Affordable Care Act What you Need to Know

Affordable Care Act: What you Need to Know

Changes Already In Place And Changes Coming In 2014

Also known as “health care reform,” the Affordable Care Act (ACA) was signed into law on March 23, 2010. The ACA represents
the most significant overhaul of the United States health care system since the passage of Medicaid and Medicare in 1965. The law attempts to address problems in the current health care system, including expanding coverage to millions of Americans who are uninsured. To accomplish this, significant changes are made to the way health care is purchased and delivered.

There are several different elements under the ACA, although not all of them will be implemented at the same time. The law
called for certain changes to go into effect six months after the passage of the law, while others will not be effective until January 1, 2014 or later.

The most significant reforms in the ACA regarding health insurance are the creation of health insurance exchanges and the health insurance market reforms. A health insurance exchange is an online marketplace where individuals, families and small employers
will be able to easily compare health insurance plans on price, benefits, services and quality. The health insurance market reforms provide consumers with important protections.

Changes Already In Place

Adult children may stay on their parents’ health insurance policies until they turn 26.

This coverage is effective for health plans beginning on or after September 23, 2010. If the young adult is offered insurance through his or her employer, they are not eligible to stay on their parents’ plan.

Children age 19 and under can no longer be turned down for coverage because of a pre-existing condition.

This coverage began on September 23, 2010 and applies to all group and individual plans.

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Health insurance policies cannot put any lifetime limits on essential health coverage.

This coverage began on September 23, 2010. Annual limits will be gradually increased over the next few years and will be completely eliminated on January 1, 2014.

Small businesses that provide health coverage for employees can apply for tax credits.

The law provides a credit worth up to 35% of the employer’s contribution to the employees’ health insurance. Small nonprofit organizations may receive up to a 25% credit. Employers must cover at least 50% of health insurance costs for some or all employees. The employer must have fewer than 25 fulltime employees (or equivalents) and pay annual wages of less than $50,000.

Eligible seniors with Medicare prescription drug coverage received a rebate.

Each eligible senior who reached the Medicare prescription drug “donut hole” received a onetime, tax free $250 rebate check.

Preventative services must be provided without cost-sharing.

All non-grandfathered plans must cover certain preventative services such as mammograms, colonoscopies, immunizations and vaccines, and smoking cessation. Medicare-eligible individuals are also provided with yearly “wellness” exams. This coverage is effective for health plans beginning on or after September 23, 2010.

Insurance companies can no longer rescind coverage for reasons other than fraud.

Companies must give a 30-day notice before rescinding coverage, during which an individual may file an appeal.

Standards for the appeals of claims are strengthened and an external review process is established.

Consumers who have had a claim denied can continue to appeal their insurance company’s decision. A process for independent, outside reviews of claims denials and rescissions is available for individuals if their internal appeal is denied.

Incentives for primary care doctors and nurses to work in underserved areas.

These incentives include funding for scholarships and student loan repayments to help strengthen the primary care workforce. Any doctor, nurse or physician’s assistant who is willing to work in underserved areas of the state may receive these incentives.

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Insurance companies must justify unreasonable rate increases.

Beginning September 1, 2011, insurers must justify any rate increase of 10% or more before the increase takes effect. These rules apply to non-grandfathered plans in the individual and small group market.

Changes Coming In 2014

Establishment of the Health Insurance Marketplace.

The law requires each state to have a health insurance exchange, either established by the state or by the federal government. Mississippi will have an exchange established and operated by the federal government, which is called the “Health Insurance Marketplace.” Only health insurance plans that meet certain benefits and cost standards will be offered in the Marketplace to individuals, families and small employers.

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Financial assistance is available to purchase a health insurance plan.

Premium tax credits and reduced cost-sharing are available to those individuals purchasing coverage through the health insurance marketplace. This assistance can be utilized by individuals and families with incomes between 100% and 400% of the Federal poverty level (FPL).

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All new health plans must cover a core package of items and services, known as “essential health benefits.”

The categories of essential health benefits include ambulatory services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, laboratory services, rehabilitative and habilitative services, preventive services and pediatric services.

Guaranteed issue and renewability of coverage.

Insurance companies are prohibited from refusing to sell coverage or renew policies because of an individual’s pre-existing condition or any other health-related factor. These rules apply in the individual and small group market.

Nearly all individuals will be required to obtain health insurance coverage or pay a penalty.

The law requires U.S. citizens and legal residents to be enrolled in a health insurance plan that meets basic minimum standards. A phased-in tax penalty will be assessed to those who do not maintain coverage. Only certain religious groups or people with very low incomes will be exempt from the tax penalty.

Eliminations of annual limits on insurance coverage.

All plans, including grandfathered plans, will be prohibited from imposing annual dollar limits on the amount of coverage an individual may receive.

Small business tax credits will increase.

Small businesses who qualify will be eligible for a tax credit of up to 50% of the employer’s contribution to provide health insurance for employees. Small nonprofit organizations will be eligible for up to 35%. Employers must cover at least 50% of health insurance costs for some or all employees. The employer must have fewer than 25 full-time employees (or equivalents) and pay annual wages of less than $50,000.

Individuals cannot be charged higher premiums because of their health status.

Insurance companies in the individual and small group markets will be prohibited from using factors such as pre-existing conditions, health status, claims history, duration of coverage, gender or occupation to charge higher premiums to some individuals. Premiums may only vary based on age, tobacco use, family size and geographic areas.


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The Health Insurance Marketplace

The ACA requires that there must be a health insurance exchange ready to function in every state by January 1, 2014. All states were given the option of running their own exchange or allowing the Federal government to run the exchange. Mississippi will have an exchange run by the Federal government, known as the “Health Insurance Marketplace.”

The Health Insurance Marketplace includes both the Individual Marketplace, where individuals and families can enroll in coverage and access premium tax credits, as well as the Small Business Health Options Program, or “SHOP,” which is for small employers and their employees.

The federal government will be responsible for providing services for the Marketplace,
including, but not limited to:

  • A call center open 24/7
  • A website (www.healthcare.gov) where consumers may view, compare and purchase health insurance plans
  • A Navigator program to help consumers understand new coverage options (these activities include training, certification and funding)
  • Registration for agents and brokers in order to sell products through the Marketplace
  • Eligibility determinations for health insurance coverage and insurance affordability programs (such as Medicaid, CHIP and premium tax credits)

All health insurance plans sold through the Marketplace must offer the essential health benefits. Four tiers of coverage will be available, and will help consumers compare different plans. All plans within a particular tier will offer the same level of coverage,
but premiums may still vary from company to company. The four tiers are:

  • Bronze – insurance covers 60% of covered expenses
  • Silver – insurance covers 70% of covered expenses
  • Gold – insurance covers 80% of covered expenses
  • Platinum – insurance covers 90% of covered expenses