What Federal Health Reform Means for Marylanders
The Patient Protection and Affordable Care Act
Coverage for Uninsured with Pre-Existing Conditions
Thousands of Marylanders are rejected from health coverage because of a pre-existing condition (cancer, diabetes, multiple sclerosis, and hundreds of others). A temporary high-risk health insurance pool program will provide access to coverage for those with pre‐existing health conditions – and who have been uninsured for at least six months – until long-term insurance reforms go into effect in 2014. By the end of this year, insurers will be prohibited from imposing any pre-existing condition exclusions on children’s coverage.
Family Coverage for All Young Adults
In Maryland, more than 240,000 young adults between ages 19 and 29 lack coverage. That number is lower than in other states because Maryland already allows young adults to remain on their family health plans up to age 25. But due to federal laws governing health insurance, many health plans are not subject to the state requirement. Now, all group health plans or plans in the individual market across the nation that provide dependent coverage for children must make that coverage available for an unmarried dependent adult up to age 26.
Help for Small Businesses Struggling to Afford Employee Health Coverage
To defray the rising costs of providing health coverage, small businesses with fewer than 25 employees and average annual wages of less than $50,000 can receive a federal tax credit of up to 35 percent of an employer’s contribution to provide health insurance for employees. In 2014, this tax credit will increase to 50 percent.
Prohibiting Insurers from Dropping Coverage
Insurers are no longer permitted to use the abusive practice of rescission, whereby insurers cancel an individual’s existing health benefits after he or she becomes sick in order to avoid the costs of covering health care.
End Annual Restrictions and Lifetime Limits on Health Plan Benefits
Insurers are prohibited from imposing annual restrictions on a policyholder’s use of coverage and cannot place lifetime caps on health benefits. No longer will someone facing a long-term, catastrophic illness have to worry about their benefits running out and being denied coverage.
Covering Preventive Health Services
Incentivizing individuals to seek and use preventive services – wellness visits, cancer screenings, diagnostic testing – will make us all healthier. Insurers are required to cover and cannot impose cost sharing requirements on preventive care services, immunizations, and wellness screenings for women and children.
Ensuring Value in Health Premiums
In the last eight years, administrative expenses in Maryland have increased more than 60 percent, easily outpacing the national average. To ensure value in health premiums before health insurance exchanges are created, insurers must spend at least 80 percent (individual and small group market) or 85 percent (large group market) of each premium dollar on health care, not administration and marketing. Enrollees will receive annual rebates if this requirement is not met.
Medicare Part D Prescription Assistance
Seniors receiving prescription drugs through Medicare Part D are forced to confront a donut hole coverage gap between $2,700 and $6,154. All seniors falling in the donut hole can receive a $250 rebate to defray drug costs.
Reducing Coverage Costs for Early Retirees
Early retirees that do not qualify for Medicare often face expensive coverage and high out-of-pocket and prescription drug costs. A temporary reinsurance program will help companies that provide early retiree health benefits for those between the ages of 55 and 64 to offset the expensive cost of their coverage.
Improving Health Plan Information for Individuals and Small Businesses
The federal government will create a website enabling individuals and small businesses to identify affordable health insurance options available in each state. The website will include information about available coverage options, reinsurance for early retirees, small business tax credits, and other important coverage details.
Loan Repayment Tax Relief for Health Professionals
Physicians, nurses, and other medical professionals that participate in state loan repayment programs in return for serving in underserved or health professional shortage areas (like the Janet Hoffman Program in Maryland) will have their loan assistance excluded from gross tax income payments, increasing the value of this benefit.
Strengthening Prevention and Primary Care
Increased Reimbursement for Primary Care
Beginning in 2011, primary care physicians and general surgeons will receive a 10 percent Medicare bonus payment. Primary care physicians working in community health centers will also see higher reimbursement rates.
State-Based Preventive Care Coverage
States that adopt initiatives to improve access to preventive care services for Medicaid beneficiaries with no cost-sharing will receive federal supporting grant funds. States are also required to provide coverage of tobacco cessation services for pregnant women on Medicaid.
Expanding Our Primary Care, Nursing, and Public Health Workforce
The Medicare Graduate Medical Education program and primary care physician and nurse training programs will be modified and expanded to grow our health workforce and improve access to primary care.
Protecting Seniors and Persons with Disabilities
Closing the Medicare Part D Donut Hole
In 2007, an estimated 3.4 million Medicare Part D seniors (14 percent of all enrollees) reached the coverage gap. Beginning in 2011, seniors will receive a 50 percent discount on brand‐name drugs, and additional discounts on brand‐name and generic drugs will phase in to completely close the donut hole.
National Voluntary Long-Term Care Insurance Program
Establishes a national voluntary insurance program, called the CLASS Program, that makes long-term services and supports more affordable for millions of Americans by providing a lifetime cash benefit to help people with disabilities remain in their homes and communities.
Preventive Health Coverage for Medicare Recipients
Beginning in 2011, seniors on Medicare will have access to a free annual wellness visit and personalized prevention plan services. New Medicare plans will be required to cover preventive services with little or no cost sharing.
