Ultimate Guide to the Patient Protection and Affordable Care Act (PPACA or ACA) - Understanding Obamacare and Your Health Care Insurance Options, New Plans, Programs, Bill of Rights
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MODULE 1: CONSUMER AND TAXPAYER GUIDANCE, FACT SHEETS, FAQs, BASIC INFORMATION
MODULE 2: OFFICIAL RULES AND REGULATIONS IMPLEMENTING PPACA
MODULE 3: COMPLETE TEXT OF THE PPACA, COMPILATION OF PATIENT PROTECTION AND AFFORDABLE CARE ACT
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MODULE 1: CONSUMER AND TAXPAYER GUIDANCE, FACT SHEETS, FAQs, BASIC INFORMATION
Provisions of the Affordable Care Act, By Year
2010
NEW CONSUMER PROTECTIONS
Putting Information for Consumers Online. The law provides for an easy-to-use website where consumers can compare health insurance coverage options and pick the coverage that works for them. Effective July 1, 2010.
Prohibiting Denying Coverage of Children Based on Pre-Existing Conditions. The new law includes new rules to prevent insurance companies from denying coverage to children under the age of 19 due to a pre-existing condition. Effective for health plan years beginning on or after September 23, 2010 for new plans and existing group plans.
Prohibiting Insurance Companies from Rescinding Coverage. In the past, insurance companies could search for an error, or other technical mistake, on a customer’s application and use this error to deny payment for services when he or she got sick. The new law makes this illegal. After media reports cited incidents of breast cancer patients losing coverage, insurance companies agreed to end this practice immediately. Effective for health plan years beginning on or after September 23, 2010.
Eliminating Lifetime Limits on Insurance Coverage. Under the new law, insurance companies will be prohibited from imposing lifetime dollar limits on essential benefits, like hospital stays. Effective for health plan years beginning on or after September 23, 2010.
Regulating Annual Limits on Insurance Coverage. Under the new law, insurance companies’ use of annual dollar limits on the amount of insurance coverage a patient may receive will be restricted for new plans in the individual market and all group plans. In 2014, the use of annual dollar limits on essential benefits like hospital stays will be banned for new plans in the individual market and all group plans. Effective for health plan years beginning on or after September 23, 2010.
Appealing Insurance Company Decisions. The law provides consumers with a way to appeal coverage determinations or claims to their insurance company, and establishes an external review process. Effective for new plans beginning on or after September 23, 2010.
Establishing Consumer Assistance Programs in the States. Under the new law, states that apply receive federal grants to help set up or expand independent offices to help consumers navigate the private health insurance system. These programs help consumers file complaints and appeals; enroll in health coverage; and get educated about their rights and responsibilities in group health plans or individual health insurance policies. The programs will also collect data on the types of problems consumers have, and file reports with the U.S. Department of Health and Human Services to identify trouble spots that need further oversight. For a list of those who have received CAP grants, click here. Grants Awarded October 2010.
IMPROVING QUALITY AND LOWERING COSTS
Providing Small Business Health Insurance Tax Credits. Up to 4 million small businesses are eligible for tax credits to help them provide insurance benefits to their workers. The first phase of this provision provides a credit worth up to 35 percent of the employer’s contribution to the employees’ health insurance. Small non-profit organizations may receive up to a 25 percent credit. Effective now.
Offering Relief for 4 Million Seniors Who Hit the Medicare Prescription Drug “Donut Hole.” An estimated four million seniors will reach the gap in Medicare prescription drug coverage known as the “donut hole” this year. Each such senior will receive a $250 rebate. First checks mailed in June, 2010, and will continue monthly throughout 2010 as seniors hit the coverage gap.
Providing Free Preventive Care. All new plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance. Effective for health plan years beginning on or after September 23, 2010. about preventive care benefits
Preventing Disease and Illness. A new $15 billion Prevention and Public Health Fund will invest in proven prevention and public health programs that can help keep Americans healthy – from smoking cessation to combating obesity. Funding begins in 2010.
Cracking Down on Health Care Fraud. Current efforts to fight fraud have returned more than $2.5 billion to the Medicare Trust Fund in fiscal year 2009 alone. The new law invests new resources and requires new screening procedures for health care providers to boost these efforts and reduce fraud and waste in Medicare, Medicaid, and CHIP. Many provisions effective now.
INCREASING ACCESS TO AFFORDABLE CARE
Providing Access to Insurance for Uninsured Americans with Pre-Existing Conditions. A new Pre-Existing Condition Insurance Plan will provide new coverage options to individuals who have been uninsured for at least six months because of a pre-existing condition. States have the option of running this new program in their state. If a state chooses not to do so, a plan will be established by the Department of Health and Human Services in that state. National program effective July 1, 2010.
Extending Coverage for Young Adults. Under the new law, young adults will be allowed to stay on their parents’ plan until they turn 26 years old (in the case of existing group health plans, this right does not apply if the young adult is offered insurance at work). While the provision takes effect in September, many insurance companies have already implemented this new practice. Check with your insurance company or employer to see if you qualify. Effective for health plan years beginning on or after September 23.
Expanding Coverage for Early Retirees. Too often, Americans who retire without employer-sponsored insurance and before they are eligible for Medicare see their life savings disappear because of high rates in the individual market. To preserve employer coverage for early retirees until more affordable coverage is available through the new Exchanges by 2014, the new law creates a $5 billion program to provide needed financial help for employment-based plans to continue to provide valuable coverage to people who retire between the ages of 55 and 65, as well as their spouses and dependents. Applications for employers to participate in the program available June 1, 2010. For more information on the Early Retiree Reinsurance Program, visit www.ERRP.gov.
Rebuilding the Primary Care Workforce. To strengthen the availability of primary care, there are new incentives in the law to expand the number of primary care doctors, nurses and physician assistants. These include funding for scholarships and loan repayments for primary care doctors and nurses working in underserved areas. Doctors and nurses receiving payments made under any State loan repayment or loan forgiveness program intended to increase the availability of health care services in underserved or health professional shortage areas will not have to pay taxes on those payments. Effective 2010 .
