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The Affordable Care Act- Two Years Later

Last Friday, March 23, marked the two-year anniversary of the passage of the Affordable Care Act (ACA). While this week the Supreme Court heard arguments on challenges to the health care law, a number of ACA’s provisions are already making an impact on the business of health care and individual consumers.

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The Affordable Care Act- Two Years Later

  1. 1. The Affordable Care ActTwo Years Later Last Friday, March 23, marked the two-year anniversary of the passage of the Affordable Care Act(ACA). While this week the Supreme Court heard arguments on challenges to the health care law, anumber of ACA’s provisions are already making an impact on the business of health care andindividual consumers. Let’s take quick look at some of the highlights and their current status. 3/29/2012
  2. 2. Grandfathered Health PlansACA includes a “grandfathering” provision for some group health plans and individual market policies thatwere in effect on the date ACA became law, March 23, 2010. Grandfathering exempts plans and policiesfrom implementing some requirements of ACA if they don’t make significant plan changes. Blue Crossand Blue Shield of Texas has had quite a number of groups maintain grandfathered status to date.Early Retiree Reinsurance ProgramThe Early Retiree Reinsurance Program (ERRP) provides reimbursement to participating employment-based health plans for a large portion of the cost of health benefits for early retirees and their eligiblespouses, surviving spouses and dependents. Congress appropriated $5 billion for this temporary programthat was originally scheduled to end by Jan. 1, 2014. However, in February this year, the Administrationannounced that funding for the program had been depleted.Medicare ChangesIn June 2010, about 4 million seniors received Medicare prescription drug rebate checks for $250 in themail. The rebates were the first step in closing the Medicare Part D prescription “doughnut hole” thatleaves seniors with a gap in coverage after they have maxed out of their initial coverage, but before theyreach the catastrophic coverage level. In 2011, seniors received a 50-percent discount on brand-namedrugs. In addition, Medicare now pays for annual wellness visits and preventive services, such as breast,colon and prostate cancer screenings.Medical Loss RatiosACA’s Medical Loss Ratios (MLR) requirements went into effect in 2011, with rebates from insurers – ifany are needed – issued by Aug. 1, 2012. The calculation of rebates is based on the percentage ofpremiums spent on medical expenses and quality improvement activities. If an insurer’s MLR is less thanthe applicable MLR standard, the insurer must provide rebates. MLR calculations and rebates continueannually.Preventive ServicesACA expands coverage of preventive health services of non-grandfathered plans. Services suchasscreenings, immunizations and health counseling provided by network providers are covered at no costto the individual member.Coverage of Dependent Children to Age 26One of the first significant provisions of ACA to go into effect for all plans and policies was one thatexpanded coverage for adult children in September 2010. The provision requires group health plans andinsurers that offer health insurance for dependent children to make that coverage available until the childdependent reaches age 26. It also removes limiting factors for that coverage, such as marital status,residency, employment, student status or financial dependency, and provides consistency – requiring thesame level of benefits for all dependent children. Grandfathered health plans may exclude an adult childunder age 26 from coverage on the parent’s plan if the dependent is eligible for another employer-sponsored health plan.AppealsACA sets new guidelines expanding the appeals process of non-grandfathered health plans, includingwhat can be appealed and how many steps of appeals must be afforded members. Members of non-grandfathered plans can appeal decisions about paying claims, eligibility for coverage, or endingcoverage. If the denial was based on medical necessity or experimental treatment, members can requestan “external review” by an independent third party once the internal appeal process is over. The provisionalso aims to help members understand their appeals rights, outlining what and how appeals rightsinformation is explained to members. This provision went into effect with plan years after September2010.
  3. 3. Essential Health BenefitsA key piece of the law’s intent to expand coverage is the provision that outlines what all health plans andpolicies must include as the baseline level of coverage. These “essential” health benefits will be includedon all plans sold on the public exchanges in 2014. Until then, the law requires that plans offering essentialhealth benefits do so without limiting the benefits with annual dollar limits or lifetime maximums. In someinstances, the removal of limits can be done in phases, and non-grandfathered plans that do not currentlyoffer a benefit deemed essential will not have to add it until 2014.No Pre-existing Condition ExclusionsOne goal of ACA is to discontinue the use of pre-existing condition exclusions. Beginning in September2010, ACA prohibited denial or limitation of coverage for children due to a pre-existing medical condition.This provision currently applies to individual and family policies that offer coverage for children, but it doesnot apply to grandfathered plans. Beginning Jan. 1, 2014, this provision will apply to everyone. Alsobeginning 2014, no coverage can exclude benefits for a specific medical condition.RescissionAlso effective in September 2010 was the provision prohibiting retroactive rescission or cancellation ofcoverage except in cases of fraud or intentional misrepresentation of material fact, or for failure to pay forthe coverage. A group health plan or health insurer must give written notice at least 30 calendar daysbefore coverage may be rescinded or cancelled.Much work is still left to be done. Two of the most pressing ACA changes on the horizon for themarketplace are the implementation of the Summary of Benefits and Coverage and preparation forparticipating on the public exchanges.Summary of Benefits and CoverageBeginning Sept. 23, 2012, all insurers and group health plans must begin providing members a Summaryof Benefits and Coverage (SBC) at certain specified times. The SBC is intended tomake it easier forconsumers to understand their insurance plans.ExchangesPublic exchanges are expected to play a key role in providing affordable, quality health coverage to morepeople across the U.S. The ACA model calls for states to establish their own exchanges. For thosestates that don’t, a federal exchange will be offered to their state residents. Jan. 1, 2014, is the “go live”date for exchanges, and an intense effort is underway to be ready in time. The new role exchanges willplay in the health insurance industry also creates challenges and opportunities for employer-sponsoredplans and individual policy sales outside the exchanges. Presented by Shelly Alvarez Shelly Alvarez Insurance & Financial Svcs., PLLC 19141 Stone Oak Pkwy. Suite 104 San Antonio TX, 78258 (210) 827-8787

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