Pre Existing Condition Insurance

Our entire healthcare system is going in for an overhaul that is going to last 8 years, but the next 4 years hold the biggest changes. Changes will affect medical providers, insurance companies, and consumers.  Some will benefit more than others but all in all it will help a lot of people.  The new law regulates insurance companies even more than they were and requires the insurance companies to provide broader coverage, accept medical conditions, remove policy limits for services, and more.  It is going to take a while to phase in all the changes and there are sure to be “hiccups” along the way.  Here are 10 things you should know about health care reform and the Patient Protection and Affordable Care Act.

1. Temporary High Risk Pool – Pre Existing Condition Insurance Plan – 2010 -All states are now required to participate in the Federal Pre Existing Condition Insurance Plan (PCIP) or have a temporary state run high risk insurance pool. Temporary because they won’t be necessary after 2014 as insurance companies will be prohibited from excluding pre existing conditions from coverage. The PCIP is only available in states that do have a state run high risk pool.  For example: Pre existing condition health insurance in Colorado is Cover Colorado, while Florida health insurance for pre-existing conditions is the federal Preexisting Condition Insurance Plan.
   Eligibility for state run programs will vary by state.  Eligibility for the PCIP is standardized.  Applicants are required to meet some requirements in order to be eligible for the Pre-Existing Condition Insurance Plan. It won’t surprise you that the first requirement that the applicant must be a US citizen, US national, or lawfully present in the United States. Next the applicant has to have been without health insurance for at least the last 6 months.  Finally they are requiring that the applicant “had problems” getting insurance.  So “had problems is pretty vague and it is really going to depend on your state.  Each state will use different ways to determine whether you are eligible or not.  The federal PCIP program will accept a letter from the insurance company, dated within 6 months stating that you were declined or had benefits excluded because of a pre-existing condition.
   The PCIP program is designed to cover a broad range of benefits like  prescription drugs, doctor visits, and hospitalization. Benefits will apply to pre-existing conditions and eligibility is not based on income.
2. Pre Existing Condition Exclusions for Children – 2010 - Pre existing condition exclusions on medical insurance plans will soon be a thing of the past.  Full implementation won’t be finished until 2014, but starting October 1, 2010 the exclusion of pre-existing conditions for people 19 and under will be prohibited on all individual and employer medical insurance plans.  The employer based group medical insurance plans are already guaranteed issue so the cost should stay the same. What is not yet clear is how much will the individual medical insurance plans cost.  I expect that they will be probably be inline with the current HIPAA limits which in some states can be 150% over a standard premium.  If cost is an issue you should also consider Medicaid or your states Child Health Insurance Program (CHIP), InsureKidsNow.gov.
3. Lifetime and Annual Limits – 2010 – Health plans sometimes place restrictive annual limits on plans in order to lower costs.  Whether it is done to lower premiums or to pay fewer claims or both the end result is the same…you pay more.  Health plans will be prohibited from putting lifetime limits on your health plan and prohibits “restrictive” annual limits on all employer and individual plans.  I still not sure what they mean by “restrictive”. Annual limits for essential benefits are prohibited on all plans, including grandfathered plans. The term “essential benefits” has not been defined yet. However, it should include: Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services Prescription drugs Rehabilitative services and devices Laboratory services Preventative and wellness services Chronic disease management Pediatric services. Lifetime maximums will be permitted on Non-essential benefits.
4. Preventative Health Services – 2010 – Not all health plans cover preventative care and even with those that do there are huge differences in the coverage and limits for that coverage. Blue Cross Blue Shield tends to have better and broader coverage for preventative and routine care than other carriers and than what will be required by law.  Other companies like HumanaOne, Aetna or Cigna offer good preventative care coverage but they will have to come inline with the new regulations.  Insurance companies will have to provide first dollar coverage for preventative care.
5. Health Insurance Exchange – 2014 – Each state will be required to have a health insurance exchange.  An insurance exchange is a marketplace or venue that allows consumers to comparison shop standardized plans.  Consumers will be able to enroll and if eligible administer tax credits as well.
6. Mandatory Health Insurance – 2014 – Individuals will be required to have health insurance or pay a penalty.  if you don’t have health insurance it is going to cost penalty of $95 up to 2.5% of your income. Employers with more than 50 employees will be required to offer health insurance or pay fines of up to $3,000 per year per employee.  Employers with fewer than 50 employees that offer health insurance to their employees will be eligible for tax credits.
   Mandatory health insurance!!! Starting in 2014 all individuals will be required to maintain minimum essential coverage (not yet defined by the law).  Failure to maintain the coverage will result in penalties.  The penalties start low and increase over three years.  In 2014 the penalty is the greater of $95 per uninsured adult or 1% of your household income, 2015 the penalty is $325 per uninsured adult or 2% of your household income, and 2016 and on is $695 per uninsured adult or 2.5% of your household income. The penalty is half for individuals under 18.
   Employers with more than 50 employees who do not provide minimum essential coverage to their full time employees (as defined by the PPACA law), and who have at least ONE employee obtain subsidized coverage through the State insurance exchange, must pay a fee of $2,000 for each full time employee.  The first 30 are excluded for the purposes of this fine.  If the employer does provide the minimum essential coverage then the fine is $3,000 per subsidized employee as long as it is less than 2,000 per full time employee.
   Employers with fewer than 50 full time employees are exempt from the PPACA penalties.  Full time employees are defined as anyone who works more than 30 hours per week.

