|
Frequently Asked Questions
Q. What is health care reform?
A. The Patient Protection and Affordable Care Act (PPACA), a federal law, was enacted in March 2010. It was amended by the Health Care and Education Reconciliation Act of 2010. Together these laws are known as the Affordable Care Act (ACA) or the health reform law. The intent of the ACA is to give greater access to quality, affordable health care for all Americans. The law calls for many reforms that will make health insurance companies more accountable, lower health care costs, improve health care choices, and enhance the quality of health care for all Americans. Health care reforms from the ACA will happen over a five-year period that began in 2010.
Q. What health reforms have already gone into effect?
A. Many parts of the ACA or health reform law went into effect right away. By the end of 2011, many Americans will have benefited from the new law. Some of the changes include:
- Children can now stay on their parents’ health plans until age 26;
- People with existing medical conditions can now enroll in a federally funded “high-risk” health insurance program;
- Small businesses can get tax credits of up to 35% of the cost of premiums;
- Health insurance plans can no longer set lifetime caps on coverage or unfair annual caps on the dollar value of benefits;
- Health insurance plans can no longer cancel policies when people get too sick or need expensive services;
- Health insurance companies can no longer deny coverage to children with pre-existing conditions;
- All health insurance plans are required to cover preventive care, including vaccines, with no co-payments;
- Funding for many community health centers has been increased; and
- Health insurance companies must spend a certain amount of premium dollars on medical care.
Q. What other health reform changes will be implemented in the future?
A. By 2014, additional health reform changes will be implemented, including:
- Health insurance exchanges will be set up in every state. The exchanges will help people buy health insurance from approved health plans based on quality and value.
- Everyone must have health insurance or pay a fine, with some exceptions for low-income people;
- People with pre-existing conditions will no longer be denied coverage.
- All annual limits on coverage will end.
By 2020, the Medicare “donut hole” will end and seniors will pay less for their drugs.
Q. What has the District done to implement health care reform?
A. The District has already made several changes to health care to benefit District residents. In 2010, the District passed a law that provided coverage for dependents up to age 26 on their parents’ health insurance. The District also passed a law that required health insurance companies to spend a certain amount of their premium dollars on medical care, instead of administrative costs like executive salaries. The District also expanded Medicaid to include childless adults under 65 with incomes up to 133% of the poverty level.
The Mayor established the Health Reform Implementation Committee (HRIC) to oversee these changes. The HRIC includes representatives from six District health and human services agencies and all HRIC meetings are open to the public. Through the HRIC, the District continues to implement new health reforms in addition to those listed above. (For information on the HRIC and the District’s health reform initiatives, go to www.healthreform.dc.gov).
Q. What will happen in the District if the ACA is repealed or overturned?
A. Some states and other groups have challenged parts or all of the ACA in Court. Currently, the Supreme Court has agreed to hear arguments from three cases related to health reform. In addition, some members of Congress have said that they want to overturn the ACA. At this point, we do not know how the courts or Congress may change the reforms of the ACA. We do know that the District is committed to moving forward to provide quality, affordable health coverage to as many District residents as possible.
Q. Does the Affordable Care Act (ACA) require me to purchase health insurance coverage?
A: Almost everyone, except the lowest-income people, must have health insurance in 2014. One of the key goals of the health care reform law was to ensure that people are not denied coverage or priced out of coverage due to a health condition. If people are allowed to wait until they have a health problem to purchase health insurance, the health insurance market simply will not work. There would be a small number of very expensive choices for everyone. The ACA requires that almost everyone has minimum health insurance coverage. This creates a larger insurance pool that includes both healthy and sick individuals and results in more affordable choices for everyone.
Q. Will I be required to give up my current coverage?
A: If you like the health insurance that you and your family now have, you can keep it. The health reform law does not force you to give up or change your health insurance. If you are looking for a new health plan and do not have health insurance through your employer, you can buy it through the DC Health Insurance Exchange in 2014.
Q. What happens if I do not have health insurance coverage by 2014?
A: Almost everyone, except the lowest-income people, must have health insurance in 2014. For people not eligible for public health programs, such as Medicaid, help is available to pay for private health insurance. For people with incomes higher than 133% but less than 400% of the federal poverty line, subsidies from the government will help pay for health insurance. In addition, people in their 20s would have the option to buy a lower-cost “catastrophic” health plan. However, most people who do not have health insurance will pay a fine of $95 or 1% of income (whichever is greater). In 2016, the fine would rise to $695 or 2.5% of income.
Q. Can my adult child be added to my health plan?
A: The Council of the District of Columbia passed a law effective May 1, 2010, to require insurers and employers to cover employees’ children up to their 26th birthday.
