How Insurance Industry Changes Could Affect You in the Coming Year

How Insurance Industry Changes Could Affect You in the Coming Year

The Essentials of Healthcare Reform

March 30, 2010. Thanks to the new healthcare reform bill, the insurance industry is about to undergo a big transformation. The federal government is requiring insurers to open the coverage gates, remove the benefit caps, and reduce cost-sharing amounts for policyholders.

You’ve probably already heard about the changes scheduled to launch later this year:

Coverage for children regardless of a preexisting condition
Dependent care coverage for children younger than 26
Mandatory preventive care coverage for all new, private policies
Removal of annual and lifetime benefit limits
Elimination of policy cancellations unless you’ve lied to your insurance company

These insurance industry reforms are only the beginning. When mandated individual coverage takes effect in 2014, it’ll bring with it several additional changes to private health insurance that will likely affect your coverage in one way or another. Here’s how:

Limit new coverage waiting period: The longest an insurance company will be able to make you wait before your policy becomes effective is 90 days.
Guarantee coverage and renewal: Health insurers won’t be able to deny you new or renewal coverage because of your past or current medical conditions, genetic testing results, or history as a domestic violence victim.
End of long-standing rate rules: Insurers will no longer be able to base your premiums on your sex or salary. (Females are typically charged higher premiums than men. Also, in some cases, the more you make, the lower your premiums.)

Insurers also won’t be able to charge you more because of your medical history or current health status, genetic information, or because you’ve been the victim of domestic violence.

Insurers will still be able to take into account your age, geographic area, family composition (such as number of people), and tobacco use when deciding how much to charge you for your coverage.

Reduce out-of-pocket costs for lower-income people: If your income is at or below 400 percent of the federal poverty level (FPL is $10,830 for an individual and $22,050 for a family of four), you’re going to see a reduction in the maximum amount of money you’ll have to pay out of pocket for healthcare coverage. Here’s the breakdown:
100 to 200 percent FPL: $1,983 for an individual, $3,967 for a family
200 to 300 percent FPL: $2,975 for an individual, $5,950 for a family
300 to 400 percent FPL: $3,987 for an individual, $7,973 for a family

Limit small group plan deductibles: If you’re an individual covered by a small group plan, your deductible will be capped at $2,000. The cap will be $4,000 for a family. These limits will take effect in 2014.
Mandate coverage for preventative services: If you plan to keep your current coverage for the foreseeable future, you’ll have to wait a while to take advantage of this benefit. Beginning this year, all new private insurance plans must provide coverage for preventative services and immunizations without charging you a co-pay or deductible. However, all private plans won’t be required to provide you with this coverage until 2018.

Understanding Healthcare Reform’s Long-Range Impact on Medicare and Medicaid

The Essentials of Healthcare Reform

March 26, 2010. Together, Medicare and Medicaid insure nearly 93 million Americans. The reforms called for in the new healthcare reform law will expand prescription drug benefits and help hold down premium costs for Medicare recipients. The changes will also make Medicare accessible to more Americans.

Medicare changes will focus on cost containment

Complete closure of the “donut hole”: By the end of the decade, you won’t have to worry about navigating through the Medicare prescription drug coverage gap known as the donut hole. On top of the 50 percent brand-name drug discount pharmaceutical companies will be required to provide beginning in 2011, in 2013 the government will start phasing in additional subsidies for both brand name and generic drugs until the donut hole is closed in 2020.
Medicare Advantage cuts: The government is going to reduce the amount of subsidies it provides for Medicare Advantage coverage, so if you have a private Medicare Advantage plan to help you pay for health-related expenses not covered under traditional Medicare, you can expect some reductions in your coverage beginning in 2012. The plans can’t reduce benefits for your basic health needs, but they will be able to cut coverage for services Medicare doesn’t consider primary.
Premium changes for Medicare Parts B and D: From 2011 through 2019, the premiums you pay for Medicare Part B coverage (doctor’s visits, medical equipment, etc.) won’t go up.However, if your annual income is more than $85,000 (for an individual), or $170,000 (for a couple), the government is going to reduce the amount of Medicare Part D premium subsidy you receive to help pay for prescription drugs.
Reduction in catastrophic coverage threshold: Beginning in 2014, Medicare will reduce the amount of money you’ll have to pay out of pocket before your Medicare Part D catastrophic prescription coverage kicks in. However, the reduction will only last five years, until 2019.
Changes to Medicare Part D cost-sharing: In 2012, Medicare will make the costs you pay out of pocket for home and community-based care the same as the amount you’d pay if you received care in a hospital, nursing home, or other health-care institution.