Holding Insurance Companies Accountable for Unreasonable Rate Hikes. The law allows states that have, or plan to implement, measures that require insurance companies to justify their premium increases will be eligible for $250 million in new grants. Insurance companies with excessive or unjustified premium exchanges may not be able to participate in the new health insurance Exchanges in 2014. Grants awarded beginning in 2010.
Allowing States to Cover More People on Medicaid. States will be able to receive federal matching funds for covering some additional low-income individuals and families under Medicaid for whom federal funds were not previously available. This will make it easier for states that choose to do so to cover more of their residents. Effective April 1, 2010.
Increasing Payments for Rural Health Care Providers. Today, 68 percent of medically underserved communities across the nation are in rural areas. These communities often have trouble attracting and retaining medical professionals. The law provides increased payment to rural health care providers to help them continue to serve their communities. Effective 2010.
Strengthening Community Health Centers. The law includes new funding to support the construction of and expand services at community health centers, allowing these centers to serve some 20 million new patients across the country. Effective 2010.
2011
IMPROVING QUALITY AND LOWERING COSTS
Offering Prescription Drug Discounts. Seniors who reach the coverage gap will receive a 50 percent discount when buying Medicare Part D covered brand-name prescription drugs. Over the next ten years, seniors will receive additional savings on brand-name and generic drugs until the coverage gap is closed in 2020. Effective January 1, 2011.
Providing Free Preventive Care for Seniors. The law provides certain free preventive services, such as annual wellness visits and personalized prevention plans for seniors on Medicare. Effective January 1, 2011.
Improving Health Care Quality and Efficiency. The law establishes a new Center for Medicare & Medicaid Innovation that will begin testing new ways of delivering care to patients. These methods are expected to improve the quality of care, and reduce the rate of growth in health care costs for Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). Additionally, by January 1, 2011, HHS will submit a national strategy for quality improvement in health care, including by these programs. Effective no later than January 1, 2011.
Improving Care for Seniors After They Leave the Hospital. The Community Care Transitions Program will help high risk Medicare beneficiaries who are hospitalized avoid unnecessary readmissions by coordinating care and connecting patients to services in their communities. Effective January 1, 2011.
Introducing New Innovations to Bring Down Costs. The Independent Payment Advisory Board will begin operations to develop and submit proposals to Congress and the President aimed at extending the life of the Medicare Trust Fund. The Board is expected to focus on ways to target waste in the system, and recommend ways to reduce costs, improve health outcomes for patients, and expand access to high-quality care. Administrative funding becomes available October 1, 2011.
INCREASING ACCESS TO AFFORDABLE CARE
Increasing Access to Services at Home and in the Community. The new Community First Choice Option allows States to offer home and community based services to disabled individuals through Medicaid rather than institutional care in nursing homes. Effective beginning October 1, 2011.
HOLDING INSURANCE COMPANIES ACCOUNTABLE
Bringing Down Health Care Premiums. To ensure premium dollars are spent primarily on health care, the new law generally requires that at least 85% of all premium dollars collected by insurance companies for large employer plans are spent on health care services and health care quality improvement. For plans sold to individuals and small employers, at least 80% of the premium must be spent on benefits and quality improvement. If insurance companies do not meet these goals, because their administrative costs or profits are too high, they must provide rebates to consumers. The rebate program will begin January 1, 2011.
Addressing Overpayments to Big Insurance Companies and Strengthening Medicare Advantage. Today, Medicare pays Medicare Advantage insurance companies over $1,000 more per person on average than is spent per person in Traditional Medicare. This results in increased premiums for all Medicare beneficiaries, including the 77 percent of beneficiaries who are not currently enrolled in a Medicare Advantage plan. The new law levels the playing field by gradually eliminating this discrepancy. People enrolled in a Medicare Advantage plan will still receive all guaranteed Medicare benefits, and the law provides bonus payments to Medicare Advantage plans that provide high quality care. Effective January 1, 2011.
2012
IMPROVING QUALITY AND LOWERING COSTS
Linking Payment to Quality Outcomes. The law establishes a hospital Value-Based Purchasing program (VBP) in Traditional Medicare. This program offers financial incentives to hospitals to improve the quality of care. Hospital performance is required to be publicly reported, beginning with measures relating to heart attacks, heart failure, pneumonia, surgical care, health-care associated infections, and patients’ perception of care. Effective for payments for discharges occurring on or after October 1, 2012.
Encouraging Integrated Health Systems. The new law provides incentives for physicians to join together to form “Accountable Care Organizations.” These groups allow doctors to better coordinate patient care and improve the quality, help prevent disease and illness and reduce unnecessary hospital admissions. If Accountable Care Organizations provide high quality care and reduce costs to the health care system, they can keep some of the money that they have helped save. Effective January 1, 2012.
Reducing Paperwork and Administrative Costs. Health care remains one of the few industries that relies on paper records. The new law will institute a series of changes to standardize billing and requires health plans to begin adopting and implementing rules for the secure, confidential, electronic exchange of health information. Using electronic health records will reduce paperwork and administrative burdens, cut costs, reduce medical errors and most importantly, improve the quality of care. First regulation effective October 1, 2012.
Understanding and Fighting Health Disparities. To help understand and reduce persistent health disparities, the law requires any ongoing or new Federal health program to collect and report racial, ethnic and language data. The Secretary of Health and Human Services will use this data to help identify and reduce disparities. Effective March 2012.
INCREASING ACCESS TO AFFORDABLE CARE
Providing New, Voluntary Options for Long-Term Care Insurance. The law creates a voluntary long-term care insurance program – called CLASS -- to provide cash benefits to adults who become disabled. The Secretary shall designate a benefit plan no later than October 1, 2012.
2013
IMPROVING QUALITY AND LOWERING COSTS
Improving Preventive Health Coverage. To expand the number of Americans receiving preventive care, the law provides new funding to state Medicaid programs that choose to cover preventive services for patients at little or no cost. Effective January 1, 2013.
