Affordable Care Act Kicks Off Era Of Comparison Shopping

From the opening of Access Health CT, the online marketplace created by health reform, to the expansion of Medicaid for the state’s most vulnerable residents, changes under the Affordable Care Act mark a new era of comparison-shopping.

Consumers have six months from Oct. 1, to take advantage of the new coverage options designed to provide some relief to the estimated 344,000 state residents who lack health insurance. The law requires most Americans to have coverage or pay a tax effective Jan. 1, 2014.

Here’s a look at the efforts underway:

The New Marketplace: Individuals who are uninsured, buy coverage on their own, or work for small employers can compare and buy health plans at Access Health with coverage beginning Jan. 1, 2014. The open enrollment period ends March 31, 2014.

In the individual market, people can choose plans offered by Anthem Blue Cross and Blue Shield, ConnectiCare and HealthyCT, a new nonprofit insurer. The small-group market includes Anthem Blue Cross and Blue Shield, HealthyCT, and UnitedHealthcare.

The plans are organized into categories – gold, silver and bronze – based on how you and the insurer will share costs. For example, gold plans have a higher premium, but lower out-of-pocket expenses, while bronze plans have the lowest monthly premiums, but the highest out-of-pocket costs. People under age 30 and individuals with very limited incomes can purchase catastrophic plans to cover worst-case scenarios.

Access Health expects to enroll 80,000 to 100,000 residents the first year. Consumers must buy a plan and make the first monthly premium payment by Dec. 15, to gain coverage by Jan. 1, 2014.

The cost of plans will vary depending on your income and where you live. Many  state residents with low and moderate incomes are expected to qualify for subsidized coverage. People earning up to 400 percent of the federal poverty line ($45,960 for individuals and $94,200 for a family of four in 2013) qualify for tax credits toward premiums. In addition to tax credits, people earning up to 250 percent of the federal poverty line ($28,725 for individuals and $58,875 for a family of four in 2013) qualify for government subsidies for out-of-pocket costs if they purchase a specific silver plan.

Consumers can apply online, call the Access Health Call Center at 855-805-4325 or meet with one of the 300 certified workers (known as in-person assisters) poised statewide to help with enrollment. Look for enrollment fairs throughout the state and the opening of retail stores in New Britain and New Haven.

The Tax Penalty: The law requires most Americans who can afford coverage to purchase health insurance or pay a tax beginning in 2014. The penalty involves a flat fee based on your household size or a percentage of your taxable income, whichever is higher. The tax ranges from $95 per adult ($285 for a family) or 1 percent of annual income in 2014 to $695 per adult ($2,085 for a family) or 2.5 percent of annual income in 2016. The law does allow people to be uninsured for a three-month period once a year without penalty. For more details read: “Should You Take The Health Care Tax Hit?”

Medicaid Expansion: Between 55,000 and 60,000 people are expected to become eligible for Medicaid on Jan. 1, 2014 when the program expands to include adults without minor children. Connecticut was the first state to receive federal approval to expand Medicaid enrollment even before the Affordable Care Act takes effect. The federal government will pay 90 to 100 percent of the costs. The number of low-income adults receiving Medicaid has grown from an estimated 47,000 to about 86,800 from July 2010 to December 2012, reports the state Department of Social Services. Some lawmakers question whether the increase stems from a bad economy or if people are deliberately moving to Connecticut to receive benefits. The Centers for Medicare & Medicaid Services in March denied a request by Connecticut to institute a $10,000 asset test and parental income reporting for applicants.

Here’s a look at changes already in place under the Affordable Care Act:

Limits On Itemized Tax Deductions:  The rules for itemizing deductions on federal income tax returns changed. Beginning 2013, taxpayers can claim deductions for medical expenses not covered by health insurance when they reach 10 percent of adjusted gross income, up from 7.5 percent. The law waives the increase for those 65 years and older for tax years 2013 through 2016.

Changes In Flexible Spending Accounts: There is now a new cap of $2,500 on flexible spending accounts (FSA), which permit taxpayers to set aside tax-free dollars for medical expenses (eye glasses, orthodontic work, speech therapy, etc.) that aren’t reimbursed. In future years, the $2,500 cap will increase by the annual inflation rate. You also can no longer use an FSA account to cover the cost of over-the-counter drugs unless prescribed by a doctor.

Medicare-Related Tax Increases: Two new Medicare-related taxes impact earners with adjusted gross income above $200,000 for individuals or $250,000 for married couples who file jointly. Effective 2013, employees pay an extra 0.9 percent Medicare payroll tax on wages. A new 3.8 percent tax on unearned income impacts investments, interest, dividends, annuities, rent, royalties, certain capital gains, and inactive businesses. Some exemptions apply, including income from tax-exempt bonds, veteran’s benefits, and qualified plan distributions from an IRA or 401(k). The new tax does not apply to the sale of a principal residence, except in rare cases.

Standard Benefit Explanations: Health insurers must provide policyholders with standard disclosure forms (no more than four pages) summarizing benefits and coverage, including information about deductibles, co-payments, out-of-pocket limits and excluded services. The standard format allows consumers to make informed decisions based on apples-to-apples comparisons of health plans. Insurers must also disclose typical out-of-pocket costs for two scenarios: having a baby and treating type 2 diabetes. Future years will include coverage estimates for other conditions, such as heart attack or breast cancer.

