Sactoking's ACA Q&A Thread

[DCal430]

I don't know, but the Deficit Reduction Act of 2005 mandated that anyone receiving Medicaid be a US citizen or legal immigrant and show documentation to prove as such. If California is voluntarily and knowingly providing Medicaid services to undocumented immigrants, or to immigrants that cannot meet the documentation requirements of the DRA, then they are doing so out of their own pockets as no federal matching funds are available for those purposes.

Yes, California pays for it out of its own pocket as California's Constitution forbids residency status bing a factor in Medi-Cal (Medicaid in California).

This is one reason why the expansion will cost California a significant amount of out of pcket money, but it should be worth it still as these people are still going to hospital for care.

EDIT: It isn't the constitution that mandates this but a federal judge ruling. The federal judge in 1995 ruled California could not deny someone any welfare benefits based on immigration status. The judge order California to provide the services but the federal government isn't mandated to pay for it. The governor at the time Davis dropped the appeal.

So it isn't possible for California to stop paying for this as it is mandated by the federal courts.

 

[sactoking]

A question asked in another thread:

The ACA gives subsidies to certain people (by income) who purchase insurance on an exchange. Where will that subsidy money come from?

Well, a few different sources:
1) Any individual or employer who doesn't conform to the "shared responsibility" (mandate) portion of the ACA will have to pay a fine/penalty. Those monies will ostensibly offset some portion of the subsidy cost;
2) Those fines/penalties won't come close to covering the subsidy costs so to make up for the shortfall the ACA levies ~$200 billion in new taxes on health insurance and pharmaceutical companies, which slowly phase in from 2014 through 2020. This interesting mechanic has the effect of taxing health insurers for funds to pay health insurers. But, rest assured that the health insurers will build those taxes into their premiums so you will be paying them.
3) Even that's not enough to cover the anticipated cost of the subsidies, so more money has to be found. Well, it actually doesn't because the subsidy isn't really a subsidy, it's a refundable tax credit like the Earned Income Tax Credit. Legally, anyone who meets the eligibility criteria is entitled to a refundable tax credit at the end of the year but the government recognized that many people wouldn't be able to afford the up-front premiums even if they knew a large check was coming later. In response, the ACA has an acceleration provision which allows someone who is eligible for the tax credit to apply to the federal government for an acceleration of payment on the credit. For those eligible people the fed will agree to pay the refundable tax credit early but only on the condition that it is paid directly to the insurance company (so the recipient can't take the money and run).
So, from a technical perspective, the subsidies are funded by a combination of direct taxation, indirect taxation, and diverted tax cuts.

 

[DCal430]

Many government workers have insurance through the government, my insurance is by the State of California, the state sets the premiums and the funds for the insurance are owned by the state. The funds to pay my medica bills comes from the State Controllers office, and when I pay my deductible it I write a check to the State Comptrollers office. The state simply hires a private company to administer it, but actual policy and such are determined by the state. Do the excise taxes on health insurance companies apply to this type of insurance too? What about other health insurance regulations?

 

[sactoking]

Many government workers have insurance through the government, my insurance is by the State of California, the state sets the premiums and the funds for the insurance are owned by the state. The funds to pay my medica bills comes from the State Controllers office, and when I pay my deductible it I write a check to the State Comptrollers office. The state simply hires a private company to administer it, but actual policy and such are determined by the state. Do the excise taxes on health insurance companies apply to this type of insurance too? What about other health insurance regulations?

Short answer: if your employer is "self insured" (most big employers are) then your health benefit is not legally "insurance", it is an "employer welfare arrangement" and subject to the provisions of the Employee Retirement Income Security Act (ERISA). Since such arrangements are not insurance and generally already subject to federal regulation through ERISA they are exempt from the provisions of the ACA.

 

[DCal430]

Short answer: if your employer is "self insured" (most big employers are) then your health benefit is not legally "insurance", it is an "employer welfare arrangement" and subject to the provisions of the Employee Retirement Income Security Act (ERISA). Since such arrangements are not insurance and generally already subject to federal regulation through ERISA they are exempt from the provisions of the ACA.

I thought ERISA was not enforceable against state and local governments.

Also most University of California Students have insurance though the University. The University "Self Insures" the students for around $1000 a year semi mandatory fee.

 

[sactoking]

I thought ERISA was not enforceable against state and local governments.

Also most University of California Students have insurance though the University. The University "Self Insures" the students for around $1000 a year semi mandatory fee.

