Your Guide to Health Care Reform
It’s Not Just Fair, It’s the Law.
2011 is not only the Affordable Care Act’s one-year anniversary, it is also a year in which many important reform provisions are implemented. Many of these will affect Medicare and Medicaid, making them especially important for seniors. Unless otherwise noted, these changes took effect on January 1, 2011. Read on to learn about some key ACA provisions and how they will affect you.
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 a rebate.
CONTINUING TO CLOSE 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.
FOCUS ON PRIMARY CARE AND PREVENTIVE 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 QUALITY AND REDUCING OVERPAYMENTS IN 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.
HIGHER MEDICARE PREMIUMS FOR THE WEALTHY. 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.
FOCUS ON WELLNESS. Do you really know how many calories your meal contains? Beginning March 23, 2011, the law will require the disclosure of nutritional information for menu items at chain restaurants and food items sold out of vending machines. Five-year grants will also become available for small employers to set up wellness programs at work.
CHANGES TO 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.
MORE 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.
FUNDING FOR INSURANCE EXCHANGES. Beginning on March 23, 2011, the federal government will start providing grant money to states to begin setting up Insurance Exchanges, the insurance marketplace designed especially for individuals and small employers that currently have difficulties finding insurance. Enrollment in the Exchanges will begin in 2014.
A comprehensive list of PPACA 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, and they will take effect when you and your family begin a new plan or renew our existing plan after that date. Need a refresher? Click on a provision to get more information about it.
No More Denying Kids with Pre-Exisiting Conditions
Right to Appeal Insurance Company Decisions
Reform Provisions Prior to September 23, 2010
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Still to Come:
- Elimination of annual limits
- Tax credits for individuals and small businesses to help with the cost of purchasing health insurance.
- No more discrimination against people with pre-existing conditions.
- The creation of a health insurance Exchange in 2014.
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.
