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.

1. 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. Let’s take quick look at some of the highlights and their current status.
3/29/2012

2. Grandfathered Health Plans
ACA includes a “grandfathering” provision for some group health plans and individual market policies that
were in effect on the date ACA became law, March 23, 2010. Grandfathering exempts plans and policies
from implementing some requirements of ACA if they don’t make significant plan changes. Blue Cross
and Blue Shield of Texas has had quite a number of groups maintain grandfathered status to date.
Early Retiree Reinsurance Program
The 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 eligible
spouses, surviving spouses and dependents. Congress appropriated $5 billion for this temporary program
that was originally scheduled to end by Jan. 1, 2014. However, in February this year, the Administration
announced that funding for the program had been depleted.
Medicare Changes
In June 2010, about 4 million seniors received Medicare prescription drug rebate checks for $250 in the
mail. The rebates were the first step in closing the Medicare Part D prescription “doughnut hole” that
leaves seniors with a gap in coverage after they have maxed out of their initial coverage, but before they
reach the catastrophic coverage level. In 2011, seniors received a 50-percent discount on brand-name
drugs. In addition, Medicare now pays for annual wellness visits and preventive services, such as breast,
colon and prostate cancer screenings.
Medical Loss Ratios
ACA’s Medical Loss Ratios (MLR) requirements went into effect in 2011, with rebates from insurers – if
any are needed – issued by Aug. 1, 2012. The calculation of rebates is based on the percentage of
premiums spent on medical expenses and quality improvement activities. If an insurer’s MLR is less than
the applicable MLR standard, the insurer must provide rebates. MLR calculations and rebates continue
annually.
Preventive Services
ACA expands coverage of preventive health services of non-grandfathered plans. Services such
asscreenings, immunizations and health counseling provided by network providers are covered at no cost
to the individual member.
Coverage of Dependent Children to Age 26
One of the first significant provisions of ACA to go into effect for all plans and policies was one that
expanded coverage for adult children in September 2010. The provision requires group health plans and
insurers that offer health insurance for dependent children to make that coverage available until the child
dependent 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 the
same level of benefits for all dependent children. Grandfathered health plans may exclude an adult child
under age 26 from coverage on the parent’s plan if the dependent is eligible for another employer-
sponsored health plan.
Appeals
ACA sets new guidelines expanding the appeals process of non-grandfathered health plans, including
what 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 ending
coverage. If the denial was based on medical necessity or experimental treatment, members can request
an “external review” by an independent third party once the internal appeal process is over. The provision
also aims to help members understand their appeals rights, outlining what and how appeals rights
information is explained to members. This provision went into effect with plan years after September
2010.

3. Essential Health Benefits
A key piece of the law’s intent to expand coverage is the provision that outlines what all health plans and
policies must include as the baseline level of coverage. These “essential” health benefits will be included
on all plans sold on the public exchanges in 2014. Until then, the law requires that plans offering essential
health benefits do so without limiting the benefits with annual dollar limits or lifetime maximums. In some
instances, the removal of limits can be done in phases, and non-grandfathered plans that do not currently
offer a benefit deemed essential will not have to add it until 2014.
No Pre-existing Condition Exclusions
One goal of ACA is to discontinue the use of pre-existing condition exclusions. Beginning in September
2010, 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 does
not apply to grandfathered plans. Beginning Jan. 1, 2014, this provision will apply to everyone. Also
beginning 2014, no coverage can exclude benefits for a specific medical condition.
Rescission
Also effective in September 2010 was the provision prohibiting retroactive rescission or cancellation of
coverage except in cases of fraud or intentional misrepresentation of material fact, or for failure to pay for
the coverage. A group health plan or health insurer must give written notice at least 30 calendar days
before 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 the
marketplace are the implementation of the Summary of Benefits and Coverage and preparation for
participating on the public exchanges.
Summary of Benefits and Coverage
Beginning Sept. 23, 2012, all insurers and group health plans must begin providing members a Summary
of Benefits and Coverage (SBC) at certain specified times. The SBC is intended tomake it easier for
consumers to understand their insurance plans.
Exchanges
Public exchanges are expected to play a key role in providing affordable, quality health coverage to more
people across the U.S. The ACA model calls for states to establish their own exchanges. For those
states 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 will
play in the health insurance industry also creates challenges and opportunities for employer-sponsored
plans 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