3. Individual and Employer Responsibilities
Medicaid and CHIP Expansion
Premium Subsidies for Lower Income
Health Insurance Exchanges
Insurance Market Reforms
Quality and Delivery System Reforms
4. In a 5 – 4 decision the Supreme Court upheld the
Constitutionality of the Patient Protection and
Affordable Care Act.
The Court ruled that the Individual Mandate is a tax
and that Congress therefore has the authority.
The Court limited, but did not invalidate, the pieces
that expand Medicaid.
5. "Our precedent demonstrates that Congress had the power to
impose the exaction in Section 5000A under the taxing
power, and that Section 5000A need not be read to do more than
impose a tax. This is sufficient to sustain it." The Court holds
that the mandate violates the Commerce Clause, but it becomes
irrelevant because five Justices find the mandate to be
constitutional under the taxing power.
On the Medicaid issue, the Medicaid expansion is
constitutional, but it is unconstitutional for the federal
government to withhold Medicaid funds for non-compliance with
the expansion provisions. "Nothing in our opinion precludes
Congress from offering funds under the ACA to expand the
availability of health care, and requiring that states accepting
such funds comply with the conditions on their use. What
Congress is not free to do is to penalize States that choose not
to participate in that new program by taking away their existing
Medicaid funding."
6. Michigan Attorney General
National Small Business Association
Vice President and General Counsel, David Burton
Small Business Association of Michigan
President and CEO, Rob Fowler
Vice President, Small Business Services, Scott Lyon
Clark Hill, PLC
Kristi Gauthier, Esq.
7. For Small Businesses and Individuals
Individual Mandate
Employer ―Mandate‖/Play or Pay
Individual Subsidies and Small Business Tax Credit
Health Insurance Exchanges
Expansion of Medicaid and CHIP
Dependent Coverage to age 26
Summary of Benefits and Coverage (not an SPD)
8. New Fees
Pharmaceutical Companies - $16 billion between now
and 2019 and then $2.8 billion/year thereafter
Insurance Carriers - $47.5 billion between 2014 and
2018 and then indexed to inflation
Medical Devices taxed at 2.9%
Changes to FSAs for over-the-counter drugs
Contributions to FSAs limited to $2,500
Medicare Part A tax increase for individuals earning
$200,000+ and couples earning $250,000+
Cadillac Tax - 2018
9. Insurance Carrier Related Changes
Loss ratios hold at 80% for individuals and 85% for small
businesses
Guarantee issue and renewability (no recession)
No lifetime limits
Modified community rating
―Precious Metals‖ - Platinum, Gold, etc. and Essential Benefits
Deductibles limited to - $2,000/$4,000
Waiting periods limited to 90 days
Children with medical conditions – No pre-ex
Preventive Services - Immunizations for children and cancer
screenings for women
No salary discrimination for eligibility
CO-OPs in market
10. Michigan Senate Passed - Still Needs Action in Michigan House
Orbitz for Health Insurance
Spreadsheet comparison of products from various insurers
Uniform enrollment
Assign a rating based upon relative quality and price to each
qualified health benefits plan
Inform individuals of eligibility requirements for the state's
Medicaid program, CHIP program and any applicable state or
local public program and screen and enroll eligible individuals
in these programs
Establish a navigator program
Assist qualified employers in facilitating the enrollment of
employees in small group qualified health benefits plans
11. Premium assistance based on Federal Poverty Level
(FPL)
◦ Those earning under 133% of FPL generally eligible
for Medicaid
◦ Premium assistance to those from 133% to 400% of
FPL
Cap on individual premium cost for 2nd-Lowest Cost
Silver Plan – 70-%/30%
In addition, those with lower incomes get better
benefits (Cost Sharing)
◦ 100-150% of FPL 70% value raised to 94%
◦ 150-200% of FPL 70% value raised to 87%
◦ 200-250% of FPL 70% value raised to 73%
12. Small Business Tax Credit (Part 2) – Tax credit equal
to 50% of the employer’s health insurance costs, if:
◦ 10 or fewer full-time equivalent employees
◦ Average annual wages of less that $25,000 (not including owner’s or
owner’s family member wages)
◦ Employer pays 50% or more of the premium
Companies with between 11 and 25 workers and an average
wage of less than $50,000 are eligible for partial credits
Credit only available for two years
Credit only available if small employer purchases coverage
from the SHOP Exchange
13. Individual Mandate - Requires all U.S. citizens and legal residents to have
qualifying health coverage or face a penalty/tax if they do not. Those under
FPL or those that do not file a tax return – no penalty
The percentage will be 1.0% in 2014, 2.0% in 2015, and 2.5% thereafter, or a
flat dollar amount assessed on each taxpayer and any dependents
(e.g., family)
The annual flat dollar amount phased in—$95 in 2014, $325 in 2015, and
$695 in 2016 and beyond (adjusted for inflation), assessed for each taxpayer
and any dependents.
The amount is reduced by one-half for dependents under the age of 18.
The total family penalty is capped at 300% of the annual flat dollar amount.
Percentage of the ―applicable income,‖ defined as the amount by which an individual’s household income exceeds the applicable filing threshold for the
applicable tax year. The filing threshold comprises the personal exemption amount (doubled for those married filing jointly) plus the standard deduction
amount.
14. Employer ―Mandate‖/Free Rider - Employers with more than 50 FTE must offer
either ―affordable‖ coverage or potentially be subject to a ―free rider‖ penalty
The Penalty
$2,000/FTE after the first 30 employees
The Calculation
Employees scheduled to work at least 30 hours per week in a typical
month, plus
For all those under 30 hours a week, the aggregate of all hours worked in a
typical month divided by 120, (do not include any seasonal employees that
work fewer than 120 days in the prior year).
Take the total number of full-time employees in Step 1 and add that to the
number of Full time equivalents that results from the calculation in Step 2
above.
If the number is 50 or below then there is no ―free-rider‖ penalty.
◦ Employers with more than 200 employees will be required to auto enroll employees into the
health plans offered.
15. In 2018
An excise tax on insurers or employer health
insurance plans with aggregate values that
exceed $10,200 for an individual and $27,500 for
a family takes effect.
Tax is indexed to the CPI-U beginning in 2020.
Cadillac Tax is 40% of the value above the
threshold.