Health Care Reform

What Does Health Care Reform Mean to You?

For Uninsured Individuals:

INTERIM HIGH-RISK POOL FOR THE UNINSURED WITH PRE-EXISTING CONDITIONS.
Effective 90 days after enactment. Provides eligible individuals with pre-existing health conditions access to high-risk pool insurance. This provision ends when Exchanges are available.

COVERAGE FOR THE UNINSURED WITH PRE-EXISTING CONDITIONS.
Effective in 2014. Provides eligible individuals with pre-existing conditions access to insurance. Health plans can no longer exclude coverage for treatments based on pre-existing health conditions.

INDIVIDUAL MANDATE TO PURCHASE HEALTH INSURANCE.
Effective in 2014. Requires most individuals to obtain acceptable health insurance coverage or pay a penalty of $95 in 2014; $325 in 2015; $695 in 2016 (or up to 2.5% of income in 2016). This is all up to a cap of the national average "Bronze Plan" premium which is still to be determined. Families will pay half the amount for children, up to a cap of $2250 per family. After 2016, the dollar amounts will be indexed. If affordable coverage is not available to an individual, they will not be penalized.

For Children

COVERAGE FOR CHILDREN WITH PRE-EXISTING CONDITIONS.
Effective 6 months after enactment: Health plans can no longer deny coverage to children with pre-existing conditions.

DEPENDENTS MAY REMAIN ON PARENT'S INSURANCE UNTIL THEIR 26TH BIRTHDAY
Effective 6 months after enactment. Requires that a health plan that provides coverage for dependent children to continue to make that coverage available to employee's dependents until the age of 26.. This is IF the parents choose to do so.

Privately Insured Individuals

HEALTH PLANS CAN NO LONGER DROP PEOPLE FROM COVERAGE WHEN THEY GET SICK
Effective 6 months after enactment
HEALTH PLANS CAN NO LONGER PLACE LIFETIME CAPS/LIMITS ON COVERAGE.
Effective 6 months after enactment
FREE PREVENTATIVE CARE UNDER NEW PLANS.
Effective 6 months after enactment. Requires new private plans to cover preventive services with no co-payments and no deductibles.
CONSUMERS HAVE ACCESS TO AN EFFECTIVE INTERNAL AND EXTERNAL APPEALS PROCESS.
Effective 6 months after enactment.
PLANS MUST PUT MORE OF YOUR PREMIUMS INTO YOUR CARE.
Effective on January 1, 2011. The medial loss ratio (MLR) requires that plans in the Individual and Small Group market to spend 80% of the premiums received on medical services. Plans in the Large Group market are to spend 85% of the premiums received on medical services. Insurers that don't meet these thresholds must provide rebates to the policyholders.

PROHIBITING HEALTH COVERAGE DISCRIMINATION IN FAVOR OF HIGHER WAGE EMPLOYEES.
Effective 6 months after enactment. Prevents new group health plans from establishing eligibility rules for health care coverage that have the effect of discriminating in favor or higher wage employees.
HELP FOR EARLY RETIREES
Effective 90 days after enactment. Creates a temporary re-insurance program until exchanges are available to help offset the cost of expensive health claims for employers that provided health benefits for retirees age 55 -64.

General Reforms

INCREASE FUNDING TO COMMUNITY HEALTH CENTERS TO INCREASE THE NUMBER OF PATIENTS SERVED OVER THE NEXT 5 YEARS:
Effective beginning in fiscal year 2010.
INCREASE THE NUMBER OF PRIMARY CARE DOCTORS, NURSES AND PUBLICHEALTH PROFESSIONALS. THIS WILL BE DONE BY PROVIDING NEW INVESTMENTS IN TRAINING PROGRAMS.
Effective beginning in fiscal year 2010.
PROVIDE MONEY TO STATES TO ESTABLISH HEALTH INSURANCE CONSUMER ASSISTANCE OFFICES TO HELP CONSUMERS FILE COMPLAINS AND APPEALS.
Effective beginning in fiscal year 2010.
CREATES A LONG-TERM CARE INSURANCE PROGRAM TO BE PAID FOR BY VOLUNTARY PAYROLL DEDUCTIONS. THIS WILL PROVIDE BENEFITS TO THOSE WHO BECOME FUNCTIONALLY DISABLED.
Effective beginning on January 1, 2011.

