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Your Guide to Health Care Reform

It’s Not Just Fair, It’s the Law.

Starting on January 1, 2014, and number of important part of the Affordable Care Act will go into effect. Many of these will affect Medicare and Medicaid, making them especially important for seniors.  Read on to learn about some key ACA provisions and how they will affect you.

(Click a topic to see details)

THE COMPETITIVE HEALTH INSURANCE MARKETPLACE

 As of March 23, 2011, the federal government  started providing grant money to states to begin setting up Healthcare Marketplaces (aka Insurance Exchanges), designed especially for individuals and small employers who currently have difficulties finding insurance. Enrollment in the Illinois Health Insurance marketplace will begin in October of 2013 with coverage beginning in January 2014.

MEDICAL LOSS RATIO

For every premium dollar, insurance companies will have to spend 85 cents on your health care, instead of on administrative costs or their own profits; individual plans or small employer plans (covering less than 50 people) have to spend 80 cents of every premium dollar on care. If insurers do not reach this percentage, they must provide you with a rebate.

CLOSING THE DONUT HOLE

Seniors who reach the coverage gap known as the Donut Hole will receive a 50 percent discount when buying Medicare Part D covered brand-name prescription drugs. Discounts will increase until the Donut Hole is eliminated in 2020.

PREVENTIVE AND WELLNESS SERVICES

Seniors on Medicare will receive certain free preventive services, like smoking cessation programs, annual wellness exams, and some health screenings. There will also be a 10% Medicare bonus payment on primary care services and to surgeons working in health professional shortage areas, creating incentives for doctors to stay in areas where they’re desperately needed.

  • A full list of eligible preventive services can be seen here on Healthcare.gov.

IMPROVING MEDICARE

 The law creates the new Center for Medicare & Medicaid Innovation, which will begin testing new ways of delivering care to patients in order to improve quality, increase efficiency, and reduce costs. Overpayments to Medicare Advantage plans will also be addressed with a number of payment-reduction strategies, including freezing 2011 payment rates at 2010 levels and phasing in lower rates next year. Currently, Advantage plans only cover about 25% of Medicare patients and are paid over $1000 more per person than the standard Medicare plans; such high payments increase premiums for everyone.

MEDICARE B PREMIUM ADJUSTMENTS

 The cut-off for wealthy Medicare Part B beneficiaries who pay higher premiums, usually adjusted for inflation, will freeze at the current level (individuals earning over $85,000 a year and couples earning over $170,000 a year). By 2019, the number of beneficiaries paying these higher premiums will increase from 2.4 million to 7.8 million (according to a Kaiser Family Foundation analysis). Premiums for Medicare Part D will now also be linked to income and will have the same cut-offs as Medicare Part B.

CHANGES IN FLEXIBLE SPENDING ACCOUNTS

Flexible spending accounts, which allow the use of pre-tax income to make medical purchases, can no longer be used to buy over-the-counter medications without a doctor’s prescription. This new rule also applies to health reimbursement arrangements, health savings accounts, and Archer medical savings accounts. However, medical devices like crutches and eyeglasses, co-pays, and deductibles can still be paid for from these accounts.

ACCOUNTABILITY FOR HOSPITAL RELATED INFECTIONS

 Beginning July 1, 2011, the federal government will no longer pay for many preventable hospital-acquired infections for Medicaid patients. Instead, the hospitals themselves will have to pick up the tab for preventable hospital-related infections and medical errors, creating an incentive to prevent such errors in the first place and maintain a high level of quality patient care.

A comprehensive list of ACA provisions can be found on Kaiser Family Foundation’s Implementation Timeline.

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Six important consumer protections became law on September 23, 2010. They will take effect when you and your family begin a new plan or renew your existing plan after that date.

 

Coverage for Young Adults

If you are a young adult without health insurance, you can be covered under your parent’s insurance plan up until your 26th birthday. This includes young adults who are married AND young adults who aren’t students.

GOOD TO KNOW:

  • Young adults that already have a health insurance offer through an employer may not be eligible

 

Free Preventive Care

Your insurance plan MUST cover preventive services and screenings, such as immunizations, colonoscopies, and screenings for newborns WITHOUT co-pays or deductibles (To see a more complete list of services that apply, click here)

GOOD TO KNOW:

  • “Grandfathered” plans, or plans that don’t change significantly from year to year, are not required to comply with this provision (to learn more about grandfathered plans and what they mean for changes to your coverage, click here for a guide from Families USA).

 

No More Denying Kids with Pre-Existing Conditions

Insurers are required to provide coverage to children with pre-existing conditions, such as asthma or hemophilia. This applies to families with group plans and non-grandfathered individual plans.

GOOD TO KNOW:

  • Grandfathered individual plans do not have to comply with this provision (though group plans DO), and some insurance companies will no longer offer child-only policies.
  • This applies to children up to the age of 19.

 

No More Lifetime Caps

Insurers are now unable to set limits on your lifetime benefits coverage, NO EXCEPTIONS. This means you will no longer have to worry about “capping out” on your coverage. Additionally, annual benefits caps will be phased out; as of now, they are raised to $750,000 of coverage a year and will be eliminated in 2014.

 

No More Rescissions

Insurance companies are no longer able to cancel your coverage for unjust reasons, a practice known as rescission. Before, if an insurance company got hit with a big claim, they could find an unintentional error on your application (even from years ago) and use it as a basis to deny you coverage; not anymore. This applies to ALL insurance plans.

GOOD TO KNOW:

  • If you intentionally commit fraud or hide something on your application, your insurance company can still rescind your coverage.
  • Your insurance company must give you 30 days notice if they intend to rescind your coverage, in order to give you time to appeal.

 

Right to Appeal Insurance Company Decisions

You will now have the right to appeal decisions your insurance company makes about your health care (such as refusing coverage) to an independent, third party reviewer. How this appeals process actually works will vary by state and by plan.

GOOD TO KNOW:

  • This doesn’t apply to grandfathered plans.

 

Reform Provisions Prior to September 23, 2010

  • A high-risk pool has been developed to provide coverage for those who have been uninsured for 6 months or more because of a pre-existing condition.
  • Senior who hit the donut hole on their Medicare prescription drug coverage received $250 rebate checks.
  • Small businesses received up to 35% tax credits on their employees’ health insurance.

 

For more information on health care reform, please visit our Info Center, Healthcare.gov, or one of our partner organizations like Community Catalyst, Families USA, or Kaiser Family Foundation.