March 10, 2014
Dear friends and colleagues,
Just to share with you my thoughts on some of the latest news and information about the Affordable Care Act. Open enrollment for the Exchanges will close for this year on March 31. There are only 20 days left to get coverage through Covered California.
In California, we now have over 2.2 million enrolled — of them about 800,000 are in Covered California, our Exchange, and a bit under 1.5 million in Medi-Cal (our Medicaid program). This is phenomenal in only 4 and ½ months. Most are enrolling in silver (70% of expected medical costs) and bronze (60% of expected medical costs) plans in Covered California because that is where the premiums are lowest and the federal assistance with paying premiums, copays and deductibles is the greatest. Very few are choosing the plans at either end of the cost spectrum — catastrophic or platinum. While the popularity of platinum is substantially higher in those counties with higher personal incomes, enrollment in catastrophic does not exceed 1% in any of the reporting counties.
The close of open enrollment is March 31, 2014, and the next opening is scheduled for November 15, 2014 until February 15, 2015. In the interim, Medi-Cal enrollment is open at any time with up to three months retroactivity for those who qualify – now $16,105 for an individual and $32,913 for a family of four. You can also enroll in Exchanges (Covered California) during this interim time period for particular “life changes”, which cause an individual to lose or gain the opportunity for coverage, such as marriage, death, adoption, turning 26 and losing parental coverage, or loss of job or an individual’s eligibility for employer or Medi-Cal coverage.
The tax penalties/fees for individuals not enrolling are relatively minor in year 1 — $95 or 1% of income whichever is greater. They increase significantly, however, in years 2 and 3.
Some counties are considering restricting eligibility for county indigent systems for those who are eligible but fail to enroll in Covered California or Medi-Cal. Likewise some hospitals are reportedly considering changes to their charity care policies to increase financial liabilities for patients who are eligible but fail to enroll.
The penalties/fees for mid-sized (50-100) employees who do not offer coverage have been moved back one year – i.e. from 2015 to 2016. The standard for large employers offering coverage is as follows: they need to offer coverage for 70% of their full time employees in 2015 and 95% of their full time employees in 2016. Since most (94%) mid sized and large employers already offer coverage, this just gives a little more time and flexibility for the few who don’t, but does not otherwise have much impact.
There have been lots and lots of confusion about the rules for immigrants.
- First, undocumented immigrants can get only limited scope Medi-Cal that pays for genuine emergencies and maternity benefits. These have been the rules since 1986, adopted under then President Reagan; that hasn’t changed.
- Second, in California legal permanent residents and US citizens can qualify for the Exchange or for full scope Medi-Cal depending on their income. These are the rules in California, but they differ in other states.
- Third, for mixed status families (i.e. one or more undocumented, one or more legal or US citizens), the family can apply for health coverage for those with legal permanent residency or US citizenship. The coverage for those who are US citizens and legal permanent residents is treated the same as any other US citizen or legal permanent resident for Medi-Cal or the Exchanges. The income of the undocumented parent is counted in assessing the family’s income eligibility; their undocumented status is not to be used by the INS to identify and deport the undocumented parent or to deny family members the ability to apply for future status changes (i.e. become US citizens or legal permanent residents in the future). The undocumented parent cannot get coverage through the Exchanges and can only get limited scope Medicaid if their income is low enough.
- Fourth, “dreamers” are those undocumented young men and women who came to this country as young children and have earned a high school degree or served with honor in the military and have not been convicted of felonies or other serious crimes. This group of young men and women were granted deferred action from deportation, but they must apply for this status, and it is renewable every two years. There are less than a million potential “dreamers” in this country and less than 300,000 in California. Uninsured dreamers are eligible in California for full scope Medi-Cal in California if income eligible, but not in most other states. Dreamers are not eligible for the Exchange/Covered California.
