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STREET WISE Alliance of Insurance Agents of NC
Does Obamacare about Insurance Agents? Contents AFFORDABLE CARE ACT & INSURANCE AGENTS? .................... 1 IN-PERSON ASSISTANCE IN THE HEALTH INSURANCE M ARKETPLACE 2 OUTWIT, OUTLAST, OUTPLAY ......... 4 LEARN ABOUT THE M ARKETPLACE IN YOUR STATE ................................. 10 WHAT IS THE SHOP M ARKETPLACE? ................................................... 11 DO I HAVE TO OFFER HEALTH COVERAGE TO MY EMPLOYEES? .... 16 THE GOLD BENEATH YOUR FEET .. 22
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Nearly half of brokers ready to exit Obamacare to pay 'navigators' $20 to $48 an hour, provide free translators Tens of thousands of health care professionals, union workers and community activists hired as "navigators" to help Americans choose Obamacare options in the Health Insurance Marketplace starting Oct. 1 will be paid up to $48 an hour, more than six times the federal minimum wage of $7.25, according to new regulations issued recently.
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The 63-page rule covering navigators, drawn up by the Centers for Medicare & Medicaid Services, also said the government will provide free translators for those not fluent in English -- no matter what their native language is. It is still not clear how many navigators will be required. California, however, provides a hint. It wants 21,000. That could be an expensive proposition, since every one of them must be paid a minimum of $20 an hour. According to the new regulations, navigators and assistants will earn $20 an hour, while navigator project leaders will earn $29 an hour. Navigator senior executives will be paid $48 an hour. Continued on page 2
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The Marketplace will also tell you if you qualify for free or low-cost coverage available through Medicaid or the Children's Health Insurance Program (CHIP).
Obamacare Navigators Continued from page 1 The rules allow navigators to come from the ranks of unions, health providers and community action groups such as ACORN and Planned Parenthood. They are required to provide unbiased advice.
The Health Insurance Marketplace is sometimes known as the health insurance "exchange." You can apply for Marketplace coverage three ways: online, by mail, or in-person with the help of a Navigator or other qualified helper. Telephone help and online chat will be available 24/7 to help you complete your application.
Navigators are only required to complete 30 hour online Federal training and certification unless your state Insurance Commissioner was successful in passing legislation that requires Navigators to undergo statespecific licensure and criminal background checks.
Open enrollment starts October 1, 2013. Plans and prices will be available then. Coverage starts as soon as January 1, 2014.
Georgia’s Insurance Commissioner Ralph Hudgens was successful. Louisiana Insurance Commissioner Jim Donelon was not.
In-Person Assistance in the Health Insurance Marketplace
Navigators are not required to have an Insurance Agency License nor carry E&O Insurance.
Starting October 1, 2013, consumers in all states will be able to choose new affordable health insurance options through a new Health Insurance Marketplace. Some states are setting up a State-based Marketplace, other states will work with the federal government in a State Partnership Marketplace and the remaining states will have a Federally-facilitated Marketplace.
Should they be required to be licensed? Not according to the NAIC. The National Association of Insurance Commissioners’ “Producer Licensing Model Act” requires people to be licensed if they “sell, solicit, or negotiate” insurance. [i] “Negotiate” is defined as offering advice about a particular contract of insurance by someone who “sells insurance or obtains insurance from insurers for purchasers.” People who provide general information about insurance but are not paid commissions are not required to be licensed, under the NAIC model.
No matter what state they live in, consumers can get help as they apply for and choose new insurance options. You can help provide that assistance in a number of different ways: by becoming Navigators, inperson assistance personnel, or certified application counselors. In addition, agents and brokers can also help consumers enroll in new insurance options. NAVIGATORS Navigators have a vital role in helping consumers prepare electronic and paper applications to establish eligibility and enroll in coverage through the Marketplaces and potentially qualify for an insurance affordability program. They will also provide outreach and education to raise awareness about the Marketplace, and will refer consumers to health insurance ombudsman and consumer assistance programs when necessary. Navigators will play a role in all types of Marketplaces, be funded through state and federal grant programs, and must complete comprehensive training.
What is the Health Insurance Marketplace? The Marketplace is a new way to find health coverage that fits your budget and meets your needs. With one application, you can see all your options and enroll.
CERTIFIED APPLICATION COUNSELORS The Federally-facilitated Marketplace will designate organizations to certify application counselors who perform many of the same functions as Navigators and non-Navigator assistance personnel—including educating consumers and helping them complete an application for coverage.
What you'll learn when you apply in the Health Insurance Marketplace When you use the Health Insurance Marketplace, you'll fill out an application and see all of the health plans available in your area. You'll find out if you can get lower costs on your monthly premiums for private insurance plans. You'll learn if you qualify for lower out-of-pocket costs. AIANC’s STREET WISE
Continued on page 4
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http://www.hrsa.gov/about/news/2013tables/outreachandenrollment An online application is available for organizations who want to become Marketplace-designated organizations that can certify application counselors. These groups might include community health centers or other health care providers, hospitals, or social service agencies.
We anticipate that many consumers will want to obtain professional advice from agents and brokers when applying for and selecting a qualified health plan.
Outwit, Outlast, Outplay With all the new regulations and changes under the Patient Protection and Affordable Care Act — and everything that goes along with it — many brokers are having a hard time seeing the light at the end of the tunnel.