How does Health Care Reform affect Small Businesses?

TAX CREDITS

SMALL BUSINESS TAX CREDITS:
Offers tax credits to small businesses to make employee coverage more affordable.
Tax credits of up to 35 percent of the premiums will be available to small businesses with 25 employees or less for tax years 2010-2013 as long as the employer contributes at least 50% of a benchmark premium. Beginning in 2014, these tax credits will increase to cover 50% of the premiums.
Small businesses with 10 or fewer employees who have annual wages of less than $25,000 will be eligible for full credit

SMALL BUSINESS EXCHANGES

STATES WILL ESTABLISH THE STATE-BASED HEALTH INSURANCE EXCHANGES FOR SMALL BUSINESSES AND INDIVIDUALS ONE YEAR AFTER THE BILL BECOMES LAW
By no later than 2014, states will have to set up Small Business Health Options Programs, or "SHOP Exchanges," where small businesses will be able to pool together to buy insurance.
Small businesses with up to 100 employees will be able to buy insurance for their employees using small business health options program (SHOP). These will be exchanges administered by a governmental agency or non-profit organization within their state.
States have the option to allow businesses with more than 100 employees to purchase coverage on the shop exchanges as well.

INSURANCE MANDATE FOR SMALL BUSINESSES

EFFECTIVE 2014, A FEDERAL HEALTH INSURANCE MANDATE WILL GO INTO EFFECT FOR INDIVIDUALS AND SMALL BUSINESS. Starting in 2014, businesses with more than 50 employees will be required to either offer healthcare coverage or pay a penalty of $750 per year per full-time worker. The coverage will also have to meet minimum benefits -- covering both a specific set of services and 60% of employee health costs overall. Otherwise, the employer will face additional penalties.

NEW REGULATIONS FOR INSURANCE COMPANIES

LEGISLATION INCLUDES SEVERAL NEW REGULATIONS ON INSURANCE COMPANIES.
Six months from the passage of the bill, there will be a ban on lifetime limits on coverage and on the practice of "recission" (Canceling policies that have already been issued). EXCEPT IN THE CASES OF FRAUD.
Effective 2014, insurers can no longer be able to set rates or exclude coverage based on pre-existing conditions, and can vary premiums only by geographic location, age and tobacco use.

TYPES OF PLANS UNDER HEALTH CARE REFORM

THE LAW PROVIDES FOR FOUR TYPES OF HEALTH CARE PLANS TO BE OFFERED ON THE SMALL BUSINESS AND INDIVIDUAL EXCHANGES:
Bronze Plan: Covers 60% of the benefit costs of the plan with an out-of-pocket limit equal to the Health Savings Account (HSA) current law limit of $5,950 for individuals and $11,900 for families.
Silver Plan: Covers 70% of the benefit costs of the plan with the HSA out-of-pocket limits.
Gold Plan: Covers 80% of the benefit costs of the plan with the HSA out-of-pocket limits.
Platinum Plan: Covers 90% of the benefit costs of the plan with the HSA out-of-pocket limits.

Health Insurance Reform and California

Had nothing been done, by 2019 the number of uninsured people would have grown by more than 30 percent in 29 states and by at least 10 percent in every state. The amount of uncompensated care provided would more than double in 45 states. Businesses in 27 states will see their premiums more than double. And fewer people would have coverage through an employer.¹ In addition to families and businesses struggling with high health care costs, state governments have really felt the burden.

The new law expands coverage to millions of Americans, reduces premiums and out-of-picket costs, and provides the security of knowing that if you lose your job, change your job, or start that new business, you'll always be able to purchase quality, affordable care in a new competitive health insurance market that keeps costs down.