There has been lots of confusion about the recent CBO (Congressional Budget Office) analysis. The analysis was not that up to 2.5 million people would lose their jobs, but rather that up to 2.5 million people would voluntarily choose to adjust their work status because they would have the assurance of coverage through the Exchanges under the ACA. Some people may take early retirement. Some women or men may delay their return to work after childbirth. Some individuals will begin or join start-ups or become self-employed rather than continue in jobs they don’t like. This is the end of “job lock” where employees with pre-existing conditions for family members stayed in particular jobs because they could not get coverage for their families if they changed to a job for which they were better suited, but lacked an offer of health insurance.
Not yet widely discussed, but also relevant is the impact of the ACA on spouses who have separated, but not divorced due to the pre-existing medical condition of one spouse. Typically the spouse with coverage keeps coverage for the other spouse, who may have a pre-existing condition and cannot qualify for coverage on their own. Under the ACA, some spouses may choose to continue to keep this arrangement, while in other situations, each spouse will now choose to apply independently for their own coverage. These decisions will depend on the incomes, job coverage opportunities, and preferred coverage options for each spouse.
ITUP has now joined the Exchange for small employers, called SHOP, in California. The premiums were a bit less; the coverage was about the same, but the big advantage that our staff perceived and valued was a choice of plans and providers. Enrollment took a lot of patience and persistence; we’ll let you know how it works out.
There can be huge benefits for those who have been excluded or over-priced due to pre-existing condition exclusions, income, gender or age. For example, I was recently at dinner with some friends and neighbors who said they had their premiums reduced from $30,000 to about $8,000 annually in California’s Exchange. I’m not sure how this happened, but they were very happy.
In general, prices for a 60 year old can be no more three times higher than prices for a 20 year old. While this is the same price spread as already existed for individuals enrolled in Kaiser, it is a narrower spread than Blue Cross or Blue Shield previously used in California. So individuals with grandfathered coverage should carefully check whether they are getting better prices for their grandfathered coverage or for the new ACA coverage. The three to one ratio increases the cost of premiums for young people, particularly those up to the age 25. These young adults have a range of options: parental coverage, catastrophic coverage, Medi-Cal and premium assistance through Covered California that need to be checked out.
A couple of pieces of information you need to know about grandfathering and adoptive or faux grandfathering. “True” grandfathering applies to those insurance policies (primarily individual coverage) that had been purchased prior to the effective date on the ACA in March 2010. These policies may not cover all essential health benefits (like prescription drugs, mental health or maternity benefits), may have very high deductibles, may not be guaranteed issue or renewal regardless of your claims experience or your medical conditions, and may be gender rated. Some call them junk policies for those reasons but some of these policies may cost a lot less than the new policies available under and compliant with the ACA. About 5% of Californians have individual policies, and about half of them are grandfathered. True grandfathered policies will be ok as long as you keep paying your premiums.
Adoptive or faux grandfathering refers to individual policies purchased after the ACA was signed but before the full scope of insurance reforms started to take effect on January 1, 2014. The discussion in the media, in Congress and elsewhere has been about the individual policies purchased after the ACA was passed and whether they now have to be ACA compliant, and the argument was about President Obama’s statements “if you like it you can keep it” and whether that should apply to the adoptive or faux grandfathered policies. California has said “no”. Their reasoning is that half the subscribers of the adopted or faux grandfathered policies will get better coverage that costs less through Covered California; another quarter will pay more and get more coverage, and the last quarter will pay more and get greater consumer protections.
The Obama Administration initially decided to give states and the insurers they regulate an additional year (until 2015) to bring these policies into compliance with the ACA. Just this week the Obama administration gave states and the insurers an additional two years (2016) to bring these adopted or faux grandfathered policies into compliance with the ACA. While California has decided not to allow this second type of grandfathering, other states have decided to do so. So if you have one of these individual policies purchased after March 2010 that you think is better priced and better meets your needs, you can keep it for another couple of years in some states, but you need to upgrade to an ACA compliant policy if you are in a state like California.
Finally, if you have your children on your coverage up to age 26, you should carefully check and compare the benefits and premium assistance available in Covered California vs. their coverage through your policy. Be very careful as you consider this as their eligibility for premium assistance in the Exchanges is linked to whether you have claimed or will claim them as a dependent on your federal income taxes. You should carefully check with an agent/broker or navigator.
Hope all is well with each of you.