IEA Region 67 Presents: Understanding the Affordable Care Act

Benefits & Options Available Under ACA

Employer-Based Coverage Health Plan Exchanges

Work Hours for Part- time Faculty & Other Employer Penalties Collective Bargaining Issues Other Issues

Unparalleled Improvements Unparalleled Improvements Under the Affordable Care Act (ACA)Under the Affordable Care Act (ACA)

32 million uninsured to be eligible for healthcare;

No denials due to pre-existing conditions; No gender discrimination on premiums; Ends annual and lifetime caps on health coverage;

Covers dependents up to age 26; Wellness/preventive care; mental illness and drug addiction coverage provided;

Lowers cost, improves quality thru payment reform;

But our work to make healthcare affordable is far from finished.

Governor & State

legislature

The Bargaining Table

Medicaid Exchanges

The Main Elements of ACA The Main Elements of ACA CoverageCoverageUnder the ACA, starting

January 1, 2014, working

people will get their

health insurance via one

of 3 ways:

Employer-provided coverage

MedicaidMedicaid

The ACA expands Medicaid for all adults and

children up to 138% of Federal Poverty Level

(FPL) This includes individuals and families

who are citizens or legal residents for 5 yrs.

(Based solely on earned income--not assets.)

The Case for Medicaid ExpansionThe Case for Medicaid Expansion

Excellent option for members who meet the eligibility requirements but don’t have access to an affordable employer plan.

Under the ACA, the federal government pays 100% of the costs of Medicaid expansion through 2016; this gradually drops to 90% of the cost in 2020.

States who opt in to the expanded Medicaid program will SAVE more than they spend, as their costs for other social programs would be reduced.

Eligibility for Medicaid Expansion

Family size

Annual Income (up to 138% of Federal Poverty Level)

Hourly rate for family of 1

Hourly rate for family of 2

1 $16,006 $7.70 N/A

2 $21,681 $10.42 N/A

3 $27,355 $13.15

4 $33,030 $15.88 $7.94

5 $38,705 $18.61 $9.30

6 $44,379 $21.34 $10.67

7 $50,054 $24.06 $12.03

8 $55,729 $26.79 $13.40

The ACA creates “exchanges” so individuals who are without

health care options can get individual coverage. Subsidies are

provided based on a sliding scale for those earning up to 400%

of Federal Poverty Level (FPL).

(Persons are not eligible for the exchanges if the Employer provides “affordable” insurance, or if the person(s) qualify for Medicaid, or

CHIP.)

Insurance Exchanges Insurance Exchanges

Exchanges will be open to individuals and small employers (50 or fewer employees) on January 1, 2014.

Sign-up for exchange starts October 1, 2013.

In 2017, states will have option of opening exchanges to large employers as well.

Subsidies Under ACASubsidies Under ACA

U.S. citizens and legal residents who do not have access to Medicaid, CHIP or suitable employer-sponsored coverage can get subsidies for health care purchased on the exchanges.

Cost of premiums and quality of coverage will vary based on income and family size.

Exchange CoverageExchange Coverage

• Four tiers of coverage• Bronze-- 60% of the Actuarial Value (Total value of

plan)• Silver-- 70% of the Actuarial Value• Gold-- 80% of the Actuarial Value• Platinum- 90% of the Actuarial Value

Actuarial Value: the percentage of TOTAL covered expenses that the PLAN pays. The balance is paid “out-of –pocket” by worker: deductibles, copays, etc. NOTE: The coverage will vary for those who receive subsidies.

Benefit Package Summary Estimated Actuarial Value

Medicaid for children

Full payment for “necessary” health services.

100%

Typical employer-sponsored HMO

No deductible, $20 copay for office visits, $250 hospital copay, no cost sharing for lab and x-ray

93%

Typical employer-sponsored PPO (large firm)

$400 deductible, 20% coinsurance, $2,000 out-of-pocket max

84%

Sample “Bronze” plan

$3,000 deductible, 20% coinsurance, $5,950 out-of-pocket max

60%

Sources: Congressional Research Service, “Setting and Valuing Health Insurance Benefits,” April 6, 2009; sample Bronze plan developed and estimated by Towers Watson

Exchange SubsidiesExchange Subsidies

• Subsidies on sliding scale based on income & family size

• For those who earn between 100% and 200% of the Federal Poverty Level, care options may range from very comprehensive to ordinary.

• For those who earn more than 200% of the Federal Poverty Level, subsidies will provide for benefits that are much less attractive.

Exchange example 1: 149% Exchange example 1: 149% FPLFPL

Family of 1 earning $16,200 in 2011 pays $56/mo. Family of 2 earning $21,900 2011 pays $76/mo. Family of 4 earning $33,300 in 2011 pays $116/mo.