Increasing Access to Home and Community Based Services
Current payment methods force many seniors with disabilities to receive long-term support and services in institutional settings. The new Community First Choice Option will encourage states to expand Medicaid home and community based services to people with disabilities.
Reducing Costs and Encouraging Quality through Innovation
Physician Payment Reforms to Integrate Health Systems
Physician payment reforms will be implemented to enhance payment for primary care services and encourage physicians to join together in “accountable care organizations” to improve quality and efficiency.
Reducing Avoidable Hospital Readmissions
The federal government will begin tracking hospital readmission rates for high-volume and high-cost conditions. New financial incentives will encourage hospitals to reduce preventable readmissions, which will help limit unnecessary health care spending and improve care.
Incentivizing Provider Collaboration
A national pilot program on payment bundling – when a single payment is made for all services related to a treatment or condition – will encourage hospitals, doctors and post-acute care providers to increase collaboration and coordination of patient care, helping to achieve substantial Medicare savings.
Stemming the Rise in Health Care Costs
The federal government will create an Independent Payment Advisory Board designed to evaluate and craft solutions to extend the solvency of Medicare, lower health care costs, improve health outcomes, and expand access to evidence-based care.
Making Insurance Fair by Eliminating Insurer Abuse
Delivering Needed Health Insurance Reforms
Beginning in 2014, all insurers offering plans to consumers in the health insurance exchanges will be required to abide by strict discriminatory practice protections. No health plans will be able to exclude coverage based on pre-existing health conditions, and gender rating – charging women higher premiums than men for the same health services – will be prohibited. Health premium rates can only vary based on age, geography, family size, and tobacco use.
Building a Framework for Coverage
Health Insurance Exchanges
Beginning in 2014, each state will create its own health insurance Exchange for individuals and small employers to comparison shop for standardized health packages. Exchanges will facilitate enrollment and administer tax credits to ensure all individuals have access to and can obtain affordable coverage. Small businesses seeking coverage in the Exchange will have the advantages of lower administrative costs, greater transparency, greater choice of plans to their employees, and reduced insurance rates usually only available to larger employers.
Health Insurance Tax Credits for the Uninsured
Premium tax credits will be available through the Exchange to allow individuals and families to obtain affordable health coverage. The refundable credits will be available to those with incomes above Medicaid eligibility guidelines and below 400 percent of the federal poverty level ($88,200 for a family of four), and who are not eligible for or offered other acceptable coverage.
Individual Responsibility for Health Coverage
Beginning in 2014, all Marylanders will be required to obtain minimal, qualified health insurance coverage. Low-income individuals who cannot afford coverage, individuals suffering hardship, or individuals with religious objections will be exempt from the penalty. The federal government will notify non-exempt, uninsured taxpayers about coverage options available in their state health insurance Exchange.
Tax penalties for non-compliance will be $95 in 2014, $325 in 2015, and $695 in 2016 (or, up to 2.5 percent of income in 2016). Families will pay half the amount for children, up to a cap of $2,250 per family. If affordable coverage is not available to an individual, they will not be penalized.
Employer Responsibility for Health Coverage
Beginning in 2014, large employers (with 50 or more employees) that do not offer coverage and have at least one employee receiving a health insurance tax credit must pay $2,000 annually for each full‐time employee excluding the first 30 employees. Large employers that offer coverage but whose employees cannot afford or otherwise lack coverage will pay the lesser of $3,000 for each employee receiving a health insurance tax credit or $2,000 for each full-time employee. Employers can avoid this penalty by offering those employees a free choice voucher equivalent to what the employer pays to provide health coverage.
Multi-State Plan Options
Individuals will have the option to seek coverage though a multi-state plan made available from a group of nationwide health plans under the supervision of the federal government.
Medicaid & Children’s Health Insurance Program
Medicaid Coverage Expansion for the States
Beginning in 2014, Maryland – and all states – will be required to extend Medicaid coverage to individuals with incomes at or below 133 percent of the federal poverty level (about $14,400 for a single adult). Between 2014 and 2016, the federal government will pay 100 percent of the cost for these newly eligible individuals. Approximately 172,000 uninsured Marylanders will fall under this newly eligible coverage category. States are required to maintain Medicaid income eligibility guidelines until 2014, when the health insurance Exchanges become operational.
Beginning in 2017, Maryland’s federal medical assistance percentage (FMAP) to cover newly eligible individuals will be reduced to 95 percent, then will decrease annually until it reaches 90 percent in 2020 and thereafter. Also beginning in 2014, former foster children under the age of 26 will be allowed to remain on Medicaid coverage.
Children’s Health Coverage Expansion
From 2016 to 2019, Maryland will receive a 23 percent FMAP increase for coverage of children on the Children’s Health Insurance Program (CHIP). States are prohibited from reducing eligibility guidelines during this period.
Improving Medicaid & CHIP Enrollment
Low-income Marylanders will be given additional tools to ensure they can find and enroll in public or private coverage. Marylanders will be able to access a state-operated website coordinating coverage options available through Medicaid, CHIP and the state health insurance Exchange. The website will enable individuals to apply and enroll, renew enrollment, and consent to enrollment through electronic signature, allowing for seamless access to all health coverage programs.