Expanding Authority to Bundle Payments. The law establishes a national pilot program to encourage hospitals, doctors, and other providers to work together to improve the coordination and quality of patient care. Under payment “bundling,” hospitals, doctors, and providers are paid a flat rate for an episode of care rather than the current fragmented system where each service or test or bundles of items or services are billed separately to Medicare. For example, instead of a surgical procedure generating multiple claims from multiple providers, the entire team is compensated with a “bundled” payment that provides incentives to deliver health care services more efficiently while maintaining or improving quality of care. It aligns the incentives of those delivering care, and savings are shared between providers and the Medicare program. Effective no later than January 1, 2013.
INCREASING ACCESS TO AFFORDABLE CARE
Increasing Medicaid Payments for Primary Care Doctors. As Medicaid programs and providers prepare to cover more patients in 2014, the Act requires states to pay primary care physicians no less than 100 percent of Medicare payment rates in 2013 and 2014 for primary care services. The increase is fully funded by the federal government. Effective January 1, 2013.
Providing Additional Funding for the Children’s Health Insurance Program. Under the new law, states will receive two more years of funding to continue coverage for children not eligible for Medicaid. Effective October 1, 2013.
2014
NEW CONSUMER PROTECTIONS
Prohibiting Discrimination Due to Pre-Existing Conditions or Gender. The law implements strong reforms that prohibit insurance companies from refusing to sell coverage or renew policies because of an individual’s pre-existing conditions. Also, in the individual and small group market, the law eliminates the ability of insurance companies to charge higher rates due to gender or health status. Effective January 1, 2014.
Eliminating Annual Limits on Insurance Coverage. The law prohibits new plans and existing group plans from imposing annual dollar limits on the amount of coverage an individual may receive. Effective January 1, 2014.
Ensuring Coverage for Individuals Participating in Clinical Trials. Insurers will be prohibited from dropping or limiting coverage because an individual chooses to participate in a clinical trial. Applies to all clinical trials that treat cancer or other life-threatening diseases. Effective January 1, 2014.
IMPROVING QUALITY AND LOWERING COSTS
Making Care More Affordable. Tax credits to make it easier for the middle class to afford insurance will become available for people with incomes above 133 percent and below 400 percent of poverty ($43,000 for an individual or $88,000 for a family of four in 2010) who are not eligible for or offered other affordable coverage. These individuals may also qualify for reduced cost-sharing (e.g. copayments, coinsurance, and deductibles). Effective January 1, 2014.
Establishing Health Insurance Exchanges. Starting in 2014 if your employer doesn’t offer insurance, you will be able to buy insurance directly in an Exchange -- a new transparent and competitive insurance marketplace where individuals and small businesses can buy affordable and qualified health benefit plans. Exchanges will offer you a choice of health plans that meet certain benefits and cost standards. Starting in 2014, Members of Congress will be getting their health care insurance through Exchanges, and you will be able buy your insurance through Exchanges too. Effective January 1, 2014.
Increasing the Small Business Tax Credit. The law implements the second phase of the small business tax credit for qualified small businesses and small non-profit organizations. In this phase, the credit is up to 50 percent of the employer’s contribution to provide health insurance for employees. There is also up to a 35 percent credit for small non-profit organizations. Effective January 1, 2014. .
INCREASING ACCESS TO AFFORDABLE CARE
Increasing Access to Medicaid. Americans who earn less than 133 percent of the poverty level (approximately $14,000 for an individual and $29,000 for a family of four) will be eligible to enroll in Medicaid. States will receive 100 percent federal funding for the first three years to support this expanded coverage, phasing to 90 percent federal funding in subsequent years. Effective January 1, 2014.
Promoting Individual Responsibility. Under the new law, most individuals who can afford it will be required to obtain basic health insurance coverage or pay a fee to help offset the costs of caring for uninsured Americans. If affordable coverage is not available to an individual, he or she will be eligible for an exemption. Effective January 1, 2014.
Ensuring Free Choice. Workers meeting certain requirements who cannot afford the coverage provided by their employer may take whatever funds their employer might have contributed to their insurance and use these resources to help purchase a more affordable plan in the new health insurance Exchanges. Effective January 1, 2014.
2015
IMPROVING QUALITY AND LOWERING COSTS
Paying Physicians Based on Value Not Volume. A new provision will tie physician payments to the quality of care they provide. Physicians will see their payments modified so that those who provide higher value care will receive higher payments than those who provide lower quality care. Effective January 1, 2015. HHS will not enforce these rules against issuers of stand-alone retiree-only plans in the private health insurance market.
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The Affordable Care Act’s New Patient’s Bill of Rights
A major goal of the Affordable Care Act – the health insurance reform legislation President Obama signed into law on March 23 – is to put American consumers back in charge of their health coverage and care. Insurance companies often leave patients without coverage when they need it the most, causing them to put off needed care, compromising their health and driving up the cost of care when they get it. Too often, insurance companies put insurance company bureaucrats between you and your doctor. The Affordable Care Act cracks down on the some of the most egregious practices of the insurance industry while providing the stability and the flexibility that families and businesses need to make the choices that work best for them.
Today, the Departments of Health and Human Services (HHS), Labor, and Treasury issued regulations to implement a new Patient’s Bill of Rights under the Affordable Care Act – which will help children (and eventually all Americans) with pre-existing conditions gain coverage and keep it, protect all Americans’ choice of doctors and end lifetime limits on the care consumers may receive. These new protections apply to nearly all health insurance plans.1
How These New Rules Will Help You
Stop insurance companies from limiting the care you need. For most plans starting on or after September 23, these rules stop insurance companies from imposing pre-existing condition exclusions on your children; prohibit insurers from rescinding or taking away your coverage based on an unintentional mistake on an application; ban insurers from setting lifetime limits on your coverage; and restrict their use of annual limits on coverage.
Remove insurance company barriers between you and your doctor. For plans starting on or after September 23, these rules ensure that you can choose the primary care doctor or pediatrician you want from your plan’s provider network, and that you can see an OB-GYN without needing a referral. Insurance companies will not be able to require you to get prior approval before seeking emergency care at a hospital outside your plan’s network. These protections apply to health plans that are not grandfathered.