$150 million in grant awards to 1,159 health centers across the nation will enable them to help uninsured Americans gain affordable health insurance coverage. AGENTS AND BROKERS CMS expects agents and brokers to play a key role in the new Marketplaces. To the extent permitted by states, agents and brokers will play an important role in educating consumers about Marketplaces and insurance affordability programs, and in helping consumers receive eligibility determinations, apply for premium tax credits and cost-sharing reductions, compare plans, and enroll in coverage. In particular, CMS anticipates that agents and brokers will play a critical role in helping qualified employers and employees enroll in coverage through the Small Business Health Options Programs (SHOPs). AIANC’s STREET WISE
Some are getting out of the business; some are admitting defeat to the massive health overhaul. But there’s always a way to win... http://www.benefitspro.com/2013/06/25/brokers-andppaca-outwit-outlast-outplay Fact Sheet: Helping Consumers Apply & Enroll through the Marketplace on pages 6, 7, 8, & 9
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Assistance Roles to Help Consumers Apply & Enroll in Health Coverage Through the Marketplace Starting October 1, 2013, consumers in all states will be able to apply for new affordable health coverage options through the Health Insurance Marketplace for coverage beginning as soon as January 1, 2014. Some states are setting up a State-based Marketplace, other states will work with the federal government in a State Partnership Marketplace, and the remaining states will have a Federally-facilitated Marketplace. No matter what state they live in, consumers will be able to get live in-person help as they go through the process of applying for and choosing new coverage options in the Marketplace. Individuals can help provide that assistance in a variety of roles. They can become Navigators, non-Navigator assistance personnel, or certified application counselors. In addition, agents and brokers can also help consumers enroll in new coverage options. Below is a description of the activities, required training, and funding for each type of consumer assistance.
What are the different consumer assistance roles? Navigators: Navigators will have a vital role in helping consumers prepare electronic and paper applications to establish eligibility and enroll in coverage through the Marketplace. This includes steps to help consumers find out if they qualify for insurance affordability programs (including a premium tax credit, cost sharing reductions, Medicaid and the Children’s Health Insurance Program), and if they’re eligible, to get enrolled. Navigators will also provide outreach and education to consumers to raise awareness about the Marketplace, and will refer consumers to ombudsmen and other consumer assistance programs when necessary. Navigators can play a role in all types of marketplaces. They’ll be funded through state and federal grant programs, and must complete comprehensive training. Non-Navigator assistance personnel: Non-Navigator assistance personnel (also known as in-person assistance personnel) will perform generally the same functions as Navigators but will exist in either a State-based Marketplace or a State Partnership Marketplace. Non-Navigator assistance personnel will serve as a part of an optional program that the state can set up before its Marketplace is economically self-sustaining, and before its Navigator program is fully functional. Though they perform the same functions as Navigators, non-Navigator assistance personnel will be funded through separate grants or contracts administered by a state. They must also complete comprehensive training.
Certified application counselors: The Federally-facilitated Marketplace will designate organizations to certify application counselors who perform many of the same functions as Navigators and non-Navigator assistance personnel—including educating consumers and helping them complete an application for coverage. An online application will be available at the end of July 2013 for organizations who want to become Marketplace-designated organizations that can certify application counselors. These groups might include community health centers or other health care providers, hospitals, or social service agencies. To be notified when the online application is available, visit Marketplace.cms.gov and sign up for email notifications and updates. If you have questions about other ways to partner with the Marketplace, contact partnership@cms.hhs.gov. A State-based Marketplace may choose to certify application counselors directly rather than designate organizations to do so. Certified application counselors and Marketplace-designated organizations won’t receive new federal grant money through the Marketplace. The counselors and organizations could, however, receive federal funding through other grant programs or Medicaid to help support their consumer assistance and enrollment activities. Examples of possible certified application counselors include staff at community health centers, hospitals, other health care providers, or social service agencies. In states that already have their own certification programs, staff at consumer non-profit organizations may also be certified as application counselors by Marketplace-designated organizations. All certified application counselors are required to complete comprehensive training. Agents and Brokers: To the extent permitted by a state and if all Marketplace requirements are met, licensed health insurance agents and brokers may enroll individuals, small employers, and employees in coverage through the Marketplace. Agents and brokers will be compensated by the issuer or by the consumer to the extent permitted under state law. Federal and state training and certification requirements will apply to agents and brokers who enroll or assist consumers in the Marketplace.
What kind of assistance will be available through the Marketplace? Navigators
Non-Navigator assistance personnel
Certified application counselors
Agents and Brokers
State-based Marketplace
Yes
Optional for states
Yes
Optional for states
State Partnership Marketplace
Yes
Yes
Yes
Yes, if a state permits it
Federallyfacilitated Marketplace
Yes
Not applicable; Navigators provide this assistance
Yes
Yes, if a state permits it
How are these roles funded? Navigators
Non-Navigator assistance personnel
State-based Marketplace
State-based grant program
State-based grants or contracts, which can be funded by Exchange Establishment grants
State Partnership Marketplace
Federal grant applications are being reviewed and awards will be announced in late summer 2013
State-based grants or contracts, which can be funded in states with consumer partnerships by Exchange Establishment grants
Federallyfacilitated Marketplace
Federal grant applications are being reviewed and awards will be announced in late summer 2013
Not applicable
Certified application counselors
Agents and Brokers
Certified application counselors will not receive new federal grant money through the Marketplace. Federal funding through other grant programs or Medicaid may be available. Some examples of possible application counselors include staff at community health centers, hospitals, other health care providers, or social service agencies.
Agents and brokers can be compensated by insurance companies or consumers, consistent with state law.
What training and certification is required? Navigators
Non-Navigator assistance personnel
Certified application counselors
Agents and Brokers
State-based Marketplace
State training and certification (state may choose to use federal training)
State training and certification (state may choose to use federal training)
State training and certification (state may choose to use federal training)
State training and certification (state may choose to use federal training)
State Partnership Marketplace
Federal training and certification, which may be supplemented by the state
Federal training and certification, which may be supplemented by the state
Federal training and federal designation of organizations, which may be supplemented by the state
Federal training and registration
Federallyfacilitated Marketplace
Federal training and certification
Not applicable
Federal training and federal designation of organizations
Federal training and registration
CMS Product No. 11647-P July 2013
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How can I get ready to enroll in the Marketplace?
