by Jay Bradford
Posted 9/10/2012 12:00 am
Updated 2 years ago
One in four Arkansas adults between 18 and 64 years of age is uninsured — a statistic that must change if we are to improve the health of our residents and sustain a viable health care delivery system. We also have one of the highest rates of chronic disease in the country. Health care costs are growing more than six times faster than overall inflation and the cost of insurance has doubled in the past ten years, resulting in a large and growing percentage of uninsured residents in Arkansas.
Arkansas consumers have limited access to health care and limited choices, which result in poorer health outcomes. Through a coordinated effort between public and private leaders, certain critical health system improvement needs are being addressed. One important element of this effort is to assure access to health care providers. Another is to share information through technology in an effort to decrease errors and avoid duplication of services. This leads to better quality of services and less in payment for those services as unneeded tests and procedures can be eliminated.
The Affordable Care Act (ACA), which was passed by Congress and signed into law in 2010, was recently upheld by the United States Supreme Court. It is the law of the land. It has already helped many Arkansas consumers. Children can stay on their parents’ health insurance until age 26. Insurance companies can no longer deny coverage of a child under age 19 due to his/her health conditions. Lifetime benefit limits have been eliminated and annual benefit limits on insurance coverage will be adjusted upward until 2014 when these limits are removed. The rescinding of coverage by insurance companies is prohibited except in cases of fraud or intentional misrepresentation.
Preventive services such as mammograms, colonoscopies, and wellness visits are now available at no cost to consumers. Rebates were available beginning Aug. 1 to certain consumers whose insurance company’s medical loss ratio did not meet required levels. In Arkansas, these rebates total $7.8 million. Small business health insurance tax credits are now available and there is coverage for early retirees (ages 55-64 years). There has been monetary relief provided to more than a half-million Arkansas seniors who hit the Medicare “donut hole.” All of these are good for consumers.
One of the major requirements of the ACA is that every state will have a health insurance exchange. States were originally given the option of running their own exchange or letting the federal government run their exchange. Arkansas opted to let the federal government, through the U.S. Department of Health and Human Services, run its exchange. However, the state has been presented with the opportunity to participate in what is commonly referred to as a Federally-facilitated Exchange Partnership whereby Arkansas would be able to protect its insurance consumers by continuing to approve and regulate all insurance plans offered to Arkansans, including those offered through the Federally-facilitated Exchange. We would also be able to provide consumer assistance functions including enrollment assistance and post-enrollment complaint resolution. These are functions that the Arkansas Insurance Department performs on a daily basis, but will lose if the federally-facilitated partnership exchange model is not adopted. With the help of a dedicated group of volunteers from both the public and private sector who meet on a regular basis, the department is planning for this type of exchange.
An estimated 572,000 Arkansans will be eligible for exchange coverage beginning Jan. 1, 2014. Individuals, families, and small businesses with 50 or fewer full-time equivalent (FTE) employees can shop for affordable coverage through the Health Benefits Exchange. Only those shopping through the Exchange will be eligible for tax credits or other cost reductions in 2014. Businesses with up to 100 employees will be Exchange eligible in 2016 and businesses with more than 100 employees will be Exchange eligible at state option beginning in 2017.
All plans offered through the Exchange will be Qualified Health Plans (QHP) and must provide Essential Health Benefits (EHB) in 10 categories. These include ambulatory services; hospitalization; emergency services; maternity and newborn care; mental health and substance use disorder treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive, wellness, and chronic disease management; and pediatric services, including pediatric oral and vision care.
Consumers with incomes 100-400 percent of the Federal Poverty Level (FPL) are eligible for federal tax subsidies. These subsidy amounts will change according to the cost of premium and the consumer’s Modified Adjusted Gross Income (MAGI). An individual consumer will not pay more than 9.5 percent (generally, less) of his or her income for insurance premium. Advance tax credits are available to help with premium costs. One requirement to receive premium tax credits is that an individual must not be eligible for other coverage such as Medicare, Medicaid, or employer-sponsored insurance.
An important fact to remember is that employers with 50 or fewer full-time employees (FTE) do not have to provide insurance coverage for their employees. So, they will not have any penalties for not providing insurance. An employer with more than 50 FTE employees must provide affordable insurance options for full-time employees. “Affordable” is defined as less than 9.5 percent of the employee’s household income. It is important to also remember Flexible Spending Accounts will be capped at $2,500.
There are penalties for those employers with more than 50 full-time employees who do not offer health insurance coverage. If an employer does not offer a plan with Essential Health Benefits coverage to every full-time employee and any one employee receives tax-subsidized coverage through an individual exchange, the employer must pay a $2,000 penalty for every full-time employee. The first 30 employees will not be counted in figuring the penalty. If an employee is offered coverage by an employer with more than 50 full-time employees, but that coverage is considered unaffordable and the employee obtains tax-subsidized coverage through the individual exchange, the employer must pay a $3,000 penalty for that employee. While any employee is free to decline the employer plan and shift to the Exchange, the tax credit (and the employer penalty) only applies if the worker’s required contribution to the employer plan for single coverage is more than 9.5 percent of the employee’s household income or the plan pays less than 60 percent of the cost of covered services.
All plans offered through the Exchange will be Qualified Health Plans (QHP) and must provide Essential Health Benefits (EHB) in 10 categories. These include:
1. ambulatory services
3. emergency services
4. maternity and newborn care
5. mental health and substance use disorder treatment
6. prescription drugs
7. rehabilitative and habilitative services and devices
8. laboratory services
9. preventive, wellness, and chronic disease management
10. and pediatric services, including pediatric oral and vision care.
This is a complicated process and the Arkansas Insurance Department, through its planning efforts, is working to provide simplified explanations for a process which will help bring vitally needed health insurance coverage to the citizens of Arkansas without putting any unfair burdens on anyone. Click here for more information.