HAP

Health Care Reform Frequently Asked Questions


FAQs

  • What taxes and fees apply to businesses with 50 or less eligible employees?
    On January 1, 2014, major provisions of the Affordable Care Act (ACA) that expand access to health coverage for the uninsured took effect, along with new taxes and fees included in the law. The following taxes apply to businesses with 2-50 eligible employees:
    • Health Insurance Premium Tax – An excise tax assessed on all fully insured health plans to help fund the provisions of the ACA
    • Transitional Reinsurance Program Fee – Funds a temporary program (2014-2016) intended to stabilize premiums for coverage in the individual market as high-risk individuals become newly insured; the program fee applies to fully insured and self-funded plans
    • Patient Centered Outcomes Research Institute (PCORI) Fee – Funds the PCORI, which will produce and promote research on clinical effectiveness to help patients and their health care providers make more informed health care decisions; applies to fully insured and self-funded plans
    • Risk Adjustment Fee – An annual assessment for the administration of a risk adjustment program that will transfer funds from plans with membership that is healthier than average to those with membership that is less healthy than average, in order to reduce the impact of adverse selection; applied to non-grandfathered small groups
    • Exchange User Fee – An assessment on insurers for all plans sold through a health insurance exchange. It will be applied to premiums of non-grandfathered small groups
    • Health Insurance Claims Assessment Act (HICAA) Tax – A tax applied to certain health insurance claims paid for services provided on or after January 1, 2012 that helps to support Michigan’s Medicaid program; applies to fully insured and self-funded plans
  • What is considered a “small” business?
    Small business health plans issued or renewed on or after January 1, 2014 are defined in two ways.
    • On the Health Insurance Marketplace, a small business is defined as 1-50 full-time equivalent employees
    • If the business is renewed through HAP (or an insurance agent), the State of Michigan regulations apply, which defines a small business as 2-50 eligible employees
  • How have the rating rules changed?
    All Qualified Health Plans for small businesses issued or renewed in 2014, must comply with the Affordable Care Act’s new, adjusted community rating rules.

    Premium prices can be determined using the following four factors:
    1. Per Member/Per Month (PMPM) rating – Premium cost by member, rather than tiered contract, capped at the three highest priced dependents, not including spouse or dependents 21 or older
    2. Geographic rating – Michigan has defined 16 geographic areas in the small group market (rates will be based on the primary zip code of the business)
    3. Age rating ratio – Members of a small group, age 21 and older, cannot be charged more than three times the rate of a younger person for the same policy (HAP will use a prescribed age curve for ages 21 to 64)
    4. Tobacco ratio – Tobacco users cannot be charged more than 1.5 times the non-tobacco users’ price

    Note that these factors do not include health status, gender or industry type.
  • What taxes and fees apply to businesses with 51 or more eligible employees?
    On January 1, 2014, major provisions of the Affordable Care Act (ACA) that expand access to health coverage for the uninsured took effect, along with new taxes and fees included in the law. The following taxes apply to businesses with over 50 eligible employees:
    • Health Insurance Premium Tax – An excise tax assessed on all fully insured health plans to help fund the provisions of the ACA
    • Transitional Reinsurance Program Fee– Funds a temporary program (2014-2016) intended to stabilize premiums for coverage in the individual market as high-risk individuals become newly insured; applies to fully insured and self-funded plans
    • Patient Centered Outcomes Research Institute (PCORI) Fee – Funds the PCORI, which will produce and promote research on clinical effectiveness to help patients and their health care providers make more informed health care decisions; applies to fully insured and self-funded plans
    • Health Insurance Claims Assessment Act (HICAA) Tax – A tax applied to certain health insurance claims paid for services provided on or after January 1, 2012; funds generated by the assessment will support Michigan’s Medicaid program; applies to fully insured and self-funded plans
 
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