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 Issue # 10:  September 2, 2010

How Will Health Insurance Reforms Affect Us? 

The new health care reform law, the Affordable Care Act (ACA), and its regulations will bring about many significant improvements for people with disabilities.  The law will greatly improve coverage (who can get health insurance) and benefits (what services and products are covered).  It will do so largely by limiting or banning many health insurance company practices have been particularly harmful to people with disabilities.  

When do the changes take effect?

Many of these changes will go into effect in a few weeks, while others take effect in 2014.  The changes described in this issue of National Policy Matters affect health insurance plans that begin on or after September 23, 2010.  This means that when these changes affect you depends on when your plan year begins (or policy year in the case of individual policies).  For example, if your employer plan year is July 1, 2010- July 1, 2011, then these requirements will not affect your plan until July 1, 2011. 

Will all health insurance plans be affected?

No.  There are some exceptions.  One major type of exception is called “grandfathered” plans.  Grandfathered plans are those that were in existence on March 23, 2010 when the ACA became law.  As long as health plans do not change significantly, they will not be affected by these changes.

Which changes apply to which type of health insurance plans?

The chart below summarizes which changes apply to all health insurance plans. Each of these is explained further in this issue.

Pre-existing conditions  exclusions for persons under age 19

All, except for grandfathered individual plans.

Lifetime limits

All, except for grandfathered individual plans.

Annual limits

All, except for grandfathered individual plans. 

Dependent coverage through age 26

All, except when the dependent has employer sponsored options (exception only through 2014).

Rescissions

All

Choice of Doctors

All, except for grandfathered plans

Access to Emergency Room

All, except for grandfathered plans

Appeals of  Denial of Claims

All, except for grandfathered plans



PRE-EXISTING CONDITIONS EXCLUSIONS FOR PERSONS UNDER AGE 19

Millions of Americans have pre-existing conditions, which include a broad range of health conditions such as cancer, diabetes, seizures, asthma, allergies and many others.  People with disabilities are more likely than the general population to have pre-existing conditions and are frequently denied (or excluded from) health insurance coverage and/or benefits. 

What is a pre-existing condition?

A condition that was present before the date of enrollment for the coverage - whether or not any medical advice, diagnosis, care or treatment was recommended or received. 

How does the law change pre-existing conditions exclusions? 

Health insurance companies will not be allowed to deny enrollment or specific benefits based on pre-existing conditions for individual under the age of 19.  For example, starting this month, insurance companies cannot deny enrollment to a child who needs heart surgery because the heart defect existed before coverage began.  In addition, the insurer will not be allowed to deny specific benefits (in this case heart surgery) needed to treat the pre-existing condition.

When will changes to pre-existing conditions exclusions go into effect?  

For people under the age of 19, it will go into effect for health insurance plan years that begin on or after September 23, 2010.  For adults (persons 19 an older), it will go into effect for plans beginning on or after January 1, 2014.

Will all plans be affected by the changes to pre-existing conditions exclusions? 

No.  There is one exception.  Individual health insurance plans are exempted.  Individual health insurance plans are policies that individuals buy on the open insurance market (they do not include employer sponsored plans).

What if I currently have inadequate individual insurance for my child with a pre-existing condition?  

If a family had bought individual coverage for a child with a preexisting condition and the policy had language excluding the costs of treatment for a pre-existing condition, then the family may need to cancel the coverage and purchase a new policy to get around the exemption.  The risk is that the price you pay may be more for the new plan. 

How many people will be affected by the changes to pre-existing conditions exclusions? 

The Department of Health and Human Services (HHS) estimates that 31,000 to 71,000 children who have a preexisting condition and are uninsured will now be eligible for coverage.  Many of these children are likely to have disabilities.  The regulations also increase coverage for an estimated 90,000 children who have insurance but those plans have a clause that excludes coverage or benefits for a preexisting condition.

 

LIFETIME LIMITS

People with many medical needs fear reaching lifetime and annual limits that some insurers put on plans.  For families that have high medical costs and reach the limits, the effects are often catastrophic to the family if they must pay out of pocket for their medical costs. They then face insurmountable medical debt and/or being unable to continue needed treatment. 

What are lifetime limits?

A lifetime limit is the total amount of money that a health insurance company will pay for your health care over the lifetime of your policy.  According to HHS, the average lifetime limit is $4.7 million.  

How common are lifetime limits in current policies?

Currently, the majority of health insurance plans apply lifetime limits, which affects about 102 million people.  However, this varies by type of plan:

  • 63% of large employer plans
  • 52% of small employer plans
  • 89% of individual policies    

How will the law change lifetime limits?

The use of lifetime limits in health plans and insurance policies issued or renewed on or after September 23, 2010 will be prohibited.  Plans cannot establish a dollar amount lifetime limit on the benefits for any individual. 

