Healthcare reform for individuals & families How healthcare reform affects you

There are still a lot of questions about healthcare reform – known as the Affordable Care Act. And it's tough to know where to turn for answers. That's why Humana has taken the time to clarify the new law. Armed with the facts, you can make informed choices for you, your family, or your business.

Health Reform timeline

Know where you stand today
Whether you currently have coverage or will be enrolling for new coverage in 2014 under the Affordable Care Act, commonly known as Healthcare Reform, changes will impact you. Get to know the key issues and when they will take effect.

Grandfathered health plans - 2010
Grandfathered plans are those that existed on or before March 23, 2010 and continued after that date. This means the plans may be exempt from some of the requirements of the Healthcare Reform law. However, certain requirements apply to all plans, whether they are grandfathered or not.

Requirements for grandfathered plans include:

  • No lifetime benefit maximum limits, specifically on essential health benefits
  • Dependent coverage for adult children up to age 26
  • No annual limits on certain types of benefits, specifically on essential health benefits
  • No pre-existing conditions exclusions for children under age 19

Temporary High Risk Pool (Pre-Existing Condition Insurance Plan PCIP) - 2010
This plan provides a health coverage option to help adults with pre-existing conditions get coverage if they have been uninsured for six months or more. The program is effective through 2013. If you have not recently had health coverage, find out if you are eligible for the Pre-Existing Condition Insurance Plan. Created by the Affordable Care Act for people with a pre-existing condition, this new health coverage option is available in every state.

Find out more or apply for pre-existing condition insurance or call 1-866-717-5826 (TTY: 1-866-561-1604).

Rescissions prohibited except for fraud - 2010
No rescissions (meaning dropped or cancelled coverage) are permitted, except in cases of fraud or intentional misrepresentation of facts.

Small business tax credits - 2010
ACA provides tax credits to small businesses with fewer than 25 employees and average wages of less than $50,000 for their contributions to buying health insurance for employees. The tax credit is 35% from 2010 to 2013 and increases to 50% in 2014 when state insurance Exchanges become operational. A full tax credit may be available to small businesses with fewer than 10 employees and average wages of less than $25,000.

Early retiree re-insurance program (ERRP) - 2010
ACA provides reimbursement to participating employment-based plans for a portion of the costs of health benefits for early retirees. This is a temporary program ending in 2014 or when funds are exhausted, whichever comes first.
The federal government will provide $5 billion to fund the program and participating employers or insurers will be reimbursed 80% of retiree claims between $15,000 and $90,000. 

Consumer website - 2010
HHS was required to develop a website for consumers to provide information regarding health insurance and the health care reform law. Explore  this material at healthcare.gov.

Dependent coverage to age 26 – 2010
Plans that offer dependent coverage are required to make the coverage available until a child reaches the age of 26, regardless of marital status. This rule applied to all plans in the individual market and to new employer plans. It also applied to existing grandfathered employer plans, unless the adult child has another offer of employer-based coverage (through his or her job, for example).

Beginning in 2014, children up to age 26 can stay on their parents' grandfathered employer plan even if they have another offer of coverage through an employer.

Lifetime and annual limits prohibited - 2010
Individual and group health plans may not impose lifetime limits on the dollar value of essential benefits. Annual limits will be restricted until 2014 and eliminated altogether starting in 2014. Restricted annual limits do not apply to grandfathered individual plans.

No pre-existing conditions for children - 2010
Plans may no longer impose pre-existing condition exclusions for children under 19. This does not apply to grandfathered plans.

Preventive services with no cost-sharing- 2010 (and updated in 2012)
New policies must cover the full cost of preventive care as recommended by the U.S. Preventive Services Task Force. This includes immunizations, preventive care for infants, children, and adolescents, and additional preventive care for women.

Insurance plan appeals process - 2010
There are new minimum requirements for internal and external claims appeals processes.

Patient protections - 2010
Group health plans and issuers offering group or individual health coverage are required to ensure choice of healthcare professionals and greater access to emergency services. Plans that require or provide for a primary care provider (PCP) designation must allow any in-network PCP or pediatrician accepting new patients. Plans no longer require an authorization or referral to see an Ob-Gyn. Prior authorization or increased cost-sharing for emergency services is prohibited.

