ACA medical

Question 1

ACA impact on individual rates

Answer 1

Rate review - federal review to supplement state review

MLR - 80% for individual and small group; rebates

Individual Mandate - tax penalties to individuals who do not enroll in Minimum Essential Coverage

Metal Tiers - allows for easier comparison across issuers

Risk Adjustment - by market in each state; issuers compete on their ability to provide affordable care and an efficient administration system rather than their ability to attract less risky membership

Premium subsidies - 1) income between 100% and 400% of FPL, 2) purchase a plan on the individual exchange, 3) not eligible for other coverage

Cost Sharing subsidies - low-income (below 250% of FPL) and select a silver plan in the exchange

Age Rating Compression and Gender Neutrality - 3:1 age rating limit; prohibit rating based on gender

Essential Health Benefits - All qualified health benefit plans (inside and outside exchange) are required to offer EHB package

Pre-existing Conditions - companies cannot refuse coverage or charge more because of pre-existing conditions

Question 2

Premium and cost sharing assistance (ACA)

Answer 2

Premium subsidies for Individuals
-1) income between 100% and 400% of FPL
-2) purchase a plan on the individual exchange
-3) not eligible for other coverage OR ER’s coverage AV <60% or EE’s share exceeds 9.5% of premium

Cost Sharing Reductions
-low-income (below 250% of FPL) and select a silver plan in the exchange
-reflect lower cost-sharing amounts and limits, and are established as variations of silver plans

Small business tax credits
-ERs with 25 or fewer EEs and ave annual wages <%50k can receive tax credit if they purchase health insurance through the SHOP exchange
-Beginning in 2014, EEs are required to contributed at least 50% of total premium cost
-Max credit is 35% of the ER’s contribution for ERs with 10 or fewer EEs and ave annual wages <$25k

Question 3

Describe how provisions of the ACA affect retiree plan costs

Answer 3

Loss of tax deductibility of the Retiree Drug Subsidy. Plan sponsors may reconsider whether to seek the subsidy as opposed to other alternatives, such as offer PDPs

ACA provided pre-65 retirees with guaranteed issue protections through the individual market

Question 4

Describe core components required by CMS for ACA filings

Answer 4

URRT
-excel spreadsheet that insurer must provide showing a number of values pertaining to the rate increase
-spreadsheet is a rate review document not a pricing template

Written explanation of rate increase
-for products with a rate increase of 15% or more, the insurer must provide a plain language narrative explaining the increase

act memo
-summarizes the URRT components, need for the increase, support of assumptions, and signed by a qualified actuary

Unique plan design supporting documentation and justification
-documentation and certification of any areas where actuarial adjustments were required