Compare options in the Health Insurance Marketplace
To prepare to enroll, you can learn about types of health coverage, research your questions, and figure out what you need to know before open enrollment begins.
Insurance plans in the Marketplace are offered by private companies, and they cover the same core set of benefits called essential health benefits. No plan can turn you away or charge you more because you have an illness or medical condition. They must cover treatments for these conditions. Plans can't charge women more than men for the same plan.
Open enrollment starts October 1, 2013. Coverage can start as soon as January 1, 2014. How to get ready now
Learn about the Marketplace in your state While all insurance plans are offered by private companies, the Marketplace is run by either your state or the federal government.
Learn about different types of health coverage. Through the Marketplace, you'll be able to choose a health plan that gives you the right balance of costs and coverage. You can be better prepared if you understand the types of coverage you'll choose from. Make a list of questions you have before it's time to choose your health plan.
The Marketplace simplifies getting health coverage
Make sure you understand how coverage works, including things like premiums, deductibles, out-ofpocket maximums, copayments, and coinsurance. You'll want to consider these details while you're looking for health insurance.
The Marketplace simplifies your search for health coverage by gathering the options available in your area in one place. You can compare plans based on price, benefits, quality, and other features important to you before you make a choice.
Gather basic information about your household income. Most people using the Marketplace will qualify for lower costs on monthly premiums or out-of-pocket costs.
In the Marketplace information about prices and benefits will be written in simple language. You get a clear picture of what premiums you'd pay and what benefits and protections you'd get before you enroll. Compare plans based on what's important to you, and choose the combination of price and coverage that fits your needs and budget.
Continued on page 11
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What is the SHOP Marketplace? The Small Business Health Options Program (SHOP) is a new program that simplifies the process of buying health insurance for your small business.
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To find out how much savings you're eligible for, you'll need income information, like the kind you get on your W-2, current pay stubs, or your tax return. Use this checklist to get started. Set your budget. There will be different types of health plans to meet a variety of needs and budgets. You'll need to figure out how much you want to spend on premiums each month. Ask your employer if it plans to offer health insurance in 2014. If not, you may need to get insurance through the Marketplace or from other sources in 2014. If you don’t have coverage, you may have to pay a fee. Explore current options. You may be able to get help with getting coverage now through existing programs. Learn more about health insurance for adults up to age 26 and programs for people and children in families with limited incomes including Medicaid and the Children’s Health Insurance Program (CHIP). Medicare covers people who are 65 and older or who have certain disabilities. Find out which Marketplace will serve you. If your state runs the Marketplace, you'll use its website to compare your options and enroll in coverage instead of this one. If your state doesn’t run the Marketplace, you’ll use this website, www.HealthCare.gov.
For 2014, the SHOP Marketplace is open to employers with 50 or fewer full-time-equivalent employees (FTEs). The advantages of using SHOP include: You control the coverage you offer and how much you pay toward employee premiums. You can compare health plans online on an applesto-apples basis, which helps you make a decision that's right for your business. You may qualify for a small business health care tax credit worth up to 50% of your premium costs. You can still deduct from your taxes the rest of your premium costs not covered by the tax credit. Beginning 2014 the tax credit is available only for plans purchased through SHOP. Compare plans and apply online The Small Business Health Options Program (SHOP) is designed for small employers with 50 or fewer full-time equivalent employees. With one online application, on your own or with the help of an agent, broker, or other assister, you can compare price, coverage, and quality of plans in a way that's easy to understand. You can enroll starting October 1, 2013 for coverage starting as soon as January 1, 2014. You can also enroll and begin coverage any time after January 1, 2014. You decide what you'll pay toward employee premiums, and then your employees can enroll. There will be a SHOP Marketplace in each state. You must have an office or employee work site within the SHOP's service area to use that particular SHOP. The online application will guide you to the right SHOP for you. How to know if you qualify for the SHOP Marketplace In 2014, SHOP is open to employers with 50 or fewer full-time equivalent (FTE) employees. Beginning in 2016, all SHOPs will be open to employers with up to 100 FTEs: If you're self-employed with no employees, you can get coverage through the individual market Health Insurance Marketplace, but not through SHOP. If you plan to use SHOP, you must offer coverage to all of your full-time employees–generally those working 30 or more hours per week on average. In many states, at least 70% of your full-time employees must enroll in your SHOP plan. See “How many of my employees must enroll in SHOP?” on the dropdown menu below for more information. Continued on page 12
AIANC’s STREET WISE
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How to know if you’re "self-employed"
Small Business Health Options Program Continued from page 11 Can I use an agent or broker to buy health insurance in the Marketplace? You will be able to use a licensed agent or broker to provide help or handle your SHOP business. You won’t pay more if you use a SHOP agent or broker. Get SHOP help from experienced agents or brokers A licensed agent or broker can help you: apply for insurance for your employees review and compare price, coverage, quality, and other important features choose a plan that works for your budget, business, and employees Using your own health insurance broker You can continue using your current licensed agent or broker to buy health insurance in the SHOP. You pay the same, with or without a broker The premiums you pay will be the same with or without the help of agents or brokers. Agents and brokers are usually paid by the insurance companies whose policies they sell. What if I'm self-employed? If you're self-employed with no employees, you're not considered an employer. You can use the individual Marketplace to find coverage that fits your needs. AIANC’s STREET WISE
If you run an income-generating business with no employees, then you're considered self-employed (not an employer) and can get coverage through the Marketplace. You’re not considered an employer even if you hire independent contractors to do some work. If you have employees (generally, workers whose income you report on a W-2 at the end of the year) you’re considered an employer. Then you could get coverage for yourself and your employees through the SHOP Marketplace. Learn more about how to determine if you have employees. New options for the self-employed If you're self-employed, you'll have more health coverage options in 2014. Starting October 1, 2013, you can use the Marketplace to find health coverage that fits your budget and meets your needs. You can compare important features of several plans side-by-side, all of them offering a full package of essential health benefits. You can see what your premium, deductibles, and out-ofpocket costs will be before you decide to enroll. You can't be denied coverage or charged more because you have a pre-existing health condition. If you currently have individual insurance--a plan you bought yourself, not the kind you get through an employer--you may be able to change to a Marketplace plan. Learn more about changing individual insurance plans. Continued on page 14 Page 12
August, 2013
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What are some of the key things an employer needs to know about the new healthcare law? The key things an employer needs to know about the new healthcare law. Lower costs for coverage Starting in 2014, you may qualify to get lower costs on your monthly premiums when you buy private health insurance in the Marketplace. When you fill out a Marketplace application, you'll learn if you qualify for these lower costs. Depending on your income, you may also qualify to for lower out-ofpocket costs, so you won't have to pay as much for deductibles, copayments, and coinsurance. Medicaid and CHIP When you fill out a Marketplace application you'll also learn if you or your children qualify for free or low-cost coverage through Medicaid or the Children’s Health Insurance Program (CHIP). You may qualify for these programs right now. Continued on page 16 AIANC’s STREET WISE
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Do I have to offer health coverage to my employees?