Q. What are Health Insurance Exchanges?
A: Health Insurance Exchanges were created by the ACA to help individuals and small businesses buy health insurance coverage they can afford. An exchange is a “one-stop shop” where people can compare and buy health insurance plans. The federal law allows for separate exchanges for small businesses – called Small Business Health Options Program (SHOP) – and for individuals. The District plans to operate one Exchange for both groups. The exchanges will also direct people to Medicaid, if they’re eligible. Exchanges must be set up by January 1, 2014.
Q. Will all states have Health Insurance Exchanges?
A: All states must have Health Insurance Exchanges, but states have several options. A state may set up its own exchange or join with other states to create a regional exchange. Another option is to let the Federal government provide the exchange. The District plans to set up its own exchange.
Q. Will all state Health Insurance Exchanges be the same?
A: State exchanges will be different. Some states will be more active in deciding which health plans can participate in the exchange. Some states may not let employees or agents of health insurance companies be involved in the exchange. Some states may choose to have their own exchange or they may work with the Federal government or other states on a joint exchange.
Q. What is the status of the District’s Health Insurance Exchange?
A. The District has been awarded $9 million in grants from the federal government to help plan for and set up an exchange for the District. The District government has spoken with District residents and done other research on the best ways to set up the District exchange. The DC Council is considering a law that will decide some things about how the DC exchange will be set up. More information on the District’s exchange will be shared as the decisions are made. The District intends to be ready for people to sign up for health insurance through the exchange by October 2013.
Q. Will everyone be allowed to buy from the Health Insurance Exchanges?
A: In October 2013 when the Exchange opens, it will only be open to individuals buying their own coverage and to employees of small businesses. In addition, individuals and families will be able to access Medicaid through the Exchange. Most District residents will continue to get health insurance through their jobs. Undocumented immigrants will not be able to buy health insurance from the exchanges.
Q. What will the health plans sold on the exchanges look like?
A: Plans participating in the exchange will have to offer a set of “essential health benefits.” These benefits are expected to include hospital, emergency, maternity, pediatric, drug, lab services and other care. Plans will be divided into four different types, based on the level of benefits: bronze, silver, gold and platinum. There will be limits on the amount consumers must pay out of pocket.
Q. Will exchanges be like travel websites or some existing health insurance sites?
A: In some ways, exchanges will be like familiar travel or health insurance sites. People will be able to compare policies sold by different companies. Buying health insurance can be confusing, so information on the plan benefits will be presented in the same way to make it easier to compare cost and quality.
Q. How much will the policies cost?
A: The costs will vary by type of plan. However, insurers won’t be able to charge more because of gender or health status. They will be able to charge older people more than younger ones.
Q. What if I can’t afford to pay the premiums?
A: People who earn less than 133% of the federal poverty level (FPL) will qualify for Medicaid. For people whose incomes are higher (133% to 400% of FPL), there will be tax credits to lower their monthly premium costs. People with incomes up to 250% of FPL are also eligible for help with their deductibles and copayment costs. The tax credits and cost-sharing subsidies help will begin in 2014.
Q. When can I get health insurance coverage for a child who has a pre-existing condition?
A: As of September 2010, insurers must cover children with serious existing medical conditions if the insurers cover the parents.
Q. I have been denied coverage because I have a pre-existing condition. What will the Affordable Care Act do for me?
A: Persons with existing medical conditions and who have been uninsured for at least six months can now be covered through high risk pools in every state. These programs are called the Pre-Existing Condition Insurance Plan (PCIP). Coverage starts right away and the costs are limited. You can call 800-220-7898 or log-on to www.pciplan.com to learn more and to apply. In 2014, no individual can be denied health insurance because of a pre-existing condition. The PCIP will be in place until the D.C. Exchange starts in 2014.
Q. What changes will occur in Medicaid as a result of health care reform?
A: The District has expanded Medicaid eligibility to include more people, including low income childless adults. Under health reform, your Medicaid coverage will not change. However, it will be easier to obtain and renew your Medicaid benefits beginning in 2014. The District will communicate with current and new Medicaid beneficiaries about these changes before they go into effect.
Q. How does health care reform affect Medicare recipients?
A: The ACA provides additional help with prescription drug costs for seniors by gradually closing the “donut hole.” Also, all preventive care (including wellness visits and prevention plan services) is now 100% covered by Medicare. Seniors no longer have co-pays for these services.
Q. What changes were made to help seniors with the “donut hole”?
A: In the “donut hole” seniors had to pay the full cost of their drugs out of pocket. The ACA gradually ends the donut hole by lowering seniors’ share of drug costs. The changes are different for brand-name and generic drugs. In 2010, those reaching the donut hole got a $250 rebate for both brand and generic drugs. In 2011 and 2012, seniors receive a 50% discount on the cost of brand-name drugs in the donut hole. In 2011, seniors in the donut hole had to pay 93% of the cost of generic drugs. In 2012, seniors in the donut hole will pay 86% of the cost of generic drugs. By 2020, the doughnut hole will disappear and seniors will have to pay 25 percent of the cost of their drugs – no matter the size of their bill.
