The Affordable Care Act is a comprehensive health care reform law enacted in March 2010. The law was enacted in two parts: The Patient Protection and Affordable Care Act was signed into law on March 23, 2010 and was amended by the Health Care and Education Reconciliation Act on March 30, 2010. The name “Affordable Care Act” is used to refer to the final, amended version of the law. (1)
What is the age band rating?
Beginning on January 1, 2014, the Affordable Care Act mandates the implementation of a nationwide 3:1 age band rating. This system regulates the differential in costs between older and younger individuals in health insurance pools. Basically, the ACA requires that older people (e.g., a 63 year old) are not to be charged more than three times the amount of younger people (e.g., a 27 year old). The law’s new age rating system will impact most states, where ratios are currently 5:1 or higher, and could trigger dramatic and disproportionate rate increases for younger individuals. (2)
What does a balanced insurance pool mean?
Having a balanced insurance pool that includes enough young, healthy people to help offset the costs of those that are older and sicker is critical to keeping coverage affordable for everyone. If younger people do not participate in the insurance pool, premiums will increase for everyone.
What is a catastrophic health plan?
Beginning in 2014, catastrophic health plans will be available to young Americans up to age 30 and to individuals who are exempt from the individual mandate because no affordable coverage is available or they have a hardship exemption. At this point, it’s difficult to predict how affordable catastrophic health plans will be in 2014. While premiums for some catastrophic plans may be lower than other plans available, catastrophic plans will not be eligible for subsidies. Catastrophic plans will have higher deductibles, meaning individuals will be responsible for initial health care costs but will be protected from unexpected high costs due to a major illness or accident (after meeting their deductible – estimated by HHS to be $6,400 in 2014 (3) ). They will also provide first-dollar coverage for preventive health services and three annual primary care visits. Once the deductible is met, the catastrophic plan will cover the essential health benefits.
What is a deductible?
A deductible is the amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay. For example, if your deductible is $1000, your plan won’t pay anything until you’ve paid $1000 deductible covered health care services subject to the deductible. The deductible may not apply to all services. (3)
What are essential health benefits?
The Affordable Care Act calls for health plans offered in the individual and small group markets to include 10 broad categories of services known as “essential health benefits” (see list below). The ACA create a structure of standardized tiers of cost-sharing associated with those benefits – insurers will be required to offer plans that fit within four levels of coverage: bronze, silver, gold and platinum. Bronze plans will have the least generous coverage with more out-of-pocket costs and platinum plans will have the most generous coverage with the least out-of-pocket costs.
Essential health benefits are defined as:
1. Ambulatory patient services
2. Emergency services
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 (4)
What are federal subsidies?
The Affordable Care Act provides subsides for eligible people in an income range of 138 to 400 percent of the federal poverty level (5). The subsidies will be offered on a sliding scale, with those earning the least getting the most assistance. Those with lower incomes, earning less than 138 percent of the poverty line (about $33,000 for a family of four), in some case less than 100 percent of the poverty line depending on decisions made by states, may receive coverage through Medicaid. Those earning up to 400 percent of the poverty line (about $92,000 for a family of four) may receive subsidies to buy private insurance. According to the Congressional Budget Office, more than 40 percent of people purchasing coverage in the individual market today will not be eligible for the premium subsidies in 2014 (6). About one-third of 25-34 year olds will not be eligible for the premium subsidies in 2014 and will be responsible for the full premium if they buy coverage on their own. Individuals and families who are not eligible for the federal subsidies (those with incomes above $44,680 for an individual, or 400% of the federal poverty level) will see their premiums increase by at least 30%, with many in this category facing even higher increases.
What does individual responsibility mean?
Under the Affordable Care Act, starting in 2014, you must be enrolled in a health insurance plan that meets basic minimum standards (7). If you aren’t, you may be required to pay a penalty. You won’t have to pay the penalty if and the required coverage is unaffordable for you, or for other reasons including your religious beliefs. You can also apply for a waiver asking not to pay the penalty if you don’t qualify automatically.
What is minimum essential coverage?
The type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. This includes individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage.
 Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment (CMS-9964-P), 156.420(a) preamble
IDAHO INSURANCE AGENCY
Paul King and Charlotte Hildebrandt
1650 Albright Ln #101
Boise, Idaho 83709