What if I have a pre-existing health condition? Starting in 2014, health insurance plans can't refuse to cover you or charge you more just because you have a pre-existing health condition.
No employer has to offer coverage. Some large businesses that don't offer coverage meeting certain standards may have to make a shared responsibility payment in 2015.
Being sick doesn't keep you from getting coverage
If you have fewer than 50 full-time equivalent (FTE) employees, you are not subject to the Employer Shared Responsibility parts of the law. You may use SHOP to offer coverage for your employees.
Starting in 2014, being sick won't keep you from getting health coverage. An insurance company can't turn you down or charge you more because of your condition. It can't refuse to cover treatment for preexisting conditions.
Businesses with fewer than 50 full-time employees are not required to provide health insurance for their employees under Obamacare. 95% of businesses in this size-range already provide health insurance for their employees, but the cost is usually high and coverage is often slim.
This is true even if you have been turned down or refused coverage due to a pre-existing condition in the past. The only exception is for grandfathered individual health insurance plans--the kind you buy yourself, not through an employer. If you have one of these plans you can switch to a Marketplace plan during open enrollment and get coverage for your pre-existing condition.
Currently, small businesses pay about 18% higher health insurance premiums than large companies. This is because the insurance risk is spread only among the employees in that company. As a result, small companies with female employees, older employees, or employees with a chronic illness pay higher premiums. This will change under Obamacare because the employer group will be part of a large, state-wide group.
You can apply for Health Insurance Marketplace insurance when open enrollment starts on October 1, 2013. Coverage starts as soon as January 1, 2014. Be sure not to miss open enrollment
To keep premiums down, many employers have been forced to choose lousy health insurance plans with high deductibles and co-pays. Before Obamacare, some companies even offered plans with very limited coverage caps such as $100,000. This will never happen under Obamacare.
Open enrollment ends on March 31, 2014. Outside of open enrollment, you can't enroll in Marketplace coverage unless you have a qualifying life event. Find out what you can do now to get ready to enroll. Pre-existing conditions with Medicaid and CHIP
Since 2010, 360,000 small businesses have taken advantage of tax credits for providing health insurance. The tax credits total 35% of what the employer paid towards their employees’ health insurance costs. The tax credit goes up to 50% in 2014.
Medicaid and the Children's Health Insurance Program (CHIP) also can't refuse to cover you or charge you more because of a health condition. What is considered a small business? If you have 50 or fewer full-time equivalent (FTE) employees you're considered a small business under the health care law. As a small business, you may get employee insurance through the SHOP Marketplace. This applies to non-profit organizations too. If you have fewer than 25 employees, you may qualify for the Small Business Tax Credit. Non-profit organizations can get a smaller tax credit. Beginning in 2016, the Small Business Health Options Programs (SHOP) will be open to employers with 100 or fewer FTEs. If you're self-employed and have no employees, you can buy insurance through the individual Health Insurance Marketplace. You would not use the SHOP.
AIANC’s STREET WISE
COMPANIES WITH 24 OR FEWER EMPLOYEES The business owner, his partners and family members are not included in the employee number. This is important because the employer might make a lot more money than his employees – and he might pay his wife and kids more than he pays his non-family employees. Full Time Equivalent (FTE): 40 hours is considered full-time. Two employees who each work 20 hours are considered 1 FTE. To receive the tax credit the employer must pay 50% of the of his employees’ health insurance premiums. Employee salaries must average less than $50,000 per year. Continued on page 17
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COMPANIES WITH FEWER THAN 10 EMPLOYEES Employee salaries must average less than $25,000 per year.
have as many choices as the feds have, but they will have more choice than they do now or will have in 2014.) COMPANIES WITH 50 OR MORE EMPLOYEES
SHOP: Small Business Health Options Program To get tax credits, employees must enroll through the SHOP. Insurance agents/brokers can help employees enroll through the SHOP. In 2015, the SHOP will be expanded to provide employees with more than one choice for health insurance. When this happens, employees who work for small companies will have several plans on a “menu”, just like federal employees now have. (Well, they won’t
There is a website that answers questions about health insurance options for small businesses. You can find it here: http://business.usa.gov/healthcare
AIANC’s STREET WISE
These companies are required to provide health insurance to their employees, but not until 2015. NO MANDATE FOR SMALL BUSINESSES If small businesses do not offer health insurance, their employees can go to the state health insurance exchange (as of October 1st) to enroll in a plan. Those who make less than $45,960 as a single person, or $62,040 as a couple, or $78,120 as a couple with one child, will get help with their premiums. (See the income chart.)
