the affordable care act part 1: the exchanges

THE AFFORDABLE CARE ACT: THE

EXCHANGES

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OVERVIEW

• Affordable Care Act

• The Exchange Program

• Employer Provided Insurance

• Legal Opt-Out Options

• Penalties

• Key Exchange Implementation Dates

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AFFORDABLE CARE ACT

•

• Healthcare Insurance Exchanges will allow individuals and employers to shop, compare, and enroll affordable insurance plans

• Effective: January 1, 2014

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AFFORDABLE CARE ACT: HIGHLIGHTED

CHANGES TO HEALTHCARE COVERAGE

• Individuals with pre-existing conditions are no longer denied coverage, nor can they be dropped when diagnosed with a serious illness/disability

• Eligibility requirements and covered healthcare services are expanded

• Lifetime insurance limits on essential services are prohibited

• Small businesses may qualify for a tax credit

• Employers will be penalized for providing inadequate coverage or for not providing coverage at all

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AMERICAN HEALTH BENEFIT EXCHANGE

(EXCHANGE)

• ACA §1311 requires each state to have an Exchange program available for consumers to both compare and purchase healthcare coverage

• The primary format of an Exchange will be via websiteo Until all state Exchanges are up and running, consumers can find

available healthcare options via the ACA website at http://finder.healthcare.gov/

• Exchanges will also be available via toll-free hotline, by mail, and through in-person assistance locationso Set up of in-person assistance programs will be optional for states

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EXCHANGE ASSISTANCE

• Each Exchange will be required to set up Navigator programs

• Navigators are to provide impartial information, assistance to consumers, and help with the appeal process

• Navigators can be in the form of different professional or community based organizationso At least one Navigator program within the state must be from the

community/consumer non-profit group

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THE EXCHANGE PROGRAM:QUALIFIED HEALTH PLANS (QHPS)

• A Qualified Health Plan is an insurance plan that is certified to operate within an Exchange

• QHPs can be offered at four different levels of coverage

• QHPs can also be in the form of Child-only or Catastrophic plans

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THE EXCHANGE PROGRAM

Main functions of an Exchange will be to:

• Allow for comparison of QHPs• Assist applicants with applications and enrollment• Administer QHP certification process• Monitor QHPs for compliance

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THE EXCHANGE PROGRAM:

QUALIFIED HEALTH PLANS (QHPS)

A QHP must offer the following 10 essential health benefits, per ACA §1302:

1. Ambulatory patient services2. Hospitalization3. Mental health & substance use disorder services4. Rehabilitative & habilitative services5. Preventative & wellness services6. Emergency services7. Maternity & newborn care8. Prescription drugs9. Laboratory services10. Pediatric services

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THE EXCHANGE PROGRAM:EXCHANGE SET-UP

There are three Exchange types: a State-Based Exchange, a State-Partnership Exchange, and a Federally-Facilitated Exchange

To set-up an Exchange, a state must submit a Declaration Letter and Exchange Application to the Centers for Medicare and Medicaid Services (CMS):

• Must be submitted November 16, 2012• If nothing is received, the Department of Health and

Human Services (HHS) declare that the state is operating as a Federally-Facilitated Exchange

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THE EXCHANGE PROGRAM:EXCHANGE TYPES

State-Based Exchange• The state conducts all of its Exchange program activities• The state may elect the government to perform tasks such as:

o Applicant tax benefits Exemptionso Risk adjustment programo Reinsurance program

State-Partnership Exchange• The state partners with HHS to operate Exchange

o States perform services for plan management, consumer assistance, or both

o HHS performs services for reinsurance programs, eligibility for Medicaid/CHIP and tax credits, and ensures the Exchange meets its required functions

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Federally-Facilitated Exchange• HHS performs all Exchange activities for the state• HHS will coordinate with the state to operate a

successful Exchange

If HHS determines that a state’s Exchange program is non-compliant, it can change the state’s Exchange to a Federally-Facilitated Exchange program

THE EXCHANGE PROGRAM:EXCHANGE TYPES

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THE EXCHANGE PROGRAM:TYPES OF EXCHANGE FUNDING

State Planning Grant • Aids state in beginning development of its Exchange

program

Early Innovator Grant • Awarded to states that developed a working Exchange

program that is transferrable to other states to use

Level One Establishment Grant • Provides funding for one year to start an Exchange Plan

Level Two Establishment Grant • Helps states continue Exchange development after one year,

provided certain criteria is met

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THE EXCHANGE PROGRAM: EXCHANGE COMPLIANCE

Exchanges are responsible for implementing a compliance monitoring and recertification system for QHPs

The Secretary of HHS will conduct annual reviews to ensure the Exchange complies with:• Eligibility verification requirements• Federal funds usage requirements• Quality and performance standards

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LEGAL OPT-OUT OPTIONS

States – can opt-out of implementing its Exchange; HHS will then implement a Federally-Facilitated Exchange

QHPs – can opt-out of providing abortion related coverage

Individuals – can opt-out of automatic enrollment in employer provided insurance plans and individual coverage, if applicable

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LEGAL OPT-OUT OPTIONS: INDIVIDUAL EXEMPTIONS

Individuals that fall under the following classifications are exempt from the individual insurance mandate:• Members of religious sects/healthcare sharing

ministries• American Indians• Individuals with financial hardships

Incarcerated individuals not pending charges and undocumented immigrants are not eligible for coverage

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UPCOMING IMPLEMENTATION KEY DATES

The Consumer Operated & Oriented Advisory Board establishes a plan that will allow the creation of non-profit and member-run insurance.

Open enrollment period begins

ACA Exchanges are in effect.

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REED & ASSOCIATES, CPAS

For more information on Reed & Associates, CPAs please contact us at:

inquire@reedassociatescpas.com

Phone: 860-395-1996

Or visit our website:

reedassociatescpas.com

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