The guidance requires employers to notify new employees, as well as current employees, no later than March 1, 2013:

1. Informing the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
2. If the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through the Marketplace; and
3. If the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer, and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

In January 2013, EBSA delayed the March 1, 2013 compliance date because a definition of the minimum value had not yet been established. The Department stated they expect the timing of the notices to be late summer or fall of 2013 to coordinate with open enrollment for the Marketplace. (Open enrollment is expected to begin October 1, 2013, for coverage effective in 2014.)

Employers must provide the notice if they are subject to the Fair Labor Standards Act (FLSA). In general, the FLSA applies to employers who have one or more employees and an annual sales volume of at least $500,000. Employers must provide the notice to each employee, including part-time employees

For the full guidance text, visit http://www.dol.gov/ebsa/newsroom/tr13-02.html.

When it comes to the health insurance marketplaces, it seems there is even less understanding among small business owners. Health reform legislation requires businesses to inform their employees about the availability of health insurance and subsidies through the marketplace, but business owners don’t have much confidence they have the knowledge to do that. Sixty-two percent said they could not confidently define or explain how Health Insurance Exchanges – or marketplaces – work, and 20% said they had only a vague idea.

Small businesses are looking to health insurance brokers to explain the Affordable Care Act (ACA) to them and help guide them through the requirements and regulations. When asked who they trusted MOST to provide answers to health reform questions, an overwhelming 72% cited their health insurance agent/broker.

In order to minimize any disruption to implementing Covered California’s online marketplace, Karen Ruiz – an IT project director at the California Public Employees’ Retirement System (CalPERS) – has been hired to replace Brown.

Covered California’s Dana Howard said Brown’s departure has caused no delays in implementing California’s insurance marketplace, “Building of the California Healthcare Eligibility, Enrollment, and Retention System (CalHEERS) is ahead of schedule.”

Surprisingly, it’s not just those without insurance who postpone medical care. Twenty-eight percent of working-age adults with good insurance also avoided getting treatment because of the cost.

Almost three in 10 didn’t visit the doctor and more than 25% said they didn’t fill prescriptions or skipped tests their doctors recommended because they couldn’t afford to pay for it.

The study also revealed the number of people who were uninsured, or considered underinsured because of high out-of-pocket expenses, rose from 61 million in 2003 to 84 million in 2013.

On a positive note, the number of young adults age 19 to 25 who were uninsured fell from 48% two years ago to 41% this year, mostly due to the Affordable Care Act (ACA), which lets children remain on their parents health insurance coverage until age 26.

A poll conducted by the Kaiser Family Foundation shows that 42 percent of Americans still don’t know the ACA is now in effect – 12 percent believe it was repealed by Congress, 7 percent think the U.S. Supreme Court overturned it and 23 percent aren’t sure of its status.

Many critics say President Obama and those implementing the ACA haven’t done much to promote the benefits to the public. Supporters are concerned without public support of state health insurance exchanges (also known as insurance marketplaces), there won’t be enough consumers in the insurance pool to lower rates.

In the Kaiser poll, 49 percent say they still don’t have enough information on the law and how it will impact them.

President Obama is beginning a “push-back” campaign to quiet critics who say the implementation will raise insurance rates, cost the government billions and generally be filled with problems. In a press event last week, Obama attempted to calm any fears about the law, saying, “Despite all the hue and cry and ‘sky is falling’ predictions about this stuff, if you’ve already got health insurance, then that part of ‘Obamacare’ that affects you, it’s pretty much already in place.”

He continued by saying the main changes will come for the 10 to 15 percent of Americans who don’t have health insurance, adding, “What we’re doing is we’re setting up a pool, so that they can all pool together and get a better deal from insurance companies. And those who can’t afford it, we’re going to provide them with some subsidies. That’s it.”

The form asks for personal information such as Social Security Number, citizenship, job and income details and current health coverage. These items will be verified by the Social Security Administration, Homeland Security and the IRS.

Beginning October 1, 2013, consumers can choose to submit a paper application or apply online or over the phone. HHS says applicants will receive a response within two weeks telling them whether they are eligible to receive Medicaid coverage or subsidies through their state Health Exchange.

The form will be used in the 33 states utilizing the federal insurance marketplace model and is also available to the other 17 states that chose to run their own online insurance marketplace.

For a look at the HHS form, visit http://cciio.cms.gov/resources/other/index.html#hie and click on the April 30, 2013, bullet “Marketplace Consumer Application.” You can then view the Individual, Family and Individual without Financial Assistance applications.

Law enforcement agencies are reporting an uptick in health insurance scams across the country as fraudsters take advantage of the confusion by a majority of Americans on what is coming with health reform. A recent study found that two-thirds of the uninsured don’t understand what the Affordable Care Act (ACA) provides and aren’t sure what their obligations, benefits or resources are for implementation.

James Quiggle, communications director at the Coalition Against Insurance Fraud in Washington, D.C., says, “Crooks are playing on that confusion. Confusion is a crook’s best friend.”

Seniors are often targets of these scams, receiving calls saying their Medicare information needs to be verified or updated from people requesting personal information such as Social Security Numbers, bank routing numbers and more.