Here is a link to the IRS web page that addresses how to count FTEs, average wages, and tax credits: http://www.irs.gov/uac/Small-Business-HealthCare-Tax-Credit-Questions-and-Answers:-DeterminingFTEs-and-Average-Annual-Wages Page 17
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FOCUS
on
Health Reform JULY 2012
EXPLAINING HEALTH CARE REFORM: Questions About Health Insurance Subsidies Good health insurance is expensive, and its cost is out of reach for many lower and moderate income families, particularly if they are not offered health benefits at work. To make coverage obtainable for families that otherwise could not afford it and to encourage broad participation in health insurance, the Patient Protection and Affordable Care Act (PPACA) includes provisions to lower premiums and cost-sharing obligations for people with low and modest incomes. The adequacy of this assistance will be a key determinant of how many people will gain coverage and whether or not lower income people will be able to use the health insurance they obtain. This summary describes the financial assistance provided under PPACA for people purchasing coverage on their own through health insurance exchanges. Expanded coverage for low income people through Medicaid and CHIP and new tax credits for small businesses offering health insurance are addressed in other reports.
What types of subsidies does PPA CA provide to people buying health insurance? New eligibility rules enacted under PPACA – as revised by the recent Supreme Court decision on the law – give states the option of extending coverage in Medicaid to most people with incomes under 138% of poverty. For people with somewhat higher incomes (up to 400% of poverty), PPACA provides tax credits that reduce premium costs. People with incomes up to 250% of poverty also are eligible for reduced cost sharing (e.g., coverage with lower deductibles and copayments) paid for by the federal government. The premium tax credits and cost-sharing assistance will begin in 2014.
Who is eligible for premium tax credits? Citizens and legal residents in families with incomes between 100% and 400% of poverty who purchase coverage through a health insurance exchange1 are eligible for a tax credit to reduce the cost of coverage. People eligible for public coverage are not eligible for premium assistance in exchanges. In states without expanded Medicaid coverage, people with incomes less than 100% of poverty will not be eligible for exchange subsidies, while those with incomes at or above poverty will be. People offered coverage through an employer are also not eligible for premium tax credits unless the employer plan does not have an actuarial value of at least 60%2 or unless the person’s share of the premium for employer-sponsored insurance exceeds 9.5% of income. People who meet these thresholds for unaffordable employer-sponsored insurance are eligible to enroll in a health insurance exchange and may receive tax credits to reduce the cost of coverage purchased through the exchange.
What is the amount of the tax credit provided to people? The amount of the tax credit that a person can receive is based on the premium for the second lowest cost silver plan 3 in the exchange and area where the person is eligible to purchase coverage. A silver plan is a plan that provides the essential benefits 4 and has an actuarial value of 70%. (In PPACA, a 70% actuarial value means that on average the plan pays 70% of the cost of covered benefits for a standard population of enrollees.) The amount of the tax credit varies with income such that the premium that the premium a person would have to pay for the second lowest cost silver plan would not exceed a specified percentage of their income (adjusted for family size), as follows: Income Level
Premium as a Percent of Income
Up to 133% FPL
2% of income
133-150% FPL
3 – 4% of income
150-200% FPL
4 – 6.3% of income
200-250% FPL
6.3 – 8.05% of income
250-300% FPL
8.05 – 9.5% of income
300-400% FPL THE HENRY J. KAISER FAMILY FOUNDATION
9.5% of income
Headquarters: 2400 Sand Hill Level Road (FPL) Menlo CA 94025 650.854.9400 Fax: for 650.854.4800 Note: The Federal Poverty wasPark, $10,830 for an individual and $22,050 a family of four through early 2010. For more Washington Officesplease and Barbara Conference Center:and 1330 G Street, NW Washington, DC 20005 202.347.5270 Fax: 202.347.5274 information, see theJordan Department of Health Human Services Poverty Guidelines, available at http://aspe.hhs.gov/poverty/09poverty.shtml. The Kaiser Family Foundation is a non-profit private operating foundation, based in Menlo Park, California, dedicated to producing and communicating the best possible analysis and information on health issues.
www.kff.org
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A person who wants to purchase a plan that is more expensive would have to pay the full difference between the cost of the second lowest cost silver plan and the plan that they wish to purchase. An example shows how the premium tax credits work. Assume: • Pat is 45 years old and has an income in 2014 that is 250% of poverty (about $28,735) 5 • The cost of the second lowest cost silver plan in the exchange in Pat’s area is projected to be about $5,733 • Under PPACA, Pat would not be required to pay more than 8.05% of income, or $2,313, to enroll in the second lowest cost silver plan. The tax credit available to Pat would be $3,420 ($5,733 premium minus the $2,313 limit on what Pat must pay). Because health insurance premiums have typically grown more rapidly than income, PPACA adjusts the percent of premium that people are required to pay to reflect the excess of the premium growth over the rate of income growth. Beginning in 2019, if aggregate premiums and cost-sharing subsidies exceed 0.54% of GDP, the premium percentages would be further adjusted to reflect the excess of premium growth over CPI.
How will premium subsidies be provided? Premium tax credits would be refundable and advanceable. A refundable tax credit is one that is available to a person even if he or she has no tax liability. An advanceable tax credit allows a person to receive assistance at the time that they purchase insurance rather than paying their premium out of pocket and waiting to be reimbursed when filing their annual income tax return. PPACA requires exchanges to provide information to prospective enrollees about their eligibility for premium tax credits. The process through which people apply for premium tax credits will likely be established by the Secretary of Treasury through regulation.
