Health Insurance MarketPlace
The Capitol Group Offers Private and Public Exchange Solutions for Individuals and Businesses
|Family Individual Coverage|
Beginning in 2014, the Affordable Care Act (ACA) requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. This rule is often referred to as the “individual mandate.” Individuals may be eligible for an exemption from the penalty in certain circumstances.
Why is Health Care Reform Significant?
The ACA is the biggest overhaul of the United States’ health care system since Medicare and Medicaid in 1965.
The law will make health care coverage a requirement for most individuals, not an option.
Health Care Reform changes the obligations of insurance companies and employers to provide consumer protections related to health coverage, like covering pre-existing conditions and not charging more for coverage based on an individual’s gender.
What are the Intended Outcomes of Health Care Reform?
• To provide individuals with higher quality and more affordability of health insurance.
• Lower the uninsured rates.
• Reduce costs of health care.
What are MarketPlaces?
All Exchanges will launch open enrollment in October 2013, with coverage becoming effective as early as Jan. 1, 2014.
Call The Capitol Group, Toll-Free at (800) 527-0669 if you have any questions about enrollment.
Health Insurance Exchanges for Employer Groups
On March 23, 2010, President Obama signed into law a comprehensive health care reform bill, the Affordable Care Act (ACA). The ACA includes numerous reforms aimed at improving the U.S. health care delivery system, controlling health care costs and expanding health coverage. The ACA’s reforms have staggered effective dates, with many key reforms taking effect in 2014.
The ACA is a federal law, which means that federal agencies, namely the Departments of Labor, Health and Human Services and the Treasury, are primarily responsible for the law’s overall enforcement. However, the ACA also creates significant responsibilities for state governments. A number of the ACA’s key health care reforms will be carried out at the state level.
This page will cover several details of the ACA reform law, please contact your insurance provider for details that are applicable to your specific insurance plan:
Why is Health Care Reform Significant?
• The ACA is the biggest overhaul of the United States’ health care system since Medicare and Medicaid in 1965.
• The law will make health care coverage a requirement for most individuals, not an option.
• Health Care Reform changes the obligations of insurance companies and employers to provide consumer protections related to health coverage, like covering pre-existing conditions and not charging more for coverage based on an individual’s gender.
What are the Employer Requirements for Healthcare Reform?
Beginning in 2014, employers with more than 50 full-time equivalent employees may be subject to a penalty tax if they do not offer health care coverage to all full-time employees (and their dependents). These employers can also be subject to a penalty if they offer coverage that is unaffordable or does not provide minimum value.
The penalty will apply if any full-time employee purchases health insurance through an Exchange and receives a tax credit or cost-sharing reduction related to the coverage.
Background on Health insurance Exchanges
The ACA requires each state to have a health insurance exchange (Exchange) to provide a competitive marketplace where individuals and small businesses will be able to purchase affordable private health insurance coverage, effective Jan. 1, 2014. According to the Department of Health and Human Services (HHS), the Exchanges will make it easier for individuals and small businesses to compare health plan options, receive answers to health coverage questions, determine eligibility for tax credits for private insurance or public health programs and enroll in suitable health coverage.
Individuals and small employers with up to 100 employees will be eligible to participate in the Exchanges. However, states may limit employers’ participation in the Exchanges to businesses with up to 50 employees until 2016. Beginning in 2017, states may allow businesses with more than 100 employees to participate in the Exchanges. Enrollment in the Exchanges begins on Oct. 1, 2013.
States have three options with respect to their Exchanges. A state may:
• Establish its own state-based Exchange;
• Have HHS operate a federally facilitated Exchange (FFE) for its residents; or
• Partner with HHS so that some FFE Exchange functions can be performed by the state.
In addition, a state may elect to partner with HHS so that the state runs the Exchange’s small business health options program (SHOP) component and HHS runs the Exchange’s individual market component.
States that intend to pursue a state-based Exchange or a state partnership Exchange must submit an application to HHS for its approval. If a state does not move forward with its Exchange or select the partnership model, HHS will operate the FFE in the state.
In January 2012, Washington D.C. Mayor Vincent Gray (D) signed a bill into law to establish the District of Columbia Health Benefit Exchange Authority (HBX). HBX’s mission is to develop a state-based Exchange for the District of Columbia. In June 2013, the District of Columbia announced that its state-based Exchange is called DC Health Link.
On Dec. 14, 2012, the District of Columbia received conditional approval from HHS for its state-based Exchange. More information on the District of Columbia’s Exchange is available at: http://hbx.dc.gov.