Funding for health insurance Exchanges - 2010
The law provides grants to states to begin planning for the establishment of insurance Exchanges and Small Business Health Options Program (SHOP) Exchanges. These Exchanges will facilitate the purchase of insurance by individuals and small employers.

Medical loss ratio - 2011
Health plans are required to report the proportion of premium dollars spent on clinical services, quality, and other costs. Plans must provide rebates to consumers if the share of the premium spent on clinical services and quality is less than 85% for large-group plans and 80% for individual and small-group plans.

MLR Frequently Asked Questions (Large Group)
MLR Frequently Asked Questions (Small Group)

OTC drugs and spending accounts - 2011
Health savings accounts (HSAs) and flexible spending accounts (FSAs) may no longer be used to purchase over-the counter drugs unless prescribed by a doctor. Increases tax for nonqualified HSA withdrawals from 10% to 20%, and for Archer MSA withdrawals from 15% to 20%.

Preventive Services with No Cost Sharing – 2012
In 2012, two new services were added to Humana new and renewing plans to be covered at full cost when provided by a network provider:

  • Contraceptive methods and counseling
  • Breast feeding support
  • The additional benefits will not impact a group’s grandfathered status
  • Does not apply to grandfathered plans
  • Religious employers who meet eligibility requirements such as churches, synagogues, and mosques may opt out entirely from the contraceptive coverage
  • Certain nonprofit nonreligious employers, such as universities, hospitals, and social service organizations who, based on religious beliefs do not currently provide contraceptive coverage in their plans, may be eligible for a one-year safe harbor from enforcement of these new guidelines

Note: For some HumanaOne plans, there is a waiting period of 90 days for preventive services. HumanaOne members, please call your agent or customer service for additional information.

Summary of Benefits and Coverage (SBC) – 2012
As of September 23, 2012, group health plans and health insurance issuers must provide a Summary of Benefits and Coverage (SBC) document to applicants, policyholders or certificate holders, and enrollees. The SBC document must meet the format and content criteria of the final regulations. It must provide consumers with a clear, concise summary of their plan benefits and allow them to compare coverage across plans and/or carriers. The SBC must be provided at specified timeframes upon enrollment and at renewal.

The employer is responsible to provide the SBC to its employees. An employer offering a self-insured plan may make arrangements with the carrier providing administrative services to produce the document.

Comparative effectiveness fee - 2012
Employers sponsoring group health plans started paying $1 per participant in 2012. This fee increases in 2013 to $2 per participant. Thereafter the amount will be indexed to national health expenditures. This fee phases out by 2019. Revenue from the fee will fund research to determine the effectiveness of various types of medical treatments.

Employer reporting requirements - 2013

Employers with 250 or more W-2s must show employees the total cost of their group health benefit plan coverage on their W-2 forms  starting with the 2012 tax reporting year.

In 2013 employers will be required to notify employees:

  • About the availability of the Exchange
  • They may be eligible for a subsidy under the Individual Exchange if the employer’s plan’s share of the total allowed cost of benefits provided is less than 60% of such costs
  • If the employee purchases coverage in the Individual Exchange, he or she will lose the employer’s coverage contribution

All employees need to be notified by later summer or early fall of 2013 based on a recent update from the U.S. Department of Labor (DOL). It is expected that DOL will issue future guidance on complying with this requirement.

Additional Medicare Part A Tax on High Income Tax Payers (starting with 2013 tax year)

  • For taxable years beginning with 1/1/2013, an additional tax of 0.9% of employment wages will be assessed on the following taxpayers: A joint return of $250,000 or more, $125,000 in the case of a married individual filing a separate return, and $200,000 for any other case.” This affects payroll for all employers.

Excessive Compensation for Employees of Health Insurers

  • Beginning on or after 1/1/2013, health insurers are allowed to take tax deductions for salaries up to $500,000 paid on or after January 1, 2013. This compares to other organizations which can take tax deductions for salaries up to $1,000,000.

2013 provision: Itemized Tax Deductions for Individuals.

  • Effective with tax years beginning on or after 1/1/2013, there will be an increase in the income threshold for claiming medical expenses as itemized deductions. The threshold changes from 7.5% to 10.0% of adjusted gross income. Individuals age 65 and over are exempted through 2016

Flexible spending account contributions - 2013
Contributions to flexible spending accounts for medical expenses are limited to $2,500 per year.

