presumably, this will maintain competition for privately offered plans.

Section 1331 gives states the right to establish different health care programs for lower income, but not eligible for Medicaid, individuals. These plans cannot cost more than an individual would pay for private insurance. The plans must also be competitively bid out to those who would provide the health care. One interesting point about these alternative plans is that people who participate in them cannot also purchase insurance through an Exchange. Presumable, this is to prevent double paying, or other cost increasing tactics.

Section 1332 gives states the right to do better. They can be waived from all requirements of the PPACA if they provide as much coverage as, without being more expensive than, and cover as many people as the PPACA, without increasing the Federal deficit (i.e., just giving everyone Medicaid). So, get out there and innovate, states!

Section 1333 deals with the sticky wicket that is the fact that insurance is typically sold on a state basis, and not a national one. Insurance plans can offer themselves in more than one state, but they have to be subject to any individual state laws that deal with insurance. These “compacts” as they are called here cannot be offered before 2016.

Section 1334 discusses multi-state health plans. These appear to be mostly the plans that will be offered in the exchanges, and requires that there be at least two such plans available through the Exchanges. States can increase the health coverage offered through these plans, at their own cost.

The next sections deal with reinsurance, and risk adjustment, so will probably take some more explaining.

Welcome back to the PPACA!

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Remember the Tooth!

So I had to have a root canal a couple of weeks ago. Could explain why my energy level has been Less than Zero ™. But we press on with the next section of the PPACA.

The next big section of the PPACA again relates to the Exchanges. This larger section is called “State Flexibility Relating to Exchanges”.

Sec 1321 involves a lengthy, and perhaps somewhat repetitive, statement of what the requirements are for the new health insurance Exchanges. It states that the Secretary for HHS shall set up requirements for the Exchanges, how to offer qualified health plans (remember those!) through the Exchanges, the establishment of risk and reinsurance programs (which we haven’t discussed yet), and other appropriate requirements, such as whether you should wear a morning coat to a wedding after 10 a.m. (Maybe not that last one.)

The states are required to set up Exchanges by Jan 1, 2014, and if they are determined by Jan 1, 2013 to be unlikely to have these on time, then the Secretary can set them up for the states. This is enforceable (according to this law) by the Public Health Service Act.

Has it occurred to you by now, as it has to me, that this is a really dull Act?

Sec 1322 – Federal Program to Assist Establishment and Operation of Nonprofit, Member-Run Health Insurance Issuers. These are the CO-OP Health plans. Since presumably these plans won’t have giant piles of cash sitting around to help them be a part of the new mechanisms, the federal government will give them loans and grants to come into existence. They have to be actual non-profits, and not use these funds for propaganda or influencing legislation. Can we get more rules like this?

Lots of stuff about the boardmembers of the loan granting program– 15 members, unpaid except for travel expenses, terms expire in 2015.

The CO-Ops get to not pay taxes on the loans and they are subject to oversight by the GAO. Fun, thy name is the GAO.

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Consumer Choice

Since the word on the street is that the Supremes will decide on this law by the end of June for sure – I am making a concerted effort to finish going through it before then.

Section 1312 is entitles Consumer Choice. Since one of the criticisms of this law is that it removes Consumer Choice – by forcing people to buy health insurance – let’s see what this section actually says.

The first part says that qualified individuals (defined below) may by qualified health care plans and that qualified employers (defined below) can provide qualified health plans. Those individuals can then pay the premiums. Oh boy.

All people who purchase individual insurance are considered part of a single risk pool. All people in the Small Group Market are part of a single risk pool. States can require that these plans be merged.

These Exchanges don’t prohibit individual insurance from being offered outside the Exchange and they don’t change what States already require to be offered.

It states then that the Exchanges are voluntary. No person has to participate in the Exchange. No person is compelled to purchase a qualified health plan. Unless you are a member of Congress. Members of Congress (and their staff) must purchase plans that are created by the PPACA, or are in an Exchange. Which of course leads me to the question – does this imply that members of Congress are not people?

