Will the law change the way my city provides health insurance?

Nothing in the law appears likely to cause cities and towns to dramatically change the ways in which they currently provide health insurance to their employees. Local governments will be able to continue to self-insure and participate in statewide risk pools, though those that do will, in 2016, need to demonstrate to the Secretary of Health and Human Services that their self-insurance plans are sufficiently funded or capitalized to cover all likely medical claims.

Will every resident of my city be required to have health insurance?

Nearly every American will have to have health insurance by 2014, whether provided by their employer, purchased on the open market through a system of state health care exchanges, or via the federal and state governments through Medicare and Medicaid. Those who refuse to have insurance will be required to pay a tax or penalty each year when they file their federal income tax.

My city is considered a large employer. Will my city have to provide its employees with health insurance?

The ACA places new requirements on all employers—including cities and towns—that must be implemented by 2014. One such requirement is that employers provide their workers with insurance or provide financial assistance to employees if they are required to purchase their own health insurance. Local governments, like all employers that already offer insurance to some workers, will have to provide insurance to all workers-both full and part-time. The insurance offered will have to meet certain minimum cost, coverage, and reimbursement requirements that are prescribed by the law and the Department of Health and Human Services.

What must the insurance include that my city provides to our workers?

All health insurance will have to meet minimum coverage requirements. For example, all plans will have to include an "essential health benefits package" that will provide a comprehensive set of services that covers no less than 60 percent of the cost of the covered benefits. Package components will be defined and annually updated by the Secretary of Health and Human Services; but must include items and services within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and new born care; mental health and substance use disorder services including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services including oral and vision care.

What other changes in health insurance will be coming by 2014 that my city must be aware of?

The ACA:

• requires states to set up state exchanges where individuals and small business may go to purchase health care coverage; 
• eliminates annual benefit limits;
• limits out of pocket expenses for any plan to no more than $6,000 for individuals and $12,000 for families; and 
• allows all employers, including public sector, to opt out of providing health benefits, but they must either provide subsidies for the purchase of insurance or face penalties as high as $3,000 per full-time worker. 

The law also establishes a 40 percent excise tax that will apply to employer-sponsored health plans with premiums exceeding $10,200 (single), $27,500 (family), $11,850 (retirees), and $30,950 (high-risk professions, such as law enforcement). The tax will be paid by insurers.

What changes should my city already have made to our employees' health insurance plans to ensure that we are complying with the ACA?

There are several provisions in the law that cities and towns should have already implemented. These include:

• prohibiting pre-existing condition exclusions for children;
• dropping coverage when employees become ill; 
• lowering seniors' prescription drug prices;
• offering tax credits to small businesses to purchase coverage; 
• eliminating lifetime limits and restrictive annual limits on benefits in all plans;
• requiring plans to cover enrollees' dependent children until age 26; 
• ensuring that consumers have access to an effective internal and external appeals process to appeal new insurance plan decisions; and
• requiring premium rebates to enrollees from insurers with high administrative expenditures, something that will happen for the first time this summer.

What are the next steps that my city or town will have to follow to be in compliance with the ACA?

Now that the U.S. Supreme Court has settled the matter and upheld the Affordable Care Act, NLC expects the Departments of Health and Human Services, Labor, and Treasury, as well as the Internal Revenue Service, to issue a range of regulations to help implement the law. NLC will continue to monitor and report on these regulations, and when appropriate, submit comments to the federal agencies.