The Affordable Care Act: A Primer
Wondering how the new health care reforms laws will affect you? Choose your health insurance status below to see how the new law will lower your health care costs and improve the care you receive.
Changes that Will Affect Everyone
Changes that will affect everyone, regardless of the source of their insurance
Effective September 23, 2010:
• All new plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance.
• Insurance companies won’t be able to impose lifetime dollar limits on essential benefits, like hospital stays, on new plans.
• Insurance companies won’t be able to place annual dollar limits on the amount of insurance coverage a patient may receive on new plans in the individual market and all group plans.
Effective January 1, 2011:
• The new law will require 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.
Beginning in 2012:
• Look out for new “Accountable Care Organizations.” The new law provides incentives for physicians to join together to form these groups, in which doctors can better coordinate patient care and improve quality, help prevent disease and illness, and reduce unnecessary hospital admissions. If these organizations provide high quality care and reduce costs to the health care system, they can keep some of the money that they helped save.
• Health care providers will be required to begin adopting and implementing secure, confidential electronic exchanges of health information. Using electronic health records will standardize billing, reduce paperwork, administrative costs and medical errors, and improve the quality of care.
Beginning in 2014:
• The law prohibits new plans and existing group plans from imposing annual dollar limits on the amount of coverage an individual may receive.
• Perhaps the most meaningful reform to our current system takes hold: insurance companies can no longer refuse 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.
I'm Uninsured
Effective June 23, 2010:
• A 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. This program serves as a bridge to 2014, when all discrimination against pre-existing conditions will be prohibited.
• Young adults will be allowed to stay on a parent’s 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.)
Beginning in 2014:
• 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.
• Insurance companies will no longer be able to discriminate on the basis of pre-existing conditions, gender or health status.
• People who do not get their insurance through a government program (Medicare, Medicaid, etc) or employer will be able to buy insurance through 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.
• 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. [Low income children will continue to be eligible for CHIP.]
• Tax credits that make it easier for the middle class to afford insurance will become available for people with incomes above 100 percent and below 400 percent of the poverty line ($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 June 23, 2010:
• A 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. This program serves as a bridge to 2014, when all discrimination against pre-existing conditions will be prohibited.
Effective September 23, 2010:
• Insurance companies cannot drop you from coverage when you get sick. 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.
Beginning 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. You will be able to shop among private insurance plans.
• People with low to moderate incomes (up to 400% FPL; 1 person: $43,320 /yr) will receive refundable and advanceable tax credits to buy insurance on the exchange.
• Insurers must offer coverage regardless of your health status.
• There will be limits on how much you will have to pay for premiums, and your coverage will include an essential set of benefits.
• There will be limits on how much you have to pay out-of-pocket for your health care.
• You may be eligible for a tax credit to pay for your coverage if you meet income guidelines.
I Get My Insurance Through My Employer Or Union
Beginning in 2010:
• There will be no lifetime limits on coverage.
• Young adults will be allowed to stay on their parent’s 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.) Some insurers began implementing this practice early.
Beginning in 2014:
• You may see a reduction in premiums due to lower administrative costs, increased competition, and a larger pool of insured Americans.
• Plan descriptions will be standardized, so that you know what your benefits are and what’s covered.
• There will be no annual limits on coverage.
• 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 2010:
• Up to 4 million small businesses (with fewer than 50 employees) 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% of the employer’s contribution to the employees’ health insurance. Small non-profit organizations may receive up to a 25% credit.
Effective in 2011:
• Insurers will not be allowed to impose sudden, arbitrary rate hikes based on the health status of employees.
• Grants will be available to create wellness programs that reward employees.
Beginning in 2014:
• Employers with more than 50 employees that don’t offer coverage will be penalized.
• By allowing small businesses to buy coverage through an insurance exchange, they will get the benefit of pooling their employees with millions of others, which will lower their own financial risk and ultimately lower costs.
• Operating through an exchange will reduce administrative costs.
• Employees at small businesses that don’t offer coverage can get tax credits to buy it. [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 in 2010:
• An estimated 4 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.The first checks were mailed in June, and will continue monthly throughout 2010 as seniors hit the coverage gap.
• Income thresholds for Part B premiums will be frozen at 2010 rates.
Effective in 2011:
• 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.
• No benefits will be cut, and many preventive services will be free for those in traditional Medicare plans, such as annual wellness visits and personalized prevention plans.
• 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.
• A voluntary federal program (CLASS) will be created to provide long-term care insurance and cash benefits to people with severe disabilities.
Beginning in 2013:
• A national pilot program that encourages hospitals, doctors, and other providers to work together to improve the coordination and quality of patient care will be established. 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.