Fraudulent callers also offer fake health insurance plans including fake health reform coverage and stripped down policies masquerading as real coverage.

Lois Greisman, who is in charge of marketing practices at the Federal Trade Commission, says she and her team are working to take down the scammers, but there seems to be an almost endless supply, “a program as vast as the health care overhaul makes for a dangerous twist on the regular scams.”

Experts advise against taking calls out of the blue; the best course is to talk to a health insurance professional who can tell you what your benefits are and help you find a real health plan that will provide you with real coverage.

Gruber tempered this message by saying the public – and the media – need to take a long-term view of health reform and remember every major federal health program including Medicare, Social Security and Medicaid, has faced problems at the beginning.

“This is a massive change that will take time to get right,” he said. Complicating the issues even further is that January 1, 2014 – implementation deadline for much of the ACA – is also the start of an election year. This means any problems that come out of implementation of state and federal Exchanges will be front-page news in political battles.

Those implementing health reform have a tough job ahead – convincing the public any problems are only short-term glitches that will be worked out given time.

Saying that “California is probably doing a better job than just about any other state,” at launching the state health Exchange for small businesses, Graboyes qualified his optimism with some reality, “if we don’t get it right at the rollout, it will only get worse.”

Many small business owners have no idea what to expect from health reform and Graboyes says it’s not their fault. Many of the rules have yet to be developed or communicated to small businesses about what they need to do and how the Affordable Care Act (ACA) will impact their business.

Two areas that seem to be causing a lot of confusion are how staffing and wage levels in 2013 will affect subsidies in 2014, and how seasonal employees are going to be handled.

Graboyes says for small business owners, the best course of action is to use your accountant, attorney and insurance broker as invaluable resources. He adds, “and if you talked to them last month, do it again, because the rules may have changed.”

J. Russell George, the US Treasury Inspector General for Tax Administration, says the IRS should be doing more to educate the public about the tax implications of the health reform law. In a recent interview George said, “Many Americans do not realize the extent that the Internal Revenue Service will be involved in the implementation of the Affordable Care Act.”

David Gamage, who worked at the US Treasury Department drafting parts of the new law says that consumers may be unaware of the tax penalties they may incur by not carrying health insurance until it’s too late. “On your tax forms you will have to certify that you have insurance that qualifies from some source. And if you don’t, you will be assessed a penalty,” said Gamage. He continued, “If you don’t pay it there are a variety of enforcement techniques that the IRS can use, one of which is to subtract that from your refund you would be owed on your existing taxes.”

The IRS had not comment on the statements made by the inspector general.

Aside from the monumental task of getting state Exchanges open for enrollment, one of the biggest challenges the administration faces is educating consumers on what is available in the Exchanges and why they should use them.

After conducting extensive research, the administration decided that telling consumers it was a cheap place to get insurance wouldn’t work. “Health insurance that fits your budget, as a message, is seen as highly motivational, but not as believable.”

Even supporters of health reform say that the President Obama and his administration have not done enough to tout the benefits of the Affordable Care Act (ACA). Dr. Ezekiel J. Emanuel who worked in the White House on healthy policy from 2009 to 2011 said, “The president’s legacy rests on this thing, but the administration has not done a good job of explaining the law or what people should expect.”

Some of the milestones facing the federal government in ACA implementation include:

• April 30 – insurers must file applications describing the benefits and costs of the products they want to sell on the Exchanges. States must review proposals to make sure rates are justified and each health plan will have enough doctors and hospitals to serve its customers.

• June – Federal telephone call center scheduled to open to assist millions of consumers with questions on tax credits, eligibility and citizenship. The government is creating a computer network that will exchange data between the Internal Revenue Service, the Department of Homeland Security, the Social Security Administration, and other agencies.

• Early September – Health plans approved for sale to the public.

• October 1 – Enrollment opens for consumers on state and federal health insurance Exchanges.

• January – Majority of Americans required to carry health insurance.

These concerns are especially troubling since Baucus helped write the ACA and has been a vocal supporter of health reform. Baucus’ biggest concern is the health insurance marketplaces – called Exchanges – that are supposed to open in every state. Baucus feels that many states won’t have working Exchanges by the start of open enrollment in October;  even where they do, they may fail because consumers and businesses don’t have enough information to make good choices.

Baucus was especially harsh in criticizing the administration’s efforts to inform the public, chastising Health & Human Services Secretary Kathleen Sebelius, “The administration’s public information campaign on the benefits of the Affordable Care Act deserves a failing grade. You need to fix this.”

Sebelius said that the blocking of funding by Republicans in Congress last year was a large part of the problem in launching communication plans. Sebelius said that “we are on track to fully implement marketplaces in Jan. 2014, and to be open for open enrollment.”

These funds have not been made available to states that are running Exchanges on their own, leaving some to believe that these states may not have Navigator programs up and running by the time their Exchanges open for enrollment in October.

Navigators are expected to have expertise in eligibility and enrollment rules and procedures; the range of qualified health plan options and insurance affordability programs; the needs of underserved and vulnerable populations; and privacy and security standards.

