In October of this year, those of you who do not get your health insurance through a group plan at work, are not enrolled in Medicare or are not otherwise exempt from Obamacare’s Individual Mandate, will need to elect one of the new Essential Benefit Plans to begin in January, 2014.
Earlier this week I was reviewing some communications between the federal government and insurance companies. As I was reviewing them I got confused a few times.
I have worked with health insurance for over 25 years. Insurance concepts are fairly easy for me to understand. However, the federal government loves to use initials rather than words when they communicate.
I am hoping that when the new exchanges are presented to the public in September there will be no initials or acronyms. However, until then, those of us who are watching will have to learn what codes the government is using.
In this post I want to translate what some of the abbreviations mean for those who are interested in the Exchanges and want to know what is going on.
FFE = Federally Facilitated Exchange
When the PPACA was written President Obama anticipated the cooperation of most of the states. What actually happened surprised the Department of Health and Human Services. Over half of the states (26) have elected not to spend the time and money to set up their own health insurance exchange to allow citizens to apply online for health insurance and get federal benefits for it. According to the language in the PPACA, the federal government, through the Department of Health and Human Services, is required to set up such an exchange when a state refuses to do so.
QHP = Qualified Health Plan
A Qualified Health Plan is one of the 4 Essential Health Plans or the Catastrophic Plan for young adults that has been certified by the Department of Health and Human Service. People who are not otherwise exempt must buy one of the Qualified Health Plans or pay a penalty starting in January, 2014.
APTC = Advanced Payment Tax Credit
Most Americans have heard about “Subsidies” for lower income Americans to help with the cost of health insurance premiums. Technically, those subsidies are part of our national tax system.
Since the U.S. government does not produce or sell anything, the Treasury is made up of taxes, interest and borrowed funds. When a person claims a “subsidy” that money is paid out of the U.S. treasury directly to a health insurance company on the insured’s behalf. The insured will be personally responsible to pay for the difference.
The money that the government pays is not a gift or grant. It is an advance of a tax credit that is based on the previous years income. Those who claim a subsidy based on their prior year’s income could potentially be required to pay back all, or a part, of the tax credit that was advanced to their health insurance company when they file their taxes for the current year.
AV = Actuarial Value
For some reason the concept of Actuarial Value has been one of the more difficult concepts for me to understand. I think I have a grasp on it now but has taken longer than normal for me to see the logic.
The government defines Actuarial Value as, “The percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an actuarial value of 70%, on average, you would be responsible for 30% of the costs of all covered benefits. However, you could be responsible for a higher or lower percentage of the total costs of covered services for the year, depending on your actual health care needs and the terms of your insurance policy.”
The PPACA mandates that 4 “medal” health insurance plans be built. These “Essential Benefit Plans” are to have 60, 70, 80 or 90% Actuarial Value. That does not necessarily mean that a plan with a 70% Actuarial value is going to have a 70% co-insurance. It means that the plan will end up paying 70% of your medical claims for large health care bills.
Unless you have some sort of supplemental insurance, you will need to pay what your health insurance plan does not. The PPACA has put a “stop-loss” cap on medical bills. In 2014, after you have paid $6250 in deductibles and co-insurance, your Essential Benefit Plan will pay 100% of your medical bills for the rest of the year.
N.A.I.C. = National Association of Insurance Commissioners
The NAIC is an organization whose members are all the head of each state’s department of insurance. Under a 1945 Supreme Court decision, states are allowed to regulate the insurance industry within their own borders, provided the federal government is silent on an issue. Historically, the NAIC was an organization to allow state insurance commissioners to communicate freely and try to keep insurance rules as consistent as possible between states.
“Model Laws” from the NAIC do not have the strength of law. Only legislative bodies, like Senates and Houses of Representatives on the state and federal level, can make laws. The “Model Laws” that come from NAIC are powerful suggestions for state legislative bodies to consider.
The PPACA requires the Secretary of Health and Human Services only to “consult” with NAIC. She is not obligated to follow their direction or advice.
NCQA = National Committee for Quality Assurance
The NCQA is responsible for making sure that only “Quality” insurers are sold through the new health insurance exchanges. The non-profit organization has been in existence since 1990. They use the Healthcare Effectiveness Data and Information Set (HEDIS) and Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey to determine the level of quality a healthcare provider offers.
SPE = State Partnership Exchange
When the politician is a state do not want to invest all the time and money required to set up and manage a health insurance exchange but wish to retain some control over the exchange that happens in their state, they form a “partnership” with the federal Department of Health and Human Services. The federal government will develop the new health insurance exchange but state resources will be used, to some degree, in the daily implementation of the new health insurance exchange.
These are just some of the initials/acronyms that are being used by all the “stake holders” who are working to get Obamacare implemented by October 1, 2013. I will explain more of them in Part 2 of this piece on Monday.
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