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Implementing the Coverage Provisions of Health Care Reform: What’s at Stake for Direct Care Workers

Implementing the Coverage Provisions of Health Care Reform: What’s at Stake for Direct Care Workers

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In March 2010, President Obama signed landmark health care reform legislation into law. Over the course of the next several years, the new health care law will extend health insurance coverage to an estimated 32 million uninsured Americans and improve health insurance options and health care quality for the vast majority of Americans. The reform will not solve all the problems with our health care system. Of particular concern, some 23 million people will likely remain uninsured. Still, the reform will bring about the most important expansion of health care coverage since the enactment of Medicare 45 years ago.

This policy brief details the key coverage-related provisions of health reform, and discusses steps that direct care workers, direct care associations, and others can take to ensure that the coverage provisions of health reform are implemented in ways that work for direct care workers and employers.
In March 2010, President Obama signed landmark health care reform legislation into law. Over the course of the next several years, the new health care law will extend health insurance coverage to an estimated 32 million uninsured Americans and improve health insurance options and health care quality for the vast majority of Americans. The reform will not solve all the problems with our health care system. Of particular concern, some 23 million people will likely remain uninsured. Still, the reform will bring about the most important expansion of health care coverage since the enactment of Medicare 45 years ago.

This policy brief details the key coverage-related provisions of health reform, and discusses steps that direct care workers, direct care associations, and others can take to ensure that the coverage provisions of health reform are implemented in ways that work for direct care workers and employers.

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Published by: Center for Economic and Policy Research on Jan 19, 2011
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In March 2010, President Obama signed landmark health care reform legisla-tion into law.
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Over the course of the next several years, the new health carelaw will extend health insurance coverage to an estimated 32 million uninsuredAmericans and improve health insurance options and health care quality for thevast majority of Americans.
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The reform will not solve all the problems with ourhealth care system. Of particular concern, some 23 million people will likely re-main uninsured. Still, the reform will bring about the most important expansionof health care coverage since the enactment of Medicare 45 years ago.This policy brief details the key coverage-related provisions of healthreform, and discusses steps that direct care workers, direct care associations,and others can take to ensure that the coverage provisions of health reform areimplemented in ways that work for direct care workers and employers. Directcare workers have a vital role to play in the implementation process, and maywant to advocate for the following:
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a state advisory committee on health reform implementation that includesdirect care workers;
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that states take full advantage of new options in the law to streamlineeligibility for Medicaid and subsidies for purchasing health care coverage inthe exchange;
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the implementation of the Basic Health Plan option for residents withincomes below 200 percent of the poverty line;
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the establishment of a publicly administered health plan to compete in theexchange; and
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the use of federal grants to fund and strengthen independent and effectiveConsumer Assistance Programs to help consumers navigate the new system.These recommendations are explained in more detail later in this policybrief. Health reform also includes important provisions related to health careworkforce development, long-term care insurance, public health, preventionand many other health-related issues. Although not discussed in this brief,many of these provisions are relevant to direct care workers.
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I. Implementing the Key Coverage-Related Provisions onHealth Care Reform
The coverage provisions of health reform take effect in roughly two phases.
Direct Care Alliance Policy Brief No. 7
This is the seventh in aseries of policy briefs aboutthe direct care workforcein long-term care issued bythe Direct Care Alliance(DCA). This series was con-ceived at a meeting of labor economists, lawyers,long-term care researchers,and other experts convenedby the DCA and funded bythe Russell Sage Foundation.Editorial committee:Nancy Folbre, Vera Salter,Leonila Vega.
Implementing the Coverage Provisionsof Health Care Reform: What’s at Stake for Direct Care Workers
By Shawn Fremstad, Center for Economic and Policy Research
 January 2011
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The Direct Care Alliance
The Direct Care Alliance isthe national advocacy voiceof direct care workers. Weempower workers to speak outfor better wages, benets,respect, and working condi-tions, so more people cancommit to direct care as acareer. We also convenepowerful allies nationwide tobuild consensus for change.
 