At the National Association of Insurance Commissioners meeting held April 6 to 9 in Houston, Texas, agents, brokers and regulators raised concerns that without proper certification and training, the possibility is high that navigators could defraud or wrongly advise consumers. They stressed that navigators should be held to the same requirements as insurance brokers and agents including fingerprinting, background checks, liability insurance or surety bonds and other measures designed to protect consumers.

The $1.5 billion is over and above an expected $450 million the government will collect in user fees from health plans that participate in federal Exchanges. This brings the total funds needed to operate the Exchanges to $2 billion.

The budget request also calls for an additional $2 billion in grants to states that run their own health insurance Exchanges.

Health and Human Services (HHS) asked for $949 million earlier in the year to fund the Exchanges, but that request was turned down by Congress and not included in the current funding resolution.

Defending the budget request, HHS Secretary Kathleen Sebelius said, "As this act is fully implemented and Americans begin to take advantage of the benefits, I'm hopeful that Congress will see that this is the law of the land. The Supreme Court has ruled, there has been an election. We intend to implement the law and millions and millions of Americans are looking forward to the full implementation."

The President stressed the need for everyone to participate to make health reform effective saying, "We're all in this together. We're going to make it work."

The President was responding in part, to recent news reports and studies, which say that consumers and businesses could see a steep increase in health insurance premiums to offset the addition of benefits required under health reform law. The Obama administration has countered these claims by saying that consumers will move from expensive policies to more efficient, lower-cost policies that will serve their needs better and save them money in the long run.

The meeting initially was scheduled with health and human services secretary Kathleen Sebelius and White House chief of staff Denis McDonough. Obama's visit was a bit of a surprise to attendees as was him staying to preside over the entire hour-long meeting.

Ms. Sebelius reported to the House Ways and Means Committee earlier that day that the Exchange marketplaces would increase competition, "When plans have to compete side by side and it's very transparent, that in and of itself drives prices down."

States do not have a deadline for a decision to opt in or out of Medicaid expansion, but may change their participation at any time.

The breakdown of states is as follows*:

Announced expansion of Medicaid or have support from governor for expansion:

• Arizona

• Arkansas

• California

• Colorado

• Connecticut

• Delaware

• District of Columbia

• Hawaii

• Illinois

• Maryland

• Massachusetts

• Michigan

• Minnesota

• Missouri

• Montana

• New York

• New Mexico

• North Dakota

• New Jersey

• Nevada

• Ohio

• Oregon

• Rhode Island

• Tennessee

• Vermont

• Washington

Highly unlikely to expand Medicaid

• Alabama

• Florida

• Georgia

• Idaho

• Indiana

• Iowa

• Louisiana

• Maine

• Mississippi

• Nebraska

• North Carolina

• Oklahoma

• South Carolina

• Texas

• Utah

• Virginia

• Wisconsin

Undecided or undeclared

• Alaska

• Kansas

• Kentucky

• Pennsylvania

• New Hampshire

• South Dakota

• West Virginia

• Wyoming

*as of March 30, 2013

The poll also showed that the public is not aware of decisions being made by states about Medicaid expansion and Health Insurance Exchanges. Popular provisions of the law such as tax credits for small businesses that provide health insurance and closure of the Medicare drug coverage “doughnut hole” are among those least understood by the public while more controversial provisions such as the individual mandate for every American to have health insurance – are among the most widely recognized.

Opinions for and against health reform are divided evenly with 40 percent holding an unfavorable view of the law and 37 percent feeling it’s a positive change in healthcare policy.

These budget cuts will affect all areas of the 2013 federal budget from the Food and Drug Administration to defense-related projects. However, most expenses associated with the Affordable Care Act (ACA) will be unaffected by the budget sequester including the expansion of Medicaid and private insurance subsidies available through Health Insurance Exchanges. This is possible because these subsidies were designed as refundable tax credits which are exempt from sequester in the BCA.

Three of these consumer groups are deemed critical to successfully implementing the Affordable Care Act (ACA) throughout the nation. The “Healthy & Young” group make up 48 percent of the uninsured and are seen to have “low motivation to enroll” in health care plans. The “Sick, Active & Worried” group is comprised of Generation X and baby boomers who are active seekers of health care and are worried about the costs of care. The third group – dubbed the “Passive & Unengaged” is age 49 and above, doesn’t understand or think much about health insurance, but instead, “lives for today.”

The goal for HHS is to reach out to the “Healthy & Young” and “Passive & Unengaged” groups to increase their participation in the health insurance pool in order to offset costs for the “Sick, Active & Worried” group.

The Administration plans to being marketing the new health Exchanges this summer, ramping up during the fall after premiums and other information about  health plans available through state and federal Exchanges.

The study is the second in recent days to garner media attention on the subject of increasing premium rates as a result of health reform. Earlier in the month, the Society of Actuaries issued their own report, suggesting the ACA would lead to higher insurance costs over the next three years.

