What does Affordable Care Act mean to you?

There is little dispute that the Patient Protection and Affordable Care Act, otherwise known as the Affordable Care Act, PPACA, ACA or simply Obamacare, has polarized the nation. While at least 27 of the ACA’s provisions have already been implemented, much of it still looms on a horizon that begins Jan. 1. Proponents insist it is the panacea for what ails health care today and it will bring affordable health care to millions of Americans who are without coverage. Opponents see it as an intrusion into civil liberties and a step toward socialized medicine.

This article is not a discussion of the extreme pros and cons of the ACA. Those discussions abound on the Internet and elsewhere. As of today, the ACA is the law of the land. States, including Nevada, are hard at work to implement it and provide information and instruction to both individuals and companies before the end of the year.

This is coming on Jan. 1:

n Phase out of “pre-existing conditions” begins.

n If you can afford insurance but do not get it, you will be charged a fee. It’s a trade-off for eliminating “pre-existing conditions.”

n If you’re not buying insurance because you can’t afford it, you may be eligible for a subsidy. (Go to http://tinyurl.com/d7c3kzm for more information on subsidies.)

n Health insurance exchanges and rebates for the lower and middle class will be established.

n Medicaid can now be used by everyone up to 133 percent of the poverty line. It is estimated that Medicaid rolls will increase by up to 16 million people.

n Some small businesses may qualify for tax credits for two years.

n Businesses with more than 50 employees must offer health insurance to full-time employees or pay a penalty.

n There will be no lifetime dollar limits on health plans.

n All annual deductibles will have limits.

n There will be some Medicare spending cuts.

n A $2,500 limit will be placed on tax-free spending with flexible spending accounts. Congress and staff will have to buy their insurance from state exchanges — with no more special treatment.

n A new tax will be placed on pharmaceutical companies.

n A new tax on the purchase of medical devices will be implemented. Insurance companies will be taxed based on their market share.

n The income tax deduction for medical expenses increases.

THERE IS MUCH ANGST AMONG EMPLOYERS

David Dahan, CEO of Orgill/Singer and Associates in Las Vegas, has been studying the ACA in depth since before it was signed into law. He is a recognized expert on it. From his perspective, the ACA has created a lot of angst among employers.

“Many employers already provide health insurance to their employees,” he observed. “For them, the changes introduced, such as type of plan that must be offered, the contributions by employers and employees, the change in waiting periods, for example, are seen as intrusive. The amount of administrative work required not only to understand but to implement ACA is tremendous and costly. Those employers who do not now offer health insurance see it as a major hardship, and some see their only option is to make employees work less than 30 hours per week.”

SILVER STATE HEALTH INSURANCE EXCHANGE

Nevada’s Silver State Health Insurance Exchange, or Nevada Health Link, has been conditionally approved by the federal government and is on time for implementation. Consumers and small businesses can go to the website at www.exchange.nv.gov for information on deadlines, operations, financial impacts, insurance premium examples, enrollment videos and directions for enrollment in the various health care insurance options.

Some of the facts provided by Nevada Health Link are:

n State insurance exchanges are not for anyone age 65 and over. These individuals are covered by Medicare options.

n There are 588,000 people under the age of 65 in Nevada without health insurance.

n Native Americans who belong to an established tribe, members of certain religious groups, incarcerated individuals and those for whom the cost of premiums would be an extreme hardship can file for exemption from the mandated requirement that everyone purchase health insurance or be penalized.

n Employers are required to explain to their employees whether or not the employer provides qualified health insurance that meets the minimum essential coverage requirements.

n The annual penalties to individuals who do not obtain health insurance and are not exempt are:

2014 — the greater of $95 or 1 percent of their income

2015 — the greater of $325 or 2 percent of their income

2016 — the greater of $695 or 2.5 percent of their income

There are actually two sides to each state exchange. One is for individuals seeking a health insurance plan. The other, called a Small Business Health Options Program or SHOP, is for small businesses. Employers with two to 50 employees will be able to use the SHOP exchange to select plans in which their employees can enroll. Employees will log on and choose a coverage plan that they would like from the plans that their employer selected. Each employer will receive one easy-to-read bill from the exchange for all of its employees.

Employers who have more than 50 full-time equivalent employees are required to provide health insurance coverage. This coverage must cost no more than 9.5 percent of the employee’s earnings and meet minimum essential coverage requirements. If the employer does not provide coverage, the employer will be fined $2,000 times the number of full-time equivalent employees in excess of 30 by the IRS. If the employer does not provide affordable coverage, the employer will be fined $3,000 per employee that qualifies for advance premium tax credits discussed below.

PREMIUMS WILL CHANGE

“The marketplace that will be created by the state exchanges will change the way premiums are charged,” Dahan said. “Premiums will rise for some and will decrease for others. Currently, insurers set their premium rates based on population demographics divided into seven bands. The law reduces that to only three bands.”

