By Jim Brown
Since 1998, the Artists Health Insurance Resource Center at The Actors Fund, with partners like CERF+, has helped entertainment[M1] professionals and artists throughout the country find quality, affordable health insurance. But often none was available to them, particularly because of pre-existing conditions and the high cost. This has left more than 30% of this population uninsured, twice the national average.
With the passage of the Affordable Care Act in 2010, and its full implementation beginning in 2013, it has now become possible for every member of this group to obtain health insurance with full benefits at a reasonable cost.
This article describes the most significant changes in health insurance, focusing especially on those features that affect those purchasing insurance on the individual market, the self-employed, episodic workers, and those who operate and are employed in small businesses.
Since the signing of the Affordable Care Act into law in March 2010, children under the age of 19 with pre-existing conditions have been guaranteed access to health insurance. Beginning January 1, 2014, every adult will also have the same guarantee. This will end one of the most onerous and unfair aspects of health insurance in the United States.
Insurers can no longer retroactively cancel, for other than clear proof of fraud, policies of people who get sick. This practice has been responsible for extreme harm, particularly to those undergoing expensive treatments such as chemotherapy which, once the policy was cancelled, they were unable to continue due to cost.
In addition, all new plans must cover a wide array of preventive services at no or low cost to the patient.
There are real financial protections as well. Insurers can no longer impose lifetime dollar limits on medical benefits. Some policies currently max out at amounts as low as $250,000. And even policies with limits as high as one or two million dollars have been exhausted in less than a couple of years when a person suffered a serious spinal injury or was diagnosed with a chronic and disabling disease.
And the maximum amount that individuals and families must pay for premiums has been set at 8% of household income for those purchasing insurance directly and 9.5% for those getting coverage through an employer or union. Premiums based on age, which in the past have had a differential as high as eight or nine times, are now limited – the most expensive policy based on age must be only as high as four times the least expensive policy. Finally, plans must limit an enrollee’s out-of-pocket expenses (including the deductible) to $6,350 for an individual or $12,700 for a family (2014 amounts). The social significance of this cannot be exaggerated – it ends the era of ruinous medical debt, with bills of 100K or more sending afflicted families into bankruptcy.
With a few exceptions (such as those not meeting the tax filing threshold and people who’ve been uninsured for less than three months) everyone will be required to have health insurance. In 2014 the individual penalty is $95 or 1% of income, whichever is greater. By 2016 it goes to $695 or 2.5% of income, and continues to rise after that. Employers with 50 or more equivalent employees (in other words, part-time employees will count toward the total – but do not need to be offered insurance) will be required to offer insurance or pay penalties per employee beginning in 2015.
Each state will have an Exchange, or marketplace, where individuals and small businesses can go to purchase insurance from private insurers. In some cases, the Exchange will be operated by the state; in others, it will be run by the federal government. All plans on the exchange will offer at a minimum an essential benefits package that will include office visits, hospitalization, maternity and newborn care, mental health and substance abuse, prescription drugs and preventive and wellness services.
In addition to choosing an insurer, everyone purchasing insurance on the exchange must choose a level of coverage. It is important to understand that this does not refer to the benefits, but rather to the cost sharing involved. There are four levels which have been given the names of metals: bronze, which covers 60% of costs; silver, 70% of costs; gold, 80%; and platinum, 90%. The premiums rise with the percentage of cost covered, with bronze the lowest cost and platinum the highest. Small businesses will have a similar choice of plans.
Each state will have so-called “navigators” to assist individuals and families in using the Exchange. They will also be able to sign people up for plans on the exchange. There will be user-friendly websites, (similar to how Orbitz helps people find good rates for hotels and airfares or how TurboTax makes filing taxes easier), that will allow visitors to compare insurers’ plans. Enrollment for the Exchange plans begins on October 1st, 2013 for plans starting on January 1st, 2014. The website www.healthcare.gov can guide the visitor to specific assistance in each state.
The Health Premium Tax Credit and the Out-of-Pocket Cap
This is at the heart of the ACA, the features that make health insurance affordable for low and middle income workers. Individuals whose employer does not offer health insurance and whose yearly income is less than $45,960 (families of 2, $62,040, families of 3, $78,120, and upward) will receive a tax credit or, if they don’t owe any taxes, a bigger refund. The amount of the credit or refund depends on actual income and family size, and works on a sliding scale. For example, a person who makes $23,000 a year might have their premiums capped at 6.3% of their income.