The Covered California report cited several reasons for rising costs including the addition of less healthy people to the insurance market pool, a requirement for health plans to increase benefits and cover more of the cost of care, and new taxes and fees being imposed on insurers.

Robert G. Cosway, an attorney who helped prepare the report said, “Health insurance will become relatively less expensive for people with chronic conditions and relatively more expensive for healthier people.” He predicted that some healthy people might drop their insurance because of the premium increases.

Federal officials say that fears of “rate shock” may be exaggerated. They argue that consumers can choose new, more efficient, lower-cost plans instead of expensive plans they may currently have. They also believe that many healthy people will be entering the insurance pool, using Exchanges to purchase economical health plans they previously couldn’t afford.

This rule – originally proposed in August 2011 – addresses who will be classified as “newly eligible” rather than “new Medicaid recipients” under existing state Medicaid program rules. This distinction is important because the ACA provides 100 percent federal matching funding for newly eligible Medicaid recipients in states that choose to expand Medicaid coverage for 2014, 2015, and 2016. Those recipients who are eligible under the existing state rules receive the traditional federal matching amount – between 50 to 73 percent – depending on the state.

“Newly eligible” Medicaid recipients are defined in the rule as parents and non-pregnant childless adults under the age of 65 but above age 19 (or higher if so elected by the state) who would not have been eligible for full Medicaid benefits under a state’s plan or waiver as of December 1, 2009, or who would have been eligible as of that date but was not enrolled or put on a waiting list because eligibility was capped or limited.

To see the final rule in its entirety, go to http://www.ofr.gov/OFRUpload/OFRData/2013-07599_PI.pdf

The Affordable Care Act (ACA) originally proposed expanding Medicaid to cover all U.S. residents with incomes up to 138% of the federal poverty level. In June of 2012, the Supreme Court ruled that states could not be forced to participate in this expansion. In those states that choose to opt in to the expansion, the federal government will cover 100% of the cost of expansion until 2016 when the federal “shared responsibility” will begin to gradually decline until it reaches 90% in 2020.

Under this shared responsibility provision of the ACA, businesses with 50 or more employees must pay a fine for each employee who qualifies for coverage through their state’s Health Insurance Exchange if the company doesn’t provide affordable health insurance to them. The choice by a state to opt out of the Medicaid expansion would mean that employers would have many more employees who would not receive coverage through Medicaid and therefore be qualified to receive subsidies for Exchange coverage. Employers face fines of up to $3,000 for each employee who doesn’t have access to affordable health care through the company.

Brian Haile, senior vice president for health policy at Jackson Hewitt Tax Service – the company who conducted the study – said, “A lot of businesses have taken the position that they oppose a Medicaid expansion because it would increase their taxes,” adding, “The irony of this, or the paradox, is that the opposite may be true, at least for some businesses in the state.”

These plans could provide continuation of health coverage to more than 670,000 Californians who lose Medi-Cal benefits because of a temporary increase in income. The Bridge Plans would also be available to parents of children enrolled in the Healthy Families program.

Bridge Plans would provide federal subsidies to help these families buy a health plan of their choice through the Covered California Exchange. This would allow beneficiaries to maintain their Medi-Cal managed care plan and keep the same provider network.

Covered California Board Chair, Diana Dooley said, “This plan will provide affordable, consistent health care for many low income Californians when a modest increase in their income makes them ineligible for Medi-Cal, but private insurance is still too expensive.”

Exchange managers have suggested they are looking at fees of 3 percent of premiums per-member, per month for individual and family plans and 4 percent of premiums for small group plans sold through the Small Business Health Options Program (SHOP) for employers. The SHOP Exchange would also charge an additional fee to cover agent commissions.

Covered California recently released guidelines for the contracting process that would be used to authorize insurers to sell on the Exchange. In addition to setting out a proposed fee structure, the contracting guidelines also note that some plans may receive fee discounts while others might be required to pay additional fees. For example, carriers that roll a large number of current plan members into the Exchange could end up paying only 2.7 percent of premiums rather than the full 3 percent. On the other hand, carriers that don’t meet Exchange service standards may be assessed fees equal to 3.3 percent of premiums and insurers that make late payments would owe a 1 percent late fee.

To avoid putting plans offered through the Exchange at a disadvantage regarding premium price, issuers of individual and small group plans sold outside the Exchange would also pay an Exchange support fee equal to half of the fees that issuers would pay if the plan were sold in the Exchange.

The Exchange has said it hopes to start giving preliminary contract approvals by May 15 and complete rate reviews by June 30.

So far 33 insurance companies – some of them start-ups – have applied to be included on the California Exchange – called Covered California. Dana Howard, exchange spokesperson says, “All the insurers will be closely scrutinized to be sure they can deliver the product they’re bidding on.” The state will be divided up into 19 regions for coverage in the Exchange and each region will likely winde up with three to five choices. Covered California has set a goal of signing up 1 million people the first year.

Many Californians will qualify for a subsidy with eligibility including a family of four with income ranging from $23,550 to $94,200 on a sliding scale. Families with incomes below those levels will be included in the state’s expansion of Medicaid, called Medi-Cal. Howard says even those with incomes above the $94,200 level may want to purchase insurance on the Exchange, particularly when their current plan doesn’t cover specific treatments. “No one will be denied,” he said. “They will be able to get great insurance.”

