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Monday, April 12, 2010

When do the Changes Affect me?

Many of the major changes in the legislation don’t go into effect until 2014. Those include:* Federal subsidies to help people buy coverage.* An end to insurers rejecting adult applicants with pre-existing medical conditions.* The requirement that nearly all Americans carry coverage.But some changes affecting insurance policies will come more quickly. Unless otherwise noted, these changes become effective on policies on the first renewal date after Sept. 23. For those with job-based coverage, that may mean a Jan. 1 date, or even later in 2011. They include:* No More Lifetime Limits on Coverage: Insurers and employers can no longer cap the amount spent on essential medical care over a person’s lifetime. Such limits are used to help hold down premiums and are more common in policies purchased by individuals. But about 16 percent of workers receiving insurance through an employer currently have a plan that caps coverage at between $1 million and $2 million, while 43 percent of covered workers have caps of $2 million or more, according to an employer survey by the Kaiser Family Foundation. The law bars the practice on all existing and new policies, according to analyses by insurers and employer groups. * New Restrictions on Annual Limits: Some insurance plans set annual dollar limits on coverage. Such practices will be prohibited for “essential benefits” for all new policies and for existing policies offered by employers. Existing policies in the non-group market will not be held to this standard. Specifics of the restrictions and the definition of “essential benefits” are yet to be developed by HHS. * Insurers Can’t Cancel Retroactively: Until now, insurers have been able to retroactively cancel policies, citing missing or incorrect information on applications for coverage, a practice that left some policyholders owing tens of thousands of dollars. The industry says such cancellations are necessary to combat fraud, but critics say they are improperly used to rid insurers of patients with costly illnesses. The new law bars the practice for all new and existing policies, except in cases of outright fraud. * Kids Can Join Your Plan: Young adults up to age 26 can join or remain or remain on a parent’s policy, so long as they aren’t eligible for coverage under their own employer’s policy. Some questions remain and may be answered by regulations now being drawn up by HHS. Insurers and employers are also barred from rejecting children under 19 with pre-existing medical problems or excluding coverage for those conditions. * Insurers Must Detail Spending, Face Rebates: This year, insurers must report how much revenue they spend on direct medical care versus administrative costs, which include such things as new equipment, disease management, executive salaries and profits. The HHS secretary must define what are considered administrative costs. Next year, if insurers fail to spend at least 80 percent of revenue (85 percent in large employer plans) on medical care, they must issue rebates to consumers and employers. Many large group insurers already meet those standards; a bigger impact could come in policies in the individual market. * Premium increases must be reported: Insurers must report their premium increases to the HHS secretary and provide justification for the increases. The rules apply to all new and existing policies, except self-insured employer plans. * Employers face new rules, rebates, costs: All new policies offered by employers must include both an internal and external appeals process so workers can contest coverage and other benefit decisions. The definition of a “new plan,” isn’t clear. It’s possible it could include an employer who switches insurance carriers. HHS is expected to define that in regulations.Employers that offer drug coverage to retirees will lose the ability to deduct a 28 percent federal subsidy in 2013, but must report the effects on financial statements this year. Some employers may drop or reduce such coverage for retirees as a result. Conversely, employers that cover early retirees’ medical costs will be able to apply for reimbursement of 80 percent of some expensive medical claims.Reprinted with permission from You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at The Kaiser Daily Health Policy Report is published for, a free service of The Henry J. Kaiser Family Foundation. © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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