Affordable Health Care Act

As the days for The Affordable Health Care Act (ACA), also known as Healthcare Reform, get nearer it is becoming clearer as to how it will work and how it is to be implemented. The concept is to encourage the estimated 49 million Americans who lack health insurance to be able to purchase a plan. This will help the estimated 58% of Americans who reported delaying or forgoing medical care in 2011, because they did not have adequate coverage. Many of these people are not offered a group plan at work, or have dropped insurance due to the increased costs. (Information is provided by CMS and Kaiser Family Foundation.)

So, how will ACA insure the now uninsured people, and cut the current and future costs of health insurance? First, the thought is ACA can cut what is considered “waste” under the current healthcare system. 30% of current health spending is considered waste according to the institute of Medicine 2009 data. The question becomes, what changes does ACA make and how will it impact healthcare?

All ACA plans and non-grandfathered plans issued after 3/23/2010 must change to cover “essential health benefits”. These include ambulatory services, rehab, maternity and newborn, emergency, labs, mental health, hospital, preventative and wellness, prescriptions, chronic disease management and pediatric services.

To share the risk of these costs an “Individual Mandate” requires all Americans, with some exceptions, to maintain a minimum level of insurance or face a penalty. This penalty in 2014 will be $95 per adult and $47.50 per child or 1% of family income, whichever is greater. This penalty will increase in 2015 and 2016. In addition, additional fees will be paid by insurance companies and insureds. Most of these fees will be built into the insurance plans and not seen by the consumers.

One of the key components to ACA is how health insurance will be marketed. The government has created insurance exchanges. These are designed to help a consumer learn their options and what projected costs they would have for insurance. People will be allowed to buy on or off the exchange products, but will only receive a subsidy for on exchange purchases. This basically means you can buy public or private insurance products. Exchange workers employed by the government will be set up to enroll people. Importantly, health insurance agents would also be allowed to enroll people in the public plan or sell a private health plan.

In either case people may be eligible for tax credits or subsidies (e.g. family of 4 income of less than $92,000 yearly). All people will be allowed to enroll in the ACA plans regardless of health status. So, pre-existing condition limitations will no longer apply, Risk management mechanisms will also be implemented to control short term future costs. Importantly, there will be an open enrollment period starting 10/1 to 12/15 for a 1/1/14 effective date. People who buy qualified insurance must enroll during that time or be “locked out” and penalized. Special enrollment periods may apply, but the annual enrollment will be each year. Recently the government announced the mandates for coverage will not apply to companies over 50 employees during 2014.

In summary, know ACA is coming this fall. If you have a health insurance agent, talk with him/her about this important issue. Keep your eyes open for more information on ACA – it will affect you.