How will cost-sharing subsidies be structured? Cost-sharing subsidies protect lower income people with health insurance from high out-of-pocket costs at the point of service. PPACA provides for reduced cost sharing for families with incomes at or below 250% of poverty by making them eligible to enroll in health plans with higher actuarial values. The premium tax credits, discussed above, generally are based on a plan with an actuarial value of 70%. PPACA provides that people with lower incomes have their cost sharing reduced so that plan on average pays a greater share of covered benefits. The amount of additional protection varies with income, as follows: Income Level
Actuarial Value
100-150% FPL
94%
150-200% FPL
87%
200-250% FPL
73%
PPACA sets maximum out-of-pocket spending limits (discussed below), but otherwise does not specify the combination of deductibles, copayments, and coinsurance that plans must use to meet the actuarial value requirements. So, for example, one plan may choose to have relatively higher deductibles but relatively low copayments for office visits and other services, while another plan may choose a lower deductible but higher copayments or coinsurance for each service. The Secretary of Health and Human Services may choose to address this issue through rulemaking.
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QUESTIONS ABOUT HEALTH INSURANCE SUBSIDIES
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As just noted, PPACA limits the total amount that people must pay out-of-pocket for cost sharing for essential benefits. Generally, the limits are based on the maximum out-of-pocket limits for Health Savings Account-qualified health plans ($5,950 for single coverage and $11,900 for family coverage in 2010), which will be indexed to the change in the Consumer Price Index until 2014 when the provision takes effect.6 After 2014, the limits will be indexed to the change in the cost of health insurance. People with incomes at or below 400% of poverty have their out-of-pocket liability capped at lower levels, as follows: 7 Income Level
Reduction in Out-of-Pocket Liability
100-200% FPL
Two-thirds of the maximum
200-300% FPL
One-half of the maximum
300-400% FPL
One-third of the maximum
The limits on out-of-pocket maximum amounts means that a person with income of 150% of poverty purchasing coverage in the exchange would have the limit on their out-of-pocket spending reduced to at least two-thirds of the generally applicable maximum value (for example, if the provision were in effect in 2010, the out-of-pocket maximum for single coverage for such a person would be about $1,981 for single coverage and $3,963 for family coverage). In combination, the two cost sharing provisions require health plans offering coverage to lower income people in the exchange to increase the actuarial value of the coverage of the plans that they receive, and to do so in a way that caps enrollee out-of-pocket liability within the specified levels.
How do subsidies affect the cost of reform? The Congressional Budget Office (CBO) estimates the direct cost of premium and cost-sharing subsidies to be $350 billion from 2010 to 2019, and $8 billion in indirect costs.8 The cost of the subsidies is a function of the number of people that are eligible for subsidies, and how generous the subsidies are.
CONCLUSION Subsidies to make insurance more affordable and increase insurance coverage are a key element of the Patient Protection and Affordable Care Act. Premium and cost-sharing subsidies of varying levels will be available to individuals and families with low to moderate incomes, making coverage and care more affordable. While many of the details on how they will be administered are forthcoming, most premiums subsidies will be delivered in the form of advanceable and refundable tax credits, while cost-sharing subsidies will increase the actuarial value of health plans. The Congressional Budget Office estimates that the subsidies will cost roughly $350 billion between 2010 and 2019, although the overall effect of the Act is estimated to reduce the deficit over the same time period. These subsidies will provide assistance for low to moderate income families, enabling them to purchase coverage and gain better access to care. For more information about the Patient Protection and Affordable Care Act, see the summary of the new health reform law at www.kff.org/healthreform/8061.cfm.
QUESTIONS ABOUT HEALTH INSURANCE SUBSIDIES
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Resources
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Center for Health System Change – Living on the Edge: Health Care Expenses Strain Family Budgets: www.hschange.org/CONTENT/ 1034/?topic=topic05 Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured – Approaches to Covering the Uninsured: A Guide: www.kff.org/uninsured/upload/7795.pdf Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured – President Obama’s Campaign Position on Health Reform and Other Health Care Issues: www.kff.org/uninsured/kcmu112508oth.cfm Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured – The Coverage and Cost Impacts of Expanding Medicaid: www.kff.org/medicaid/7901.cfm Kaiser Family Foundation – Health Reform Side-by-Side: www.kff.org/healthreform/upload/healthreform_tri_full.pdf Kaiser Family Foundation – Tax Subsidies for Health Insurance: www.kff.org/insurance/upload/7779.pdf
ENDNOTES 1
Kaiser Family Foundation, “Explaining Health Care Reform: Questions About Health Insurance Exchanges.” Available at www.kff.org/healthreform/7908.cfm.
2
For definition of Actuarial Value, please see “Glossary of Key Health Reform Terms,” available at www.kff.org/healthreform/7909.cfm.
3
For more information about the silver plan and other plans available in the exchange, please see “Explaining Health Care Reform: Questions About Health Insurance Exchanges,” available at www.kff.org/healthreform/7908.cfm.
4
Essential benefits must include at least the following general services: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health benefits and substance use disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease managements, and pediatric services including oral and vision care.
5
Poverty projected based on projected change in consumer price index, available at www.cbo.gov/budget/econproj.shtml.
6
See 26 U.S.C. §22 3(g).
7
PPACA provides that the Secretary can adjust the maximum out-of-pocket limits if they would result in plans exceeding the specified actuarial values. This could happen if an out-of-pocket limit is too low to allow a deductible and other cost sharing that is consistent with the specified actuarial value.