Do the lifetime limit changes apply to all health insurance plans?

No.  There is one exception.  Individual health insurance plans in existence prior to March 23, 2010 plans are exempted. Individual health insurance plans are policies that individuals buy on the open insurance market (they do not include employer sponsored plans). 

Do the lifetime limits changes apply to Flexible Spending Arrangements (FSA) or Medical Savings Accounts (MSA)?

No.   FSAs and MSAs are generally not considered group health insurance.  These programs are not affected by this provision of the Affordable Care Act 

What if I have already hit my lifetime limit?

If you are otherwise eligible for the health insurance, you must be notified that the lifetime limits no longer apply and you should be given an opportunity to enroll.  You must be given written notice and have a minimum of 30 days to enroll. 

 

ANNUAL LIMITS

What are annual limits?

An annual limit is the total amount of money that a health insurance company will cover for your care in one calendar year. 

How common are annual limits in current policies?

Currently, a minority of health insurance plans apply annual limits, which affect about 17 million people.  According to HHS, annual limits are used by the following types of plans:

  • 8% of large employer plans
  • 14% of small employer plans
  • 19 % of individual policies 

How will the law change annual limits?

The use of annual limits will be phased out over the next three years and end in 2014.   

How will the annual limit changes be phased in?

To limit premium increases, the regulations implement a three-year phase-in of the restrictions on annual limits of essential benefits. The restrictions, which apply on an individual-by-individual basis, are as follows:

  • For plan years beginning on or after September 23, 2010 through September 23, 2011, the annual limits on the dollar value of benefits may not be less than $750,000
  • For plan years beginning on or after September 23, 2011 through September 23, 2012, the annual limits on the dollar value of benefits may not be less than $1.25 million
  • For plan years beginning on or after September 23, 2012 through January 1, 2014, the annual limits on the dollar value of benefits may not be less $2 million  

What are essential benefits?

The law includes these categories of essential benefits:

  • Prescription drugs and laboratory services
  • Rehabilitative and habilitative services and devices
  • Mental health and substance use disorder services including behavioral health treatment
  • Preventative and wellness services and chronic disease management
  • Pediatric services including dental and vision care
  • Maternity and newborn care

Future regulations will be developed to define these terms.  How these terms are defined is very important for people with disabilities.  The Arc and UCP will work to make sure that rehabilitative and habilitative services and devices definitions includes a broad listing of therapies that might needed by people with disabilities as well as durable medical equipment and other services and supports. 

Do annual limits changes apply to Flexible Spending Arrangements (FSA) or Medical Savings Accounts (MSA)?

No.   FSAs and MSAs are generally not considered group health insurance.  These programs are not affected by this provision of the Affordable Care Act. 

Do the lifetime limit changes apply to all health insurance plans?

No.  As with pre-existing exclusions, there is one exception.  Individual health insurance plans are exempted.  Individual health insurance plans are policies that individuals buy on the open insurance market (they do not include employer sponsored plans).

  

DEPENDENT COVERAGE

Many children with disabilities are covered under their parents’ health insurance plans as dependents.  One study found that over half of children with special needs were covered by employer sponsored insurance and about 30% were covered by Medicaid.  Continuing to have access to insurance for children with disabilities is critical to maintaining good health given that many have secondary medical conditions requiring medication or other treatments. 

How does the law change dependent coverage?

Dependents will now be able to continue to be covered under their parents’ health insurance plans until they turn 26. 

Why extend the age of dependent coverage?

Many young adults are uninsured.  They often do not have access to employer provided health insurance during the years they are transitioning to adulthood and starting jobs.  This is especially true for young adults with disabilities. 

Do employers have to provide family or dependent coverage?

No.  But, if they do they offer dependent coverage, they must offer coverage to enrollees’ adult children until age 26. 

Are all dependents eligible?

The term “dependent” is meant to be broad and include young adults 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.  It applies to both married and unmarried children.  (although, if a dependent is married, their spouse or children would not be eligible for coverage).  Until 2014, if a dependent has other employer sponsored coverage the parent’s plan does not have to cover them.  

Are any insurers implementing the dependent coverage changes early?

Yes.  About 65 companies are offering coverage for young adults who age off their parents’ insurance before September or the plan year.  Check with your insurance broker or your employer to see if your insurance company is offering early coverage.   

How will I know how to enroll my dependent child who is under age 26?

Parents should watch for a notice from their insurance company or benefits administrator.  Plans must provide both a notice of the benefit and at least a 30 day period to enroll. 

Will all dependents under age 26 be treated the same?

Yes.  For example, premiums and benefits for a 17-year old dependent would be no different than those for his 25-year old brother under their parents’ plan.  The plan could not charge more for the same coverage or offer different plans for these dependents.

Are there any new tax benefits for dependent coverage through age 26? 

Yes.  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.