Builds On Other Affordable Care Act Policies
These new protections complement other parts of the Affordable Care Act including:
Reviewing Insurers’ Premium Increases. HHS recently offered States $51 million in grant funding to strengthen review of insurance premiums. Annual premium hikes can put insurance out of reach of many working families and small employers. These grants are a down-payment that enable States to act now on reviewing, disclosing, and preventing unreasonable rate hikes. Already, a number of States, including California, New York, Maine, Pennsylvania and others are moving forward to improve their oversight and require more transparency of insurance companies’ requests to raise rates.
Getting the Most from Your Premium Dollars. Beginning in January, the Affordable Care Act requires individual and small group insurers to spend at least 80% and large group insurers to spend at least 85% of your premium dollars on direct medical care and efforts to improve the quality of care you receive – and rebate you the difference if they fall short. This will limit spending on overhead and salaries and bonuses paid to insurance company executives and provide new transparency into how your dollars are spent. Insurers will be required to publicly disclose their rates on a new national consumer website – HealthCare.gov.
Keeping Young Adults Covered. Starting September 23, children under 26 will be allowed to stay on their parent’s family policy, or be added to it. Group health plans that are grandfathered plans can limit this option to adult children that don’t have another offer of employment-based coverage. Many insurance companies and employers have agreed to implement this program early, to avoid a gap in coverage for new college graduates and other young adults.
Providing Affordable Coverage to Americans without Insurance due to Pre-existing Conditions: Starting July 1, Americans locked out of the insurance market because of a pre-existing condition can begin enrolling in the Pre-existing Condition Insurance Plan (PCIP). This program offers insurance without medical underwriting to people who have been unable to get it because of a preexisting condition. It ends in 2014, when the ban on insurers refusing to cover adults with pre-existing conditions goes into effect and individuals will have affordable choices through Exchanges – the same choices as members of Congress.
New Consumer Protections Starting As Early As This Fall
The new Patient’s Bill of Rights regulations detail a set of protections that apply to health coverage starting on or after September 23, 2010, six months after the enactment of the Affordable Care Act. They are:
No Pre-Existing Condition Exclusions for Children Under Age 19. Each year, thousands of children who were either born with or develop a costly medical condition are denied coverage by insurers. Research has shown that, compared to those with insurance, children who are uninsured are less likely to get critical preventive care including immunizations and well-baby checkups. That leaves them twice as likely to miss school and at much greater risk of hospitalization for avoidable conditions.
A Texas insurance company denied coverage for a baby born with a heart defect that required surgery. Friends and neighbors rallied around the family to raise the thousands of dollars needed to pay for the surgery and put pressure on the insurer to pay for the needed treatment. A week later the insurer backed off and covered the baby.2
The new regulations will prohibit insurance plans from denying coverage to children based on a pre-existing conditions. This ban includes both benefit limitations (e.g., an insurer or employer health plan refusing to pay for chemotherapy for a child with cancer because the child had the cancer before getting insurance) and outright coverage denials (e.g., when the insurer refuses to offer a policy to the family for the child because of the child’s pre-existing medical condition). These protections will apply to all types of insurance except for individual policies that are “grandfathered,” and will be extended to Americans of all ages starting in 2014.
No Arbitrary Rescissions of Insurance Coverage. Right now, insurance companies are able to retroactively cancel your policy when you become sick, if you or your employer made an unintentional mistake on your paperwork.
In Los Angeles, a woman undergoing chemotherapy had her coverage cancelled by an insurer who insisted her cancer existed before she bought coverage. She faced more than $129,000 in medical bills and was forced to stop chemotherapy for several months after her insurance was rescinded.3
Under the regulations, insurers and plans will be prohibited from rescinding coverage – for individuals or groups of people – except in cases involving fraud or an intentional misrepresentation of material facts. Insurers and plans seeking to rescind coverage must provide at least 30 days advance notice to give people time to appeal. There are no exceptions to this policy.
No Lifetime Limits on Coverage. Millions of Americans who suffer from costly medical conditions are in danger of having their health insurance coverage vanish when the costs of their treatment hit lifetime limits set by their insurers and plans. These limits can cause the loss of coverage at the very moment when patients need it most. Over 100 million Americans have health coverage that imposes such lifetime limits.
A teenager was diagnosed with an aggressive form of leukemia requiring chemotherapy and a stay in the intensive care unit. He reached his family’s plan’s $1 million lifetime limit in less than a year. His parents had to turn to the public for help when the hospital informed them it needed either $600,000 in certified insurance or a $500,000 deposit to perform the bone marrow transplant he needed.4
The regulation released today prohibits the use of lifetime limits in all health plans and insurance policies issued or renewed on or after September 23, 2010.
Restricted Annual Dollar Limits on Coverage. Even more aggressive than lifetime limits are annual dollar limits on what an insurance company will pay for health care. Annual dollar limits are less common than lifetime limits, involving 8 percent of large employer plans, 14 percent of small employer plans, and 19 percent of individual market plans. But for people with medical costs that hit these limits, the consequences can be devastating.
One study found that 10 percent of cancer patients reached a limit of what insurance would pay for treatment – and a quarter of families of cancer patients used up all or most of their savings on treatment.5
The rules will phase out the use of annual dollar limits over the next three years until 2014 when the Affordable Care Act bans them for most plans. Plans issued or renewed beginning September 23, 2010, will be allowed to set annual limits no lower than $750,000. This minimum limit will be raised to $1.25 million beginning September 23, 2011, and to $2 million beginning on September 23, 2012. These limits apply to all employer plans and all new individual market plans. For plans issued or renewed beginning January 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited
Employers and insurers that want to delay complying with these rules will have to win permission from the Federal government by demonstrating that their current annual limits are necessary to prevent a significant loss of coverage or increase in premiums. Limited benefit insurance plans – which are often used by employers to provide benefits to part-time workers — are examples of insurers that might seek this kind of delay. These restricted annual dollar limits apply to all insurance plans except for individual market plans that are grandfathered.
Protecting Your Choice of Doctors. Being able to choose and keep your doctor is a key principle of the Affordable Care Act, and one that is highly valued by Americans. People who have a regular primary care provider are more than twice as likely to receive recommended preventive care; are less likely to be hospitalized; are more satisfied with the health care system, and have lower costs. Yet, insurance companies don’t always make it easy to see the provider you choose. One survey found that three-fourths of OB-GYNs reported that patients needed to return to their primary care physicians for permission to get follow-up care.