8
Congression Budget Office, “H.R. 4872, Reconciliation Act of 2010 (Final Health Care Legislation),” March 20, 2010, available at www.cbo.gov/ftpdocs/113xx/doc11379/Manager%27sAmendmenttoReconciliationProposal.pdf. While CBO is required to project the costs over a ten-year time period, the subsidies will not be available until 2014.
This publication (#7962-02) is available on the Kaiser Family Foundation’s website at www.kff.org. THE HENRY J. KAISER FAMILY FOUNDATION Headquarters: 2400 Sand Hill Road Menlo Park, CA 94025
www.kff.org
650.854.9400
Fax: 650.854.4800
Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW Washington, DC 20005 202.347.5270 Fax: 202.347.5274 The Kaiser Family Foundation, a leader in health policy analysis, health journalism and communication, is dedicated to filling the need for trusted, independent information on the major health issues facing our nation and its people. The Foundation is a non-profit private operating foundation, based in Menlo Park, California.
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THE GOLD BENEATH YOUR FEET Most agents don’t mind hard work. They love clients and prospects that come to the agency looking for information, advice and even quotes. They enjoy being busy. But most agents also draw the line when THEY, not the prospect, must do something proactively to promote sales in the agency. For the most part, agents have admitted that although they may know their products and carriers inside-out, they do not know how to attract customers nor are they comfortable in the “sales” role instead of in the “consulting” role. The best salespeople in the world understand that selling is more about GAINING TRUST and MAKING FRIENDS than it is about what you know. Having a strong knowledge base makes you better and more valuable than your competitors, but it doesn’t get you in front of more prospects and it doesn’t convince them of your sincerity, honesty and trustworthiness. Those three traits, HONESTY, SINCERETY AND TRUSTWORTHINESS win you the “opportunity.” KNOWLEDGE converts the opportunities into clients. I’m in the process of replacing the roof of the Agency Consulting Group building. I called several roofers, all referrals from others, I had trepidation because of the lousy reputation that contractors, in general, have in our area. AIANC’s STREET WISE
Each of the roofers I invited to inspect the property was assumed to be knowledgeable, but one of the criteria of our interview was whether they seemed to know their business or were just blowing smoke. They all certainly seemed to know their job and products, but I’m always leery because I don’t know much about roofs. So my decision was based more on which one I trusted more. Insurance agents are appropriately proud of their knowledge base and insurance expertise. It is certainly what separates some independent insurance from their competitors. But the insurance-buying public is less interested in our knowledge than in the package in which that knowledge is wrapped. And most of us have ‘lousy’ packages. A sales personality can make friends, gain trust and influence people to use their services and products. The sales personality without the knowledge will sell product and services, but they do not do a very good job in protecting the client’s assets. These are the sales pros that seem to be more ‘fluff’ than substance. Yet, they sell a lot of insurance because of their personalities. The insurance professional without a sales personality can do a wonderful job assessing risk, but will not often get the prospect to move because he doesn’t necessarily elicit confidence and trust. Continued on page 23 Page 22
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Gold … Continued from page 22 The insurance agents in the world who have neither the sales personality nor the insurance professional skills are usually the ‘maintenance men’ of the industry. They don’t sell much and count their new business each year on two hands. Yet they are always busy ‘servicing’ their clients. They try to retain the customer base built by others and acquired through agency acquisitions, external perpetuation and internal succession plans. Most of the roofers I encounter, like many agents, have a mix of sales personality and some knowledge about their trade. The ones that impress me enough for me to spend thousands of dollars on their services had both traits in abundance and instill a sense of trust that they will do as good a job as they claim. The roofers who are basically ‘hammer swingers’ know how to lay a roof. They neither have the in depth knowledge of their profession nor the personality to cause a trust relationship. They abound after a storm and can’t get customers in the off season times when they have to count on their personalities to win clients. We also have a lot of ‘hammer swingers’ in the insurance agency industry. They are the ones who start every conversation with, “Let me give you a quote. I can probably get it for you cheaper.” When rates are escalating, it’s not hard to get insurance buyer’s attention. Whether or not you instill trust is secondary to potentially saving them thousands of dollars. However, without that relationship, your longevity with that client is limited. Facing a better sales personality when the agent does not pay attention to an existing client relationship will find that they lose the customer to another agent with a better personalities and can match or beat their pricing. However, when rates are stable and pricing leverage doesn’t drive prospects to your agency, that flow of business doesn’t occur and agents either learn how to evolve relationships with prospects or they wither on the vine. Unfortunately, for the industry, we are not replacing retiring insurance professionals with even the same knowledge base in their successors. Luckily for the insurance professionals still in the business and the younger insurance professionals who are being trained properly to assume control, lack of expertise will allow them to easily reach the client base that is smart enough to seek professional services instead of trying to buy insurance out of “the box” or from the gecko. However, unless our existing and arising insurance professionals also hone their sales personalities, they will not become the Insurance Sales Professional – the entire package – that will insure their success in the future of their agencies. I selected my roofer today. He came highly recommended. He visited me and walked me through the needs, the products he would use, and the time it AIANC’s STREET WISE