Under reform in California:

7.3 million residents who do not currently have insurance and 2.7 million residents who have nongroup insurance could get affordable coverage through the health insurance exchange.

3.8 million residents could qualify for premium tax credits to help them purchase health coverage.

4.5 million seniors would receive free preventive services.

794,000 seniors would have their brand-name drug costs in the Medicare Part D "doughnut hole" halved.

392,000 small businesses could be helped by a small business tax credit to make premiums more affordable.

Health Insurance Reform Provides Early Relief and Health Security.

Proposals implemented in 2010 and 2011 will produce real benefits for:

* Families: The 36.8 million residents of California will benefit as reform:
o Ensures consumer protections in the insurance market. Insurance companies will no longer be able to place lifetime limits on the coverage they provide, use of annual limits will be restricted, and they will not be able to arbitrarily drop coverage.
o Creates immediate options for people who can't get insurance today. 9 percent of people in California have diabetes2, and 25 percent have high blood pressure3 - two conditions that insurance companies could use as a reason to deny health insurance coverage. Reform will establish a high-risk pool to enable people who cannot get insurance today to find an affordable health plan.
o Ensures free preventive services. 40 percent of California residents have not had a colorectal cancer screening, and 17 percent of women over 50 have not had a mammogram in the past two years.4 Health insurance reform will ensure that people can access preventive services for free through their health plans. It will also invest in a prevention and public health fund to encourage prevention and wellness programs.
o Supports health coverage for early retirees. An estimated 482,000 people from California have early retiree coverage through their former employers, but early retiree coverage has eroded over time.5 A reinsurance program would stabilize early retiree coverage and provide premium relief to both early retirees and the workers in the firms that provide their health benefits. This could save families up to $1,200 on premiums.
* Seniors: California's 4.5 million Medicare beneficiaries6 will benefit as reform:
o Lowers premiums by reducing Medicare's overpayments to private plans. All Medicare beneficiaries pay the price of excessive overpayments through higher premiums - even the 66 percent of seniors in California who are not enrolled in a Medicare Advantage plan.7 A typical couple in traditional Medicare will pay nearly $90 in additional Medicare premiums next year to subsidize these private plans.8 Health insurance reform clamps down on these excessive payments.
o Reduces prescription drug spending. Roughly 794,000 Medicare beneficiaries in California hit the "doughnut hole," or gap in Medicare Part D drug coverage that can cost some seniors an average of $4,080 per year.9 Reform legislation will provide a 50 percent discount for brand-name drugs in this coverage gap.
o Covers free preventive services. Currently, seniors in Medicare must pay part of the cost of many preventive services on their own. For a colonoscopy that costs $842, this means that a senior must pay $19510 - a price that can be prohibitively expensive. Under reform, a senior will not pay anything for that colonoscopy, or for any other recommended preventive service. A senior will also get free annual wellness visits to his or her provider, with a personalized prevention plan to remain in good health.
* Small businesses: While small businesses make up 77 percent of California's businesses, only 47 percent of them offered health coverage benefits in 2008.11 392,000 small businesses in California could be helped by a small businesses tax credit proposal that makes premiums more affordable.12 And these small businesses would be exempt from any employer responsibility provisions.
* States: State budgets will be relieved from rising health care costs as reform:
o Reduces state employee premiums. Coverage would immediately be expanded to the uninsured, decreasing the amount of uncompensated care costs that gets shifted to the premiums of state employees. For states that provide early retiree health benefits to their state employees, a reinsurance program would provide premium relief of up to $1,200 per family policy per year for all employees.
o Reduces uncompensated care. Right now, providers in California lose $5.2 billion in uncompensated care each year,13 which states subsidize at least in part. Instead, under reform, uncompensated care would begin to be reduced immediately as more uninsured people gain coverage.

Health Insurance Reform Provides Stability, Security, and Choice.