The new rules make clear that health plan members are free to designate any available participating primary care provider as their provider. The rules allow parents to choose any available participating pediatrician to be their children’s primary care provider. And, they prohibit insurers and employer plans from requiring a referral for obstetrical or gynecological (OB-GYN) care. All of these provisions will improve people’s access to needed preventive and routine care, which has been shown to improve the health of those treated and avoid unnecessary health care costs. These policies apply to all individual market and group health insurance plans except those that are grandfathered.
Removing Insurance Company Barriers to Emergency Department Services. Some insurers will only pay for health care provided by a limited number or network of providers – including emergency health care. Others require prior approval before receiving emergency care at hospitals outside of their networks. This could mean financial hardship if you get sick or injured when you are away from home or not near a network hospital.
The new rules make emergency services more accessible to consumers. Health plans and insurers will not be able to charge higher cost-sharing (copayments or coinsurance) for emergency services that are obtained out of a plan’s network. The rules also set requirements on how health plans should reimburse out-of-network providers. This policy applies to all individual market and group health plans except those that are grandfathered.
Benefits of Consumer Protections
The new rules will bring immediate relief to many Americans and provide peace of mind to millions more who are only one illness or accident away from medical and financial chaos.
The new ban on lifetime limits would affect group premiums by 0.5% or less and individual market premiums by 0.75% or less. The restricted annual limit policy would affect group and individual markets by roughly 0.1% or less (grandfathered individual market plans are exempt). And, the prohibition of preexisting conditions exclusions for children would affect group health plans by just a few hundredths of a percent. For new plans in the individual market, this impact would be roughly 0.5% in many states. In states with community rating, (roughly twenty states), the impact could be up to 1.0%. These costs are before taking into account benefits.
In addition, the rules will achieve greater cost savings by:
Reducing the“hidden tax” on insured Americans: By making sure insurance covers people who are most at risk, there will be less uncompensated care and the amount of cost shifting among those who have coverage today will be reduced by up to $1 billion in 2013.
Improving Americans’ health: By making sure that high-risk individuals have insurance, the rules will reduce premature deaths.6 Insured children are less likely to experience avoidable hospital stays than uninsured children7 and, when hospitalized, insured children are at less risk of dying.8
Protecting Americans’ savings: High medical costs contribute to some degree to about half of the more than 500,000 personal bankruptcies in the U.S. in 2007.9 These costs borne by individuals might be assumed by insurance companies once rescissions are banned, annual limits are restricted, lifetime limits are prohibited, and most children have access to health insurance without pre-existing condition exclusions.
Enhancing workers’ productivity: Making sure that kids with health problems have coverage will reduce the number of days parents have to take off from work to care for family members. Parents will also be freed from “job lock,” which occurs when people are afraid to take a better job because they might lose coverage for themselves or their families.10
1
Limits on pre-existing conditions and annual limits will not apply to
existing “grandfathered” plans offering individual coverage. For
details, see the Fact Sheet and interim final regulations released on
the topic on June 14.
2 Jarvis, Jan, “Under Fire, Blue Cross Blue Shield of Texas Offers to Cover Medical Expenses for Crowley Baby,” Houston Star-Telegram, (March 31, 2010).
3 Girion, Lisa “Health Net Ordered to Pay $9 million after Canceling Cancer Patient’s Policy,” Los Angeles Times (2008), available at: http://www.latimes.com/business/la-fi-insure23feb23,1,5039339.story.
4 Murphy, Tom. “Patients struggle with lifetime health insurance benefit caps,” Los Angeles Times, July 2008.
5 See “National Survey of Households Affected by Cancer.” (2006) accessed at http://www.kff.org/kaiserpolls/upload/7591.pdf
6 See, for example, Almond, Doyle, Kowalski, Williams (2010), Doyle (2005), and Currie and Gruber (1996).
7 Keane, Christopher et al. “The Impact of Children’s Health Insurance Program by Age.” Pediatrics 104:5 (1999), available at: http://pediatrics.aappublications.org/cgi/reprint/104/5/1051..
8 Bernstein, Jill et al. “How Does Insurance Coverage Improve Health Outcomes?” Mathematica Policy Research (2010), available: http://www.mathematica-mpr.com/publications/PDFs/Health/Reformhealthcare_IB1.pdf
9 David Himmelstein et al, 2009.
10 Gruber, J. and B. Madrian. “Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature.” (2001).
HHS will not enforce these rules against issuers of stand-alone retiree-only plans in the private health insurance market.
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Young Adults and the Affordable Care Act: Protecting Young Adults and Eliminating Burdens on Families and Businesses
The Affordable Care Act allows young adults to stay on their parents’ health care plan until age 26. Before the President signed this landmark Act into law, many health plans and issuers could and did in fact remove young adults from their parents’ policies because of their age, leaving many college graduates and others with no insurance. This helps to explain problems like:
Young adults have the highest rate of uninsured of any age group. About 30% of young adults are uninsured, representing more than one in five of the uninsured. This rate is higher than any other age group, and is three times higher than the uninsured rate among children.
Young adults have the lowest rate of access to employer-based insurance. As young adults transition into the job market, they often have entry-level jobs, part-time jobs, or jobs in small businesses, and other employment that typically comes without employer-sponsored health insurance. The uninsured rate among employed young adults is one-third higher than older employed adults.
Young adults’ health and finances are at risk. Contrary to the myth that young people don’t need health insurance, one in six young adults has a chronic illness like cancer, diabetes or asthma. Nearly half of uninsured young adults report problems paying medical bills.
Providing Relief for Young Adults
The Affordable Care Act requires plans and issuers that offer coverage to children on their parents’ plan to make the coverage available until the adult child reaches the age of 26. Many parents and their children who worried about losing health insurance after the children moved away from home or graduated from college no longer need to worry.