I'll try to double check tomorrow but I believe the state/local ERISA exemption applies only to pension benefits and not to self insured health benefits.

 

[seepy83]

Short answer: if your employer is "self insured" (most big employers are) then your health benefit is not legally "insurance", it is an "employer welfare arrangement" and subject to the provisions of the Employee Retirement Income Security Act (ERISA). Since such arrangements are not insurance and generally already subject to federal regulation through ERISA they are exempt from the provisions of the ACA.

So, do Self-Insured Health Benefit Funds need to issue forms (similar to 1099's, as you said Insurers would need to file) to plan participants that prove coverage/eligibility?

What happens to individuals that have a break in coverage due to being out of work (for example, people in the construction industry that get laid off over the winter months and do not purchase cobra when their eligibility ends)? Would they end up paying a fine at the end of the year?

 

[sactoking]

Many government workers have insurance through the government, my insurance is by the State of California, the state sets the premiums and the funds for the insurance are owned by the state. The funds to pay my medica bills comes from the State Controllers office, and when I pay my deductible it I write a check to the State Comptrollers office. The state simply hires a private company to administer it, but actual policy and such are determined by the state. Do the excise taxes on health insurance companies apply to this type of insurance too? What about other health insurance regulations?

After further review I do believe that the state employee plans are ERISA-exempt. That means that while they are not subject to ERISA oversight they are also still not considered "insurance", are not subject to the excise taxes, are not subject to most other forms of regulation, and are not subject to the ACA provisions.

Concerning the UC/CSU students, those health plans appear to still be subject to ERISA. While ERISA exempts government-run plans it does so only for those plans benefiting employees. Other jurisdictions that have tried to create government-run health plans for non-employees have been smacked down by the federal courts on ERISA grounds.

 

[sactoking]

So, do Self-Insured Health Benefit Funds need to issue forms (similar to 1099's, as you said Insurers would need to file) to plan participants that prove coverage/eligibility?

What happens to individuals that have a break in coverage due to being out of work (for example, people in the construction industry that get laid off over the winter months and do not purchase cobra when their eligibility ends)? Would they end up paying a fine at the end of the year?

Self-insured groups will still need to provide proof of enrollment for their employees. Both the employee and the employer are still subject to the "shared responsibility" (mandate) provisions of the ACA but the self-insured employer will not be subject to most of the market reforms of the ACA.

Anyone who loses coverage is allowed a "grace period" of three months before the penalty kicks in. If you have more than one lapse only the first one will be forgiven. It looks like lapse forgiveness is determined on a "per occurrence" basis, meaning if you have a one month lapse, then get insurance, then have a two month lapse, you cannot claim a three month exemption; the first lapse would consume the exemption and the second lapse would subject you to the penalty.

 

[herm0016]

how do these provisions effect a large company that self insures? We must be exempt from the 80/20 rule correct? seeing as we do not get our money from the premiums, but from our service business. also, how do they determine what the cost is to levy the Cadillac tax, as we are only paying bcbs to administer the program. I imagine that our plan would be above the limit if we were purchasing it from bcbs, but we don't purchase it from anyone, and the employee contribution is pretty low.

My premiums have gone up like everyone else. what effect will the aca have on a system like this?

Short answer: if your employer is "self insured" (most big employers are) then your health benefit is not legally "insurance", it is an "employer welfare arrangement" and subject to the provisions of the Employee Retirement Income Security Act (ERISA).

if it is not "insurance" do i get to pay the "no insurance tax"?

 

[sactoking]

how do these provisions effect a large company that self insures? We must be exempt from the 80/20 rule correct? seeing as we do not get our money from the premiums, but from our service business. also, how do they determine what the cost is to levy the Cadillac tax, as we are only paying bcbs to administer the program. I imagine that our plan would be above the limit if we were purchasing it from bcbs, but we don't purchase it from anyone, and the employee contribution is pretty low.

My premiums have gone up like everyone else. what effect will the aca have on a system like this?

A self-insured plan is exempt from the MLR "80/20" rule.

The Cadillac tax is calculated against premium value as mentioned in a post above. I'm not sure what you mean when you say your plan is paid for not by "premiums" but by "service business". ERISA-regulated self-insured plans are required to calculate an actuarial premium "value" to the coverage, which may be split between employer and employee. The Cadillac tax is calculated against that "value".

if it is not "insurance" do i get to pay the "no insurance tax"?