HHS did not say when a new draft form would be issued.

originally posted March 19, 2013

 Health Exchange Application Complexity Topic of National Discussion

In an article distributed by the Associated Press last week, questions about how people would get health insurance coverage through the Health Insurance Exchanges hit the national stage. In the article, author Ricardo Alonso-Zaldivar likens applying for benefits to doing your taxes – not a task most Americans relish.

Alonso-Zaldivar discusses the 15-page draft application quietly released for comments by the Department of Health and Human Services (HHS) along with a 60-page description of the online version. HHS estimates it would take 30 minutes to complete the online version and 45 minutes for the paper application.

Exchange systems will need to verify an applicant’s identity, income and citizenship by pinging data stored by Social Security, the IRS and Homeland Security.

While Alonso-Zaldivar pointed out many of the hurdles consumers will face when using an Exchange, he claimed that getting insurance through the Exchange may still be easier than what many people – especially those with existing medical conditions – face now.

HHS says that the application is still a work in progress and that they are seeking input from the public to make it better.

Alonso-Zaldivar discusses the 15-page draft application quietly released for comments by the Department of Health and Human Services (HHS) along with a 60-page description of the online version. HHS estimates it would take 30 minutes to complete the online version and 45 minutes for the paper application.

Exchange systems will need to verify an applicant’s identity, income and citizenship by pinging data stored by Social Security, the IRS and Homeland Security.

While Alonso-Zaldivar pointed out many of the hurdles consumers will face when using an Exchange, he claimed that getting insurance through the Exchange may still be easier than what many people – especially those with existing medical conditions – face now.

HHS says that the application is still a work in progress and that they are seeking input from the public to make it better.

One area that may need particular attention is helping human resource departments understand how to count full-time and part-time hours to determine who is eligible for coverage under rules of the Affordable Care Act (ACA).

Employers will also need assistance with reporting issues, changes in eligibility definitions, revised waiting periods and more. One of the thornier issues for employers will be the new definition of full-time employees as those who work 30 hours or more a week and the requirement for employers with more than 50 employees to provide health care benefits or face penalty payments.

2013 offers brokers and agents a great opportunity to begin educating both themselves and their clients for  new requirements that will take effect in 2014. In addition, employers have faced rising premium costs over the past five years and offering cost-saving measures like high-deductible health plans, health savings accounts and wellness programs can also position a broker as a valuable resource to clients.

 Both health care and immigrant advocates in California are urging the Exchange to build a website that offers information in many languages as well as expand their efforts to get community groups spreading the word in ethnic communities about what’s available on the Exchange.

 Covered California recently announced that they would use part of the grants they have received from the federal government to:

 • Support a multilingual campaign to encourage residents to enroll in the Exchange;

 • Develop a network of community-based assistants who can help guide non-English speakers to an appropriate health plan; and

 • Build multilingual call centers

 Oscar Hidalgo, communications director for the Exchange, said that CoveredCalifornia,com has been designed so that information can be easily translated into additional languages at a later time.

In an interview with Capital Public Radio’s KXJZ News, Lee said he doesn’t believe this will have much of an impact on the insurance market as this is a small number compared to the five million individuals expected to participate in the Exchange.

Lee also stated, “To make this whole health system work, employers need to stay in the game. We need to keep employers offering employer-based coverage and [the Exchange] become a backstop for where they aren’t offering that coverage or for individuals right now who have no place to go.” For example, if an employer is offering coverage that doesn’t meet the employee’s needs, they can “come to us and get a federal subsidy and get health care through Covered California.”

In a bigger surprise, 63 percent of Americans said that provisionally legal immigrants should be able to enroll in Medicaid or receive insurance subsidies. This has been the subject of major disagreements between Republicans and Democrats as a plan for overhauling the U.S. immigration system is being developed.

Similar bills were proposed and passed last year though vetoed by Governor Brown who said he didn’t want California to be bound by new health reform laws if the federal law might be repealed should a Republican win the presidential election. The two new bills are both expected to be passed by both houses of the legislature and signed into law by the governor.

One of the bills addresses regions used to calculate individual insurance premiums with lawmakers hoping to control increases by redefining the number and characteristics of the state’s regions. Covered California has proposed 19 regions – favored by insurers – with consumer advocates vying for fewer regions, which they say will help even out costs.

Other aspects of the bills include banning insurers from denying coverage for pre-existing conditions, eliminating higher premiums for smokers or former smokers and requiring plain-English disclosures of what is not covered by particular plans.

Many of the professionals who participated in the survey said that while joining an Exchange might come with extra work to comply with mandates, the boost in member enrollment was worth the extra effort. The Congressional Budget Office projects that as many as 12 million Americans will purchase health insurance through an Exchange in 2014, representing nearly $60 billion in premiums – a figure too high for insurers to ignore.