Direct Care Alliance Policy Brief No. 7
2First, between this year and 2013, numerous provisionsthat expand insurance options will be implemented. How-ever, no one who is currently uninsured will be required toobtain insurance. Second, three years from now, in 2014,most businesses with 50 or more full-time employees will be required to provide insurance (or pay a penalty) to em-ployees working more than 30 hours per week, and nearlyall uninsured adults will be required to obtain insurance.Financial credits will be available to low- and middle-in-come families—and to certain small businesses and small non-prot organizations—to offset the cost of coverage.By 2019, some 92 percent of Americans under the age of 65 should have health insurance.
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A. PHASE 1 OF HEALTH REFORM IMPLEMENTATION:2010-2013
A number of important provisions in the law that expandcoverage options will go into effect between now andthe end of 2013. Some of the most important provisions,including the following, have already taken effect.
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Pre-Existing Condition Insurance Plan (PCIP):
Health care reform creates a new program—the Pre-Exist-ing Condition Insurance Plan—to provide coverage to un-insured people who have been denied insurance becauseof a pre-existing condition. The Pre-Existing ConditionInsurance Plan is now available in all states until 2014,when insurers will be prohibited from denying coveragebased on a pre-existing condition. The new plan coversa broad range of health benets, including treatment of a pre-existing condition, and has no income eligibilitylimits. You will need to pay a monthly premium, but thepremium will not be higher because of your condition.Premiums and other details of the plan generally vary bystate; in 23 states and the District of Columbia, PCIP isadministered by the federal government.
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In most states,PCIP has only enrolled about 10 percent or fewer of thosepotentially eligible, suggesting that many states need toconduct more outreach and marketing to inform the pub-lic about PCIP, and review their PCIP policies to ensurethat the program is affordable and accessible.
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Coverage for Young Adults:
Young adults are morelikely to be uninsured than any other age group. In 2008,nearly 3 out of every 10 young adults (age 18 to 24) wereuninsured compared to an overall uninsurance rate of 15.4percent, and more than one out of every four uninsuredAmericans were young adults ages 19 to 29. Health carereform will help address this problem by requiring healthcare plans that offer coverage to children on their par-ents’ plan until the adult child reaches the age of 26.
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 The adult child does need to live with their parents, bea dependent on the parents’ tax return, or be a studentor unmarried. Health care plans must notify adult chil-dren of continued eligibility and give them the opportu-nity to join their parents’ plan beginning on or afterSeptember 23, 2010.
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New Health Care Tax Credit for Small Employers:
Small employers, including non-prot employers, areeligible for a tax credit if they cover at least 50 percentof the cost of health care coverage for some or all of their workers. To qualify, an employer must have lessthan the equivalent of 25 full-time workers, and payaverage annual wages below $50,000. For employerswith the equivalent of 10 full-time workers and averagewages under $25,000, the credit is equal to 35 percentof employers’ premium costs. For other small businesses,the value of the credit phases out as the number of employers and/or average wages increases to the 50FTE/$50,000 annual wages limit. Tax-exempt (non-prof-it) employers can receive the credit even though theydon’t pay federal taxes.
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Medicaid and CHIP:
States must at least maintain theMedicaid and CHIP coverage and enrollment proceduresthat they had as of the date of enactment of the new law(March 23, 2010) until January 1, 2014. However, begin-ning in 2011, states with budget decits can seek an ex-emption from maintaining adult eligibility levels above 133percent of the poverty line.
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(As discussed below, statesmust provide Medicaid coverage for non-elderly up to 133percent of the federal poverty line starting in 2014).
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Immigrant Eligibility for Medicaid and CHIP:
Underpreviously established rules that will remain in place,most lawfully residing immigrants are ineligible forfederal Medicaid and CHIP during their rst ve years inthe United States (undocumented immigrants are alsoineligible, except for emergency Medicaid). More than half of all states already use state funds to provide Medicaid-
 
