The Affordable Care Act: Your Rights & Protections

Open enrollment has begun for the Patient Protection and Affordable Care Act, popularly known as Obamacare. New coverage and changes to existing plans will take effect January 1, 2014. Over the next few months it’s important for everyone to understand how the Affordable Care Act will affect their lives.

It’s more accurate to say that Obamacare is health insurance reform as opposed to health care reform. Once enacted the legislation will provide protections for all citizens, with the greatest impact felt by the uninsured and formerly uninsurable. New rules protect those with chronic or pre-existing conditions and prevent insurance companies from denying coverage, dropping coverage or maxing out coverage for these patients.

New Health Insurance Requirements and Provisions

Pre-existing Conditions

For all health insurance plans beginning in 2014 and moving forward, no insurance company can deny you coverage because of a pre-existing health condition. They also may not charge women higher premiums than they charge men.

Insurance for Children Under 26

Adult children under the age of 26 will be able to join, remain on, or return to a parent’s health insurance plan if dependent coverage is offered as part of that plan. Adult children are eligible even if they are married, live away from home, are employed, in school, or financially independent.

Protection Against Policy Cancellation

Insurance companies can no longer cancel your policy if you make honest mistakes when filling out documents, especially if it does not pertain to your health. Companies can still cancel policies if you intentionally file false documents or fail to pay your premiums.

Free Preventive Care

Some common tests and immunizations will be covered free of charge to help prevent illness and promote a healthier lifestyle.

Ends Lifetime and Yearly Benefit Limits

Insurance companies will no longer be able to establish annual or lifetime caps for essential health benefits. A general list of items included in essential benefits includes:

  • Prenatal, maternity and newborn care
  • Emergency services
  • Hospitalization
  • Pediatric care
  • Preventive and wellness care
  • Chronic disease management
  • Laboratory services
  • Rehabilitative services
  • Mental health and substance abuse care
  • Outpatient care

Explanation of Health Benefits

Insurance companies will be required to provide a clearly written, easy-to-read summary of their insurance plans so patients know exactly what their coverage includes.

Emergency Room Access

Insureds will have access to emergency room services regardless of their inclusion in the plan’s network and insurance companies cannot charge a higher copayment or coinsurance.

The 80/20 Rule

The 80/20 Rule requires insurance companies to spend at least 80% of the premiums they take in on health and wellness benefits. If a company doesn’t meet this target you might be eligible for a premium rebate.

Rate Review

Insurance companies must now notify you in advance and provide justification for any rate increase of 10% or more.

Right to Appeal

Insureds are guaranteed the right to appeal when an insurance company denies coverage of a claim. The company must disclose the specific reason the claim was denied and notify the insured that they have a right to appeal the decision.

Grandfathered Plan Exceptions

Certain employer-provided and individual insurance plans are grandfathered and may not offer all of the services or meet all of the requirements required by the Affordable Care Act. Generally, those plans in existence prior to or on March 23, 2010, regardless of when you joined the plan. To find out if your plan is grandfathered you can check with your employer, your plan administrator or the documents you have listing your plan benefits.

All Plans, Regardless of Grandfathered Status, Must

  • Provide coverage for adult children up to the age of 26 if the plan already offers dependent coverage
  • Hold insurance companies accountable for the 80/20 rule requiring that at least 80% of premiums paid go toward actual coverage, not administrative costs
  • End lifetime limits on coverage
  • End arbitrary cancellation of coverage
  • Provide an easy to read and understand summary of benefits

Grandfathered Employer-Sponsored Plans Do Not Have To

  • Guarantee your right to appeal a denied claim
  • Cover out-of-network emergency room care or protect your choice of physicians
  • Cover preventive care tests and screenings for free
  • Be held accountable for charging excessive or unfair premiums

Grandfathered Individual Health Insurance Plans

In addition to the exclusions granted employer-sponsored plans, providers of individual plans do not have to:

  • End annual coverage cap
  • Cover pre-existing conditions

Avenues for Acquiring Health Insurance

Beginning in 2014 most people will be required to have health insurance coverage or face a financial penalty. Medicare, Medicaid, CHIP, and employer provided health insurance benefits all provide minimum essential coverage. Anyone covered under these programs will be considered insured for the purposes of the Affordable Care Act and will not be subject to a fine.

