How will the ACA affect you

Will my benefits be subject to Annual Dollar or Lifetime Limits?

Under the Affordable Care Act (ACA), there are no longer annual or lifetime dollar limits on “essential health benefits” for individual and family plans and for all employer group plans. This mandate became effective upon renewal on or after September 23, 2010 for group plans, and on January 1, 2011 for Individual and Family Plans. This also applies to grandfathered plans in the first plan year on or after January 1, 2014.

Prior to this mandate, health insurers could set a limit on the dollar amount for which a patient could be covered for medical expenses for as long as they had coverage.

What Costs come with the Healthcare Reform?:

Without underwriting, how will rates be established for Qualified Health Plans?

A new formula called Modified Community Rating (MCR) will be used to set premiums beginning in 2014. Insurance companies must use modified community rating to price their products for individuals and small employers with 1-50 employees. Under modified community rating, all members will pay the same premium regardless of their personal health. Costs can be adjusted only on the basis of family size, location (which can be an entire or part of a state), tobacco use and age.

Is there a penalty if I don't comply with the Individual Mandate?

Yes. Starting on January 1, 2014, if you fail to maintain minimum essential coverage for any portion of the year you may have to pay a penalty. In 2014, the penalty will be $95 or 1 percent of your income (whichever is greater). In 2016, the penalty will be $695 or 2.5 percent of your income (whichever is greater). Some individuals may be able to obtain an exemption to avoid this penalty.

How do I know if I qualify for a subsidy?

Starting in 2014, Advanced Premium Tax Credits also known as subsidies will be available for individuals whose annual income is between 100 percent and 400 percent of the federal poverty level (FPL) and who meet other applicable guidelines. Individuals whose income is between 100 percent and 250 percent of the FPL may also be eligible for additional cost-sharing subsidies, intended to reduce their out of pocket costs for deductibles, coinsurance or copays. Both subsidies can only be obtained through the Individual Marketplace.

If you do qualify for a subsidy, you will need to use the Health Insurance Marketplace to apply your subsidy to the plan you select. Your broker can assist you with this process, and explain all of your plan options on and off the Marketplace that fit your budget and health needs.

What does Medical Loss Ratio mean to me?

The ACA requires health carriers to spend a certain percentage of premium revenue on medical expenses. This percentage is determined from a calculation called the Medical Loss Ratio (MLR). For individuals and small group health plans – carriers must spend no less than 80 percent of premium revenue on medical expenses. For large groups – carriers must spend no less than 85 percent of premium revenue on medical expenses. If carriers do not meet the required MLR, they will be required to pay rebates to employers and individuals.

For group plans, MLR rebates are issued to the employer, and the employer determines how and if they will issue rebates or offset premiums in future years for their employees. Any MLR rebate for individual coverage is distributed to the member. Rebates are distributed by August 1 for the premium paid the previous year.

What does actuarial value mean?

While this can sometimes be a complicated topic to understand, the actuarial value (AV) is the percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an actuarial value of 70 percent, the average person would be responsible for 30 percent - in the form of deductible, copayments or coinsurance - of the costs of all covered benefits. However, you could be responsible for a higher or lower percentage of the total costs of covered services for the year, depending on your actual healthcare needs and the terms of your health insurance plan.