by Jacques Chambers, CLU
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.
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.
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.
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.
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.
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.
Effective January 1, 2014, all legal residents of the
U.S. 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.
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.
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.
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
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
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
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
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.
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.
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,
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.
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.
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.
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. For a complete table of the Federal Poverty Level released
04-01-2013, go to: https://www.federalregister.gov/articles
level will be eligible for Medicaid. In those states not expanding
their Medicaid coverage to accommodate these persons, individuals will
not be penalized for not purchasing health insurance.
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.
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.
- Henry J. Kaiser Family Foundation (http://kff.org/health-reform/) provides information on the law state by state, and the site is constantly updated as regulations and changes occur.
- HealthCare.gov (www.healthcare.gov) is an official website managed by the U.S. Department of Health & Human Services.