The Departments of Health and Human Services, Labor, and Treasury have issued regulations implementing the Affordable Care Act by expanding dependent coverage for adult children up to age 26. Key elements include:
Coverage Extended to More Children. The goal of this new policy is to cover as many young adults under the age of 26 as possible with the least burden. Plans and issuers that offer dependent coverage must offer coverage to enrollees’ adult children until age 26, even if the young adult no longer lives with his or her parents, is not a dependent on a parent’s tax return, or is no longer a student. There is a transition for certain existing group plans that generally do not have to provide dependent coverage until 2014 if the adult child has another offer of employer-based coverage aside from coverage through the parent. The new policy providing access for young adults applies to both married and unmarried children, although their own spouses and children do not qualify.
Effective for Plan or Policy Years Beginning On or After September 23, 2010. Secretary Kathleen Sebelius called on leading insurance companies to begin covering young adults voluntarily before the implementation date required by the Affordable Care Act (which is plan or policy years beginning on or after September 23rd). Early implementation would avoid gaps in coverage for new college graduates and other young adults and save on insurance company administrative costs of dis-enrolling and re-enrolling them between May 2010 and September 23, 2010. Over 65 companies have responded to this call saying they will voluntarily continue coverage for young adults who graduate or age off their parents’ insurance before the implementation deadline.
All Eligible Young Adults Will Have A Special Enrollment Opportunity. For plan or policy years beginning on or after September 23, 2010, plans and issuers must give children who qualify an opportunity to enroll that continues for at least 30 days regardless of whether the plan or coverage offers an open enrollment period. This enrollment opportunity and a written notice must be provided not later than the first day of the first plan or policy year beginning on or after September 23, 2010. The new policy does not otherwise change the enrollment period or start of the plan or policy year.
Same Benefits/Same Price. Any qualified young adult must be offered all of the benefit packages available to similarly situated individuals who did not lose coverage because of cessation of dependent status. The qualified individual cannot be required to pay more for coverage than those similarly situated individuals. The new policy applies only to health insurance plans that offer dependent coverage in the first place: while most insurers and employer-sponsored plans offer dependent coverage, there is no requirement to do so.
Affordable Premiums. According to an analysis of this provision, adding young adult coverage would increase average family premiums by as little as .7% while allowing 1.2 million young Americans coverage under their parents' plan through an employer or the individual market.
Access to Insurance: What Young Adults and Parents Need to Do:
Check for Immediate Options: Private health insurance companies that cover the majority of Americans have volunteered to provide coverage earlier than the implementation deadline for young adults losing coverage as a result of graduating from college or aging out of dependent coverage on a family policy. This stop-gap coverage, in many cases, is available now. Ask your employer and insurer about this option.
Watch for Open Enrollment: If early coverage is not an option with your employer or insurance company, then young adults will qualify for an open enrollment period to join their parents’ family plan or policy beginning on or after September 23, 2010. Insurers and employers are required to provide notice for this special open enrollment period. Watch for it or ask about it.
Expect an Offer of Continued Enrollment: Insurers and employers that sponsor health plans will inform young adults of continued eligibility for coverage until the age of 26. To get the coverage, young adults and their parents need not do anything but sign up and pay for this option.
New Tax Benefits for Adult Child Coverage
The new regulation complements guidance issued by the Treasury Department on April 27, 2010, on the tax benefits provided for such coverage through the Affordable Care Act. Under a new tax provision in the Affordable Care Act and the Treasury guidance, the value of any employer-provided health coverage for an employee's child is excluded from the employee’s income through the end of the taxable year in which the child turns 26. This tax benefit applies regardless of whether the plan is required by law to extend health care coverage to the adult child or the plan voluntarily extends the coverage.
Key elements include:
Tax Benefit Continues Beyond Extended Coverage Requirement. While the Affordable Care Act requires health care plans to cover enrollees’ children up to age 26, some employers may decide to continue coverage beyond the child’s 26th birthday. In such a case, the Act provides that the value of the employer-provided health coverage is excluded from the employee’s income for the entire taxable year in which the child turns 26. Thus, if a child turns 26 in March but stays on the plan through December 31st (the end of most people’s taxable year), all health benefits provided that year are excluded for income tax purposes.
Available Immediately. These tax benefits are effective March 30, 2010. The exclusion applies to any coverage that is provided to an adult child from that date through the end of the taxable year in which the child turns 26.
Broad Eligibility. This expanded health care tax benefit applies to various workplace and retiree health plans. It also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return.
Both Employer and Employee Shares of Health Premium Are Excluded from Income. In addition to the exclusion from income of any employer contribution towards qualifying adult child coverage, employees can receive the same tax benefit if they contribute toward the cost of coverage through a “cafeteria plan.” This benefit is available immediately, even if the cafeteria plan document has not yet been amended to reflect the change. To reduce the burden on employers, they have until the end of 2010 to amend their cafeteria plan documents to incorporate this change.
Companies Responding To Secretary Sebelius’ Call For Early Implementation:
Early implementation by the companies listed below will avoid gaps in coverage for new college graduates and other young adults and save on insurance company administrative costs of dis-enrolling and re-enrolling them between May 2010 and the start of the plan or policy year beginning on or after September 23, 2010. Early enrollment will also enable young, overwhelmingly healthy people who will not engender large insurance costs to stay in the insurance pool. The following companies have agreed to implement this program before the September 23, 2010 deadline:
Coventry Healthcare, Inc.
Blue Cross and Blue Shield of Alabama
Blue Cross Blue Shield of Delaware
Blue Cross and Blue Shield of Arizona, Inc.
Blue Cross and Blue Shield of Florida
Arkansas Blue Cross and Blue Shield
Blue Cross and Blue Shield of Hawaii
Blue Shield of California
Blue Cross of Idaho Health Service
Regence Blue Shield of Idaho
Wellmark Blue Cross and Blue Shield of Iowa
Health Care Service Corporation
Blue Cross and Blue Shield of Kansas
Blue Cross Blue Shield Association
Blue Cross and Blue Shield of Louisiana
WellPoint, Inc.
CareFirst BlueCross and BlueShield
Blue Cross and Blue Shield of Massachusetts
Blue Cross and Blue Shield of Kansas City
Blue Cross and Blue Shield of Michigan
Blue Cross and Blue Shield of Montana
Blue Cross and Blue Shield of Minnesota
Blue Cross and Blue Shield of Nebraska
Blue Cross & Blue Shield of Mississippi
Horizon Blue Cross and Blue Shield of New Jersey, Inc.