In another interesting result, 69 percent of the survey participants ranked the quality of information sharing and collaboration between health insurers and Exchanges as “poor” or “very poor.” 93 percent expressed a desire for Exchanges to get more input from insurers on how to operate the enrollment processes.

24 states and the District of Columbia will either be running their own Exchange or working in partnership with the federal government. While setting up 26 Exchanges in 8 months may prove to be a daunting task, HHS Secretary Kathleen Sebelius has pledged that every American will have access to an Exchange, “No matter where a qualified consumer lives, he or she will have access to coverage through a marketplace.”

Sebelius also said that states that have not joined in to run their Exchange or partner with the federal government still have the option of doing so in the future.

A Health Plan Benefits Comparison Chart shows, deductible and copayment amounts for four plan levels – Bronze, Silver, Gold and Platinum – as required by the federal Affordable Care Act (ACA). Deductibles shown on the chart, range from $0 for Platinum and Gold plans to $2,000 for Silver and $5,000 for Bronze.

Copayment amounts are listed for services like preventive care, urgent care, generic medications, lab testing and emergency room care. While copayment amounts vary, even the Platinum plans require a minimum $25 copayment for primary care visits, rising to $60 for bronze plans, limited to 3 visits a year.

To download the chart, visit www.coveredca.com/media/10748/coveredCA-HealthPlanBenefitsComparisonChart.pdf

The rule did not change much from previously issued proposed rules which was good news for states and insurers alike. This means that insurance companies won’t need to make drastic changes to plans they have offered to state Exchanges.

Industry experts predict that “exchange” plans will become a new category of coverage, rather than affecting current plans offered to employers. They see this new category landing somewhere between Medicaid and traditional commercial benefit plans.

The final rule continued to provide states with the role of determining how the Essential Benefits requirements are met by selecting benchmarks from plans sold within their states. Some consumer groups argued that the feds should set a standard federal requirement, but HHS decided that allowing states the final say would provide more continuity with what was already offered in each state.

Legislators and medical professionals around the country are worried that a shortage of doctors, especially primary care physicians will put our entire health care system at risk.

In California, the Senate Health Committee has said they are planning to offer legislation that would let physician assistants treat more patients and allow nurse practitioners to set up independent practices, in an efforts to alleviate the doctor shortage. Senator Ed Hernandez from West Covina questioned if health reform would be effective if patients “are going to have a health insurance care, but no access to doctors.”

Physicians in California don’t believe changing the standards of care is the solution and say that relaxing regulations could impact patient safety. They also argue that it could drive up costs because providers with less education and training would tend to order more tests and prescribe more antibiotics. The California Medical Association has asked for funding to expand loan repayment programs for medical school graduates to increase the number of students who pursue medical educations.

Number of uninsured in California: 5.6 million Number of uninsured eligible for coverage under PPACA: 4.6 million

Number of ineligible because of citizenship status: 1 million

Predicted number covered by Covered California Exchange by 2017: 2.3 million

Number currently served by Medicaid: 8 million

Predicted number covered under Medicaid expansion: 1.4 million

Number of businesses with 25 or fewer employees making an average of less than $50,000 per year that will be eligible to receive a 50 percent tax credit for health insurance premiums: 375,000

Amount allocated to California to establish its Exchange since September 2010: $910 million

Number of people that Covered California will employ by launch: 700 plus 500 seasonal employees for enrollment periods.

Sebelius said that these new models have been successful in pilot programs and although she did not elaborate with details, said, “These new models are spreading rapidly in states and the private sector.” There are currently 250 ACOs operational, servicing over 4 million Medicare beneficiaries.

Sebelius also reiterated the administration’s push for expansion of Medicaid in the states – a program the Supreme Court made optional with their ruling on health reform in June of 2012. “An expanded Medicaid can provide coverage for working families, reduce the burden of uncompensated care, increase productivity, and save lives,” she said, calling on governors throughout the nation to expand their states’ Medicaid coverage.

Recruiting, hiring and training these workers is no small feat – but one that is critical to the success of the Health Insurance Exchanges. California alone is looking to certify 21,000 navigators, with tens of thousands more being needed throughout the country.

While initial funding to pay navigators will likely come from federal grants or state money, eventually, the Exchanges are expected to cover those costs through Exchange participation fees.

Insurance brokers in many states want to prohibit navigators from giving advice on health plans or directing people in which plan to choose. Many brokers feel that navigators won’t have the experience or training to provide appropriate advice and should bear responsibility for any financial harm that comes from their guidance in the same way brokers are held accountable to their customers.

Ryan Young, head of government relations for the Independent Insurance Agents and Brokers of America, said in a recent interview with the Washington Post, “What you don’t want is for our agents to be cut out and have this force of untrained, unlicensed individuals giving advice with no financial responsibility.”

The DOL gave several reasons why the notice requirement – slated to take effect on March 1, 2013 – would not begin:

• The notice should be coordinated with the Department of Health and Human Services education efforts and IRS guidance on minimum value.

• The implementation process should give employers enough time to comply and ensure that employees receive the notices at a meaningful time.

The DOL anticipates moving the timing to late summer or fall of 2013 to coordinate with the open enrollment period of the Exchanges. The FAQ also says that the DOL “is considering providing model, generic language that could be used to satisfy the notice requirement.”

