By Ted Thurn
In June 2012, the US Supreme Court upheld the Affordable Care Act (ACA), which establishes new health care requirements for consumers, insurers, and providers. The primary objective of the ACA is to reduce the number of uninsured citizens while decreasing health care costs. Now that the law has been deemed constitutional, many health care professionals are speculating on how these new requirements will affect their practice. The most common questions asked include: Which provisions will go into effect starting in 2014? How will these new requirements impact sleep professionals? What do sleep professionals need to know about these provisions?
Since a number of key provisions will not be implemented until 2014, it is difficult to determine how the act will affect sleep medicine specifically. However, it is important for all health care professionals to have a broad understanding of the central provisions in the ACA such as the individual mandate, health insurance excise tax, and state exchanges.
Beginning January 1, 2014, most individuals will be required to obtain health insurance or pay a penalty for noncompliance. Individuals will be required to maintain “minimum essential coverage” for themselves and their dependents. It is estimated that 32 million uninsured Americans will enter the health care system as a result of this mandate. Individuals exempt from the mandate include those who have a religious exemption, are incarcerated, or are not lawfully present in the United States.
Minimum essential coverage is defined as:
- Government-sponsored programs including: Medicare, Medicaid, Children’s Health Insurance Program (CHIP), TRICARE, coverage through Veterans Affairs, and Health Care for Peace Corps volunteers;
- Employer-sponsored plans including governmental plans, grandfathered plans, and other plans offered in the small or large group market;
- Individual market plans, including grandfathered plans; or
- Other coverage designated as minimum essential coverage by Health and Human Services (HHS) and/or the Department of the Treasury.
Tax Penalty for Not Having Insurance
Individuals who have not obtained health insurance by 2014 will be penalized each year they are not covered:
• In 2014, it will be $95 per adult and $47.50 per child, up to a family maximum of $285 or 1% of family income.
• In 2015, it will be $325 per adult and $162.50 per child, up to a family maximum of $975 or 2% of family income.
• In 2016, it will be $695 per adult and $347.50 per child, up to a family maximum of $2,085 or 2.5% of family income.
Under the ACA, companies with 50 or more full-time workers beginning in 2014 will be required to offer a minimum level of health coverage or pay a penalty, starting at $2,000 per full-time employee after the first 30 employees. If a company offers employee health insurance but the coverage is found to be minimal or unaffordable, the company will be required to pay a penalty of $3,000 for every worker who receives a federal subsidy to purchase health coverage on the individual market.
Health Insurance Excise Tax
A 40% tax will be levied on so-called expensive “Cadillac” health plans. The tax is not paid by the individual but by the insurance provider. But it could have an impact on the premiums and availability of these plans. The tax would be levied on premiums above threshold levels that were set at $10,200 for individual policies and $27,500 for policies covering multiple family members. These figures will be adjusted upward to reflect increases in health care costs that occur between now and when the tax takes effect in 2018.
Another important component of the ACA is the establishment of State Exchanges. The ACA requires that states establish an insurance exchange by January 1, 2014. The fundamental purpose of a health insurance exchange is to provide a marketplace to individuals and businesses for the sale and purchase of health insurance. An exchange allows for “one-stop shopping” and may be a physical location or may conduct its business online. The insurance options offered through an exchange include large group, small group, and individual markets.
Insurance companies that choose to sell their products through an exchange will be required to comply with consumer protections in the ACA, such as offering insurance to every qualified applicant. Exchanges will contract with the insurance companies, which will, in turn, make their products available for purchase. To make exchange coverage more affordable, certain individuals will receive premium assistance in the form of federal tax credits. In addition, some recipients of premium credits may receive subsidies toward cost-sharing expenses.
There will be three types of exchanges: A state-operated exchange, a partnership exchange through which the state and federal government assume responsibility for a defined set of activities within the exchange, and a federally operated exchange. The ACA directs the HHS Secretary to establish and operate a federally facilitated exchange in any state that is not able or willing to establish a state-based exchange. In a federally facilitated exchange, HHS will perform all exchange functions. States entering into a state-federal partnership exchange may administer plan management functions, in-person consumer assistance functions, or both, and HHS will perform the remaining exchange functions. If a state opts for a state-federal partnership exchange, it has until February 15, 2013, to submit an exchange blueprint to HHS.
