Healthcare reform timeline: What happens when

Children can now be on a parent’s health plan until their 26th birthday, and maybe even longer in some states. Both married and unmarried children can be included on a parent’s policy. The only exception is that parents covered by a “grandfathered” plan through their job cannot insure an adult child if the child is offered insurance through his or her own job. However, beginning in 2014, the rules change and a child can stay on a parent’s plan up to age 26, even if they are offered insurance by an employer.

Previously insurers could put a limit on the dollar value of medical costs they would cover over the span of your lifetime. Basically, this meant that if you had a serious, long-term disease, such as cancer, you might be cut off from further health insurance coverage once this pre-determined dollar amount was reached. Insurers may no longer impose these limits on key benefits, such as hospitalization.

Sometimes, people accidentally make a mistake on their insurance application. It’s not hard to overlook something, or unintentionally leave something out. Before, insurers could deny payments on claims and even withdraw a member’s benefits because of these mistakes. This is no longer the case. Now, your insurer can only cancel your policy if you intentionally lie about something important, put incomplete information on your application, or don’t pay your premiums on time.

Insurers will not deny insurance to children under 19 with health problems, such as asthma or diabetes.

New policies must cover the cost of preventive care for infants, children and adolescents, including immunizations, annual exams, developmental assessments, hearing and vision screenings, and more. Insurers must also cover the cost of vaccinations and screenings for men and women, including cholesterol, blood pressure, and sexually transmitted diseases. Women receive 8 additional preventive services, at no out-of-pocket cost, such as well-woman check-ups and screenings for cancer, such as mammograms and Pap smears.

Many states already have Consumer Assistance Programs (CAP), geared to help consumers with insurance problems. The new law helps strengthen these services by providing grants to states that already have them, and makes it possible for states without CAPs to set them up. These programs can help you file complaints, and provide a standardized review process for appealing health plan decisions. If your plan still denies payment, you can ask for an external review by an independent review organization outside of your insurance company.

* An appeal is when you ask your health insurer or plan to reconsider a decision to deny payment or coverage for medical treatment.

This provision, part of a Patient’s Bill of Rights, allows you to choose your own primary care physician for yourself, and pediatrician for your children, from your insurer’s network of healthcare providers. In addition, women can choose their own OB-GYN and schedule appointments without having to get a referral.

In the past, some insurance companies would limit payments for Emergency Room services if you visited an ER outside of your plan’s network. Now, members who need immediate medical care for a true emergency will be charged the same rates, regardless of whether they visit an ER in- or out- of their plan’s network. You also no longer need to wait for approval from your insurer to seek care in an out-of-network Emergency Room. This provision is especially important if you get sick or injured when away from home.

Under the new law, adults under age 65 who don’t have children and earn $15,282 or less (according to this year’s salary guidelines) will be eligible. On June 28, 2012, the Supreme Court reached a decision that left it up to each state to decide whether to add this expansion of coverage. States choosing to participate will offer Medicaid coverage to qualifying childless adults by 2014.

"After The Election: A Consumer's Guide To The Health Law," Kaiser Health News , (accessed 25 Feb. 2013)

Starting on September 1, 2011, if insurance companies want to raise the costs of member premiums by more than 10%, they must justify the increase through something called a Rate Review program. Your state or the federal government will review the proposed increase to make sure it is reasonable before it can go into effect.

“Rate Review,” HealthCare.gov, (accessed 25 Feb. 2013)

A new rule, called Medical Loss Ratio, requires health plans to spend 80% (85% for large groups) of premiums on medical services and quality programs designed to help find ways to improve care for members. Only 20% or less can go towards administrative costs (like advertising) and profit for the insurer. Companies that don’t meet this requirement will send rebate checks to members.

“Medical Loss Ratio (MLR),” HealthCare.gov, (accessed 25 Feb. 2013)

Health saving account (HSA) and flexible spending account (FSA) may no longer be used to purchase over-the-counter drugs unless prescribed by a doctor.

Insurance companies are required to provide consumers with a clear, concise summary of their plan benefits, allowing them to easily compare plans and/or insurers. The law calls it Summary of Benefits and Coverage (SBC). Standardized language is used across all insurance carriers, making it easy to compare apples to apples when evaluating plans.

Some taxpayers who file itemized claims deduct their medical expenses – but they can only do so if their medical expenses are more than 7.5% of their Adjusted Gross Income (AGI). Starting this year, that threshold has been raised to 10.0%.

For example, a person with an adjusted gross income of $100,000 who had $10,500 of medical expenses for the year could claim a $3,000 deduction in 2012, the difference between their medical expenses and $7,500 (7.5% of their AGI). In 2013 that number would be reduced to $500, the difference between their medical expenses and $10,000 (or 10% of AGI).