No. Technically the "shared responsibility" (mandate) provisions aren't contingent upon insurance, they're contingent upon "minimum essential coverage". The ACA defines minimum essential coverage as:
Medicare;
Medicaid;
CHIP (Children's Health Insurance Program);
TRICARE;
VA benefits;
Peace Corps benefits;
an eligible employer-sponsored plan;
an eligible individual plan;
a grandfathered plan;
State health benefits risk pool; and
Any other plan as approved by the Secretary of Health and Human Services.

 

[sactoking]

Some questions that came to me today while reading the latest HHS standards clarification:

What is an Essential Health Benefit?

There are two categories of EHB, though they have the same weight. The federal government, through the ACA, stipulates ten EHBs which must be included in all non-gradfathered plans, both on- and off-exchange:
1) Ambulatory patient services
2) Emergency services
3) Hospitalization
4) Maternity and newborn care
5) Mental health and substance use disorder services, including behavioral health treatment
6) Prescription drugs
7) Rehabilitative and habilitative services and devices
8) Laboratory services
9) Preventive and wellness services and chronic disease management
10) Pediatric services, including oral and vision care

In addition to these items there are additional items set at the state level. The state must elect a "benchmark" plan; whatever services are offered by that benchmark become state-specific EHBs.

The selection of state-specific EHBs is important on two counts:
1) An EHB cannot have a lifetime dollar limit attached to it; and
2) A state-specific EHB is not considered as a cost when an individual subsidy is calculated.

#2 is critical as subsidies are calculated in part on the cost of the second least expensive Silver plan offered. If that plan has state-specific EHBs resulting from the benchmark plan choice then the cost of those EHBs must be actuarily removed from the plan premium, which will drive down the subsidy.

EXAMPLE: A state currently mandates that all plans in the state include autism spectrum and temperomandibular joint syndrome treatment. Presumably then (unless the state law changes) the state's benchmark plan will include autism and TMJ. If the benchmark has autism and TMJ then they become state-specific EHBs. If they are state-specific EHBs then they will have to be offered by all plans, including the second least expensive Silver plan. The second least expensive Silver plan may cost $6000/year, but if autism and TMJ cost $500/year then the subsidies will be calculated on $5,500.

What is a "benchmark" plan?

States are required to designate one plan as a benchmark. The benchmark sets the state-specific Essential Health Benefits. States have five options for selecting their benchmark plan:
1) One of the three largest small group plans in the state
2) One of the three largest state employee health plans
3) One of the three largest federal employee health plan options
4) The largest HMO plan in the state's commercial market; or
5) No selection. If the state makes no selection then the default is the state's largest small group plan based on enrollment.

The selection of the benchmark plan is significant. The Department of Health and Human Services ("HHS") distributed a final rule on July 18, 2012 on 45 CFR indicating that the definition of "benchmark plan" is to include the term "portal plan" as used in §159.110. The use of "portal plan" is significant because a portal plan includes coverages which might normally be considered optional riders.

EXAMPLE: A state currently mandates that all plans in the state include autism spectrum and temperomandibular joint syndrome treatment. If the plan selected as benchmark in the state offered autism and TMJ coverage and the plurality of plan customers also purchased an optional rider that gave a free gym membership, then:
Under the rule as originally written only autism and TMJ would be considered state-specific EHBs; but
Under the rule as reinterpreted to include "portal plans", autism, TMJ, and gym memberships would now be considered state-specific EHBs.

 

[DCal430]

A self-insured plan is exempt from the MLR "80/20" rule.

The Cadillac tax is calculated against premium value as mentioned in a post above. I'm not sure what you mean when you say your plan is paid for not by "premiums" but by "service business". ERISA-regulated self-insured plans are required to calculate an actuarial premium "value" to the coverage, which may be split between employer and employee. The Cadillac tax is calculated against that "value".



No. Technically the "shared responsibility" (mandate) provisions aren't contingent upon insurance, they're contingent upon "minimum essential coverage". The ACA defines minimum essential coverage as:
Medicare;
Medicaid;
CHIP (Children's Health Insurance Program);
TRICARE;
VA benefits;
Peace Corps benefits;
an eligible employer-sponsored plan;
an eligible individual plan;
a grandfathered plan;
State health benefits risk pool; and
Any other plan as approved by the Secretary of Health and Human Services.

I assume VA includes CHAMPVA.

 

[sactoking]

I assume VA includes CHAMPVA.