Medicaid will broaden enrollment to include more Americans

Most of the Medicaid changes outlined in the healthcare reform law center around cost containment and rewarding doctors and hospitals that provide quality care to Medicaid beneficiaries. However, in 2014, a landmark change in the 45-year-old program is slated to take effect: All adults under age 65 who meet certain income guidelines will be eligible to enroll in Medicaid.
Medicaid has always insured only children, adults with children, and people with certain disabilities. However, the new law opens up the program to also include adults without children and pregnant women. Enrollees will still have to meet certain income guidelines. Specifically, household incomes won’t be able to exceed 133 percent of the federal poverty level (FPL). FPL is $10,830 for an individual and $22,050 for a family of four.
Your state may decide to institute the new Medicaid enrollment guidelines early. The healthcare reform law gives your state the option of beginning expansion as early as 2011.

Healthcare Reform 2014: Mandated Coverage, Insurance Exchanges, and Employer Requirements

The Essentials of Healthcare Reform

March 26, 2010. Some parts of the new healthcare law are slated for implementation within the next year. However, several of the more groundbreaking provisions that will affect the greatest number of Americans won’t go into effect until 2014. During the next few years, federal and state officials will be working with leaders in the health and insurance industries to restructure our nation’s healthcare system.

That restructuring means most Americans will be required to have health insurance and most businesses will be required to offer it to their employees. It also means the creation of another kind of insurance plan called a health insurance exchange.

Healthcare reform mandates coverage for most

The government will require most America’s to have health insurance by 2014. The government has enacted this provision as a way to get healthy people who don’t feel the need to pay for coverage to buy insurance. That way, the healthy people can help fund the cost of people who require more medical care.
Several states have filed suit against the federal government saying that it is unconstitutional to make individual citizens to buy health insurance.
If you don’t have coverage and you’re not in one of the groups that’s an exception to the rule, you’ll pay a penalty. You may not be required to purchase health insurance if you

Face financial hardships
Have been uninsured for less than three months
Have religious objections
Are American Indian
Are a prison inmate
Are an undocumented immigrant

If you’re penalized, the amount you’ll be fined will go up each year for the first three years. In 2014, you’ll pay $95 or 1 percent of your taxable income, whichever is greater. In 2015, the fine will be $325 or 2 percent of taxable income, and in 2016 the penalty will be $695 or 2.5 percent of income. Each year after 2016, the government will refigure the fine based on a cost-of-living adjustment.
To help you meet the cost of mandated insurance, the government will offer premium credits and cost sharing subsidies to you and your family meet certain income guidelines and if you enroll in one of the new state-run insurance exchanges (more on those below).
If your income falls between 133 and 400 percent of the federal poverty levels (FPL), you could receive premium credits that will lower the maximum amount of premium you have to pay for your coverage. For instance, if your income is 133 percent of FPL, you won’t have to pay more than 2 percent of your income in premiums. At the high end of the range, if your income is 400 percent of FPL, your premium costs won’t be more than 9.5 percent of your income. FPL is $10,830 for an individual and $22,050 for a family of four.
You could also receive a cost-sharing credit to help reduce your out-of-pocket expenses for deductibles and co-pays. Like the premium credits, the amount of cost-sharing credit you receive will be based on your income in relation to FPL.

Insurance exchanges will be additional marketplace option

Many specifics still have to be worked out, but basically the new healthcare reform law provides federal funding for states to establish American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges.
Whether you’re an individual or a small business owner, these exchanges are supposed to serve as an easy, cost-affordable way for you to get health-insurance for yourself or your employees.
From a consumer perspective, the exchanges are about power in numbers. For instance, the American Health Benefit Exchanges are supposed to provide access to lower cost insurance plans for the uninsured because they allow individuals to join together individuals to join together with other individuals to create a large pool of insured people. Usually, in the insurance world, the more people who are insured under any one plan, the lower the premiums for that plan.
The SHOP exchanges are where business owners with fewer than 100 employees can join forces with other small businesses to try and get the best coverage at the best price for themselves and their workers.
Even if you’re offered insurance through your employer, you could still opt to purchase insurance through the individual exchange if your income meets certain FPL guidelines.
Both the individual and small business exchanges are supposed to give you access to plans that have four tiers of benefits: bronze, silver, gold or platinum. There will also be a catastrophic plan for people under 30 and for those who are exempt from mandated coverage.
States don’t have to set up the exchanges. If a state chooses not to, the federal government can come in and create them. States that do opt for exchanges will decide whether they’ll be run by a government or not-for-profit entity. States can also establish regional, interstate exchanges if they choose. States must make the exchanges available to consumers via call center, but it’s up to the states to create additional avenues of communication, such as Web access.