On Oct. 3, 2012, the Exchange’s board voted unanimously to designate the Exchange as the sole health insurance marketplace for individuals and small employers (50 or fewer employees). On June 5, 2013, the District Council voted unanimously to approve the “Better Prices, Better Quality, Better Choices for Health Coverage Emergency Amendment Act of 2013.” This legislation requires all health insurance plans for both individuals and small businesses to be sold through the Exchange by 2015, which in effect dissolves the District’s non-Exchange individual and small group markets.
Under the Act’s transition provisions:
• Individual health plans with plan years beginning on or after Jan. 1, 2014, must be offered solely through the Exchange;
• On or after Jan. 1, 2014, small group health plans offered to any small business that was not insured as of Dec. 31, 2013, must be offered and issued solely through the Exchange; and
• On or after Jan. 1, 2015, all small group health plans must be offered, issued and renewed solely through the Exchange.
What is Additional Insurance Rate Review?
To help hold insurance companies accountable for their proposed rate hikes, the ACA required HHS to establish a process to review the reasonableness of certain premium increases.
Effective Sept. 1, 2011, insurers seeking rate increases of 10 percent or more for non-grandfathered plans in the individual and small group markets must publicly disclose the proposed increases, along with justification for the increases. After 2011, states may work with HHS to set state-specific thresholds for disclosure of rate increases, using data and trends that reflect cost trends particular to a state.
The proposed increases must be reviewed by either state or federal experts to determine whether they are reasonable. States with effective rate review systems will conduct their own reviews, but if a state does not have the resources or authority to conduct rate reviews, HHS will conduct them.
According to HHS, the District of Columbia has an effective system for reviewing rate increases in both the individual and small group markets. In the District of Columbia, the Department of Insurance, Securities and Banking conducts rate reviews for these markets.
What is Required for Essential Health Benefits?
Beginning in 2014, the ACA requires non-grandfathered plans in the individual and small group markets, both inside and outside of the Exchanges, to offer a core package of items and services. This core package is known as essential health benefits (EHBs).
Under the ACA, EHBs include items and services in 10 general benefit categories, including hospitalization, maternity and newborn care, mental health and substance use disorder services, and prescription drugs.
The ACA also directs that EHBs should be equal in scope to benefits offered by a typical employer health plan. To meet this requirement in every state, HHS further defines EHBs based on a state-specific benchmark plan. States can select a benchmark plan from among the following options:
• The largest plan by enrollment in any of the three largest products by enrollment in the state’s small group market;
• Any of the largest three state employee health benefit plans options by enrollment;
• Any of the largest three national Federal Employees Health Benefits Program (FEHBP) plan options by enrollment; or
• The HMO plan with the largest insured commercial non-Medicaid enrollment in the state.
If a state does not select a benchmark, HHS will select the largest plan by enrollment in the largest product by enrollment in the state’s small group market as the default benchmark plan.
The selected benchmark plans have been finalized for benefit year 2014. The District of Columbia selected a plan from the largest small group product (PPO) as its benchmark – Group Hospitalization and Medical Services, Inc. Blue Preferred Option 1. More information on the District’s benchmark plan is available on The Center for Consumer Information & Insurance Oversight (CCIIO) website.
What is Involved in Health Insurance Reform?
The ACA requires sponsors of self-funded and insured group health plans to make changes to their plans’ design and administration over the next several years. For example, effective for plan years beginning on or after Sept. 23, 2010, the ACA requires:
• Group health plans to extend dependent coverage up to age 26; and
• Non-grandfathered group health plans to follow minimum requirements for external review of claims appeals.
Dependent Coverage Requirements
Although the ACA creates a host of federal standards, the health insurance market is primarily regulated at the state level. Some states may have laws that go beyond the federal minimums established by the ACA. For example, some states extend dependent coverage beyond age 26. The District of Columbia does not require insured health plans to maintain dependent coverage beyond the federal minimum age limit.
The ACA amended the federal tax code so that, for federal tax purposes, the value of employer-provided coverage for young adult dependents is excluded from the employee’s gross income through the tax year in which the dependent child turns 26. The District of Columbia’s tax code is consistent with the federal tax code with respect to the favorable income tax treatment given to health plan coverage for an employee's adult child to age 26.
However, health coverage for an adult child after the year in which the child turns age 26 will be subject to federal and District tax, unless he or she qualifies as a tax dependent.
External Review Requirements
In addition, ACA requires insured plans to comply with their state’s external review process if it includes certain minimum consumer protections. If a state’s external review process does not include the required minimum consumer protections, health insurers in the state must comply with a federal process for conducting external reviews, effective Jan. 1, 2012.
HHS concluded that the District of Columbia’s external review process includes the minimum consumer protections. Thus, insured health plans in the District of Columbia must conduct external appeals in accordance with the District’s external review process.