PPACA is schedule to take full effect 1/1/2014. In Part 1 we discussed the “what” of PPACA. The full white paper can be viewed through the link on the home page of this website — which includes timelines, taxes, calculation methods for subsidies etc.

In Part 2 we begin the discussion of how this program is structured…

What is Going To Occur, and When?

Here is a brief summary of some of the more significant features that have already taken effect (Sept 2010-present):::

  • Annual and lifetime limits on plan benefits removed;
  • Gender neutral ratings;
  • Dependent children, up to age 26, are allowed to stay on parent’s plan’
  • Children, up to age 19, are guaranteed issue;
  • Many States have implemented open enrollment for child only coverage;
  • Rescission no longer allowed except for fraud or misrepresentation;
  • Preventive screenings provided with no cost share;
  • Medical loss ratios floors became effective;
  • Early HSA withdrawal penalty boosted to 20%;
  • FSA contribution limited to $2500;
  • Limited small employer tax credit program made available;
  • Employers issuing more than 250 W2s must list benefit costs on W2;
  • Increased Medicare payroll tax effective for higher incomes (more on all PPACA taxes in a later section)
  • Full implementation of some requirements, such as non-discrimination testing, have been delayed. The CLASS act portion of PPACA (long term care) has been repealed, as has business 1099 reporting of certain expense amounts.

Most of the full implementation occurs with PPACA starting on 1/1/2014. At this time, the following portions of PPACA take effect, summarized below::

  • All plans will be guaranteed issue, meaning that no consideration for any pre-existing medical condition can be taken into account for issuing a health insurance policy (tobacco use excepted);
  • State or federal exchanges will come online, with pre-enrollment scheduled to begin 10/1/2013;
  • Premium tax credits and cost sharing subsidies will commence (as described elsewhere herein);
  • Individual mandates in the form of a tax penalty for non-participation takes effect;
  • All plans offered must contain Essential Health Benefits to be considered qualified to meet the mandate;
  • Medicaid eligibility will be expanded to those with 133% of federal poverty level (FPL)
  • Basic Health Plan, (essentials plan) becomes available to those whose income is between 133 – 200% of FPL

In order to fully understand the timelines, one must understand the structure of the reform universe. To that end, let’s take a look at specific elements of coverage under PPACA.

Plan Design Changes

Many of the significant changes in the early days of PPACA adoption occurred after 9/23/2010. At that time, all plans, including grandfathered plans (those in effect prior to 3/23/2010), had to include dependent child coverage up to the dependent’s 26 birthday, elimination of overall plan benefit limits (reasonable annual limits may still apply), zero cost preventive screenings services, guaranteed issue child coverage, etc.

The main changes occurring 1/1/2014 for individual plans will be the elimination of pre-existing condition underwriting (guarantee issue), required essential health benefits included in plan design, and coverage of dental and vision benefits for children.

Minimum Qualifying Benefits

The benefits included in individual and small group plans, inside or outside an exchange are controlled by a definition of Minimum Essential Health Benefits (EHBs), created by the federal government, which fall into the following categories::

  •   Ambulatory patient services
  •   Emergency services
  •   Hospitalization
  •   Maternity and newborn care
  •   Mental health and substance use disorder services
  •   Prescription drugs
  •   Rehabilitative and habilitative service
  •   Laboratory services
  •   Preventive and wellness care
  •   Chronic disease management
  •   Pediatric dental and vision care (for childrens’ plans)

The prescription drug coverage in a qualified plan must offer at least one drug in each therapeutic category, and must match the benchmark plan (there are approximately 44 therapeutic categories). States may require additional categories of health care benefits to be covered, but will be responsible for funding those services from state resources.

This benefit structure applies to individual and small group plans, but not to large group, self-funded or grandfathered plans. Large group and self-funded group plans are covered by the federal law known as ERISA.

Qualifying Health Plans (QHPs) will also have to adhere to out-of-pocket limits. Out-of-pocket maximums may not exceed the limitations imposed on HSA qualified high-deductible health plans ($6,250/single, $12,500/family for 2013 — a bit higher in 2014). In addition, all member cost-sharing must apply to the out-of-pocket maximum (e.g., copays and deductibles). For plans with network benefits, the limits apply only to the in-network, out-of-pocket maximum. This requirement does not apply to grandfathered plans, or out-of-network cost sharing.

All fully funded, non-grandfathered plans will eliminate any annual or lifetime maximum limits on any of the EHBs. This does not apply to self-funded or grandfathered plans.

Part 3…. Plan types, grandfathering, mandates and more