HealthNow New York, Inc.
The Regence Group
Excellus Blue Cross and Blue Shield
Capital BlueCross
Blue Cross and Blue Shield of North Carolina
Independence Blue Cross
BlueCross BlueShield of North Dakota
Highmark, Inc.
Blue Cross of Northeastern Pennsylvania
BlueCross and BlueShield of Tennessee
Blue Cross and Blue Shield of Vermont
Blue Cross & Blue Shield of Rhode Island
Premera Blue Cross
Blue Cross and Blue Shield of South Carolina
Blue Cross and Blue Shield of Wyoming
Kaiser Permanente
Cigna
Aetna
United
WellPoint
Humana
Capital District Physicians’ Health Plan (CDPHP), Albany, New York
Capital Health Plan, Tallahassee, Florida
Care Oregon, Portland, Oregon
Emblem Health, New York, New York
Fallon Community Health Plan, Worcester, Massachusetts
Geisinger Health Plan, Danville, Pennsylvania
Group Health, Seattle, Washington
Group Health Cooperative Of South Central Wisconsin, Madison, Wisconsin
Health Partners, Minneapolis, Minnesota
Independent Health, Buffalo, New York
Kaiser Foundation Health Plan Oakland, California
Martin’s Point Health Care, Portland, Maine
New West Health Services, Helena, Mt
The Permanente Federation, Oakland, California
Priority Health, Grand Rapids, Michigan
Scott & White Health Plan, Temple, Texas
Security Health Plan, Marshfield, Wisconsin
Tufts Health Plan, Waltham, Massachusetts
UCARE, Minneapolis, Minnesota
UPMC Health Plan, Pittsburgh, Pennsylvania
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Young Adults and the Affordable Care Act: Protecting Young Adults and Eliminating Burdens on Businesses and Families
Q: How does the Affordable Care Act help young adults?
A: Before the President signed the Affordable Care Act into law, many health plans and issuers could remove adult children from their parents’ policies because of their age, whether or not they were a student or where they lived. The Affordable Care Act requires plans and issuers that offer dependent coverage to make the coverage available until the adult child reaches the age of 26. Many parents and their children who worried about losing health insurance after they graduated from college no longer have to worry.
Q: What plans are required to extend dependent coverage up to age 26?
A: The Affordable Care Act requires plans and issuers that offer dependent coverage to make the coverage available until a child reaches the age of 26. Both married and unmarried children qualify for this coverage. This rule applies to all plans in the individual market and to new employer plans. It also applies to existing employer plans unless the adult child has another offer of employer-based coverage (such as through his or her job). Beginning in 2014, children up to age 26 can stay on their parent’s employer plan even if they have another offer of coverage through an employer.
Q: I’m a young adult under the age of 26 and I’m on my parents plan now, but I’m scheduled to lose coverage soon. How can I keep my health insurance?
A: You have a number of options. First,check with your insurance company. Private health insurance companies that cover the majority of Americans have volunteered to provide coverage for young adults losing coverage as a result of graduating from college or aging out of dependent coverage on a family policy. This stop-gap coverage, in many cases, is available now. Second, watch for open enrollment. Young adults may qualify for an open enrollment period to join their parents’ family plan or policy on or after September 23, 2010. Insurers and employers are required to provide notice for this special open enrollment period. Watch for it or ask about it. Finally, expect an offer of continued enrollment for plans that begin on or after September 23, 2010. Insurers and employers that sponsor health plans will inform young adults of continued eligibility for coverage until the age of 26. Young adults and their parents need not do anything but sign up and pay for this option.
Q: I’m under the age of 26, and I used to be on my parents’ plan, but I recently lost this coverage because I graduated from college. Can I get coverage?
A: Yes. Check with your insurance company to see if they will provide that coverage to you now. If not, watch for the special open enrollment period and sign up then.
Q: Now that the regulation is published, are plans required to immediately enroll eligible young adults in their parents’ plan?
A: No. The law says that the extension of dependent coverage for children is effective for plan years beginning on or after 6 months after the enactment of the law – that means plan years beginning on or after September 23, 2010. However, the Administration has urged insurance companies and employers to prevent a gap in coverage for young adults aging off of their parents’ policy prior to this effective date. To date, over 65 insurers have volunteered to do so. You should check with your insurance company or employer to see if they are offering this coverage option.
Q: Will young adults be given a special chance to enroll after September 23, 2010?
A. Yes. For plan or policy years beginning on or after September 23, 2010, plans and issuers must give children who qualify an opportunity to enroll that continues for at least 30 days regardless of whether the plan or coverage offers an open enrollment period. This enrollment opportunity and a written notice must be provided not later than the first day of the first plan or policy year beginning on or after September 23, 2010. Some plans may provide the opportunity before September 23, 2010
Q: Will young adults have to pay more for coverage or accept a different benefit package?
A: Any qualified individual must be offered all of the benefit packages available to children who did not lose coverage because of loss of dependent status. The qualified young adult cannot be required to pay more for coverage than similarly situated individuals who did not lose coverage due to the loss of dependent status.
Q: Can plans or issuers who offer dependent coverage continue to impose limits on who qualifies based upon financial dependency, marital status, enrollment in school, residency or other factors?
A: No. Plans and issuers that offer dependent coverage must provide coverage until a child reaches the age of 26. There is one exception for group plans in existence on March 23, 2010. Those group plans may exclude adult children who are eligible to enroll in an employer-sponsored health plan, unless it is the group health plan of their parent. This exception is no longer applicable for plan years beginning on or after January 1, 2014.
Q: Does the adult child have to purchase an individual policy?
A: No. Eligible adult children wishing to take advantage of the new coverage will be included in the parents’ family policy.
Q: Will Medicare cover adult children in the same way that private health insurance will?
A: No. The provision does not apply to Medicare.
Q: Are both married and unmarried young adults covered?
A: Yes
Q: Are plans or issuers required to provide coverage for children of children receiving the extended coverage?
A: No
Q: Why is there a special exception for group plans in existence on March 23, 2010?
