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Health Care Reform Changes for 2010

Spring 2010

Earlier this year Congress passed and the President signed into law a massive Health Care Reform, named the Patient Protection and Affordable Care Act (PPACA). Its implementation will create major changes in how healthcare is delivered and how health insurance is purchased.

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Because of the massive changes to the current health care delivery system, the effective dates of the various provisions vary. Some parts start this year, in 2010, and other parts are not coming into force until later years, 2011, 2012, 2014, 2018, and even 2020. Rather than trying to understand the entire law, perhaps, it will be easier to comprehend if we focus on the changes taking effect this year and next. The following issues will have some parts taking effect in 2010:

Children With Pre-Existing Conditions -- Effective September 23, 2010, insurance companies will no longer deny coverage to children because of a pre-existing condition. (This will not apply to adults until 2014.) Children applying for coverage under a health plan that requires medical underwriting, whether singly or with a family, cannot be denied coverage due to past medical history.

Transitional High Risk Insurance Pool -- Effective July 1, 2010, persons who are not able to purchase health insurance due to a pre-existing condition will have the opportunity to purchase "affordable" coverage through high risk insurance pools operated by the states and funded by the federal government. Rates charged will be based on the average charge for health insurance by private insurers for similar coverage in the individual health market in that geographical area.

To be eligible for the coverage this year, a person:

  • Must have a pre-existing condition that makes them otherwise uninsurable; and,
  • Must have been uninsured for at least six months prior to applying.

A person meeting these two criteria will be able to obtain coverage regardless of their health.

As of May 3, 2010, 30 states have indicated they will operate their own high risk pools. Persons living in states which do not operate such a pool will be able to purchase coverage through a federal fallback high-risk pool, currently being set up. These pools will operate until insurance companies are required to accept anyone regardless of their pre-existing condition or age in 2014.

Dependent Coverage -- Effective September 23, 2010 (although insurers have indicated they will implement it immediately), children may remain under their parent's health policy until their 26th birthday. This extended coverage will be available to all adult children, including those who are no longer living with their parents and/or are not dependent on their parent's tax return. It applies to both single and married adult children, although the children's spouses and children are not eligible.

It should be noted that there is still no mandate that employers offer dependent coverage. If an employer chooses not to provide coverage for dependents at all, that will still be permitted.

Lifetime Maximums Prohibited -- Effective at the start of plan years beginning after September 23, 2010, health plans will no longer be able to place lifetime or annual limits on new or existing health plans, both group and individual. For many employers who use December 31 as the end of their plan year, this would take effect on January 1, 2011.

Rescissions Prohibited -- Effective September 23, 2010, insurers will be prohibited from dropping persons from coverage when they become ill. Insurance companies have announced they will implement this provision immediately as well. It is not clear what impact this will have on persons who have obtained their insurance through fraud.

Preventive Care Expanded -- New insurance policies sold must provide first dollar coverage without co-payments for preventive care (existing plans do not have to meet this requirement until 2018). This would include all recommended screenings, preventive care and vaccines. Medicare beneficiaries will get free annual physical exams, and Medicaid will cover stop smoking programs for pregnant women.

The law requires carriers to provide coverage for all services recommended by an independent panel of experts, the US Preventive Services Task Force. They must all be covered without any co-pays to be paid by the insureds.

Other features, implemented later, include:

  • A trust fund to pay for bicycle paths, playgrounds, sidewalks, and hiking trails;
  • Chain restaurants with 20 or more locations will have to provide the calorie count of each menu item including food in buffets and salad bars; and,
  • Employers will be able to offer greater incentives to employees who participate in programs to stop smoking, lose weight, and improve their health.

Medicare Part D Donut Hole Phased Out -- The PPACA gradually eliminates the infamous donut hole in Medicare prescription drug coverage. That is the portion of Medical Part D Prescription Drug coverage where, after the initial coverage level, no benefits are paid until over $4,000 has been spent out of pocket. In 2010, Medicare will send checks for $250 to each Medicare beneficiary who has reached the donut hole this year. Checks will be sent out beginning June 15 with additional checks sent every six weeks through 2010.

Given the problems the Part D drug plans have had separating payments from other sources such as ADAP from "True-Out-of-Pocket" expenses, it is possible that beneficiaries will still receive the payment even if ADAP paid all donut hole costs.

Beginning in 2011, drug companies will have to provide medications under the Part D donut hole at a 50% reduction in price in brand name drugs. That gradually increases for both brand name and generics until 2020 when coverage is 75% as the first portion of Part D pays now.

Lowering Health Insurance Premiums -- In an effort to avoid excessive profits from driving health insurance rates ever higher, June 1, 2010, is the date that the National Association of [State] Insurance Commissioners (NAIC) has agreed upon to submit uniform definitions and methods of calculating medical loss ratios, i.e., the percentage of premiums collected that is spent on direct medical services to insureds. After that date, the medical loss ratio cannot exceed 85% for large groups and 80% for small groups and individuals. The goal is to limit the amount of administrative fees an insurance company pays out of the premiums collected.

Other features starting in 2010, that will eventually, but not immediately, help reduce health care costs include:

  • The Food & Drug Administration is authorized to approve generic versions of biologics for certain diseases and allow for generic medications to be marketed after 12 years;
  • Provisions to reduce fraud in the Medicare system;
  • Improved coordination of care for persons covered under both Medicare and Medicaid; and,
  • Tax credits are immediately available to small employers as an incentive for them to offer health insurance to their employees. The IRS is currently sending notices of this to small businesses and tax-exempt organizations.

Many of the regulations for these programs are still being written and will be released over the next few months.

Jacques Chambers, CLU, 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 Web site 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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