I've heard about a number of different health care proposals over the last year. Which one did Congress pass? The health care reform law is a combination of two bills:
- The Patient Protection and Affordable Care Act (H.R. 3590), which was signed into law on March 23, 2010; and
- The Health Care and Education Reconciliation Act of 2010 (H.R. 4872), which was signed into law on March 30, 2010.
Does health care reform allow people to keep their current health coverage? Yes. Nothing in the new law requires individuals to terminate coverage that they had on the date the law was passed. However, due to new coverage requirements, the coverage provided under an individual's plan may change. Also, employers are not required to offer the same coverage in future years.
If an employer’s health plan existed on March 23, 2010, and the employer has not made certain changes to the plan, the plan may have grandfathered status. Grandfathered plans are subject to many, but not all, of the health care reform law’s requirements.
Are individuals required to have health coverage? Not yet. However, in 2014, most U.S. citizens must obtain health insurance coverage or they will be subject to penalties. There are exceptions for low-income individuals and those who are unable to obtain affordable coverage.
What are the penalties for individuals who don't have health coverage? Beginning in 2014, the penalties for individuals who are not enrolled in coverage will be the greater of a flat dollar amount or an applicable percentage of income. The flat dollar amount for 2014 is $95, $395 for 2015 and $695 for 2016. After 2016, the flat dollar amount is indexed for inflation. The applicable percentage of income is 1 percent for 2014, 2 percent for 2015, and 2.5 percent for 2016 and later years. The penalty for children is half of that for an adult. A family's total penalty generally cannot exceed 300 percent of the adult flat dollar penalty or the national average annual premium for the "bronze" level of coverage through the insurance exchange.
Does the new law affect dependent care flex accounts and health flexible spending accounts? Prior to the passage of the health care reform legislation, dependent care flex accounts are capped at $5,000 annually, and health flexible spending accounts (health FSAs) have no cap (although many employers implement their own caps, typically at the $5,000-$6,000 level or less). The new health care reform law does nothing to change the limits on dependent care accounts, which remain capped at $5,000. However, the law does establish an annual cap on health FSAs of $2,500. This change is effective on January 1, 2013.
How do I get my 21-year-old covered under my plan? Beginning with the first plan year after September 23, 2010, insurers will be required to permit children to stay on family policies until they turn 26. This rule applies to all plans in the individual market and to non-grandfathered employer plans. It also applies to grandfathered employer plans; however, the sponsor of a grandfathered plan may decide to exclude from coverage adult children with another offer of employer-based coverage (such as through his or her job). Beginning in 2014, grandfathered plans must cover children up to age 26, even if they have another offer of coverage through an employer. Note that state law requirements may require offering coverage beyond age 26.
Is the coverage for my adult dependent taxable? No, the value of the coverage is not subject to federal tax for the employee or dependent. The Health Care and Education Reconciliation Act revised the Internal Revenue Code to clarify that the cost of coverage for a taxpayer's child is excluded from income through the end of the year in which the child turns 26. However, state requirements may differ, so state taxes may apply.
Can I now get coverage for my child who has a pre-existing condition? Effective for the first plan year after September 23, 2010, health insurance companies that cover children will not be able to deny coverage to your child under 19 years old based on a pre-existing condition. This applies to all non-grandfathered and grandfathered plans.
What consumer protections will I get if I obtain insurance at work? Effective for the first plan year after September 23, 2010, insurers will be prohibited from placing lifetime limits on what they will pay for your medical care and they can only apply restricted annual benefit limits. Insurers will no longer be able to arbitrarily cancel your insurance policy when you get sick, except in cases of fraud.
Insurance companies will be prohibited from denying coverage to children with pre-existing conditions. This applies to all non-grandfathered and grandfathered plans.
All non-grandfathered group health plans must provide coverage for preventive services. Recommended prevention and vaccination services will be covered without any deductibles or copayments. Plans must also have a straightforward and independent appeals process so you can appeal decisions by your health insurance company.
I have a pre-existing condition. How can I get coverage this year? This year, if you have been uninsured for 6 months and have a pre-existing condition, you may have access to health insurance through the high-risk pool program. This temporary program will be available until 2014.
