Information on Health Care Reform – TOP TEN UPDATE
The US Supreme Court ruled in June 2012 that the health care reform law is, for the most part constitutional. Some aspects of the Patient Protection and Affordable Care Act (PPACA) are already in effect, but other provisions take effect in the next couple of years.
The following are the Top Ten Biggest issues surrounding health care that individuals and employers need to be aware of in the next several years.
1. What does it mean that the “individual mandate” was ruled a tax by the Supreme Court?
For individuals and employers in everyday practice, it really means nothing. The “individual mandate” is a provision of the law that requires people who do not have insurance to purchase it or pay a fine to the government. The current penalty for not having or buying health insurance is $285.00 for a family or 1% of income, whichever is greater. Beginning in 2014 the penalty increases to $2,085 a family or 2% of income. Additionally, there is a requirement that employers with 50 full-time employees or more must provide health insurance or face fines. The mandate is designed to make sure that all people have health insurance and are in the insurance pool so that people with certain high risk health conditions can have access to health insurance at a reasonable cost. There are benefits to small employers who provide health insurance. Employers of fewer than 25 employees that provide health coverage may qualify for a tax credit of up to 35% (25% for non-profits). These amounts increase in 2016 to up to 50% for for-profit employers (35% for non-profit employers).
2. Can I keep the health insurance plan that I have now?
The law does not require anyone to change plans, but there may be some changes required in the plan to comply with the law. People enrolled in the same health insurance plan prior to March 23, 2010, the day the PPACA became law, may be allowed to stay in grandfathered health plans which are exempt from many insurance reforms. Even grandfathered plans must comply with some elements of the new law: ending discrimination based on preexisting conditions, eliminating lifetime maximum benefits, and covering dependents under a parent’s health plan until age 26. If benefits are changed or reduced in a grandfathered plan, the plan could lose grandfathered status. If a plan loses its grandfathered status, all of the PPACA consumer protections would apply when the plan begins a new plan year or policy year.
3. What is a Health Insurance Exchange?
Health insurance exchanges go into law and take effect on January 1, 2014. This is a program designed to provide individuals and small businesses looking for health insurance policies with a marketplace to find them. The program is state-based, but states can partner with the federal government or just adopt the federal government’s exchange. The policies offered will vary in categories of coverage from bronze (generally covering 60 percent of health costs) to platinum (generally covering 90 percent of health costs). Most all citizens will be eligible to enroll in health policies through the insurance exchanges. There are exceptions for persons way below the poverty level.
4. How does the Health Care Reform affect the Ability of People with High Risk Health Problems to get Adequate Health Care and Coverage?
Beginning January 1, 2014, health insurance companies can neither deny coverage to people with preexisting medical conditions, nor charge higher insurance premiums because of the existence of these conditions. When the PPACA is fully implemented, insurance companies are precluded from discriminating on the basis or gender, disability or health status.
5. How is the Law Going to Make Insurance Affordable?
Many people obtain health insurance through their employer or government programs like Medicare. The new law may not change much for them. For individuals who buy their own insurance and pay their own premiums or who do not even have insurance, the law is creating the insurance exchange (See No. 3 above) that provides an avenue for people to “shop” for a plan. The insurance exchanges are designed to increase competition amongst providers, which may reduce the amount of health premiums. The exchange allows individuals who have no employer coverage or do not qualify under a government program like Medicare to obtain affordable insurance through premium and cost-sharing reductions.
6. Will the Exchange Plans Be Adequate Insurance Coverage?
All health plans found in the exchange must contain coverages for the following ten items: ambulatory patient services, emergency services, hospitalization coverage, maternity and newborn care services, mental health services and substance disorder services, prescription drug coverages, laboratory services, rehabilitation services and devices, preventative and wellness services, and pediatric services. Only those plans grandfathered in or that are outside the exchange are exempt from providing all of these services.
7. Are Any Services Provided At No Cost to the Insured?
Certain preventative services must be covered by insurance with no cost or co-pays to the insured. These items/ services include: blood pressure screening, cholesterol screening, depression screening, diabetes screening, aspirin when used to reduce risk of stroke or heart attack, diet counseling, obesity screening and counseling, and gestational diabetes screening for pregnant women.
8. Will Care Be Rationed?
The simple answer is that rationing will not be allowed. As health care currently exists, insurers may deny coverage of services that doctors are necessary, drop coverage when a policyholder’s care is too expensive, deny coverage for those with preexisting medical condition, and implement monetary caps in medical benefits. By 2014, none of those behaviors or actions will be allowed. At the very least, every insurance plan must provide the services listed in No. 6 above.
9. Is Medicaid Being Cancelled?
Actually, the reverse is true. By 2014, Medicaid will be expanded to include coverage to a wider range of low-income individuals. In the recent court case, this expansion of Medicaid coverage was upheld by the Supreme Court, but states can still decide whether to adopt the changes, and they cannot be penalized by the federal government with reduced Medicaid funding for refusal to expand Medicaid to the larger group.
10. How Are We All Paying for These Changes in Coverage?
PPACA’s provisions are intended to be funded by a variety of taxes and offsets. Major sources of new revenue include a much-broadened Medicare tax on incomes over $200,000.00 and $250,000.00, for individual and joint filers respectively, an annual fee on insurance providers, and a 40% excise tax on extensive insurance policies. There are also taxes on pharmaceuticals, high-cost diagnostic equipment, and a 10% federal sales tax on indoor tanning services. Offsets are from intended cost savings programs. There are some that argue that the taxes will not be enough to adequately fund the changes in the law.
Tax changes are already in the works, as beginning January 1, 2013, income from self-employment and wages of single individuals in excess of $200,000.00 annually will be subject to an additional tax of 0.9%.
The continuing implemented changes in the health care law will continue to confuse and frustrate. No one knows if the PPACA will be successful or if it will reduce costs or create additional ones.
The above information admittedly only covers the basics – the law itself is 906 pages. However, the top ten above at least provide workable knowledge to know what is going on.
If you have any questions about this topic or any other legal issue, please contact the attorneys with Anderson Jones, PLLC today at (919) 277-2541 or by email!