Phasing Out Annual Dollar Limits: In 2013, an insurance company must pay no less than $2 million a year for an individual’s medical expenses. The law eliminates all annual limits in 2014.

Essential Benefits: Insurers must provide a minimum level of coverage known as “essential benefits” beginning 2014, including dental care for children and maternity services. ConnecticutCare’s HMO plan, the Children’s Health Insurance Program for pediatric dental coverage, and the Federal Employee Vision Plan for pediatric vision coverage were chosen as the benchmark plans for policies sold on Access Health.

The law applies to non-grandfathered health plans sold to individuals and small businesses in the private market or state exchange. Health plans must cover emergency services, hospitalizations, maternity services, laboratory services, mental health and substance abuse treatment, outpatient care, pediatric care, prescription drugs, preventive care, vision and dental care for children, and rehabilitative services.

Prescription Drug Savings For Older Adults: This year, Medicare recipients who reach the prescription coverage gap – known as the “donut hole” – will get a 52.5 percent discount on prescription drugs and a 21 percent discount on generic drugs. Since the law’s passage, Connecticut residents with Medicare have saved $62.9 million on prescription drugs. A total of 32,451 state residents with Medicare saved $26 million on brand-name prescription drugs during the first nine months of 2012, for an average savings of $803 per person. The “donut hole,” the point at which people must start paying for their medications, disappears by 2020.

Coverage For Pre-Existing Conditions: As of August 2012, a total of 484 previously uninsured Connecticut residents locked out of the coverage system for more than six months because of a pre-existing condition are now insured through the Pre-Existing Condition Insurance Plan created by the law. Although insurers cannot deny coverage to children under 19 with a pre-existing condition, discrimination against adults with pre-existing conditions doesn’t kick in until 2014.

Expanded Coverage For Young Adults: Young adults up to age 26 who do not have job-based health insurance can stay on their parent’s plan whether or not they live at home or attend school. The law applies to all health plans, even those that are self-insured.

Free Preventative Care: With its emphasis on prevention and primary care, the law requires new private health pans to cover wellness visits and evidence-based preventive measures (such as immunizations and cancer screenings) without charging a deductible, co-pay or co-insurance. Additional preventive measures for women since August 2012 include free screening for gestational diabetes, breast-feeding supplies, domestic violence screening and contraception. Although workplaces run by religious organizations that object to birth control do not have to pay for contraception, insurers must pick up the cost.

In the first nine months of 2012, a total of 277,412 Connecticut residents with Medicare received free preventive services. A total of 710,000 state residents were among the 54 million Americans with private health insurance who gained coverage for free preventive services in 2011.

In addition, Connecticut will receive $493,891 each year for five years in “community transformation grants” to address chronic disease and health disparities in five rural counties (Litchfield, Middlesex, New London, Tolland and Windham).

Consumer Rebates: Consumers whose private insurance carriers do not spend at least 80 percent of premium dollars on health care and quality improvements can expect to receive a rebate in August. Last year, 137,452 Connecticut consumers (individuals, small businesses and large employers) received nearly $13 million in rebates (for an average of $168 per person) from insurers that spent too much money on administrative costs rather than on health care. The rebates do not apply to people with self-insured health plans.

Scrutinizing Premium Increases: Insurance companies seeking premium increase rates of 10 percent or more trigger an automatic review by the Connecticut Insurance Department to determine if the request is reasonable. The state has received $1 million under the new law to fight unreasonable premium increases.

Banning Lifetime Dollar Limits: Lifetime dollar limits on health benefits are banned. Already, 1.4 million Connecticut residents with insurance – including 525,000 women and 367,000 children – no longer need to worry about going into debt when their coverage runs out.

Consumer Protection: The Connecticut Office of the Healthcare Advocate (OHA), the independent state agency that helps consumers with insurance issues, generated $6.3 million in savings for consumers in 2012. OHA received federal funds to assist additional residents. Also, the Insurance Department's consumer affairs unit helps consumers with health insurance denials recover about $4 million each year. Insurers can no longer cancel coverage if you get sick or make an honest mistake on your application. You can also appeal insurance company decisions to an independent reviewer.

Tax Credits For Small Business Owners: Small businesses can apply for a 35 percent tax credit (50 percent by 2014), while non-profit organizations can receive a 25 percent credit (35 percent by 2014). About 36,620 small businesses employing 192,400 state residents are eligible to receive up to $166 million in tax credits to defray the cost of insuring employees. To qualify, a small business must pay at least half of their employees’ health insurance costs and have fewer than 25 people earning an average of less than $50,000 a year.

Community Health Centers: Connecticut health centers that serve the state’s most vulnerable residents have received $56 million under the health care reform law to support ongoing operations, establish new sites, expand services and fund capital improvements. In Connecticut, 13 health centers operate 184 sites, providing preventive and primary health care services to 315,992 people.

This report was compiled by Magaly Olivero, C-HIT writer.

Information for this report came from the U.S. Department of Health and Human Services, Kaiser Family Foundation, Connecticut Department of Social Services, Connecticut Health Insurance Exchange, Connecticut Insurance Department, Connecticut Office of the Healthcare Advocate, Connecticut Office of Health Reform and Innovation, and Access Health CT.