Can my insurance company terminate my coverage if I get sick? Effective for the first plan year after September 23, 2010, insurance companies will be prohibited from dropping, or rescinding, your coverage when you get sick. Rescissions of coverage will only be allowed in cases of fraud or material misrepresentation. This rule will apply to all non-grandfathered and grandfathered plans.
When does free preventive care start and will it affect my plan? Effective September 23, 2010, all non-grandfathered group health plans and plans in the individual market must provide coverage for preventive services. Recommended prevention and vaccination services will be covered without any deductibles or copayments. Seniors enrolled in Medicare will also no longer have to pay for proven preventive services.
What information about insurance companies is going to be posted on the Web? The Department of Health and Human Services has established www.healthcare.gov/, a website where residents of any state may identify health insurance coverage options in that state. The site includes information on coverage options for small businesses as well. Effective January 1, 2011, health insurers, including insurers of grandfathered plans, must annually report on what percentage of premium dollars they spend on medical care, as opposed to profits, marketing and administrative expenses. You will be able to see that information online and may be entitled to a rebate if your plan spent too much on overhead and profits. Health insurers must also post information about some rate increases along with a justification for them.
Did the health care reform legislation extend the COBRA premium subsidy extension? No. The new health care reform legislation, The Patient Protection and Affordable Care Act (PPACA) as amended by the Health Care and Education Reconciliation Act, did not extend the eligibility time period for the COBRA premium reduction. Eligibility for the subsidy ends May 31, 2010; however, those individuals who become eligible on or before May 31, 2010 can still receive the full 15 months as long as they remain otherwise eligible.
Did the health care reform legislation extend the time period I can have COBRA beyond 18 months? No. The new health care reform legislation, The Patient Protection and Affordable Care Act (PPACA) as amended by the Health Care and Education Reconciliation Act, did not extend the maximum time periods of continuation coverage provided by COBRA. COBRA establishes required periods of coverage for continuation health benefits. A plan, however, may provide longer periods of coverage beyond those required by COBRA.
COBRA beneficiaries generally are eligible for group coverage during a maximum of 18 months for qualifying events due to employment termination or reduction of hours of work. Certain qualifying events, or a second qualifying event during the initial period of coverage, may permit a beneficiary to receive a maximum of 36 months of coverage. Individuals who become disabled can extend the 18 month period of continuation coverage for a qualifying event that is a termination of employment or reduction of hours.
To qualify for additional months of COBRA continuation coverage, the qualified beneficiary must:
- Having a ruling from the Social Security Administration that he or she became disabled within the first 60 days of COBRA continuation coverage (or before); and
- Send the plan a copy of the Social Security ruling letter within 60 days of receipt, but prior to expiration of the 18-month period of coverage.
If these requirements are met, the entire family qualifies for an additional 11 months of COBRA continuation coverage.
Did the health care reform legislation eliminate COBRA? No. The new health care reform legislation, The Patient Protection and Affordable Care Act (PPACA) as amended by the Health Care and Education Reconciliation Act, did not eliminate COBRA or change the COBRA rules.
How does the new health care reform legislation affect my coverage under my group health plan? The new health care reform legislation, The Patient Protection and Affordable Care Act (PPACA) as amended by the Health Care and Education Reconciliation Act, makes many changes to employee health benefit plans. Some of the changes go into effect for the first plan year that begins on or after six months after enactment (September 23, 2010), so for calendar year plans, January 1, 2011. However, many changes do not go into effect until the first plan year beginning on or after January 1, 2014.
- EBSA has developed a dedicated Web page on the new health reform law – the Patient Protection and Affordable Care Act. You can also get to the dedicated Web page from EBSA’s Home Page by selecting the second button on the right-hand navigation bar.
- EBSA is adding information regarding the new law as it becomes available so we suggest that you subscribe to the page. (There is a subscribe button in the header of the page.) As new information is added such as Frequently Asked Questions, Fact Sheets and technical guidance you will receive notification by e-mail that the new information is available.
- HHS also has a website addressing many of the questions people have about the new legislation.
If you have any questions regarding Health Insurance, Health Care Reform, or any other type of insurance related question, please feel free to contact GDI Insurance Agency, Inc. as 209-634-2929.
Sources: Department of Labor, Department of Health and Human Services
Matthew Davis MBA, AAI