Now that the Supreme Court has upheld most of the Affordable Care Act (otherwise known as the ACA, or “Obamacare”), it seems a good idea to take a closer look at one of its most important provisions: the health insurance exchanges, which come online in 2014. These may come in handy for people who find themselves without union or employer coverage.
WHAT ARE THE EXCHANGES?
Health insurance exchanges are the new health insurance marketplaces beginning in 2014 for individuals or businesses of 50 employees or fewer. They are to be set up and regulated by the states, but if states choose not to do so, the federal government will do it.
The policies will come in four levels:
Platinum (benefits covered 90 percent)
Gold (benefits covered 80 percent)
Silver (benefits covered 70 percent)
Bronze (benefits covered 60 percent)
Each plan is required to furnish a summary of benefit coverage (SBC), which must be no more than eight pages (four, front and back) to facilitate easy comparisons of plans.
The premium amount the plans may charge for coverage is strictly regulated. They cannot charge more for females and can only vary rates by area, age and individual versus family up to a certain amount. (New York state already prohibits insurers from varying the premium amounts because of age and gender.)
Large plans must spend 85 percent of the premium revenue on medical services, small plans 80 percent; if they fall short, they must rebate the extra amount to the individual or employer who purchased the plan. They will not be permitted to refuse anyone for a pre-existing condition and they can impose a waiting period for coverage of no more than 90 days. Yearly and lifetime benefit caps are prohibited.
The policies have to offer as yet undefined “essential benefits.” However, we know that any preventive service like physicals and vaccinations will be covered. Also covered will be maternity care, hospitalization, “necessary surgery,” and physical therapy. Some things are still being argued over like contraception and end-of-life counseling. Each state is required to choose a group policy currently in force that will be the “benchmark” – the standard for essential benefits.
HOW MUCH WILL IT COST?
The cost of buying a policy on the exchanges is not yet known. However, federal subsidies will be available to offset the cost for people with incomes up to four times the federal poverty level, currently $92,200 for a family of four or $44,680 for a single person. Subsidy recipients near the top income level will pay no more than 9.5 percent of their income; at the lower income level it is as little as 3 percent for silver level (70 percent) coverage.
One other thing to note: on top of the monthly cost of health insurance, you’ll have to pay co-insurance out of your own pocket. The amount of co-insurance you pay will depend on what level of health plan you’re in (platinum, gold, silver or bronze).
Confused yet? The Kaiser Foundation (not affiliated with Kaiser Health Insurance) has published a very nice calculator so you can figure out what subsidies you might be eligible for. We encourage you to check this out. See: bit.ly/EasyHealthCalculator
The deadline for states to demonstrate readiness under the new health exchanges is Jan. 1, 2013. They must be ready to accept enrollees by Oct. 1, 2013. There is some alarm on the part of the Department of Health and Human Services that many states have made no progress at all. Twenty-two states – including New Jersey – have taken no action. Eight states have declared they will not set up exchanges, which means that the federal government will set up exchanges for them.
On April 12, Gov. Cuomo issued an executive order to establish a state exchange after the legislature failed to pass a law doing so. The exchange will do everything that was outlined above, as required by the federal law and also will have at least one limited dental plan.
The exchange will be governed by a board of nine directors, including the state health commissioner and the superintendent of financial services. The other seven seats will be appointed by the governor in consultation with the Assembly and the Senate, and will be required to have expertise in the fields of health care and/or health insurance markets.
If a small employer (50 employees or less) opts into the exchange and then the number of employees increases because the business grew, it will continue to be treated as a qualified small employer.
Part-time employees will be counted toward the number of employees at a business, even if the business does not offer them health benefits.
The state will be divided into five regions, each with its own “regional advisory committee.”
In New Jersey, a working group made up of university and industry health, law and finance researchers made recommendations to the state government. Gov. Christie vetoed the Assembly bill that would have formed an exchange on May 10 before the Supreme Court decision. Later, Gov. Christie said that establishing a state exchange should be based on two criteria: “what makes it better for the people of our state and what is the most efficient and effective way to do it from a cost prospective.”
Connecticut’s legislature did pass a law setting up an exchange called “a quasi-governmental organization.” It is governed by a board of 14 and does largely what the New York exchange will do. Connecticut’s legislature did consider a public option called SustiNet, but that idea seems to be dead, lacking the support of Gov. Malloy because of cost concerns.
WHAT IF OBAMA LOSES?
If President Obama loses re-election and both the Senate and the House go Republican, it is likely the ACA will still go forward and the health exchange system described above will continue because so much of of the groundwork has already been laid. However, in that case, it may be that the exchange system will be under-funded and the system may die “a death of a thousand cuts.”
LOCAL 802’S PLAN
Finally, it’s important to note that everything in this article applies only to those who don’t have health insurance already and who will be required to buy health insurance on the new exchanges.
For those musicians who are currently on one of the Local 802 health plans, we still don’t know how our plans will be affected by the ACA.
The structure of our health plan falls completely outside the wording of the law and the National Coordinating Committee of Multi-employer Plans (NCCMP), our advocate in Washington D.C., is working very hard to influence the regulations being written to make sure our plan can be compliant. The trustees are keeping abreast of the situation.
FOR MORE INFORMATION:
Martha Hyde is a multi-woodwind player who performs on Broadway. A member of Local 802, she is also a trustee on the Local 802 Health Benefits Fund.