Part 3 continues the series on the PPACA and is an excerpted version of changes occurring in 2014.Part 1 dealt with immediate (2010) changes while Part 2 addressed 2011-2013.

The list of changes required by the federal reform law becomes quite extensive in 2014; accordingly, we will break changes for this year down over several weeks. The following summarizes changes that will be made regarding insurance and coverage issues.

New Employer Coverage Requirements: Employers with more than 50 full-time employees must offer full-time employees coverage. See link for information about income and coverage requirements, as well as penalties.

Employer Free Choice Vouchers: Employers that offer coverage must provide "free choice vouchers" to employees with incomes less than 400% of the federal poverty level if their contribution for employer-sponsored coverage exceeds 8% but is less than 9.8% of their household income and who choose to enroll in a plan in the Exchange. See link for detailed information about voucher amounts.

• Automatic Enrollment in Coverage: Employers with more than 200 employees are required to automatically enroll employees in health insurance plans offered by the employer; however, employees may opt out of coverage.
• Individual Mandate: All U.S. Citizens and legal residents are required to obtain qualifying coverage. See link for income requirements and penalties.
• New State Health Insurance Exchange: Each state is required to establish a health insurance exchange to be administered by a governmental agency or non-profit organization through which individuals and employers with up to 100 employees can purchase qualified coverage.

Funding for these state Exchanges become available in 2011 through January 1, 2015, but Exchanges will not go into effect until 2014. See link for multi-state plan information and age rating requirements, qualifications of plans participating in exchange, and benefit tiers in the exchange.

• Basic Health Plans: States are given the option of creating a Basic Health Plan for uninsured individuals with incomes between 133-200% FPL who would otherwise be eligible to receive premium subsidies in the Exchange. See link for details.
• Essential Benefits Package: All qualified health benefits plans, including those offered through the Exchanges and those offered outside of the Exchanges must offer at least the essential health benefits package, which must cover at least 60% of the actuarial value of the covered benefits, limit annual cost-sharing to the current law HSA limits ($5,950/individual and $11,900/family), and is not more extensive than the typical employer plan. See link for wellness incentive details.
• Market Merge Option: States are given the option of merging the individual and small group markets.

Guarantee Issue and Rating Restrictions: Health plans in the individual and small markets, as well as those plans within the Exchange are required to guarantee issue and renewability and allow rating variation based only on age (limited to 3:1 ratio), premium rating area, family composition, and tobacco use (limited to 1.5:1 ratio).

• Pre-Existing Condition Exclusions: All plans (new and existing) are prohibited from imposing pre-existing condition exclusions on adults.
• Deductible Limits: Deductibles for health plans in the small group market are limited to $2,000 for individuals and $4,000 for families unless contributions are offered that offset deductible amounts above these limits.
• Waiting Periods: Any waiting periods for coverage may not exceed 90 days (this also applies to existing or "grandfathered" plans.
• Lifetime and Annual Limits: Prohibits all plans (new and existing) from imposing lifetime limits and any annual dollar limits for essential benefits.

Clinical Trials: Requires coverage for approved clinical trials.

New Taxes, Credits and Fees:

• Individual Mandate Penalty: Penalty for lack of coverage is the greater of $95 per year or 1% of taxable income.
• Employer Coverage Penalty: Employers (with more than 50 employees) that do not offer coverage and have at least one full-time employee taking advantage of federal premium assistance must pay a fee of $2,000 per full-time or full-time equivalent employee (first 30 employees are exempt). See link for examples

The fee on employers is not tax deductible. (The CBO estimates the cost of this penalty to be nearly $30 billion through 2019.)

• Small Business Tax Credit- Phase II: For tax years 2014 and later, a tax credit of up to 50% of the employer's contribution toward the employee's health insurance premium is available for eligible small businesses that purchase coverage through the state Exchange only. Eligible employers must contribute at least 50% of the total premium cost and the credit will be available for 2 years. See link for further details.
• Premium Credits: Provides refundable and advanceable premium credits to eligible individuals and families with incomes between 133-400% FPL to purchase insurance through the Exchanges. The premium credits are set on a sliding scale and tied to a percentage of income per specified income levels.
• Cost-Sharing Subsidies: Cost-sharing credits are available to eligible individuals and families between 100%-400% FPL and are used to reduce the cost-sharing amounts and annual cost-sharing limits and have the effect of increasing the actuarial value of the basic benefit plan to the certain percentages of the full value of the plan (based on the specified income level).

Health Insurance Provider Fees: Imposes a new annual fee schedule, starting with an $8 billion fee in 2014. See link for details.