No Charge for Preventive/Wellness Care Typical Deductible: $0 Typical Co-Insurance: 8% Maximum Out of Pocket: $2100

Estimated benefits based on Kaiser Family Foundation Study)

Exchange Example 2: 204% Exchange Example 2: 204% FPLFPL

Premium Max: 6.5% of income AV: 73%(assumes 2%/year income growth)

Family of 1 earning $22,250 in 2011 pays $127/moFamily of 2 earning in $30,000 2011 pays $171/moFamily of 4 earning $45,500 in 2011 pays $258/mo

• No Charge for Preventive Care• Typical Deductible: $1,750• Typical Co-Insurance: 25%• Maximum Out of Pocket: $3200

(Premiums are for 2nd least expensive silver plan in exchange. Estimated benefits based on Kaiser Family Foundation Study)

Employer insurance and exchange subsidies

Employees who can get insurance from their employer are not eligible to participate in exchanges, unless the employer’s coverage is either:

“Unaffordable” OR

“Below Minimum Standards”

Employer insurance and subsidized Employer insurance and subsidized coverage on the Exchangescoverage on the Exchanges

Unaffordable:

If the cost of employer-provided individual insurance exceeds 9.5% of total family income. Example: Single head of household makes $15/hour, or $31,200/year. If his/her share of premium exceeds $2,964/year, or $247/month for individual coverage is it considered “unaffordable.”

 

Employer insurance and subsidized Employer insurance and subsidized coverage on the Exchangescoverage on the Exchanges

Definition of “Inadequate”

 An insurance plan that pays less than 60% of the total health costs (not including premiums). (Actuarial Value below 60%)

Very low thresholds – many high-deductible plans will still meet this standard.

Eligibility Rules for Eligibility Rules for Subsidized Dependent Subsidized Dependent

CoverageCoverage• The Employer’s offer of individual coverage for less than

9.5% of family income and offer of dependent coverage at ANY price will disqualify dependents for subsidized coverage on exchange.

• Children who are eligible for Medicaid or CHIP are not eligible for exchange.

• Only if employer does not offer spouse coverage and spouse does not have affordable coverage from his/her employer, then spouse WOULD be eligible for subsidized coverage on exchange.

Employer PenaltiesEmployer Penalties

• Applies to employers with over 50 FTE’s• Penalty of $2,000 per employee if employer does not offer

coverage to at least 95% of full-time workers; or

• IF employer offers coverage, but plan is inadequate or unaffordable for some employees: $3,000/FT penalty for each worker who then gets subsidized coverage on the exchange.

• Many employers are carefully calculating if it is “cost beneficial” to maintain health insurance “Play” or to pay the penalty “Pay”.

• Individuals must maintain minimum essential coverage or receive tax penalty for each month without coverage;

• Exceptions: • No penalty if coverage not available for less than 8% of

family income• No penalty if under tax filing income threshold, if

undocumented, or if valid religious objection

Individual PenaltiesIndividual Penalties

IRS Scrutinizes How Colleges Calulate Adjunct Hours

On 1/2/13, the IRS proposed rules that would consider calculating hours spent outside of the classroom which are necessary to teach a class.

One plan being considered is to calculate 3 hours for every classroom hour taught.

Deadline for public comments: 3/18/13

Colleges Limit Adjunct HoursColleges Limit Adjunct Hours

• Several colleges, including Oakton CC, Youngstown State, and Allegheny CC have publicly announced plans to limit adjunct hours.

• Over the next several months, more colleges could follow suit.(Hours compiled through teaching at multiple colleges

do not count toward achieving full-time status.)

Potential Collective Bargaining IssuesPotential Collective Bargaining Issues• Be Pro-Active. Don’t wait for management to announce

its own plan. Get the information and develop the local’s strategy and proposals.

• Maintenance of Hours provision. To protect part-time faculty and other employees from having hours cut.

• Define “Reasonable” in a way that advances union’s goals. Different strategies include a “1 to 1” approach, or an expanded definition of 75%.

• Carefully analyze any new or existing health care plan to see if it meets litmus test for eligibility under ACA.

• Employer subsidy for exchange. Consider an employer- provided subsidy for employees required to purchase health insurance on the exchange.

Possible Collective Bargaining Possible Collective Bargaining IssuesIssues

• Grandfathered contracts. Some existing health care plans may grandfather until contract expires if the contract signed before March 23, 2010;

• Information requests. May be helpful to help clarify if college intends to cut part-time employees’ hours and/or provide a new or revised health care plan that is acceptable under the ACA.

• Dependent Children. Remember to take into account that children can receive strong health care coverage under CHIP’s

• Spousal coverage. Remember also that spouses may be eligible for exchange only if there is no spousal coverage offered under Employer’s plan.

SO WHAT’S THIS MEAN FOR US?

Move State of Illinois to fully expand Medicaid;

Win at the bargaining table — ensure that workers have access to quality and affordable insurance coverage;.

Pressure employees not to cut adjunct/part-time employee hours

Evaluate employer coverage vs. exchange

Promote multi-region, multi-union coordination