This announcement comes as welcome news to many employers who have been rushing to make provisions to provide their employees with information despite a lack of guidance about when, what and how to deliver it.

Covered California is looking for community, professional, healthcare and even government entities that can help it reach uninsured and subsidy-eligible citizens, especially in rural areas, minority neighborhoods and other areas that may be difficult to reach with traditional media.

Applications for grants totaling $43 million are due by March 4, 2013. Depending on the number of applications received, the Exchange may solicit additional applications in late May. Organizations eligible to apply include nonprofit community, consumer and advocacy groups, faith-based organizations, trade, industry or professional organizations, chambers of commerce, health care providers, colleges, tribal organizations and city or county agencies.

Although these provisional residents aren’t eligible to participate in health exchanges, some health experts say that including them in health reform could help support the exchanges and reduce costs for everyone. They argue that it may make more sense to allow them to receive subsidies and benefits since they will be subject to the individual mandate, which requires every resident to have health insurance Without access to a health exchange or Medicaid benefits, undocumented citizens would be responsible for purchasing coverage entirely on their own.

Many conservatives have stated that they would not be willing to support any immigration bills that would add millions of beneficiaries to PPACA programs, making this a challenging point of compromise for the Obama administration.

Lee referenced a recent report to the governor and Legislature which explains “Every insurance policy offered inside and outside the Covered California marketplace will be given a ‘metal rating’ – platinum, gold, silver or bronze – based on ‘actuarial value’ calculations.” This means that consumers and businesses shopping for insurance policies will have the option of choosing from platinum plans with 90 percent coverage through less expensive bronze plans which offer 60 percent coverage. Accordingly, those enrollees with bronze plans will have to pay 40 percent of their medical costs out-of-pocket.

Lee also laid out a plan for marketing Covered California to California’s millions of eligible consumers and businesses. The plan includes hiring translators to cover 13 languages as well as dividing the state into seven geographical regions to reflect different markets.

Lee noted that development of the Exchange may be a bumpy road, “We will get things wrong as we go, but we will make them right as quickly as we can.”

Top on the action list is development of a website where consumers can easily shop for and purchase insurance. Covered California has received almost $1 billion in federal monies – with a new $674 million grant announced just last week – since becoming the first state in 2010 to announce development of a state health exchange in accordance with the Patient Protection and Affordable Care Act.

Health industry experts say this could be an attempt to rebrand the state Exchanges in the midst of attacks from conservative activists who are attempting to block state-based Exchanges. Some feel the term “marketplace” more accurately reflects the function of the Exchanges as a one-stop location where consumers can shop for and purchase health insurance.

Democratic leaders say the name change isn’t a reaction to any politic pressure, but merely an attempt to better educate consumers on what is available. They claim that it’s not that the term “exchange” is unpopular, but that there isn’t broad awareness about what an exchange is and how it will work.

Many states have avoided the issue altogether by coming up with their own name for their marketplace including Covered California, Massachusetts Connector, Washington HealthPlanFinder and Maryland Health Connection.

The grant money will be used in large part, to create a marketing campaign aimed at signing up millions uninsured consumers and educating them on how Covered California will work. Enrollment in the program is slated to begin October 1, 2013 with coverage starting in January of 2014.

California has been a leader in developing their Exchange and now faces the task of lining up potential customers. Getting the word out to the millions of Californians who are eligible to use the Exchange and educating them on subsidies, plan availability and purchasing procedures is a monumental undertaking.

Peter Lee, the Exchange’s executive director, said last week, that the Exchange will embark on a two-year, $250 million marketing campaign across the state which will include both traditional advertising as well as allocating grants to religious and other groups for education in the community.

The grant money will also be used to fund operations through January 2015, at which time the Exchange will begin to recoup operating costs via a fee assessed on policies sold through the Exchange.

John Hiber will be joining Covered California as CFO and will be tasked with managing and administering overall financial activities, including a strategy for financial sustainability by 2015. Hiber has been the chief operating officer in California’s controller office since 2009 and previously was an executive at the California Public Employees’ Retirement System.

To oversee product development, the creation and support of the Covered California brand as well as mass media and marketing for all programs, Ken Wood has been hired as a marketing consultant. Wood previously held management positions at North Hawaii Community Hospital, Blue Shield of California, and Vimo, an online health insurance brokerage.

These include:

Employee Notification Requirement According to the Patient Protection and Affordable Care Act (PPACA), employers must notify employees about the availability of state Health Insurance Exchanges. A tight deadline considering that exact wording of the notices has not yet been provided and guidelines for how this information must be transmitted (email? in print?) have not been clarified.

Automatic Enrollment Employers with more than 200 employees are required to automatically enroll new employees in a health care plan. Employers must also notify employees of the automatic enrollment and give them an option to opt-out. Federal officials have said that rules for this automatic enrollment requirement would not be available until next year.