* Provides relief from rising health care costs.
o Ends the "hidden tax". The $5.2 billion spent on uncompensated care in California often gets passed along to families in the form of a hidden premium "tax".14 By expanding coverage to the uninsured, health insurance reform will eliminate this burden on people who already have insurance.
o Provides premium tax credits. Without reform, individuals and families in California will spend increasing amounts of money out-of-pocket to cover premiums, deductibles, and co-payments, from $40 billion today to up to $66.6 billion in 2019.15 Through health insurance reform, 3.8 million California residents could be eligible for premium credits to ease the burden of these high costs.16
* Promotes health insurance portability and choice. Health insurance reform establishes a health insurance exchange that will provide individuals with a wide variety of choices and ensure that they will always have coverage, whether they change jobs, lose a job, move or get sick.
o Currently 7.3 million residents of California do not have health insurance, and if nothing is done, by 2019 this population could swell to 9.8 million. The exchange will help the uninsured to obtain needed coverage and will also help the 2.7 million California residents who currently purchase insurance in the individual insurance market to get quality coverage at an affordable price.17
* Supports long-term home and community based services: It is estimated that 65 percent of those who are 65 today will spend some time at home in need of long-term care services,18 which typically cost almost $18,000 per year.19 This means that 2.4 million older residents of California who are aged 55 to 64 today will need home health services after they turn 6520 - services that are not always covered by Medicare, Medicaid, or private health insurance.
o Health insurance reform will create a new voluntary long-term care services insurance program, which will provide a cash benefit to help seniors and people with disabilities obtain services and supports that will enable them to remain in their homes and communities.
o Reform will encourage states to expand their home and community based services through Medicaid by providing enhanced funding, and it will create a program to provide community support services for disabled Medicaid enrollees who would otherwise need to be in a nursing home. These programs could help improve care for many of the 964,000 disabled Medicaid beneficiaries in California.21

Health Insurance Reform Improves Quality and Reforms the Delivery System.

* Reduces preventable readmissions. The current health care system does not place enough emphasis on improving quality of care. For example, nearly 20 percent of Medicare patients who are discharged from the hospital end up being readmitted within 30 days.22 For California, that's 165,000 readmissions each year which could potentially be prevented with improved care coordination.23 Health insurance reform will invest in innovations in primary care and will provide financial incentives to hospitals to better coordinate care at discharge to avoid preventable readmissions.
* Lessens Paperwork. Physicians spend on average about 140 hours and $68,000 a year just dealing with health insurance bureaucracy.24 For the 115,740 physicians in California, this adds up to 16 million hours and $7.8 billion in costs.25 By simplifying and standardizing paperwork and computerizing medical records, doctors will be able to focus on caring for their patients instead of dealing with bureaucracy.
* Incentivizes primary care. Roughly 45,700 doctors in California practice primary care and would qualify for a new 5 to 10 percent payment bonus under health insurance reform.26
* Invests in the health primary care. Approximately 3.3 million people, or 9 percent of California's population, cannot access a primary care provider due to shortages in their communities.27 Health insurance reform will expand and improve programs to increase the number of health care providers, including doctors, nurses, and dentists, especially in rural and other underserved areas.

Most of the information on this Resource Center was obtained from government agency websites and publications, including the Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (DHHS), National Institutes of Health (NIH), Social Security Administration (SSA), Coverage forALL.org and HealthReform.gov. All content is provided for informational purposes only and is subject to change without notice. Although we believe that the source of this information is reliable, we do not warrant or guarantee its accuracy, completeness or timeliness.

TheHealthInsuranceLINK.com contains information about and access to insurance plans for people who are eligible for Medicare and seniors in general and others seeking health insurance coverage. It is operated by Lunzer & Associates Insurance Services LLC., a licensed health insurance agency. Lunzer & Associates and this website are not associated with or endorsed by Medicare, the Centers for Medicare & Medicaid Services (CMS), the Department of Health and Human Services (DHHS) or any other government agency.

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