Health Reform Overview – What’s in Effect Already?
A couple days ago we looked at some of the big consumer-focused provisions of the Affordable Care Act (the “ACA”) that are due to roll out in 2014, including the “individual mandate” and the provision extending access to coverage to people with pre-existing medical conditions.
Today, let’s follow up with some of the provisions of the ACA already in effect and already affecting consumers across the country. Some of these – like the provision allowing adult children to stay on a parent’s plan until age 26 – you may be familiar with. Others may be new to you.
As always, our intention here is not to take a partisan position on the health reform law or to guess about its future. We just want to know: what does health reform mean for health insurance consumers today?
Provisions of the ACA Currently in Effect:
Tax Breaks for Small Business – Though not subject to the “employer mandate” (see above), businesses with fewer than fifty full-time workers may qualify for special tax incentives when they choose to purchase group health insurance for workers. These tax incentives are in place now, and they’re scheduled to be expanded in 2014.
- Who’s affected: Employers and employees at small businesses. Small businesses with fewer than fifty employers will not be penalized for not providing health insurance to workers in 2014, but they may be more inclined to provide coverage as tax credits are expanded. Employees of these small businesses may be able to choose between enrolling in their employer-sponsored plan or purchasing coverage on their own.
Medical Loss Ratio – This provision of the ACA went into effect in 2011 and requires insurance companies to spend 80-85% of member premiums directly on member medical expenses. The insurance company’s costs and profits are limited to the remaining 15-20% of premium income. Insurance plans that do not meet these medical loss ratio (MLR) criteria are required to issue rebates to policyholders.
- Who’s affected: Health insurance policyholders. Rebates due to policyholders for premiums paid in 2011 must be issued by insurance companies no later than August 1, 2012. Rebates based on premiums paid in 2012 must be issued to policyholders by August 2013.
Children’s Coverage – An early provision of the ACA prevents health insurance companies from declining coverage for children (age 18 and under) due solely to the presence of pre-existing medical conditions. This provision of the law has been in effect since September 2010. As an unintended consequence of the rule, insurance companies in some states stopped offering so-called “child-only” plans – that is, policies without a parent or guardian listed on the same application. Some states have tried to fill in the gap by requiring insurers to offer child-only coverage during special enrollment periods.
- Who’s affected: Children and families. Though it may continue to prove challenging to obtain child-only coverage in some states for the next year and a half, beginning in 2014 no one (child or adult) will be declined coverage based on their pre-existing medical conditions. As a result, child-only plans may become more broadly available again in 2014.
Young Adult Coverage – A popular 2010 provision of the ACA allows young adults to retain coverage under a parent’s health insurance policy until age 26, even when the adult child is no longer in school or claimed as a dependent on the parent’s tax return.
- Who’s affected: Young adults age 19-25. Since the ACA has been upheld, young adults will retain this as a coverage option. Though it’s not the best choice for everyone (e.g. if the adult child lives in another state where there are no in-network medical providers), it’s an especially valuable option for those with pre-existing medical conditions who may not qualify for coverage on their own until 2014.
Preventive Medical Care – A September 2010 provision of the ACA mandated better coverage for specified preventive medical services and screenings. These benefits were made available on most new and existing individually-purchased or employer-sponsored health insurance plans with no out-of-pocket cost to the member seeking medical care.
- Who’s affected: People with health insurance. Health insurance consumers will retain gains in preventive care coverage as a result of the Supreme Court’s decision to uphold the ACA.
Lifetime Coverage Caps – The ACA did away with lifetime coverage limits for most medical services on most health insurance plans. This provision of the law went into effect in 2010. Prior to this, it was common for a person’s lifetime coverage under a health insurance policy to max out at between $1-6 million.
- Who’s affected: People with very serious medical conditions. People receiving expensive ongoing medical treatments or organ transplants, for example, will not run out of coverage dollars while still in need of basic and necessary care.
Pre-existing Condition Insurance Plans – As a sort of stop-gap prior to 2014, the ACA provides additional funding for state high-risk pools and “pre-existing condition insurance plans,” or PCIPs. These are subsidized health insurance plans for people with complicated medical histories that prevent them from qualifying for individually-purchased health insurance on their own. Funding for these plans is scheduled to sunset in 2014 when the “guaranteed issue” provision of the law will require all health insurance plans to accept applicants regardless of pre-existing medical conditions.
Who’s affected: People with pre-existing medical conditions. Funding for these plans remains in place. People covered under these stop-gap plans may be transitioned to open market plans in 2014.
Image by Flickr user AMagill