Q. Will any Medicare benefits be cut under the new law?
A: The health reform law itself does not reduce Medicare benefits in any way. The Medicare program loses billions of dollars a year because of waste, fraud and abuse. The new law intends to reduce overbilling by providers, cut down duplicative paperwork and tests, reduce billing fraud and prevent hospital readmissions by helping individuals safely move back home after a hospital stay.
Q. I currently have a Medicare Advantage plan. Will I be able to keep it?
A: The health reform law does not require seniors to drop their Medicare Advantage coverage. It should be noted, however, that these plans are not required to be renewed. Also, the ACA does lower payments to these plans. Thus, carriers may leave a market or reduce benefits. As a result, enrollees may need to change carriers or return to fee-for-service Medicare.
Q. When will the new Medicare preventive care improvements begin?
A: Preventive services without cost-sharing began on January 1, 2011. Also, an annual wellness visit to create a personal prevention plan is now covered under Medicare.
Q. I have a Medicare Supplement (Medigap) plan. Must I make any changes to my plan under the new law?
A: The Affordable Care Act does not require any changes to Medigap coverage. The law will add cost-sharing requirements to plans C and F sold after January 1, 2015.
Q. How are employers affected by health care reform changes?
A: The ACA’s impact on employers will vary based on several characteristics, including employer size, the wages of workers and whether the employer currently offers health insurance. While the ACA does not require that employers offer health insurance to their employees, beginning in 2014 penalties will be imposed on employers with 50 or more workers in certain situations.
- Employers not offering health insurance will be penalized $2,000 per employee per year if at least 1 full-time employee receives a premium tax credit through the health insurance exchange (does not count for first 30 employees).
- Employees who offer health insurance will be penalized if at least 1 full-time employee receives a tax credit through the exchange. The penalty will be the lesser of $3,000 for each employee receiving a credit or $2,000 for each full time employee (not counting the first 30 employees).
- Businesses with less than 50 full time works would be exempt from the penalties.
Q. Must I go to the Exchange to purchase health insurance or can I still purchase coverage through my insurance agent?
A: The Affordable Care Act specifically states that businesses are not required to purchase health insurance through the small business exchange.
Q. What is the new small business tax credit and how do I know if I am eligible?
A: In 2014, small employers that provide health care coverage are eligible (“a qualified employer”) if they have fewer than 25 full-time equivalent employees for the tax year, the average annual wages paid are less than $50,000 per FTE, and the employer pays at least 50% of the premium cost under a “qualified arrangement.” A “qualified arrangement” means that the employer pays 50% or more of the cost of the employee-only premium for coverage through a state-licensed company for traditional health insurance. This contribution requirement also applies to add-on coverage including vision, dental and other limited-scope coverage.
For tax years 2010-2013, there is a sliding-scale tax credit of up to 35% of the employer’s eligible premium expenses for tax years 2010-2013. Employers with 10 or fewer full time employees, paying annual average wages of $25,000 or less, qualify for the maximum credit. Beginning in tax year 2014, the maximum tax credit increases to 50% of premium expenses and coverage must be purchased from a state health insurance exchange. For more information on employer tax credits, see http://www.ncsl.org/documents/health/SBtaxCredits.pdf.
Q. Is a tax-exempt organization a qualified employer?
A: Yes, the same definition of qualified employer applies, but the amount of the tax credit is lower and special rules apply.
Q. Are there changes to Health Spending Accounts (HSAs), Flexible Spending Accounts (FSAs) and Archer Medical Spending Accounts (MSAs)?
A: Yes, there are several changes. Beginning in 2011, the FSA definition of qualified medical expenses will be the same as those allowed under itemized tax deduction. As a result, over the counter items will not be covered unless directed by a physician. Currently, employers can be more restrictive than the government for what qualifies as an acceptable medical expense. Beginning in 2013, annual contributions will be limited to $2500 for FSAs under a cafeteria plan. The cap is indexed to the Consumer Price Index – Urban (CPI-U) – for subsequent years. Currently, there is no federal limit and employers set the annual cap.
The additional tax that applies to early distribution for nonqualified medical expenses before age 65 will change: for HSAs the tax will increase from 10% to 20% and for Archer MSAs, from 15% to 20%.
In addition, the threshold of adjusted gross income for deducting medical expenses is raised from 7.5% of adjusted gross income (AGI) to 10%. Those 75 and over can continue to claim 7.5% of AGI through 2016.
Q. Are there new reporting requirements, such as on the W-2?
A: Yes. Every employer was required to report the value of the health insurance benefit for each employee on his or her annual W-2 beginning in 2011. This is to determine whether (a) an individual has coverage and (b) his or her health plan will be subject to the excise tax. There is no new tax associated with this requirement. See IRS fact sheet for more information on the tax impact of ACA provisions: http://www.ncsl.org/documents/health/SBtaxCredits.pdf.
| 