Employer Form 5500 – 2014
Large employers will be subjected to expanded 5500 reporting requirements to include information on the health insurance coverage of their employees.

Health insurance Exchanges - 2014
Exchanges are online marketplaces. Insurance Exchanges will be created, along with Small Business Health Options Program (SHOP) Exchanges. In 2014, individuals and small businesses with up to 100 employees can purchase health insurance on these Exchanges. States can allow large employers to participate beginning in 2017.

ICD-10 Requirements - 2014
Beginning 10/1/2014, ICD-10 provisions will be effective. It builds on and enhances the HIPAA requirements regarding standards of electronic transactions.
The updates to the standards are needed to accommodate the transition to ICD-10, the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD) list by the World Health Organization. It codes for diseases, signs and symptoms, abnormal findings, complaints, social circumstances, and external causes of injury or diseases.
For further information, please link to the following document: Humana ICD-10 Implementation

Individual requirement to have insurance - 2014
The law requires U.S. citizens and legal residents to have qualifying health insurance. For those without coverage (with certain exemptions), there will be a phased-in tax penalty.

  • In 2014, an individual without insurance must pay $95 or 1% of income, whichever is greater.
  • In 2016 and beyond, that penalty rises to $695 or 2.5% of income, whichever is greater. This $695 is indexed to inflation after 2016.
  • Families will pay half of the penalty for children, up to a cap of $2,085 per family.
  • There will be exemptions to this requirement, in cases of financial hardship and other limited circumstances.

Subsidies to buy insurance in new state health insurance Exchanges will be available. People who do not qualify for Medicaid eligibility but who are still below 400% of the federal poverty level may be eligible for tax credits and cost-sharing assistance.

Pre-existing conditions - 2014
Individual and group health plans can no longer exclude any person of any age due to pre-existing conditions. However, this does not apply to Individual grandfathered plans.

Essential benefits - 2014
Individual and small group plans offered inside/outside the exchange must provide the essential benefits package. The minimum benefit package applies to individual and small group new business in 2014 and non-grandfathered existing business. It includes: Ambulatory patient services, Emergency services, Hospitalization, Maternity and newborn care, Mental health & substance abuse, Prescription drug, Rehabilitative & habilitative services/devices, Lab services, Preventive/wellness, Disease management and Pediatric services including oral & vision care.

Deductibles are limited to $2,000 for individuals and $4,000 for families in the small group market, though proposed rules allow deductibles to be higher if needed to reach bronze status (self-funded plans and grandfathered plans are exempt from this requirement).

No annual limits on coverage - 2014
Annual limits on essential health benefits are prohibited. However, this does not apply to grandfathered individual plans.

Guaranteed availability of insurance - 2014
Also known as "guaranteed issue," with this provision health insurers must accept every individual and employer who applies for coverage.

Rating restrictions - 2014
Rating restrictions go into effect for new individual and fully insured small group plans. Insurance companies cannot base premiums on health status, claims experience or gender. Premiums can only vary by age, geography, family size, or tobacco use (no more than 1.5:1).

Merged markets - 2014
States are allowed to merge together individual and small group markets if the state determines it is appropriate.

Cost-sharing limits - 2014
For 2014, the out of pocket maximums are the same as the maximum out-of-pocket limits applicable to HSA-compatible high deductible health plans under IRS Code (note that the 2012 maximums are $6,050 for self-only coverage and $12,100 for family coverage). For future years, the 2014 limits are increased by the premium adjustment percentage - the percentage increase in the average per capita premium for health insurance coverage. These limits impact individual, small group  and large group new  business in 2014 and existing non-grandfathered  business.

Wellness programs - 2014
The law permits employers to offer employee rewards of up to 30% of the cost of coverage for participating in a wellness program and meeting certain health-related standards.

Transitional reinsurance program - 2014
A transitional reinsurance program will be established for the individual market and funded by individual and group health plan assessments (totalling $25 billion between 2014 – 2016). This program will provide payments to plans in the individual market that cover high-risk individuals.

Pre-existing conditions - 2014
Individual and group health plans can no longer impose pre-existing condition exclusions for any person of any age. This includes children under the age of 19 and does not apply to grandfathered individual plans.

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