And because there is an annual out-of-pocket cap (i.e., the amount an individual or family is responsible for before the insurer pays all costs) also based on income, that person’s costs (excluding premiums), based on an income of $23,000 will be limited to $1,983 a year rather than the maximum $6,350 cited earlier.
There is a calculator available on-line at the Kaiser Family Foundation website (www.kff.org/interactive/subsidy-calculator) that will give an approximation of the tax credit and out-of-pocket cap.
The tax credit can be taken two ways – in advance, i.e., monthly to bring down the cost of the premium, or later, i.e., by subtracting the tax credit from the tax you owe or getting a bigger refund.
For the self-employed, and those whose income changes from month to month, taking the tax credit in advance can present a potential problem. These individuals will need to estimate the income on which their tax credit is based. If they underestimate that income, or fail to notify the Exchange of increases in income over the year, they will be liable to pay back the difference between what they received based on the estimate and what they should have received based on the actual income. While there is a limit to the amount that must be paid back, it can be significant.
Special categories: Young Adults and Low Income People
Adult children under the age of 26 can enroll in their parents’ coverage. Those already on their parents’ coverage can stay on it up to age 26. They can be married or unmarried, in school or out, can live outside their parents’ home, and do not need to be claimed as dependents on their parents’ tax returns. Some states already have laws that allow young adults to stay on their parents’ coverage, even up to age thirty, but they are required to pay the full premium. Under the ACA, the young adult is simply added as any other child to the insurance under family coverage without any additional cost. This is particularly advantageous for young people pursuing careers in the arts, where first jobs are often either with small companies that don’t offer health insurance or as contracted workers without benefits. It is important to note that if an employer does offer health insurance, the under 26 adult cannot enroll in the parents’ plan.
Young adults can also enroll in a special high-deductible, or “catastrophic” plan, to meet the requirements of the mandate. The deductible in 2014 will be $6,350. Prevention services and three annual primary care visits will be exempt from the deductible. The monthly premiums for these plans are expected to be quite low.
In many (but not all) states (go here for current state status: kff.org/Medicaid) the income limits to receive Medicaid has been greatly expanded, and widened to include single adults. In those states, individuals and families with income below 138% of the Federal Poverty Level (for an individual, $1322/month; family of two, $1784; family of four, $2709) will now be eligible. This is an important safety net for those whose income fluctuates from year to year and allows them to maintain continuity of care, particularly for on-going medical conditions.
Businesses with less than 50 full time equivalent (FTE) employees (remember, the hours of part-time employees are included in the calculation) are not mandated to offer health insurance to employees. But the ACA helps small businesses, including studios, workshops, and arts organizations, offer coverage in two ways. First, there is a small business health insurance tax credit, available from and retroactive to 2010. Employers with fewer than 25 employees with average wages less than $50,000, and who are willing to pay at least half the cost of their employees premiums, are eligible on a sliding scale for a tax credit up to 50% (35% for non-profits) of the premium cost. Information on how to claim the credit is available at www.irs.gov.
And just as states will have Exchanges for the purchase of individual insurance, many will also have a Small Business Health Options Program (SHOP), designed to simplify the process of buying health insurance for a small business. The health insurance plans available in the SHOP will be run by private health insurance companies, the same way small group plans are run now. All plans will offer the same benefits as a “typical” employer plan. Plans will present their cost and coverage information in a standard format, making it easier to compare plans based on price, coverage, quality and how much will be contributed towards employees’ coverage.
It is expected that the SHOPs will make it possible for many small businesses to offer health insurance to their employees for the first time.
Every Artist Insured
Over the past 15 years The Actors Fund and its partners like CERF+ have worked to secure the health of their communities. The goal to have every artist insured is now within reach. But all of us must stay informed of our options and enroll in a plan to make it a reality. Visit the Actors Fund health insurance website at https://actorsfund.org/services-and-programs/artists-health-insurance-resource-center for further guidance.
Jim Brown has worked in the performing arts, in social services, and in the insurance industry. He taught in the Drama Department at New York University’s Tisch School of the Arts for thirteen years; was a public information officer for disaster relief in the United States and overseas for the American Red Cross; negotiated provider contracts for Aetna Health Plans and Empire Blue Cross Blue Shield, and served as a managed care regulator for the New Jersey Department of Banking and Insurance. He is currently the National Director of Health Services at The Actors Fund where he oversees the Al Hirschfeld Free Health Clinic and supervises the operation of the Artists’ Health Insurance Resource Center.