   Mandatory Health Insurance – 2014 – Individuals will be required to have health insurance or pay a penalty.  if you don’t have health insurance it is going to cost penalty of $95 up to 2.5% of your income. Employers with more than 50 employees will be required to offer health insurance or pay fines of up to $3,000 per year per employee.  Employers with fewer than 50 employees that offer health insurance to their employees will be eligible for tax credits.
   Mandatory health insurance!!! Starting in 2014 all individuals will be required to maintain minimum essential coverage (not yet defined by the law).  Failure to maintain the coverage will result in penalties.  The penalties start low and increase over three years.  In 2014 the penalty is the greater of $95 per uninsured adult or 1% of your household income, 2015 the penalty is $325 per uninsured adult or 2% of your household income, and 2016 and on is $695 per uninsured adult or 2.5% of your household income. The penalty is half for individuals under 18.
   Employers with more than 50 employees who do not provide minimum essential coverage to their full time employees (as defined by the PPACA law), and who have at least ONE employee obtain subsidized coverage through the State insurance exchange, must pay a fee of $2,000 for each full time employee.  The first 30 are excluded for the purposes of this fine.  If the employer does provide the minimum essential coverage then the fine is $3,000 per subsidized employee as long as it is less than 2,000 per full time employee.
   Employers with fewer than 50 full time employees are exempt from the PPACA penalties.  Full time employees are defined as anyone who works more than 30 hours per week.

7. Health Care Tax Credits – 2014 – Health care tax credits are premium tax credits made available to people who make to much to be eligible for Medicaid  but below 400% of the poverty level (approximately $88,000 per year for a family of 4).  These tax credits apply to premiums, deductibles, copays, and other cost sharing fees.  The overall objective is to ensure that no family goes bankrupt because of medical expenses.
8. Cadillac Plan Tax – 2018 – The 40% excise tax on Cadillac plans starts in 2018.  Its main purpose is to discourage companies from providing plans that are “too good”.  There is a pretty complex calculation of the amount of the tax and it only kicks in if you have great insurance, which most us don’t have.
9. Health Insurance Rate Reform – 2014 – Health insurance premiums are currently based on several factors: age, health status, gender, geographic location, weight, and of course smoking.  So healthy people pay lower health insurance premiums than unhealthy people.  Young people have lower premiums than older people, and women pay more than men of the same age.  The difference in cost can be 10 fold or more.  The new provisions will restrict the price difference based on age, geography, or tobacco use by no more than 3 to 1.
10. Limits on Executive Compensation – 2013 -This point tends to cause some confusion and a lot of people misunderstand it.  This provision simply limits the amount of the executive’s compensation that the insurance company will be able to deduct for tax purposes, not how much the executive’s will get paid.  This deduction is also tied in to the type’s of health insurance plans the insurance company is selling.