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Thursday, November 11, 2010

Health Care Reform Summarized

Health Insurance Reform Law Summarized

By Bill Hannant
On March 23rdof this year, President Obama signed the Patient Protection and Affordable Care Act into law, and one week later, the Health Care and Education Affordability Reconciliation Act. Whether this new law will ultimately help or hurt you depends on whether you need help getting insurance (eventually easier) or paying for it (may become harder).

Although the new law is referred to as Health Care reform, it is primarily health insurance reform. Not a bad thing, but without seriously addressing the skyrocketing cost of health care itself, the cost of insurance, inextricably tied to the cost of health care, may increase dramatically.

The cost of this law was originally pegged at around $850 billion, but has since been adjusted by the Congressional Budget Office at $1.3 trillion – with a t - give or take a dollar or two. The bulk of the money is to come from reducing fraud and waste in the Medicare and Medicaid systems. There will also be a number of taxes and fees on insurance companies and higher income individuals, most of which will likely be passed on to the beneficiaries of the law, you.

In my mind, the heart of the legislation is that, starting in 2014, insurance companies can no longer decline to accept any individual applying for insurance, regardless of pre-existing conditions. The kicker is that this could lead to high premiums (health care is expensive) or reduced benefits (benefits must be paid for), or both. With some exceptions, everyone will have to purchase at least a minimal level of coverage or pay a fine. Sheer numbers of enrollees may help ameliorate the cost of such a mandate.

Some features of the law went into effect immediately; some after 90 days, some 6 months after enactment, and the rest are spread out over the next 8 years.

2010 Highlights:
Individual Market
After 90 days:
Creates high-risk pool coverage for people who have been uninsured for at least six months and cannot obtain current individual coverage due to preexisting conditions. California already has such a program, but with serious limitations.

After 6 Months:
Prohibits rescissions of health plan coverage (cancellation of coverage when a claim is made) in all insurance markets, except when a claim is fraudulent or intentionally misrepresents material fact.

Small Group/Employer
Small Employer Tax Credit - makes available tax credits for qualified small employer contributions to purchase coverage for employees. In order to qualify, the business must have no more than 25 full-time employees, pay average annual wages of less than $50,000 and provide qualifying coverage.

Small Group/Individual Market
After 6 Months:
Lifetime limit on the dollar value of benefits for any participant or beneficiary is prohibited.

The age of a dependent for health plan coverage increases to up to age 26, regardless of that dependent’s status.

Mandates coverage of the following preventive services with no cost sharing :
- Immunizations;
- For infants, children, and adolescents, preventive care and screenings;
- For women, additional preventive care and screenings provided for in comprehensive guidelines regarding breast cancer screening, mammography, and prevention.

All health plans will have to cover preexisting conditions for children 19 and under. Insurance will likely be more expensive.

Mandates coverage of emergency services at in-network level regardless of provider.
Allows HMO enrollees to designate any in-network doctor their primary care physician (including OB/GYN and pediatrician).

Oh, and most important: Ten percent excise tax on amounts paid for indoor tanning services, whether or not an individual’s insurance policy covers the service.

2011 Highlight:
Starting January 1, 2011 expenses for medicines or drugs will qualify as tax-free and reimbursable by an employer-provided health plan, including an FSA, HRA or HSA, only if:
- the medicine or drug requires a prescription;
- is an over-the-counter medicine or drug and the individual obtains a prescription; or
- is insulin
Insurance companies will have to spend a certain percentage of premium dollars on (to be determined) member care: 85% for large groups, 80% for small groups (under 100) and individuals.

Most of the rest involves taxes, insurance company mandates, reporting rules, premium credits and subsidies (2014), government-administered insurance exchanges. I’ll cover some of this in future articles.

If you want to research on your own, you can start with the government site: Or give me a call, Bill Hannant at 707-829-2328.

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