There are no fees imposed if people choose minimum essential coverage outside of the Exchange. It creates brokers and agents to facilitate enrollment in the Exchanges.

Qualified individuals are people seeking insurance who are residents of the State they are seeking insurance in. Those people in prison or jail don’t count. Qualified employers are small employers who to choose to allow their employees to have access to the insurance plans in the Exchange. In 2017 the Exchanges are opened to large employers. You must be a citizen or lawful resident to participate in the Exchanges.

We still haven’t gotten to the fee portion of the PPACA – that will be exciting when we do.

Section 1313 relates to Financial Integrity of the Exchanges. They will keep receipts! They will be subject to investigations! Audits! If they are bad, the Feds will take away their allowance. (No really – they will reduce the payments they are eligible for under this Act). There will be GAO oversight about operations, administration, utilization, improvements, cost and affordability, and access.

We are 10% done! With 13 posts. You may end up seeing more than one a day as we get to the end. But onward!

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In need of health care myself

I’ve fallen back off the posting wagon, due to illness in the youngest son, and myself. We had to enjoy some fine health care – which, thankfully, we have. The next sections of the PPACA are actually quite interesting. They discuss the Exchanges, or the private market compromise so as not to have government provided health care (except for the Armed Forces, the VA, Medicaid, and Medicare of course) once everyone is required to buy health care insurance.

Sec 1311 gives money to the states to set up these Exchanges, which most likely due to insurance laws are run through the States. They have to be set up starting in 2014, and money won’t be available after January 1, 2015.

The Exchanges themselves are to “facilitate the purchase of qualified health plans” and assist small businesses in doing the same, which under the PPACA are now required to offer health insurance in finding appropriate plans. These are separate goals, although states can choose to offer a single Exchange to achieve them both. There are some restrictions placed on advertising, so as not to scare off people with high medical needs, ensure provider choice, assistance for low income people in finding health insurance, meet certain quality standards and plans for improving quality, and share information with those people who would choose to enroll in these plans.

The plans would be rated, by a system developed by the states, to make decision making easier on the prospective enrollees. These ratings, and all of the other information, would be available by the aforementioned Internet Portals (Portals!!). The Exchanges would have open enrollment periods similar to the ones that current health insurances have. There are special provisions that say that stand-alone dental plans can be offered, even though they don’t offer any of the previously described qualifying health benefits.

The states retain the right to add benefits to the plans in their Exchanges, above and beyond the Federal minimum, but these costs must be borne by the state.

So, to sum up, the Exchanges will certify health plans, operate a toll-free number where you can ask for assistance, operate the Internet Portal, rate the health plans, present the details of the health plans in a standardized format, tell people when they are eligible for Medicaid, CHIP, or any state assistance program for health care, provide a calculator that tells people how much their insurance actually costs after the tax credits (that we haven’t gotten to) are applied, grant certifications that people are exempt from the penalty for not purchasing insurance (we’ll get to that soon), tell the employers who ceases to have insurance each year, and establish something called the Navigator program (explained at the end of this post).

The Exchanges have to be self-sustaining, they must consult with the relevant stakeholders, and they must publish their costs. The Exchanges also ask the health plans to justify any rate increases they wish to implement, and then use this information in deciding whether the plan can be offered in the Exchange. It also requires the insurance plans to increase their transparency of costs. They must also implement methods to improve health care quality such as patient-centered education, reduction of medical errors, wellness and health activities, and reduction of disparities.

The final part of this section provides grants for Navigators, or entities that have previously established relationships with employers and employees, consumers, or the self-employed, that could be used to facilitate those groups’ purchases of the health plans available from the Exchanges.

So – there you have it – one of the more controversial sections of the PPACA. The only one more controversial is the section that provides for the penalties if you don’t buy a health plan. We shall press on and try to get to that one quickly.

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