Direct Care Alliance Policy Brief No. 7
exchanges in place where individuals can buy healthinsurance through private insurers if affordable coverageisn’t available through their employers. In addition, small businesses with up to 100 employees can purchase cover-age through a Small Business Health Options Program(SHOP) exchange. The exchanges will offer individuals andqualied employers a choice of health plans that meetcertain benets and cost standards. Starting in 2017,states may allow businesses with more than 100 employ-ees to purchase coverage for their employees through theSHOP exchange.
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Benet Plans Offered Through the Exchange:
Plansoffered through the exchange must provide a compre-hensive set of services, including pediatric services andpreventive care, and cover at least 60 percent of the actu-arial value of the covered benets. Four benet packages(bronze, silver, gold, platinum) may be offered withinthe exchanges. These packages will vary by actuarial value (the share of medical expenses the plan pays for astandard population) with the bronze plan at 60 percentof actuarial value and the platinum at 90 percent. TheSecretary of Health and Human Services will dene andannually update the benet package through a transpar-ent and public process.3like coverage during this period to low-income lawfullyresiding immigrants. In addition, legislation passed lastyear provides a new state option to waive the federal ve-year requirement for lawfully residing immigrants who arechildren or pregnant.
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States that take this option canreceive federal Medicaid and CHIP matching funds for thechildren and pregnant women they cover.
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New Voluntary Long-Term Care Insurance Program:
Health reform establishes a new voluntary long-termcare insurance program, known as the Community Liv-ing Assistance Standards and Supports (CLASS) program.Under the program, workers will be able to have premiumsdeducted from their paychecks to purchase long-term careinsurance. CLASS will be a public program that is distinctfrom Medicare and private long-term care insurance. Itwill provide cash assistance to insured individuals whobecome disabled or otherwise limited in basic activitiesof daily living. The assistance can be used to purchasenon-medical services and supports necessary to maintaincommunity residence.
B. PHASE II OF HEALTH REFORMIMPLEMENTATION: 2014
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Individual Requirement to Obtain Insurance:
U.S.citizens and legal residents must obtain health insur-ance or pay a penalty. If a person can’t obtain affordablecoverage through their employer, or a public program—nearly all individuals and families with incomes below 133percent of the poverty line will be eligible for Medicaid,as discussed further below —they can purchase coveragethrough the new “exchanges” established by the law. Thecost of this coverage is subsidized for low- and middle-income people. The penalty for not obtaining insuranceis the greater of $695 per year up to a maximum of $2,085 per family or 2.5 percent of household income.The penalty does not apply to people with income belowthe federal income tax ling threshold (in 2009, this was$9,530 for a single non-elderly individual, and $18,700for couples). In addition, exemptions are available fornancial hardship, religious objections, American Indians,those without coverage for less than three months, andthose for whom the lowest cost plan option exceeds 8percent of income.
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Health Exchanges Established:
All states must have
FPLPremium Limit asa Share of IncomeActuarial Value After Cost Sharing AppliedOut of Pocket Limit(Individual/Family)
Below 133%2%94%$1,983/$3,967133%3%94%$1,983/$3,967150%4%94%$1,983/$3,967200%6.3%87%$2,975/$5,950250%8.05%73%$2,975/$5,950300-400%9.5%70%$3,967/$7,933
Table 1
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Individual Tax Credits Available:
Low- and middle-income individuals that will purchase coverage throughthe exchange will be eligible for tax credits that offsetthe cost of insurance. Credits will be available for peoplewith incomes below 400 percent of poverty ($43,000 foran individual or $88,000 for a family of four in 2010) whoare not eligible for or offered other affordable coverage.As Table 1 shows, credits will be set so that the pre-mium contribution in 2014 is not more than 3 percent of income for individuals with income at 133 percent of the

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