Those now paying the higher premiums are basically the elderly, who experience greater health care needs. Young, healthy individuals, who do not need to access health care as frequently, pay lower premiums. Under the law, the premiums for the age groups will level out. Older consumers will see a decrease and younger consumers will see higher premiums.

In a March 13 Associated Press article titled “Insurers warn of PPACA-induced sticker shock,” Tom Murphy wrote, “Some Americans could see their insurance bills double next year as the health care overhaul law expands coverage to millions of people. The nation’s big health insurers say they expect premiums to rise from 20 to 100 percent for millions of people due to changes that will occur.”

Some of this sticker shock will be lessened by an advance premium tax credit. For individuals and families whose annual income falls between 100 percent and 400 percent of the federal poverty level, a tax credit on a sliding scale will help with the cost of premiums. The advance premium tax credit is a refundable credit, meaning that the credit will be paid to the taxpayer by the IRS regardless of whether it exceeds the amount of the taxpayer’s income tax liability. However, the rules for who qualifies, how they qualify and how much tax credit they receive are complicated. IRS regulations for the advance premium tax credit can be found at http://tinyurl.com/8gngn8b.

EXPECT JOBS TO BE AVAILABLE

People who used to be able to file a simple 1040A may find it necessary to seek out a tax professional for assistance in preparing a more complicated tax return. This should open up additional opportunities for employment in tax preparation businesses. Also, the complexities of the law will require expertise to ford the crocodile-infested waters of implementation.

In an article on ascpa.org titled “Health care act opens up opportunities for CPAs in business and industry,” Paul Shillam, controller of Pacific Medical Centers, said, “CPAs’ combined financial and nonfinancial expertise, and insights into workplace dynamics, are guiding organizations to legislative compliance, a well-informed management team and an engaged workforce.”

The Silver State Health Insurance Exchange has received a grant and allocated a budget of $2.2 million to hire navigators and enrollment assisters for state fiscal year 2014. It explained that navigators educate consumers, provide information and enroll individuals in qualified health plans in the exchange. For information on job opportunities, visit the exchange website at www.exchange.nv.gov.

The addition of 30 million more people with insurance is likely to cause significant changes in access to health care. Health care has been projected to be the leading growth industry for new jobs over the next decade. But will the increase in new practitioners be sufficient to handle the accelerated demand?

ACCESS TO Health care MAY CHANGE

Nevada already ranks low in the nation in doctor-to-patient ratio. Now, some physicians are saying they will be much more selective in the types of patients they are willing to see. Especially when doctor reimbursements are tied to outcomes, doctors may be reluctant to take on less healthy patients or patients that exhibit resistance to following doctor instructions in favor of those who have fewer needs. Simply having health insurance is no guarantee people will be able to find a doctor to treat them.

Brian Brannman, CEO of University Medical Center, does not expect much of an increase in the number of patients seeking service at the hospital. Hospitals like UMC are required to provide care for a portion of the population who cannot afford it.

“When a person has insurance, they will likely go to a primary care physician to receive care,” Brannman said.

This should alleviate some of the pressures that now exist in hospital emergency rooms. One of the most important results of the ACA, according to Brannman, is that hospitals and providers are more quickly converting to electronic health records.

The national average wait to see a primary care provider is about 21 days. In Boston, after Massachusetts enacted health care reform similar to the ACA, the wait time to see a family practice doctor rose to 63 days. The wait time to see an OB-GYN in Boston increased from 45 days in 2004 to 75 days in 2009.

THERE IS MORE TO BE DONE

“Essential benefits and unlimited coverage are not the issue,” Dahan said. “Employers want to have input and they feel they have been left out. This is insurance reform, not health care reform. Health care has an infrastructure; a lot of adjustments need to take place in the health delivery system.”

There is still a lot to do before open enrollment begins Oct. 1. The Department of Health and Human Services is still not finished with guidance. Companies are making business plans and budgetary estimates for 2014-15 and beyond and are still unsure how the ACA will impact their bottom line in 2014.

“Profit margins are already low for many employers,” Dahan said. “They can’t see how they can afford another $2,000 per year per employee. They are crying for relief. This disruption in the business process is especially difficult in Las Vegas, where businesses are trying to get back on track after the downturn.”

There is a silver lining, though, according to Dahan. “All insurance agencies in Las Vegas are in complete compliance with the regulations as they exist today. Orgill Singer is giving its clients the best instruction available,” he said.

Will the nation be ready for the mechanics of the 2014 implementation deadline? More than likely, it will.

However, the larger question remains. What is it going to cost, not only for employers and employees, but the government as well?

We’re on a freight train barreling 90 miles an hour in a tunnel toward a pinpoint of light. Is that light the end of the tunnel or the head lamp of another train coming toward us? We won’t know until we’re there.