“Cadillac Plan” Tax In order to level the playing field in employee benefits, the PPACA imposes a 40% tax for high-end health insurance coverage where annual premiums exceed $10,200 for single employees and $27,500 for families. While this tax is not scheduled to kick in until 2018, some in the health insurance industry say that rate increases will push many more plans into this category than was first anticipated, The IRS and federal health officials have not yet clarified how this tax will be calculated or collected.

1. Medicaid rolls to swell.

As states implement the expansion of Medicaid, it’s estimated that nearly 17 million Americans will be newly qualified for coverage. While the federal government will pick up the tab initially in 2014, states will be required to take over at least 10 percent of the cost by 2020. This coverage expansion will not only affect states’ budgets, but is anticipated to increase demand for primary care physicians, hospital services and other medical care.

2. States become the focus of health reform.

Most of the discussion and decision-making about health reform, up to now, has been conducted at the federal level. This focus will now shift to individual states as they must prepare not only for the Medicaid expansion mentioned above, but for implementation of state Health Insurance Exchanges.

3. Employers see changing role in healthcare.

A majority of employers say they will continue to provide health insurance coverage to their employees. However, health reform mandates as well as new coverage choices are leading many employers to consider new options including private health exchanges, state Health Insurance Exchanges, and defined contribution plans. Employers will also assume new responsibilities for employee notification, automatic enrollment and W-2 requirements.

4. Consumers become more powerful.

As more choices become available for when and where they can get health insurance, consumers are expected to wield new power. Consumers – who have become accustomed to Amazon.com-style customer experiences – will be looking for that same level of choice and service from Health Insurance Exchanges, insurance brokers and health insurance companies.

While state health insurance exchanges are slated to begin open enrollment in October of 2013, January 2014 is really the date when major parts of the Patient Protection and Affordable Care Act (PPACA) will go into effect.

Many businesses, hospitals, and government organizations were waiting for the outcome of the Supreme Court decision along with results of the November presidential race. They now find themselves under the gun to implement PPACA requirements with little more than 11 months to spare.

Adding to the pressure is the fact that many facets of the PPACA remained undecided including Medicaid expansion, exchange implementation by the federal government, and tax penalty enforcement by the IRS. Consumers too face uncertainty, as they are left to wonder what subsidies they may be eligible for, how they can sign up for their state exchange and how will health reform affect premium rates?

The California Health Benefit Exchange board – called Covered California – submitted a plan to HHS last month estimating that the exchange could expand health insurance coverage in the state to at least 2 million people.

California was the first state to pass legislation creating a health insurance exchange after the Patient Protection and Affordable Care Act (PPACA) was passed in March of 2010. Covered California is scheduled to begin open enrollment in October of this year with coverage becoming effective January 1, 2014.

The IRS regulation, available at www.irs.gov/pub/newsroom/reg-138006-12.pdf, covers full-time equivalents and adds up the service hours of part-time employees. Full-time employees are defined as those who work 30 hours a week or more.

This means that businesses with just a few full-time employees, but lots of part-time employees might need to begin calculating hours to make sure they don’t run afoul of the requirement and be assessed a penalty. This new proposed IRS regulation may mean that more businesses will be classified as large employers and need to purchase insurance to cover their employees.

The proposed regulation also provides some flexibility for employers, saying that employers wouldn’t be penalized as long as “substantially all” full-time employees were offered coverage – "after further study and consideration of the comments, the Treasury Department and the IRS believe that they should exercise their administrative authority to allow recognition of a margin of error consistent with an intent to recognize the possibility of inadvertent errors together with the specificity and administrationof a specific percentage, and therefore have concluded that a clear and definitive 95 percent standard would be an administrable and appropriate interpretation of the statutory provision," according to the proposed regulations.

The regulation is still in the proposal phase and the IRS is seeking public comments through March 18.

• Insurance administration simplification – Several rules to help make health insurance administration simpler are slated to take effect throughout 2013 and 2014, including: a single set of rules for eligibility verification and claim status (January 1, 2013), electronic fund transfer and healthcare payment and remittance rules (January 1, 2014),  and enrollment and disenrollment, premium payments and referral certification and authorization rules (adopted by July 1, 2014).  

• Medicare tax – Starting January 1, 2013, Medicare Part A (hospital insurance) tax rate on wages increases from 1.45 percent to 2.3 percent on earnings over $200,000 for individuals and $250,000 for married couples filing jointly. There is also a Medicare tax assessment on investment income from interest, dividends, royalties, rents, gross income from a business and net gain from disposition of property of 3.8 percent.  

• FSA contribution limit – Beginning January 1, 2013, FSA contributions for medical expenses are capped at $2,500 per year. This limit will be increased annually with a cost-of-living adjustment.  

• Part D subsidy payment tax deduction eliminated – The Medicare Part D retiree drug subsidy tax deduction for employers is eliminated as of January 1, 2013.  

• Notification of coverage options to employees – As currently required by the PPACA, employers must provide written information to each employee about Health Insurance Exchanges, at the time of hiring. The current deadline for implementation is set at March 1, 2013, but it is anticipated that this deadline will be pushed back until regulations clarifying requirements are issued by the Department of Health and Human Services (HHS).