The specific language in the ACA is "the veteran's health care program under chapter 17 of title 38, United States Code". I'm by no means an expert in US Code but it looks to me that eligibility for CHAMPVA is under 38 USC §1781 and CHAMPVA medical/hospital benefits are under 38 USC §§1701-1786, so yes, I'd say it is included.

 

[sactoking]

I just got my hands on a copy of the NAIC/NIPR eReg presentation on Navigators from late April/early May of 2012. There's not a whole lot of new information in the presentation but I thought I'd share these projections with you, as I found them interesting.

These four projections are from the article "A Profile of Health Insurance Exchanges Enrollees", Trish E., et al, Kaiser Family Foundation, 2011.

CBO estimates 81% of individuals purchasing through the new exchanges will receive subsidies;
About 25% will speak a language other than English in their homes;
77% will have a high school diploma or less education; and
About 65% of individuals purchasing on the exchanges will have been previously categorized as uninsured.

 

[chucky2]

81% receive subsidies.....Wowzahs....

 

[sactoking]

Keep in mind that's 81% of people purchasing a qualified health plan on an individual exchange will receive a subsidy. I believe this makes intuitive sense in that most people earning more than 400% of the FPL will likely have a job that provides insurance with minimum essential benefits.

 

[chucky2]

It didn't have any estimate on how many people that would be did it? Just %'s or were there actual numbers?

 

[sactoking]

Nothing direct. A paper release in 2011 (The Uninsured: A Primer, Kaiser Family Foundation) indicates that there were 49 million non-elderly people uninsured in 2010. The CBO estimates that 32 million of them will have coverage by 2019, 16 million people will be added to the Medicaid rolls if all states undertake the expansion, and 24 million people will purchase health insurance on an exchange.

You could say that the 81% would be of the 24 million, so 19.44 million people receiving subsidies, but I doubt such a straightforward calculation is accurate or appropriate.

 

[sactoking]

The Congressional Budget Office ("CBO") recently released a new report on ACA costs and sent a summary letter to House Speaker Boehner about the cost/savings of repealing the ACA under HR 6079. I'll summarize the key points:

*Given the Supreme Court decision upholding the ACA but throwing out the mandatory expansion of Medicaid, the March 2012 projections are no longer valid;
*The March 2012 projection stated that the ACA would cost $1,252 billion from 2012-2022;
*Those cost projections did not account for some of the anticipated budgetary effects of the ACA which are impossible to separate from what may have happened under existing law and which are projected to lower budget deficits;
*The new projection is for the ACA to cost $1,168 billion from 2012-2022, a savings of $84 billion;
* The CBO estimates that the lack of Medicaid expansion will cost more in increased subsidies than there will be in Medicaid direct spending savings, but that some people who would have been eligible for Medicaid under the expansion will not purchase insurance with a subsidy or will not be eligible for a subsidy, resulting in a net savings;
* CBO estimates spending $289 billion less on Medicaid and CHIP from the lack of expansion but $210 billion more in subsidies, with a $5 billion buffer;
* The ACA will cost $1,683 billion for Medicaid, CHIP, tax credits for small employers, and individual tax credits (subsidies);
* That $1,683 billion is comprised of $642 billion for Medicaid and CHIP and $1,017 billion for individual and small employer tax credits;
* The ACA costs are offset by $515 billion in receipts from penalty payments, the "Cadillac" tax, and tax code changes to employer-provided health insurance coverage;
* HR 6079 would increase net deficits by $109 billion from 2013-2022;
* HR 6079 would have a gross savings of $1,677 billion and a savings net of penalty payments, "Cadillac" tax, and other coverage-related savings of $1,171 billion;
* Offsetting those savings would be Medicare cost increases of $711 billion from repealing certain cost-saving provisions of the ACA;
* Also offsetting the savings would be a loss of $569 billion in revenues from increased payroll taxes on high-income individuals and excise taxes on manufacturers and insurers.

 

[sactoking]

Is their any estimates to what a gold, silver, or bronze insurance will look like?

I wanted to revisit this question as I have more information.

Each of the metal plans (Bronze, Silver, Gold, Platinum) will be required to cover the 10 Federal Essential Health Benefits as defined in post #87 above. What separates the metal tiers is their Actuarial Value ("AV"). From a Kaiser Family Foundation bulletin AV is described as such:

[T]he levels of coverage in the ACA are not defined using specific deductibles, copays, and coinsurance. Rather, they are specified using the concept of an "actuarial value" (AV). For example, a plan with an actuarial value of 70%... means that for a standard population, the plan will pay 70% of their health care expenses, while the enrollees themselves will pay 30% through some combination of deductibles, copays, and coinsurance. The higher the actuarial value, the less patient cost-sharing the plan will have on average.