State Exchange Status. Washington, DC and 18 states have decided to run a state-based exchange, 7 are planning for a partnership exchange, and 25 have defaulted to a federal exchange.
Essential Health Benefits. The ACA requires exchanges to offer a comprehensive package of items and services, known as “essential health benefits (EHB).” The EHB must include items and services within at least the following 10 categories:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care.
States may impose additional benefit mandates beyond what is required under EHBs. However, any state that requires health plans to offer benefits beyond EHBs must assume the total cost of providing those additional benefits, for all the plans, and regardless of whether an individual is receiving any financial assistance with premiums or cost-sharing.
Cost Assistance. To make exchange coverage more affordable, certain individuals will receive premium assistance in the form of federal tax credits. Some recipients of premium credits also may receive subsidies toward cost-sharing expenses. Exchanges have some responsibilities in regard to determining an individual’s eligibility for cost assistance and calculating the amount of cost assistance provided.
Premium Tax Credits. Beginning in 2014, federal tax credits will be authorized to help low- to middle-income individuals pay for insurance coverage. To be eligible for a premium credit in an exchange, an individual must:
- Have household income between 100% and 400% of the federal poverty level; not be eligible for Medicaid or Medicare or other types of “minimum essential coverage” (other than through the individual health insurance market);
- Be enrolled in an exchange plan; and
- Be part of a tax-filing unit.
The amount of the tax credit will vary from person to person depending on household income, the premium for the exchange plan, and other factors. In certain instances, the credit amount may cover the entire premium. In other instances, the individual may be required to pay part or the entire premium.
Cost-sharing Subsidies. Certain individuals who are eligible for premium credits in the exchanges also will be eligible for subsidies toward service-related cost-sharing. Exchanges are required to either determine an individual’s eligibility for cost-sharing subsidies or implement a determination made by HHS.
Other provisions that will take effect January 1, 2014, include:
No Lifetime or Annual Limits. This requirement prohibits group health plans and health insurance issuers from establishing lifetime limits on the dollar value of benefits for any participant or beneficiary.
Coverage of Preventive Health Services. Requires group health plans and health insurance issuers to provide, at a minimum, coverage for certain specified health care services. Group health plans and health insurance issuers cannot impose any cost-sharing requirements for these health care services: (1) evidence-based items or services recommended by the United States Preventive Services Task Force; (2) immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention; (3) evidence-informed preventive care and screenings for infants, children, and adolescents; and (4) with respect to women, such additional preventive care and screenings.
Coverage for Preexisting Conditions. Prohibits excluding children from coverage on the basis of a preexisting medical condition in all group plans and plans in the individual market.
Extension of Dependent Coverage. Requires group health plans and health insurance issuers to provide coverage for unmarried children of participants until the age of 26.
Review of Increases in Premiums. Directs the Secretary of Health and Human Services to establish a process for the annual review of unreasonable increases in premiums for health insurance coverage.
Quality Reporting Requirements. Within 2 years, the HHS Secretary must develop reporting requirements for use by group health plans and health insurance issuers with respect to plan or coverage benefits and health care provider reimbursement structures that (1) improve health outcomes through implementation of activities such as quality reporting and care compliance initiatives; (2) implement activities to prevent hospital readmissions; (3) implement activities to improve patient safety and reduce medical errors; and (4) implement wellness and health promotion activities.
For purposes of the reporting requirements, wellness and prevention programs may include personalized wellness and prevention services (eg, smoking cessation and weight management), which are coordinated by a health care provider; a wellness and prevention plan manager; or a health, wellness, or prevention services organization.
Reporting of Medical Loss Ratio. Insurance companies are required to spend at least 80% or 85% of premium dollars on medical care, known as the medical loss ratio (MLR). If the MLR does not fall within these parameters, the act requires payment of rebates to enrollees.
It is uncertain how the ACA will affect the practice of sleep medicine until the entire law has been implemented. However, health care professionals need to be vigilant and prepare for the upcoming new health care requirements. It will be important to discuss the new requirements, the role of the physician within the new exchanges and insurance marketplaces, and what will be expected from the physician. SR
Ted Thurn is senior health policy and government affairs analyst at AASM. Questions for the author can be submitted to firstname.lastname@example.org.