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Health Insurance Changes January 1, 2014

02-Mar-2013

A massive change in how health insurance is marketed is coming January 1, 2014 as mandated by the Affordable Care Act (ACA). The "final rules" are now emerging.

Initial Open Enrollment

The new ACA qualified plans will be available for an effective date of 1/1/2014. Initial open enrollment will begin October 1, 2013 and end March 31, 2014 however the last day to apply for coverage effective 1/1/2014 will be 12/15/2013. Beginning with 2014, a limited annual "Open Enrollment" period will happen between October 15th to December 7 of each year.

Important: Health insurance plans will not be available for purchase outside of "Open Enrollment" except for special circumstances.

Marketplace (Health Insurance Exchanges)

Texas will be a Federal Government run exchange since a Texas State health insurance exchange was not created by the legislature. The individual exchange will be call "Marketplace" and will be operational in Texas October 1, 2013 for the initial open enrollment period. Plans will be available outside of the "Marketplace" but the only place to receive a financial subsidy will be via applications submitted via the Marketplace program.

Essential Benefits

Each new plan will have, at a minimum, a package of ten "Essential Benefits":

  1.  Ambulatory patient services (outpatient care you get without being admitted to a hospital)
       
  2. Emergency services
       
  3. Hospitalization
       
  4. Maternity and newborn care (care before and after your baby is born)
       
  5. Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
       
  6. Prescription drugs
       
  7. Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
       
  8. Laboratory services
       
  9. Preventive and wellness services and chronic disease management
       
  10. Pediatric services

Color-Coded Plan Levels

Each plan offered will be categorized by the relative benefit level into four different color-coded levels:

  1.  Bronze
  2. Silver
  3. Gold
  4. Platinum

The "color-code" Metal Levels are based on the actuarial values of each plan. A plan that is expected to have a consumer be responsible for 40% of the healthcare costs is rated as a Bronze Plan (highest consumer contribution), 30% for a Silver Plan, 20% for a Gold Plan and 10% for a Platinum Plan (least consumer contribution).

There will also be a "Catastrophic Plan" of limited benefits and lower insurance cost for adults under age 30 and for individuals that have financial hardships and can't meet the affordable insurance cost rule.

Plan Designs / Features

Each health insurance companies will create different selections of plan features such as Doctor Co-pays, Deductible, etc. Actual plan designs are still waiting for regulatory approval. What cost-sharing features will be an important consideration on which plan to select along with the Metallic Benefit Level, Network and Price.

Network Types

There is expected to be two predominant network types offered in the Marketplace (Health Insurance Exchange).

HMO (Health Maintenance Organization): Healthcare cost are only covered "in-network" except in a medical emergency. To received treatment from a specialist, a referral is required from your assigned Primary Care Physician.

PPO (Preferred Provider Organization): Significantly better pricing if "in-network" healthcare providers are used but out-of-network coverage is available. A referral for treatment from an in-network specialist is not required.

Access / Pre-Existing Conditions / Rating Rules

One of the major changes in the health insurance marketing is the availability of insurance regardless of current health conditions and with no exclusions on treatments for pre-existing condtions. Insurance policy prices will be community based and not increased for people due to medical conditions. Health plans can be rated for age, tobacco use and family size (number of family members covered). The rate differential for age and tobacco use is limited by law.

Individual / Employer Mandate

Individuals: Nearly all U.S. Citizens and legal residents will be required to have a qualifying health insurance plan or pay a penalty via their income tax filing.

Small Employers (under 50 employees): Small employers may be able to qualify for a tax credit to off-set some of the cost of their contribution for health insurance for employees.

Large Employers (over 50 employees): Employers with the equivalent of 50 or more full-time employees will also have a financial penalty if health insurance coverage is not offered to employees. However, this requirement has been delayed one year to 1/1/2015.

Dependent Coverage

The new market rules require insurers to offer coverage to dependent children until age 26 on a parent's health plan.

Maximum Out-of-Pocket Limits

Health plans will have Federally mandated maximum out-of-pocket costs. Maximum out-of-pocket costs including co-pays, deductibles and other cost sharing will be limited to $6350 for an individual and $12,700 for a family.

High-Deductible plans will also have maximum out-of-pocket costs of $6350 for individual and $12,700 for a family.

The maximum out-of-pocket limit rule has been delay until 1/1/2015.

Price / Cost of New Plans

The expectation is that the price of the new plans will be much higher since they include more benefits and are guaranteed issued without limitations on pre-existing conditions. If you apply via the Marketplace, your actual cost can be adjusted with an advance on your health insurance income tax credit. The advance is calculated based on your current income and paid to health insurers so that your current health insurance payment is reduced. Households with incomes up to 400% of the Federal Poverty Level will be eligible for this tax credit on a sliding scale based on their income. The actual income tax credit is reconciled on your annual income tax filing.

Grandfathered?

A "Grandfathered" health plan is one that was in-force prior to the ACA law that was signed into law March 23, 2010. A policy that is "grandfathered" can be retained without change. A plan purchased since March 23, 2010 is "Ungrandfathered"  and will need to be replaced with a new "Essential Benefits" ACA compliant plan. 

Additional Information:

www.healthcare.gov/law/timeline/full.html


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