The New Health Insurance Paradigm
On March 23, 2010, President Barack Obama signed the Affordable Care Act into law and on June 28, 2012 the law was upheld by the Supreme Court of the United States of America in a 5 to 4 majority vote. This set into motion a New Paradigm for health insurance coverage in our country. The intent of the law is to:
- Put into place comprehensive health care reforms that will improve access to affordable health coverage for everyone.
- Protect consumers from abusive insurance company practices.
- Protect existing health insurance policy holders.
- Help small businesses get health insurance for their workers.
Highlights of the Affordable Care Act
Young adults can remain on their parents' health plans until they are 26 years old. This will also include young adults who don't live with their parents, are out of school, are not financially dependent on their parents, and are married (however, spouses and offspring will not be covered).
Even if the young adult has gone off a parent-owned plan, they will be able to enroll again.
Parents whose plans were already in place before March 23rd, 2010, can enter their young adult children into their plans if those are not eligible for their own employer-sponsored plan.
Group plans which started before the Affordable Care Act was signed into law do not have to offer health coverage to young adults who qualify for other group coverage.
- Employers with fewer than 25 workers may receive help in funding the cost of providing health insurance. Some small businesses are taking advantage of new tax credits which makes the purchasing of health insurance for employees more affordable. Small businesses are eligible if they provide health care for their employees, have no more than 25 full-time workers, and pay an average yearly salary of less than $50,000. Starting in 2014, the tax credit will be 50% for small businesses and 35% for non-profit ones.
Kids with pre-existing conditions may not be denied health coverage by insurance companies. This applies to people up to the age of 19 years and includes any pre-existing health problem, disease or disability that developed before their parents applied for health coverage.
In 2014 this will apply to anybody, regardless of age.
Premiums will not be allowed to be raised for babies or children because of a pre-existing condition or disability.
- Adults who have been denied coverage because of an existing precondition and have been uninsured for 6+ months may now get insurance. PCIP (Pre-Existing Condition Insurance Plan) is aimed at adults who could not get coverage because of a pre-existing condition, such as diabetes or cancer. In 2014, access will be available to them.
- Individuals in the "doughnut hole" now receive a 50% discount on brand named prescription medications and a 7% discount on generic ones. Those enrolled in the Medicare Part D program often fell into a "coverage gap", commonly referred to as a doughnut hole. As soon as their plan had spent a pre-determined amount of money, further expenses had to be paid for fully out-of-pocket. The new legislation aims to gradually eliminate this problem, so that it no longer exists by the end of this decade.
- Medicare patients are now eligible for mammograms, colonoscopies, and some other preventive services
- All new health policies must offer screening and preventive services free of charge (mammograms, colonoscopies, etc.)
Health insurance policies will be available for all people with pre-existing conditions (companies will not be allowed to refuse them). As from January, 2014, refusing coverage because of a pre-existing condition or disability will not be possible. Companies will not be allowed to raise premiums for those reasons either.
What is a pre-existing condition? This is a health problem, disability or disease that started before the individual applied for health coverage.
As from January 2014, health insurance companies will not be able to raise premiums because of an individual's gender or health status - this applies to individual and small group markets (small businesses that buy health insurance for their employees).
Essential health benefits and coverage will be guaranteed for almost all Americans. As from January, 2014, policies will be required to offer a set of basic benefits which will be available on state-based marketplaces (exchanges). All exchanges will list the health plans on offer, so that people can make comparisons and shop around for the best plans. By 2014, all Medicaid state plans must offer at least:
- Chronic disease management (such as asthma or diabetes)
- Emergency room visits
- Laboratory services
- Maternity and newborn care
- Mental health
- Preventive care
- The majority of Americans who do not already have health insurance or health coverage will have to make sure they do in 2014. Financial assistance will be available for those who cannot afford it. Individuals who decide not to be covered will have to pay a tax. Individuals who pay over 8% of their monthly income to buy health insurance will be exempt.
- Dollar limits on the amount of care people are entitled to with insurance companies will eventually be done away with
- Exchanges will be created in 2014, state-based marketplaces where Americans without insurance will be able to buy health insurance. The aim is to increase competition between insurers in a state and allow people to compare and shop around for health plans that suit their circumstances and pockets.
- A larger percentage of American citizens will have access to Medicaid health coverage
How Health Insurance Works
Health Insurance is a contract betwen you and your insurance company. You buy a plan, and the company agrees to pay part of your medical costs when you get sick or hurt.
This is how Health Insurance Coverage works: When you have insurance, you pay some costs and your insurance plan pays some costs.
- Premium A premium is a fixed amount you pay to your insurance plan, usually every month. You pay this even if you don't use medical care that month.
- Deductible If you need medical care, a deductible is the amount you pay for care before the insurance company starts to pay its share. Once you meet your deductible, your insurance company begins to cover some costs of your care. Some plans have lower deductibles, like $250. Some have higher deductibles, like $2000. Many plans provide preventive services, and sometimes other care, before you've met your deductible.
- Copayment A copayment is a fixed amount you'll pay for a medical service after you've met your deductible. For example, after meeting your deductible you may pay $25 for a visit to the doctor's office that would cost $150 if you didn't have coverage. The health plan pays the rest.
- Coinsurance Coinsurance is similar to copayment, except it's a percentage of costs you pay. For instance, you may pay 20% of the cost of a $100 medical bill. So you would pay $20 and the health plan would pay the rest.
- Out-of-pocket maximum This is the total amount you'll have to pay if you get sick. For example, if your plan has a $3000 out-of-pocket maximum, once you pay $3000 in deductibles, coinsurance, and copayments the plan will pay for any covered care above that amount for the rest of the year.
- No yearly or lifetime limits Health plans in the Marketplace can't put dollar limits on how much they will spend each year or over your lifetime to cover essential health benefits. After you've reached your out-of-pocket maximum, your insurance company must pay for all of your covered medical care with no limit.
You may qualify for cost assistance. Based on your income, you may now be able to get help paying for health insurance coverage. Premium tax credits and help with cost-sharing are available to those who qualify. You will be able to compare plan prices and benefits from a number of health insurance companies offering coverages. However, you will still be able to buy directly from an insurance company or broker if you'd like. It's your choice.
The New Paradigm of Medicare
Nearly 50 million older Americans and Americans with disabilities rely on Medicare each year, and the new health care law makes Medicare stronger by adding new benefits, fighting fraud, and improving care for patients. The life of the Medicare Trust Fund will be extended to at least 2024 as a result of reducing waste, fraud, and abuse, and slowing cost growth in Medicare. And, over the next ten years, the law will save the average person in Medicare $4,200. People with Medicare who have the prescription drug costs that hit the so-called donut hole will save an average of over $16,000.
Lower Cost Prescription Drugs: In the past, as many as one in four seniors went without a prescription every year because they couldn’t afford it. To help these seniors, the law provides relief for people in the donut hole – the ones with the highest prescription drug costs. As a first step, in 2010, nearly four million people in the donut hole received a $250 check to help with their costs. In 2011, 3.6 million people with Medicare received a 50 percent discount worth a total of $2.1 billion, or an average of $604 per person, on their brand name prescription drugs when they hit the donut hole. Seniors will see additional savings on covered brand-name and generic drugs while in the coverage gap until the gap is closed in 2020.