would take to do the roof. The next time we speak, you should ask me how the results measured up to the proposal! The price wasn’t even an issue until he was sure I understood 1) that he knew his business, 2) that I understood the products he would use, 3) that he was proud of his work, and 4) that he would make me a priority. Of course if he was way above (or way below) the other proposals, I may have had other questions. But he clearly told me how much the material would cost and how much the labor would cost – summing up the costs to a final price. Similarly, the Sales Personality in the insurance agency industry immediately gets past the cost issue, telling the prospect that we wouldn’t make a change unless the pricing indicated that it would be the best course of action for the client. That permits the agent to probe and identify the real issues that are the ‘hot buttons’ for that prospect and responding to each of those issues in a way that makes it perfectly clear that the agent understands the client’s pain and can respond to it appropriately. Finding the prospects to hone your sales personality is also not complicated. It is NOT an issue of cold calling or mass marketing. Your prospects are already in your files and systems. They are your clients with whom you should be establishing an on-going and lasting relationship. Once you build a strong client relationship, you will find they refer people to you or you can request their friends and families as referrals for them. If you don’t believe me, ask yourself and the close agent friends where they got their best and longest lasting accounts. Invariably, they will admit those customers were or became their FRIENDS and that they are also the source of their most valuable referrals. Word of mouth is the best type of referral. We encourage you to call us or visit our website and investigate the Asset Protection Model of Relationship Selling that re-teaches us to build trust relationships in order to grow our customer base. We do these ourselves and have found that it works with insurance agents referring us to other insurance agents as well as it works for insurance clients referring YOU to other insurance clients. We can be reached at 856-779-2430 and our website is www.agencyconsulting.com. The Asset Protection Model can be accessed in the Archive Section of the PIPELINE. Simply search for Asset Protection and you’ll get dozens of papers covering all sections of this program. If you have concerns or would like to discuss the Asset Protection Model, give me or David a call. (P.S. This week, subsequent to the new roof, it rained more in one day than it EVER rained in recorded history (8+ inches) and Agency Consulting Group, Inc. is DRY!!) THE PIPELINE | Copyright © 2013 Agency Consulting Group, Inc.| 800-779-2430 | Visit The Pipeline | Subscribe to The Pipeline Page 23
August, 2013
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LIMRA Tests Americans’ Health Insurance IQ — Only 1 in 10 Americans Demonstrate a High Level of Knowledge About Health Insurance WINDSOR, Conn., July 11, 2013 — Recently, LIMRA asked more than 2,000 Americans a series of ten true/false questions to gauge their understanding and basic knowledge of health insurance. The results were grim: · Nearly 8 in 10 consumers failed the test — answering five or fewer questions correctly · Only 1 in 10 consumers correctly answered at least seven questions · Uninsured consumers, on average, answered less than 3 in 10 questions correctly
The IRS has launched a new Affordable Care Act Tax Provisions website at IRS.gov/aca to educate individuals and businesses on how the health care law may affect them. The new home page has three sections, which explain the tax benefits and responsibilities for individuals and families, employers, and other organizations, with links and information for each group. The site provides information about tax provisions that are in effect now and those that will go into effect in 2014 and beyond. Topics include premium tax credits for individuals, new benefits and responsibilities for employers, and tax provisions for insurers, tax-exempt organizations and certain other business types. Visitors to the new site will find information about the law and its provisions, legal guidance, the latest news, frequently asked questions and links to additional resources. Several other federal agencies have a role in implementing the health care law, including the Department of Health and Human Services, which has primary responsibility. To help locate additional online resources from the Department of Health and Human Services, the Department of Labor and the Small Business Administration, the IRS has issued a new Web-based flyer - Healthcare Law Online Resources (Publication 5093). Visit IRS.gov/aca for more information regarding the tax provisions of the Affordable Care Act.
“Overall, Americans expressed a great deal of confusion about how health insurance plans work,” said Anita Potter, assistant vice president, LIMRA Group Insurance Research. “Not surprisingly, insured Americans had a better understanding of health insurance than those uninsured – but not by a large margin.” LIMRA found consumers with low levels of health insurance knowledge more likely to be younger, less affluent, less educated, more likely to be a student, unemployed or uninsured. The survey results also revealed that while consumers are more knowledgeable about what health insurance is and how to access care, many showed a tremendous lack of knowledge about plan features, the costs involved, and how various types of plans work. The study found that few consumers (14 percent) understand how the public health exchanges, established by PPCA, will work. For uninsured consumers — who are most likely to use these exchanges — less than 1 in 10 know what types of plans will be available. LIMRA also asked consumers to identify the deciding factor that would influence how they chose a health insurance plan. While cost is the number one criterion for both insured (36 percent) and uninsured consumers (60 percent) deciding on a plan, LIMRA found insured consumers are nearly as likely to consider how comprehensive the plan is as they are to consider its cost. “Our survey confirms that consumers need help determining what types of coverage are available and what they should buy to best meet their need,” noted Potter. “Our industry can help by engaging and educating consumers now – so when they ultimately choose their health care insurance, it is done prudently.” No one surveyed answered all ten questions correctly. (Take the quiz and compare your knowledge). http://www.limra.com/public/businessanalytics/default .aspx?tbid=39b78cbf-4c4f-4a80-bdc5-a5644cf7b6fe
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Health Insurance Tax Credits Will Be Available. Starting in 2014, Americans with an income of up to 400 percent over the Federal Poverty Line (roughly $43,320 for an individual or $88,200 for a family of four) may be eligible for tax credits when they purchase coverage through a health insurance exchange. To qualify for these tax credits, you can't be eligible for public benefits like Medicaid, Medicare, the Children's Health Insurance Program or military coverage. You can't have employer health insurance unless the coverage doesn't meet minimum standards. Premium tax credits are paid to your insurer on a monthly basis to lower your monthly payments. There will be reconciliation on your tax return after the end of the coverage year. AIANC’s STREET WISE
Do you qualify for tax credits? Find Out http://kff.org/interactive/subsidy-calculator/ This tool illustrates health insurance premiums and subsidies for people purchasing insurance on their own in new health insurance exchanges (or “Marketplaces”) created by the Affordable Care Act (ACA). Beginning in October 2013, middle-income people under age 65, who are not eligible for coverage through their employer, Medicaid, or Medicare, can apply for tax credit subsidies available through state-based exchanges. Page 25
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Contact Rick Pegram at http://RickRPegram.LegalShield.com
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