Where can I get more information? 

http://www.hhs.gov/ociio/regulations/adult_child_faq.html

 

 

RESCISSIONS

Every year, thousands of Americans lose their health insurance when they get sick.  People with disabilities have been disproportionately affected by this harmful health insurance practice, known as a “rescission.” 

What is a rescission?

A rescission is when an insurance company voids your health plan from the start of coverage.  It usually happens usually when an insurer retroactively cancels your policy when you become sick.  Insurers often claim that you had a pre-existing condition or they find some reason to say they would not have offered coverage to you in the first place.  This can happen even if it was an unintentional mistake in the paperwork made by you or your employer. 

How does the law change rescissions?

Rescissions will be prohibited.  Insurance companies won’t be allowed to drop your coverage when you get sick except in the case of fraud or intentional misrepresentation.   The insurers must provide at least 30 days advance notice to give people time to appeal the decision. 

Will all plans be affected by the rescission changes?

Yes, both new and grandfathered plans are covered.

  

CHOICE OF DOCTORS

 How does the law protect choice of doctors?

 There are three important changes:

  1. Insurance companies cannot assign a person a primary care doctor.  The person can choose who they want within the network of providers (if that is part of the plan)
  2. Parents can choose any participating pediatrician to be their child’s primary care doctor.
  3. Plans are prohibited from requiring a referral for obstetrical or gynecological care

Do the choice of doctor changes apply to all plans?

No, grandfathered plans do not have to include these protections. 

  

ACCESS TO EMERGENCY CARE

How does the law make emergency care more accessible?

Plans will not be able to charge higher copayments or coinsurance for emergency services that are obtained out of network.  Currently many plans charge more if you have an emergency and do not get prior approval for care or go to the closest emergency room even if it is not in your plan network. 

Who decides what is an emergency?  

It is generally what “a person with average knowledge of health and medicine would think the injury or situation would, without immediate attention, cause serious harm to the person.” 

Do the new emergency care changes apply to all plans?

No, grandfathered plans do not have to include these protections.  

 

APPEALS OF DENIAL OF HEALTH INSURANCE CLAIMS

Currently there is a patchwork of protections that apply to some plans in some states.  Some types of health plans are regulated at the state level and others at the federal level and they offer varying degree of protections to consumers.  For example, a person with cerebral palsy has few recourses when he is denied coverage for a specific type of therapy that has been recommended by his doctor.  Under the new law, he will have more opportunity to appeal the health insurance company’s denial of his claim. 

What changes are made to strengthen appeal rights?

The new law requires greater consistency and puts standards in place to make the protections more uniform.  The ACA makes changes to both the internal appeal process that an individual has with their insurance company and provides for an external appeal to an independent decision maker. 

My plan already allows me to appeal a decision how is this different?

New health plans must now have an internal appeals process that meets these standards:

  • Allows consumers to appeal when a health plan denies a claim for a covered service;
  • Gives consumers detailed information about the grounds for the denial of claims;
  • Requires plans to notify consumers about their right to appeal and instructs them on how to begin the appeals process;
  • Ensures a full and fair review of the denial; and
  • Provides consumers with an expedited appeals process in urgent cases.

What is external review?

Being able to go outside the plan and have the conflict decided by an independent person.

What standards must they meet? 

These standards were established by the National Association of Insurance Commissioners (NAIC). States are encouraged to make changes in their external appeals laws to adopt these standards before July 1, 2011. The NAIC standards call for:

  • External review of plan decisions
  • Clear information
  • Expedited access to external review in some cases
  • Health plans must pay the cost of the external appeal
  • Review by an independent body
  • Emergency processes for urgent claims
  • Final decisions must be binding

If state laws don’t meet these standards, consumers in those states will be protected by comparable federal external appeals standards.

Do these changes apply to grandfathered plans?

No, they only apply to new plans. 

What is the federal government doing to help consumers understand these changes?

The new Consumer Assistance Grants program will provide nearly $30 million in new resources to help States and Territories educate consumers about their health coverage options, empower consumers, and ensure access to accurate information. Grants will be made available to support States’ efforts to establish or strengthen consumer assistance programs that provide direct services to consumers with questions or concerns regarding their health insurance. 

Summary

Many important changes to our private health insurance system are upon us.  People with disabilities stand to benefit greatly from improved access to coverage and enhanced benefits.  As direct service providers, The Arc and UCP’s chapters and affiliates should be prepared to help our constituents take advantage of the many health insurance reforms.

For additional information see: 

Health Care.Gov - section for People with Disabilities:
http://www.healthcare.gov/foryou/disabilities/index.html

Health Care.Gov - Find Insurance options (select “for people with disabilities”)
http://finder.healthcare.gov/

Office of Consumer Information and Insurance Oversight
http://www.hhs.gov/ociio/regulations/index.html

 

 



 








 

 







 


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