Navigating Health Care Reform

StorageContainerThe health care landscape will change in 2014 when the most significant portions of the Affordable Care Act (ACA) kick in. The new law will require all Americans to have health insurance (or pay a penalty) by January and require insurers to cover people who previously could not get coverage.

If you’re like many consumers recently polled by the Henry J. Kaiser Family Foundation, you’re still uncertain about how the law will affect you. A tracking survey completed in April 2013 provides confirmation on the amount of confusion still surrounding the status of the Affordable Care Act, with four in 10 Americans unaware that the ACA is still the law of the land and is being implemented.

What has already happened with the implementation of the law?

  • Young adults are able to remain on their parents’ health insurance plan up to age 26.
  • Lifetime limits on benefits have been eliminated.
  • Many preventive services are now 100 percent covered.
  • Insurers can no longer deny coverage to children because of pre-existing health conditions.
  • Insurance companies are required to spend a minimum percentage of their premiums on health costs.

What is the impact of all of these changes?

  • You are most likely going to have to select a new health insurance policy. Whether you are on an individual or group plan, there is a good chance you are going to have to select a new policy that is compliant with the law. Your agent or employer will help you with this transition.
  • It is going to cost more. There are several new fees and taxes in the new law which will raise costs. In addition, the fact that insurance companies can no longer underwrite based on a person’s risk profile means the price of coverage overall is going to go up – in some cases dramatically. Some people may actually find the new plans to be less expensive, but the majority of people will pay more for these plans – in some cases, much more – offset for some by the premium subsidy that is available.

What is coming as we move toward 2014?
January 1, 2014, is the implementation date of many, if not most, of the major provisions of the Affordable Care Act. Below is a list of some of the major implementations:

  • All legal citizens of the U.S. will be required to have health insurance or will be assessed a penalty or tax for lack of coverage.
  • Insurance companies will be required to issue policies to any legal citizen that applies for coverage and will not be able to decline coverage or rate the coverage differently due to any existing health conditions.
  • Medicaid may be expanded greatly to increase the number of people covered. This expansion is subject to each state’s approval and, at this point, the Nebraska Legislature has said it’s off the table for 2013.
  • There will be premium credits and subsidies available for coverage for a majority of Nebraskans. These subsidies will be available based on income status as well as the cost of the plans available in the market. At a high level, those that earn between 100-400 percent of the federal poverty level may qualify for subsidies. There are other qualification standards in place as well.
  • All benefit plans will cover certain benefits. Each plan will cover 10 categories of what are called “essential health benefits.” These may be covered at different levels depending on the plan you buy, but all services will be covered at some level. These include: Ambulatory Patient Services, Emergency Services, Hospitalization, Maternity and Newborn Care, Mental Health and Substance Abuse, Prescription Drugs, Rehabilitative and Habilitative Care, Lab Services, Preventive and Wellness Services and Pediatric Services including Dental and Vision.
  • All plans will be classified according to what are called metallic tiers. Those tiers are based on how much of the average costs of medical care the plan will cover versus the amount the member will pay. Here is a brief breakdown of those tiers:
Graphic Courtesy of Blue Cross and Blue Shield of Nebraska

Graphic Courtesy of Blue Cross and Blue Shield of Nebraska

  • All risk pools for an insurer will be combined in the individual and small group market. There will no longer be several different “pools” of business – meaning pricing will be consistent across these pools.
  • Insurance companies can only vary premiums based on age, family size, geographical location and tobacco use. Within the age and tobacco use categories, there are limits on how much they can differentiate.
  • There are several new fees and taxes that will be included in health insurance premiums going forward from Jan. 1, 2014. Combined, these taxes are expected to add about 5-7 percent to the cost of the average premium. These include: Transitional Reinsurance Fee, Health Insurer Tax, Patient Centered Outcomes Research Fee and Exchange User Fee
  • There will be new health insurance exchanges, or Marketplaces, which are designed to be a place for consumers to compare various plans. They are a centralized place (typically a website or 800 number) where consumers can apply for advanced premium tax credits and choose coverage. They are also where consumers who qualify for subsidies under the new law must go if they want those subsidies verified and immediately applied to the monthly premium for the plan chosen.

What Should I Be Doing to Prepare?

  1. Make an appointment to see your agent. They are trained to help and be familiar with the new law and can help answer some of the questions you may have.
  2. Make a list of things that are important to you in selecting your health plan – choice of doctor, cost of plan, amount of deductible, does it cover me while traveling, etc.
  3. Know your budget. There will be numerous health coverage options, and breaking them down by cost can help narrow your choices.
  4. Find out from your employer whether they plan to offer health insurance, especially if you work for a small business.
  5. Explore current options. You may be able to get help with insurance now, through existing programs or changes that are in effect already from the new health care law.

— Questions answered by Steve Kammeyer, director of health insurance services for Farm Bureau Financial Services and Jerome Rewolinski, director of account management at Blue Cross and Blue Shield of Nebraska.

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