It's important to note that an AV is not the same thing as coinsurance, though a coinsurance percentage does affect AV.

Under the ACA each of the four metal tiers are assigned an AV and there is a de minimis variation of +/- 2%. The AV levels are:
Bronze 60%
Silver 70%
Gold 80%
Platinum 90%

In addition, there is a "cost-sharing provision" in the ACA whereby Silver plans (and only Silver plans) will actually have a moving AV based on the insured's income as a % of FPL. If the insured's MAGI is 200-250% of FPL then the Silver AV adjusts to 73%. If the insured's MAGI is 150-200% of FPL then the Silver AV adjusts to 87%. If the insured's MAGi is 100-150% of FPL then the Silver AV adjusts to 94%.

These AV adjustments must be accomplished through lower deductibles, lower copays, and lower coinsurance amounts while the premium remains constant and the adjustments must be cumulative. For example:

A standard Silver plan costs $300/month with a $1500 deductible, 30% coinsurance, and $50 copay for certain services. That same Silver plan must offer richer benefits at the same price for someone with a MAGI <250% of FPL. For the 200-250% band the plan might reduce the coinsurance to 25%, for the 150-200% band the plan might reduce the deductible to $500, and for the 100-150% band the copay may be waived. However, the changes are cumulative so that the 150-200% band would get the coinsurance and deductible reduction and the 100-150% band would get all three changes.

This has an interesting effect. Normally, one would expect that those with the largest subsidies (those closest to the FPL) would use the subsidy to purchase an inexpensive Silver plan with little out-of-pocket cost (~2%) or choose a Bronze plan for no out-of-pocket. However, Bronze plans are likely to be similar to current high-deductible, "catastrophe" plans and those close to the FPL would not be able to afford the deductible costs. What this cost-sharing provision does is allow those people within a certain distance of the FPL to receive very inexpensive coverage (by way of the "subsidy") and have that coverage be substantially better than it normally would. For someone at 100-150% FPL the cost-sharing Silver plan is better than a Platinum plan. and still only costs at most 2% of MAGI.

 

[DCal430]

What guarantee do you we have that congress will maintain proper funding for these subsidies int he next 5 to 10 years.

 

[sactoking]

What guarantee do you we have that congress will maintain proper funding for these subsidies int he next 5 to 10 years.

Technically the subsidies are not subsidies, they are refundable tax credits. Normally a tax credit would only be able to be claimed when your 1040 is filed, but to prevent undue harm to those near the FPL the ACA allows the refundable tax credits to be claimed early, so long as the taxpayer can prove that he meets the requirements.

One of the requirements is purchase of a Qualified Health Plan from an Exchange. The ACA pulled a little trick and said that the tax credit can be paid early but only if paid directly to the insurer. This mechanism prevents someone from taking their tax credit and running.

Since the "subsidies" are not actually subsidies but instead tax credits they don't have to be "paid for" in the traditional sense; they are paid for through reduced tax revenue. So long as the law remains as it is now Congress cannot "de-fund" the payments any more than they could refuse to pay a legally obtained tax refund.

 

[soccerballtux]

Is there a loophole that allows insurance firms to fit their lawyer and administration fees determining if something is "not covered" into that 85% number of "providing healthcare"? Example my friend who is also on my United Healthcare plan was told a $75 fee when the doctor looked at his jaw hurting due to hereditary joint problems was not covered because it was "dental".

 

[sactoking]

Is there a loophole that allows insurance firms to fit their lawyer and administration fees determining if something is "not covered" into that 85% number of "providing healthcare"? Example my friend who is also on my United Healthcare plan was told a $75 fee when the doctor looked at his jaw hurting due to hereditary joint problems was not covered because it was "dental".

I don't believe so. I'm looking at the MLR spreadsheet right now and all of the input cells are cross referenced to a specific cell on the insurer's NAIC annual statement. The NAIC statements are very strict in how things are categorized because they are used as the primary source of solvency information. Given that, plus the extent to which NAIC statements are scrutinized through financial examinations, I would say the the ability of an insurer to "misclassify" an expense is very low.

Just as a side note about your friend, it's likely that his condition was diagnosed as a form of TMJ which is considered a dental problem. Here, our legislature had to pass a law with the sole purpose of reclassifying TMJ as a non-dental medical issue.