Employer Sponsored Health Insurance

If health insurance is available through your employer you can still purchase insurance through the marketplace, though you will not be eligible for the premium subsidy unless your employer’s plan is unaffordable or it does not offer essential services.

Your employer is not required to provide you with a health insurance benefit, however, if there are 50 or more full-time equivalent employees (FTE) your employer may have to pay a shared responsibility tax beginning in 2015 if they fail to provide a health insurance benefit.

Small Business Health Insurance

Employers with fewer than 50 full time equivalent employees are not required to provide health insurance benefits to their employees and will not face a penalty in 2015. The Affordable Care Act has created the Small Business Health Options Program (SHOP) to offer small businesses with affordable options for providing health insurance for their employees. In 2016 SHOPs will be available to companies with up to 100 FTE employees.

If you plan to go this route you must offer insurance to all full-time employees, typically those who work 30 hours or more per week. Many states require that at least 70% of employees that do not have coverage through another source must agree to participate in the plan before it can be implemented. Those covered by Medicaid, Medicare, another employer-sponsored plan, the military or veteran’s programs are not included in the calculation. It’s a good idea for business owners to talk with employees to gauge interest in the benefit plan before you are too far into the process.

Self employed individuals with no other employees may not buy through the Small Business Health Options Program. Instead they should search for a plan through the Health Insurance Marketplace.

Private Insurance Plan

For those who have private insurance the Affordable Care Act will not require that you change plans to one purchased from the newly created Health Insurance Marketplace. If your plan is grandfathered you may not have all new rights and protections available to you. Review your plan and compare it to those offered in the Health Insurance Marketplace to determine if you should make a change.

Many families qualify for a financial subsidy to help pay for their health insurance premiums. To qualify for this subsidy, you must purchase your insurance coverage through the Health Insurance Marketplace. You can calculate your potential subsidy using this calculator.

Health Insurance Marketplace

Open enrollment for each state’s newly created Health Insurance Marketplace started on October 1, 2013, and will run through March 31, 2014. States had the option to create their own marketplace or default to allow the federal government to create the marketplace. Most states that did not create their own marketplace do not offer as many insurance plan providers and the reduced competition has resulted in much higher premiums for residents of some states.

Plans are rated as Bronze, Silver, Gold and Platinum with multiple insurance plans offered under each category. Your premium will be based on the plan you choose and will be affected by the state in which you live and whether you qualify for premium assistance. You can use this calculator to determine whether you qualify for premium assistance.

If you do not sign up for a health insurance plan during the open enrollment period you may be fined for failure to comply with the Affordable Care Act. The fine starts out relatively low, but increases over time. In 2014 it is 1% of your income or $95 for each adult, whichever is higher. The fee is $47.50 for each uninsured child with a cap in 2014 per family of $285. This fine does not result in any insurance coverage. You will be 100% responsible for paying for all health care costs. The fine increases in 2016 to 2.5% of income or $695 per person whichever is higher.

To avoid being fined for failure to comply with the new health care reform law make sure you have coverage from either a private insurer in the new Health Care Marketplace or one of the follow:

  • Medicare
  • Medicaid
  • CHIP - The Children’s Health Insurance Program
  • Individual private plan
  • Employer provided health insurance, including an extension of the plan through COBRA
  • Veterans health care plans
  • Tricare - Insurance for active duty and retired military, and their families
  • Plans available for Peace Corps Volunteers
  • Any other qualified plan

To find out if you are exempt from this fine or fee, check out the lists of exemptions here.

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