A: Our goal is to cover as many young adults under the age of 26 as possible with the least amount of burden. If a young adult is eligible to purchase other employer-based health insurance such as through her job, the law does not require the parent or parents’ plan to enroll that child if the parents’ plan is a grandfathered health plan (i.e., in existence on March 23, 2010). Of course, all group plans have the option to cover all adult children until the age of 26 or beyond. In 2014, this exception will no longer apply.
Q: What happens if a young adult under the age of 26 is not eligible for employer-sponsored insurance and both parents have separate plans that offer dependent coverage?
A: Neither parent’s plan can deny coverage.
Q: Does the law apply to plans or issuers that do not provide dependent coverage?
A: No. There is no federal requirement compelling a plan or issuer to offer dependent coverage at this time. However, the vast majority of group health plans offer dependent coverage and many family policies exist in the individual market.
Q: Are insurers doing anything to help young adults prior to the September 23rd implementation date?
A: Secretary Kathleen Sebelius called on leading insurance companies to begin covering young adults voluntarily before the September 23rd implementation date required by the Affordable Care Act. Early implementation would avoid gaps in coverage for new college graduates and other young adults and save on insurance company administrative costs of dis-enrolling and re-enrolling them between May 2010 and September 23, 2010. Many companies have responded including:
Blue Cross and Blue Shield of Alabama
Blue Cross Blue Shield of Delaware
Blue Cross and Blue Shield of Arizona, Inc.
Blue Cross and Blue Shield of Florida
Arkansas Blue Cross and Blue Shield
Blue Cross and Blue Shield of Hawaii
Blue Shield of California
Blue Cross of Idaho Health Service
Regence Blue Shield of Idaho
Wellmark Blue Cross and Blue Shield of Iowa
Health Care Service Corporation
Blue Cross and Blue Shield of Kansas
Blue Cross Blue Shield Association
Blue Cross and Blue Shield of Louisiana
WellPoint, Inc.
CareFirst BlueCross and BlueShield
Blue Cross and Blue Shield of Massachusetts
Blue Cross and Blue Shield of Kansas City
Blue Cross and Blue Shield of Michigan
Blue Cross and Blue Shield of Montana
Blue Cross and Blue Shield of Minnesota
Blue Cross and Blue Shield of Nebraska
Blue Cross & Blue Shield of Mississippi
Horizon Blue Cross and Blue Shield of New Jersey, Inc.
HealthNow New York, Inc.
The Regence Group
Excellus Blue Cross and Blue Shield
Capital BlueCross
Blue Cross and Blue Shield of North Carolina
Independence Blue Cross
BlueCross BlueShield of North Dakota
Highmark, Inc.
Blue Cross of Northeastern Pennsylvania
BlueCross and BlueShield of Tennessee
Blue Cross and Blue Shield of Vermont
Blue Cross & Blue Shield of Rhode Island
Premera Blue Cross
Blue Cross and Blue Shield of South Carolina
Blue Cross and Blue Shield of Wyoming
Kaiser Permanente
Cigna
Aetna
United
WellPoint
Humana
Capital District Physicians’ Health Plan (CDPHP), Albany, New York
Capital Health Plan, Tallahassee, Florida
Care Oregon, Portland, Oregon
Emblem Health, New York, New York
Fallon Community Health Plan, Worcester, Massachusetts
Geisinger Health Plan, Danville, Pennsylvania
Group Health, Seattle, Washington
Group Health Cooperative Of South Central Wisconsin, Madison, Wisconsin
Health Partners, Minneapolis, Minnesota
Independent Health, Buffalo, New York
Kaiser Foundation Health Plan Oakland, California
Martin’s Point Health Care, Portland, Maine
New West Health Services, Helena, Mt
The Permanente Federation, Oakland, California
Priority Health, Grand Rapids, Michigan
Scott & White Health Plan, Temple, Texas
Security Health Plan, Marshfield, Wisconsin
Tufts Health Plan, Waltham, Massachusetts
UCARE, Minneapolis, Minnesota
UPMC Health Plan, Pittsburgh, Pennsylvania
Q: I understand that there are tax benefits related to the extension of dependent coverage. Can you explain these benefits?
A. Under a change in tax law included in the Affordable Care Act, the value of any employer-provided health coverage for an employee's child is excluded from the employee’s income through the end of the taxable year in which the child turns 26. This tax benefit applies regardless of whether the plan or the insurer is required by law to extend health care coverage to the adult child or the plan or insurer voluntarily extends the coverage.
Q: When does this tax benefit go into effect?
A: The tax benefit is effective March 30, 2010. Consequently, the exclusion applies to any coverage that is provided to an adult child from that date through the end of the taxable year in which the child turns 26.
Q: Who benefits from this tax treatment?
A: This expanded health care tax benefit applies to various workplace and retiree health plans. It also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return.
Q: May employees purchase health care coverage for their adult child on a pre-tax basis through the employer’s cafeteria plan?
A: Yes. In addition to the exclusion from income of any employer contribution towards qualifying adult child coverage, employees may pay the employee portion of the health care coverage for an adult child on a pre-tax basis through the employer’s cafeteria plan – a plan that allows employees to choose from a menu of tax-free benefit options and cash or taxable benefits. The IRS provided in recent guidance [(Notice 2010-38)] that the cafeteria plan could be amended retroactively up until December 31, 2010 to permit these pre-tax salary reduction contributions.
Q: It seems like plans and insurers can terminate dependent coverage after a child turns 26, but employers are allowed to exclude from the employee’s income the value of any employer-provided health coverage through the end of the calendar year in which the child turns age 26. This is confusing.
A. Under the law, the requirement to make adult coverage available applies only until the date that the child turns 26. However, if coverage extends beyond the 26th birthday, the value of the coverage can continue to be excluded from the employee’s income for the full tax year (generally the calendar year) in which the child had turned 26. For example, if a child turns 26 in March but is covered under the employer plan of his parent through December 31st (the end of most people’s taxable year), the value of the health care coverage through December 31st is excluded from the employee’s income for tax purposes. If the child stops coverage before December 31st, then the premiums paid by the employee up to the time the plan was stopped will be excluded from the employee’s income.
HHS will not enforce these rules against issuers of stand-alone retiree-only plans in the private health insurance market.