Many employers face penalties if they don’t offer health insurance

By 2014, the only businesses not at risk for being penalized if they don’t offer health insurance to their employees are businesses with 50 employees or less.
Subsidies serve as insurance enticement: Even if you don’t have to insure your employees, the government is going to try and coax you into it with a series of subsidies to help you pay your premiums. If you purchase insurance for your employees through SHOP, you might be eligible for a tax credit equal to up to 50 percent of the cost you pay toward your employees’ health insurance. That credit will be paid out for two years.
Penalties for not insuring: If you don’t offer health insurance and you’re an employer with more than 50 employees, if one of those employees is a full-timer who receives a premium subsidy because he participates in an exchange, you’ll have to pay a fee of $2,000 for every full-time employee you have (although penalties for the first 30 are waived).
Penalties even if you do insure: Even if you offer health insurance, if one or more of your full-time employees chooses not to participate in your insurance plan and, instead, opts for an exchange plan that allows them to receive a premium credit, you could still be penalized up to $3,000 for each employee receiving a subsidy.
You can avoid being penalized for the number of employees who receive insurance through the exchange by providing each one of them with a free choice voucher to help offset the cost of their premiums.
Automatic enrollment required for large employers: If you employ more than 200 employees, the new law will require you to automatically enroll them in your insurance plan. However, an employee may choose not to participate.

How Healthcare Reform Could Affect You within the Next Year

The Essentials of Healthcare Reform

March 24, 2010. Healthcare reform is now the law of the land. The legislation means the American health system is about to undergo an overhaul the size of which hasn’t been seen since Medicare and Medicaid were created in 1965. The law calls for insurance industry reforms, mandates healthcare coverage for most Americans, creates more insurance options, and expands Medicaid.

Although the broadest of the bill’s provisions won’t take effect until 2014, Americans will notice some changes almost immediately — within the next 90 days (through June 2010). Several others are slated to take effect as early as next year.

Here’s a look at the new healthcare reforms that could affect you within the next year.

Healthcare changes you’ll see within 90 days

Creation of high-risk pool: If you’re an adult who hasn’t had health insurance for six months or more and you have a preexisting condition, you’ll be able to enroll in a high-risk insurance pool. The premiums you pay will be partially subsidized by the government. The program will be eliminated when the new healthcare exchanges are up and running in 2014.
Formation of retiree reinsurance program: If you’re a business that provides health insurance for retirees older than 55 who aren’t yet eligible for Medicare, you could be reimbursed for 80 percent of your retirees’ health claims. The payback applies to claims between $15,000 and $90,000. The program will be phased out once mandated health coverage becomes effective in 2014.

Reforms that’ll take effect by year’s end

Coverage for children with preexisting conditions: Insurance companies won’t be able to deny coverage for your child because the child has a preexisting condition.
Increase in age for dependent coverage: You’ll be able to keep your dependent children on your individual or group health plan until they reach age 26.
Mandated preventative care coverage: If you obtain coverage under a new, private insurance policy, that policy must cover the cost of your preventative care without charging you a co-pay or a deductible. By 2018, all plans will be required to follow suit.
Elimination of coverage caps: Your insurance provider won’t be able to set a lifetime or annual benefit limit on your health group or individual coverage.
Ban on coverage rescission: Insurance companies will be prohibited from voiding your insurance coverage. The only exception is if you provide the company with fraudulent information.
Rebate for Medicare prescriptions: If you’re a senior on Medicare whose prescription coverage has fallen through the infamous prescription “donut hole” (coverage gap), you’ll receive a $250 rebate to help offset your out-of-pocket costs. Improvements in Medicare designed to close the prescription drug donut hole are slated to be phased in over the next several years.
Tax credits for small businesses: If you employ 25 or fewer employees and pay for at least half of your employees’ health insurance, you could be eligible for a tax credit of up to 35 percent of the premiums you pay. The tax credit will apply to tax years 2010 through 2013.

Health system overhauls slated for 2011

Additional donut hole help: If you’re on Medicare and in the donut hole, you’ll be able to get your prescriptions for brand-name drugs filled at a 50 percent discount.
Expanded Medicare preventative services: If you receive health care though Medicare, your prevention care will be covered without co-pays or deductibles.
Optional Medicaid enrollment expansion: Your state will have the option of instituting new, more inclusive Medicaid enrollment guidelines before the mandated 2014 start date. All individuals under age 65, including adults without children, pregnant women, and children whose household incomes don’t exceed 133 percent of the federal poverty level (FPL) will be eligible for enrollment.

FPL is $10,830 for an individual and $22,050 for a family of four. Additionally, states will have to continue administering CHIP, Children’s Health Insurance Program, at current coverage levels.