Those age 65 and over are exempted from this change through 2016.

“Topic 502 - Medical and Dental Expenses,” IRS.gov, (accessed 25 Feb. 2013)

Virtual online “Marketplaces” must be set up for consumers to shop for policies from a variety of health insurance companies, including Humana. The state-based Marketplaces will begin open enrollment on October 1, 2013, so that you have time to compare plans, get answers to your questions, and sign up so that your coverage begins by January 1. You’ll also be able to find out if you’re eligible for a government subsidy to help lower the cost.

One of the most significant impacts of healthcare reform is called the Individual Mandate. Put simply, starting on January 1, 2014, most everyone – adults and kids alike -- must have health insurance or pay a tax penalty. There are some exemptions – for instance, those who are unable to use medical care because of religious beliefs or extreme financial hardship.

There is a phased-in tax penalty for those who remain uninsured. This means that from 2014 on, you will have to pay a fee for each person in your family who doesn’t have coverage. In 2014, the penalty is $95 per adult and $47.50 per child (up to $285 for a family) or 1% of income, whichever is greater. This amount goes up to $695 per adult and $347.50 per child (up to $2,085 per family) or 2.5% of income, whichever is greater, by 2016.

"After The Election: A Consumer's Guide To The Health Law," Kaiser Health News, (accessed 25 Feb. 2013)

Subsidies will become available to help middle class families and individuals who buy insurance via the online “marketplace.” Those who are eligible can receive monthly tax credits to help pay their insurance premiums. In some cases, their deductibles and copayments may also be reduced. Current qualifying income levels are between $15,282 and $45,964 for singles and $31,322 and $94,200 for a family of four.

"After The Election: A Consumer's Guide To The Health Law," Kaiser Health News, (accessed 25 Feb. 2013)

In 2010 insurers were prohibited from denying insurance coverage to a child with an existing health condition or a history of health problems. In 2014 that rule will be extended to adults. This means that if you have heart trouble, or breast cancer that’s in remission, you can’t be turned down for what was once called a pre-existing condition. Nor can your premiums be higher because of your health status. This rule is called the “Guaranteed Availability of Insurance.” Health insurers must accept every individual who applies for coverage.

In the past, insurers could place annual limits on the dollar value of benefits and limit payment of medical claims for essential health services. Annual spending limits have been phased out on medically necessary care since 2010 – and in 2014 will be prohibited completely.

As it stands, there are no federal laws limiting how insurance companies set their rates. Starting in 2014, insurance companies can’t base premiums on how healthy (or unhealthy) you are, the number of claims you’ve filed in the past, or your gender. Premiums can, however, be adjusted based on the following factors:

  • Age – But older adults can’t be charged more than three times what a younger person is charged
  • Geography - Insurers can charge more in areas where medical costs are high
  • Family size - An individual versus an individual plus a spouse and/or children
  • Tobacco use - Those using tobacco products can be charged up to 1.5 times what a non-tobacco user is charged

"Health Insurance Market Reforms: Rate Restrictions," The Henry J. Kaiser Family Foundation, (accessed 25 Feb. 2013).

Under the new law, a core group of benefits, called “Essential Benefits” must be included in every new individual and small-group plan. The benefits currently include coverage for hospitalization, prescription medications, and maternity and newborn care, among others.

With health insurance plans, you and your insurer share the cost of your medical expenses. Your share is called out-of-pocket expenses, or cost-sharing. This includes deductibles, copayments (a flat fee paid for a doctor’s visit), and coinsurance (the percentage of medical costs your insurer pays after you’ve met your deductible). Starting in 2014, there will be a limit on how much you pay out-of-pocket each year through the combination of deductibles, copayments and coinsurance. If this rule were in effect today, the limit would be $6,250 for individuals and $12,500 for families. This amount will be adjusted each year for inflation.

“For 2013, Higher Limits for HSA Contributions and Out-of-Pocket Expenses for High-Deductible Plans,” Society for Human Resource Management, (accessed 25 Feb. 2013)

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This information is only a high-level summary of certain provisions of the health care law. This information does NOT attempt to summarize all provisions of the health care reform law. This information is not and should NOT be used as legal or tax advice; it should not be used as a basis for decisions regarding how the health care reform law will affect you and/or your business. Should you have any questions on how the health care reform law (including the high level summary of certain provisions of health care reform) will affect you and/or your business, you should seek professional advice from attorneys or other advisors.

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For Arizona residents: Insured by Humana Insurance Company. For Texas residents: Insured by Humana Insurance Company or offered by Humana Health Plan of Texas, Inc.

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