The Affordable Care Act (the “ACA”) is a leading topic in today’s news. Some of it will not take effect until 2014, but some of the provisions of the ACA are already in force. Some provisions, like coverage for adult children, have been discussed widely. Others may not be as familiar to you. Regardless of your political affiliation, it is important to know how health care reform will affect you as a consumer.
Provisions of the ACA Currently in Effect:
Tax Breaks for Small Business – Smaller businesses (those with fewer than fifty full-time employees) may qualify for tax incentives if they chose to provide these workers with a group health plan. Even though these tax breaks are already in effect, they are scheduled to be expanded even further in 2014. While small business are not required to provide their workers with health insurance and are not punished if they do not, they may find that these tax incentives make it beneficial to do so. Their employees may also find it beneficial to be able to choose between purchasing their own health insurance and enrolling in their employer’s group plan.
Medical Loss Ratio – This provision of the ACA went into effect in 2011 and regulates how insurance companies spend their premium income. Insurance companies may only spend 15-20% of member premiums on their own costs and profits, while 80-85% must be spent directly on member medical expenses. If a rebate is due from premiums paid in 2011, the rebate must be issued by August 1, 2012. Rebates from premiums paid in 2012 must be issued by August 2013.
Children’s Coverage – Since September 2010, insurance companies have been prevented from declining coverage for children age 18 or younger if that coverage would have been declined solely because of a pre-existing medical condition. Because of this, most health insurance companies have stopped offering “child-only” plans. However, beginning in 2014, no one, regardless of age, will be denied coverage based on a pre-existing medical condition. Therefore, child-only plans may make a more broad reappearance at that time.
Young Adult Coverage – This is one of the most widely discussed and popular provisions of the ACA. It permits young adults to remain on their parent’s health insurance policy until age 26, even if they are no longer students or dependents on the parent’s tax return. This option is especially important for those who might have a pre-existing medical condition that would prevent them from obtaining coverage until 2014.
Preventive Medical Care – An increase in coverage for specified medical services and screenings is another popular feature of the ACA. These benefits are now a staple of most individual and group health plans and have no out-of-pocket cost to the member/patient.
Lifetime Coverage Caps – Before 2010, most insurance policies maxed out after paying somewhere between $5-6 million. The ACA has mandated that there are no longer any lifetime coverage caps. This is extremely important to those member/patients who might be receiving ongoing, expensive, yet life-sustaining care.
Pre-existing Condition Insurance Plans – Currently, many individuals with pre-existing health conditions are obtaining insurance through state high-risk pools or “pre-existing condition insurance plans”, also known as PCIPs. Until coverage for all goes into effect in 2014, the ACA is providing additional funding to these state plans and PCIPs. Once the pre-existing coverage benefit of the ACA goes into effect (currently scheduled for 2014) this funding will cease.