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Affordable Care Act in 2014

Spring 2013

Since being enacted in March, 2010, the Affordable Care Act (sometimes called ObamaCare) has already initiated some changes in healthcare delivery, permitting children to stay on parents' coverage until age 26, covering preventive care at 100%, and prohibiting lifetime limits on benefits, just to name a few.

Effective January 1, 2014, however, the law is going to completely overhaul how health insurance is provided. The implementation of this law will cause the greatest changes in health insurance since the inception of Medicare in 1965.

One of the most important changes is that every legal resident will be able to purchase health insurance regardless of their medical condition or health history. Just as important, premium rates can no longer be based on an insured person's health history.

This change in the method of obtaining health insurance is going to be of the greatest benefit to persons with no insurance, those having individual coverage, and those receiving their coverage from an employer with less than 50 employees.

Coverage under these new plans will take effect on January 1, 2014, but enrollment in the plans begins on October 1, 2013. In the next few months you will be seeing much more about it as a major informational campaign is rolled out. Special efforts will be made to encourage healthy young persons to enroll since their participation is vital to the financial stability of the program, yet they are a group that may be reluctant to enroll.


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Patient's Bill of Rights

Under the law, a new "Patient's Bill of Rights" summarizes the goals of giving the American people the stability and flexibility they need to make informed choices about their health. The new healthcare law puts consumers back in charge of their health care.

The Patient's Bill of Rights:

  • Provides Coverage to Americans with Pre-existing Conditions. You will be eligible for health coverage regardless of your medical condition or health history.
  • Protects Your Choice of Doctors. Choose the primary care doctor you want from your plan's network.
  • Keeps Young Adults Covered. If you are under age 26, you may be eligible to be covered under your parent's health plan.
  • Ends Lifetime Limits on Coverage. Lifetime limits on most benefits are banned for all new health insurance plans.
  • Ends Arbitrary Withdrawals of Insurance Coverage. Insurers can no longer cancel your coverage just because you made an honest mistake.
  • Reviews Premium Increases. Insurance companies must now publicly justify any unreasonable rate hikes.
  • Helps You Get the Most from Your Premium Dollars. Your premium dollars must be spent primarily on health care -- not administrative costs with limits on how much of your premiums can be used for administrative costs.
  • Restricts Annual Dollar Limits on Coverage. Annual limits on your health benefits will be phased out by 2014.
  • Removes Insurance Company Barriers to Emergency Services. You can seek emergency care at a hospital outside of your health plan's network.


Coverage Mandate

Effective January 1, 2014, all legal residents of the US must have health insurance. It may be individually purchased directly from insurance companies or through one of the health insurance exchanges being set up in each state.

Employers with 50 or more employees will face tax penalties if they don't offer health insurance to all full-time employees. Employers with less than 50 employees are not required to offer health insurance to their employees, however, if they do, they may take advantage of the healthcare exchanges.

One reason for requiring everyone to be covered is to provide an incentive that will prevent healthy, younger persons from not applying until they need it. In insurance terms, this is the "spread of risk"; the more the spread includes healthy, young people who don't usually require a lot of medical care, the more reasonable premium rates will be for all.


Purchasing Coverage

The simplest way for persons to purchase health insurance coverage is to use their state's exchange. This marketing tool will allow insurance companies to offer coverage, but, as elaborated on in this column in February, they must offer no more than four standardized plans. All plans must provide an easy-to-understand explanation of coverage called a Summary of Benefits and Coverage (SBC).

The exchanges will be on line. Personal assistance will be available through counselors by telephone, and some states are opening brick and mortar stores with trained counselors. The resources at the end of this article can direct you to your state's exchange website. California's exchange website is up and running at CoveredCA.com. Even though it is not yet accepting applications, you can see how much of a government subsidy you will be eligible for.

Under the exchanges, the only factors that can affect an individual's rates are the person's age, their geographical location, and the plan selected. Gender and health history cannot be considered. The law also provides for a surcharge for smokers, however, the implementation of that provision may not be the same in all states.


Penalties for Not Purchasing Health Insurance

As an incentive for all to purchase health insurance, tax penalties will be assessed on persons who do not purchase health insurance. The penalty starts in 2014 as 1% of family income with a minimum dollar amount. It rises until the penalty is 2.5% of family income in 2016, with increases that track inflation in the following years.

The only persons not penalized for not purchasing health insurance are: undocumented residents, incarcerated persons, Native American Indians, families whose income is so low they are not required to file income tax returns, and persons whose religion conflicts with the concept of receiving such benefits.


Premium Costs

It is widely believed that the premiums for health insurance will rise substantially initially, primarily due to the broader coverage required by the law and because medical costs continue to rise. There are provisions in the law that are aimed at controlling the rise in costs, but it may be some time before the results of those provisions are seen in the marketplace.

However, there will be generous subsidies for persons buying coverage through the state health exchanges. The subsidies are available to those individuals who are not otherwise eligible for other public programs such as Medicare, Medicaid (Medi-Cal in California), Children's Health Insurance Program or military coverage. Also, persons covered under employer plans are not eligible for the subsidies unless the employer plan covers less than 60% of medical charges or the employee portion of the premiums is over 9.5% of the employee's income.

A glitch has developed over the final issue noted above, "those employees whose portion of the premiums is over 9.5% of the employee's income." One court has ruled that it only applies to the employee's premium, not that of his or her dependent's coverage. Since that is the largest portion of the premium, if upheld, it almost defeats the purpose of the provision. This issue will hopefully be resolved by the October 1 Open Enrollment period.

The subsidies will be large enough to limit the insurance premiums of a family to a sliding scale percentage of their family income, ranging between 2% and 9.5% for persons whose income is between 100% and 400% of the Federal Poverty Level.

Using the newly published Federal Poverty Guidelines for 2013, 100% of the Federal Poverty Level in the contiguous 48 states is $11,490 for an individual and $23,550 for a family of four. 400% of the Federal Poverty Level is $45,960 for an individual and $94,200 for a family of four. These amounts are higher in Alaska and Hawaii. The latest, complete table of the Federal Poverty Level was released April 1, 2013.

Families with incomes below the Federal Poverty level will be eligible for Medicaid/MediCal. In those states not expanding their Medicaid coverage to accommodate these persons, individuals will not be penalized for not purchasing health insurance.

Families with incomes over 400% of the Federal Poverty Level, which is only about 9% of the uninsured population, may still use the exchanges to purchase health insurance but they will not be eligible for any premium subsidy.


More Information

There are many websites with information about the new law. As with anything on the internet, care should be taken to make sure you are getting accurate and current information.

Two of the most informative and reputable sites are:

Henry J. Kaiser Family Foundation provides information on the law state by state, and the site is constantly updated as regulations and changes occur.

HealthCare.gov is an official website managed by the US Department of Health & Human Services.

Jacques Chambers, C.L.U., is a benefits counselor in private practice with over 35 years experience in health, life and disability insurance and Social Security disability benefits. He can be reached by phone at 323.665.2595, by e-mail at jacques@helpwithbenefits.com, or through his website at www.helpwithbenefits.com.



  
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This article was provided by Being Alive. It is a part of the publication Being Alive Newsletter. Visit Being Alive's website to find out more about their activities, publications and services.
 
See Also
U.S. Health Care Reform

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