An easy understanding of the Affordable Care Act

Posted on August 13, 2013

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By now, we should all be familiar with the term Affordable Care Act also known as “Obamacare“. However there is a host of us that have no idea what its all about, and cannot be bothered to waddle through the technical jargon. I have therefore decided to compile a layman’s summary of how the Affordable Care Act benefits you.

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Most of this information is a brief summary, so if you need more in depth explanation, it is available at Healthcare.gov. The bottom line of this new law is that it gives you more choice and control over your own health coverage. Here are the ways the Affordable Care Act protects your rights:

  • It requires you to have minimum essential coverage: Starting Jan 1, 2014, everyone is required to have minimum essential insurance coverage or they would have to pay a fee. You will also have to pay all your health care costs. If you lose your employment insurance, you have 2 options to consider: a Marketplace plan (even if you have missed the enrollment period) or COBRA continuation coverage which allows you to keep your company health insurance for a limited time (usually 18 months) after your employment ends. However, under COBRA, you may not be able to get any of the lower cost on premiums that people get using the Marketplace. Also your employer-based insurance may have been subsidized, so you will have to also pay the part of the premium that your employer had previously contributed resulting in a much higher premium.
  • It creates the Health Insurance Marketplace: Staring October 1, 2013, individuals, families, and small businesses will have a new way to get health coverage known as the “marketplace”. Here, you will be able to compare several plans offered by various private companies and select your options based on price, benefits, quality and other parameters that are important to you. All the plans in the marketplace must offer the same set of essential health benefits which are the minimum requirements that every plan must offer. Plans are free to offer additional coverage in addition to the essential health benefits, and in the marketplace you will be able to compare these side by side. Furthermore, filling out a marketplace application can let you know if you qualify for free or low cost coverage such as Medicaid. Even though you will be unable to find out your final costs for specific plans until enrollment begins in October 1, 2013, you can get a rough estimate of costs using the Kaiser family foundation cost calculator. Open enrollment ends on March 31, 2014. Marketplace coverage starts as soon as January 1, 2014.
  • People with pre-existing health conditions are also covered: Just because you are sick doesn’t mean you deserve a higher charge for your insurance or no coverage at all. Everyone is equal according to the Affordable Care Act. The only exception is if you have been “grandfathered” in from a previous individual insurance plan (one you purchased yourself NOT through an employer). This simply means that if you were previously under a health plan that was created or purchased on or before March 23, 2010, your plan may be exempt from some of the changes required under the Affordable Care Act. However, if they make significant changes that reduce the benefits or increase costs to consumers, the plans may lose their “grandfathered” status. Therefore if you do not like the terms of your old individual plan, you can switch to a Marketplace plan during open enrollment and get coverage for your pre-existing condition.
  • It gives you an easy to understand summary of your benefits and coverage: Lets face it, there is a lot of medical jargon that makes it hard to understand the true terms of your insurance plan. With the Affordable Care Act, health plans (including plans you are already enrolled in) are required to provide you with: A short, plain-language Summary of Benefits and Coverage (SBC) &  A Uniform Glossary of terms used in health coverage and medical care. With this knowledge, you will be able to make a better comparison between your prospective health plans. The SBC also used “coverage examples”, so you can see what each plan will cover in 2 common medical situations: like diabetes care and childbirth. You may also be able to request the SBC and glossary in your native language upon request.
  • It cracks down on frivolous cancellations: The Affordable Care Act will make it illegal for companies to cancel your health insurance for honest mistakes such as: unintentionally filling a form improperly or leaving out information that has little or nothing to do with your health. However, the act does not shield people who purposely falsify information or do not pay premiums on time, but they must give you at least 30 days notice to either appeal or find new coverage before they cancel.
  • It protects your choice of doctors: Remember when you were penalized for using an emergency room out of your provider network? Well, the Affordable Care Act now allows you to use out-of-network emergency rooms without penalty or prior approval. It also give you the freedom to choose whatever physician you want from your plan provider’s network. Furthermore, it eliminates the need for a referral from your primary care provider before you can get obstetrical or gynecological (OB-GYN) care from a specialist.
  • It covers young adults: Young adults under the age of 26 may be able to get insured under their parent’s plan even if they’re: financially independent, eligible to enroll on their own employer plans, married, still in school, not living with said parent. The only exception to this grandfathered group plans, who up till 2014, don’t have to offer it if the 26 year old is eligible for job-based coverage through their own employer. As a young adult under 30, you also have several other options under this act, which include being able to purchase catastrophic plans which are policies that cover only very high medical costs and very few preventive costs.
  • It provides free preventive care: Many health plans will be required to cover certain preventive care services such as: blood pressure tests, cholesterol checks, mammograms, vaccines, colonoscopies etc. at no charge to you. This may not apply to grandfathered plans.
  • Ends lifetime and yearly dollar limits on coverage of essential health benefits: In the past, insurance companies established maximum dollar limits to what they could spend on essential health benefits for the year or for entire time you are enrolled. Under the Affordable Care Act, only policies starting before January 1, 2014 can set a yearly dollar limit of $2 million. For plans starting after January 1, 2014, there will be no yearly dollar limits. In the case of lifetime limits (aka the entire time you are enrolled), no dollar limit can be set on what is spent on essential health benefits. Note that these only apply to limits on essential health benefits only
  • It guarantees your right to appeal coverage decisions: Private insurance plans are required by law to let you know why your claim was denied, your right to dispute their decision and the availability of a Consumer Assistance Program (if your state has one). Insurance company must always review every single internal dispute or appeal. If payment is denied after dispute, the law allows you to have an external independent organization who will decide if the company insurance should pay or not. However, your rights may vary depending on the state you reside in. Some states require more than one level of internal appeal before you can get an external review. For more information, see the guide to filing an appeal.
  • It holds insurance companies accountable for cost increases: The Affordable Care Act provides two new ways to protect you from unreasonable rate increases: Rate Review and the 80/20 rule. The Rate Review process requires insurance companies (except grandfathered plans) to publicly justify any rate increase of 10% or more before raising your premium. The 80/20 Rule requires insurance companies to spend at least 80% of your premium dollar on your health care and quality improvement activities instead of administrative costs. If this requirement is not met, you will receive a rebate from your premiums in form of either: a rebate check, a reduction in future premium, or a lump sum deposited into the same account with which you paid your premium. The only exception to the 80/20 is when the insurance company has fewer than 1000 enrollees in a particular state or market.

What do you think about Obamacare/Affordable Care Act? Do you think it would be beneficial to you? or do you think it would end up being more expensive for you as a taxpayer? I would love to hear your thoughts!

P.S – You can get ready now by signing up for email or text updates about the Marketplace. You can also visit facebook.com/healthcare.gov or follow @healthcare.gov on Twitter.

 

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