Health Care Reform After The Supreme Court Ruling – A Consumer’s Guide

By Mary Agnes Carey, KHN Staff Writer– The Supreme Court Thursday, 28 June 2012, upheld the 2010 federal health care reform law, dismissing the challenge by states to the law’s requirement that individuals get insurance.

The justices, however, did give states the right to opt out of a critical provision requiring them to expand Medicaid programs for the poor and disabled.

The decision will have sweeping ramifications for consumers, state officials, employers and health care providers, including hospitals and doctors.

While some of the key features don’t kick in until 2014, the still-controversial law has already altered the health care industry and established a number of consumer benefits.

Here’s an FAQ about some of the health care law’s provisions that are already up and running as well as major features of what’s to come.

Q. I don’t have health insurance. Under the law, will I have to buy it and what happens if I don’t?

A. Right now, you are not required to have health insurance.

But beginning in 2014, most people will have to have it or pay a fine. For individuals, the penalty would start at $95 a year, or up to 1% of income, whichever is greater, and rise to $695, or 2.5% of income, by 2016.

For families the penalty would be $2,085 or 2.5% of household income, whichever is greater by 2016 and beyond. The requirement to have coverage can be waived for several reasons, including financial hardship or religious beliefs.

Millions of additional people will qualify for Medicaid or federal subsidies to buy insurance under the law.

Q. I get my health care coverage at work and I’d like to keep my current plan. Will I be able to do that? How will my plan be affected by the health care law?

A. If you get insurance through your job, it is likely to stay that way. But, just as before the law was passed, your employer is not obligated to keep the current plan and may change premiums, deductibles, co-pays and network coverage.

You may have seen some law-related changes already. For example, most plans now ban lifetime coverage limits and include a guarantee that an adult child up to age 26 who can’t get health insurance at a job can stay on her parents’ health plan.

Q. What are some other parts of the law that are now in place?

A. You are likely to be eligible for preventive services with no out-of-pocket costs, such as breast cancer screenings and cholesterol tests.

Health plans can’t cancel your coverage once you get sick – a practice known as “rescission” – unless you committed fraud when you applied for coverage.

Children with pre-existing conditions cannot be denied coverage. This will apply to adults in 2014.

Insurers will have to provide rebates to consumers if they spend less than 80 to 85% of premium dollars on medical care.

Some existing plans, if they haven’t changed significantly since passage of the law, do not have to abide by certain parts of the health care law. For example, these “grandfathered” plans can still charge beneficiaries part of the cost for preventive services.

If you’re currently in one of these plans, and your employer makes significant changes, such as raising your out-of-pocket costs, the plan would then have to abide by all aspects of the health care law.

Q. I want health insurance but I can’t afford it. What will I do?

A. Depending on your income, you might be eligible for Medicaid. Currently, in most states nonelderly adults without minor children don’t qualify for Medicaid.

But beginning in 2014, the federal government is offering to pay the cost of an expansion in the programs so that anyone with an income at or lower than 133% of the federal poverty level, (which based on current guidelines would be $14,856 for an individual or $30,656 for a family of four) will be eligible for Medicaid.

The Supreme Court said that states cannot be forced to make that change.

What if I make too much money for Medicaid but still can’t afford to buy insurance?

You might be eligible for government subsidies to help you pay for private insurance sold in the state-based insurance marketplaces, called exchanges, slated

No one can be refused health care insurance for a pre-existing condition.

to begin operation in 2014. Exchanges will sell insurance plans to individuals and small businesses.

These premium subsidies will be available for individuals and families with incomes between 133% and 400% of the poverty level, or $14,856 to $44,680 for individuals and $30,656 to $92,200 for a family of four (based on current poverty guidelines).

Q. Will it be easier for me to get health care coverage even if I have health problems?

A. Insurers will be barred from rejecting applicants based on health status once the exchanges are operating in 2014.

Q. I own a small business. Will I have to buy health insurance for my workers?

A. No employer is required to provide insurance.

But starting in 2014, businesses with 50 or more employees that don’t provide health care coverage and have at least one full-time worker who receives subsidized coverage in the health insurance exchange will have to pay a fee of $2,000 per full-time employee. The firm’s first 30 workers would be excluded from the fee.

However, if you have a firm with 50 or fewer people you won’t face any penalties.

In addition, if you own a small business, the health law offers a tax credit to help cover the cost of health insurance.

Employers with 25 or fewer full-time workers who earn an average yearly salary of $50,000 or less today can get tax credits of up 35% of the cost of premiums. The credit increases to 50% in 2014.

Q. I’m over 65. How does the legislation affect seniors?

A. The law is narrowing a gap in the Medicare Part D prescription drug plan known as the “doughnut hole.”

That’s when seniors who have paid a certain initial amount in prescription costs have to pay for all of their drug costs until they spend a total of $4,700 for the year. Then the plan coverage begins again.

That coverage gap will be closed entirely by 2020. Seniors will still be responsible for 25% of their prescription drug costs.

The law also has expanded Medicare’s coverage of preventive services, such as screenings for colon, prostate and breast cancer, which are now free to beneficiaries. Medicare will also pay for an annual wellness visit to the doctor.

The health care law reduced the federal government’s payments to Medicare Advantage plans, run by private insurers as an alternative to the traditional Medicare.

Medicare Advantage costs more per beneficiary than traditional Medicare. Critics of those payment cuts say that could mean the private plans may not offer many extra benefits, such as free eyeglasses, hearing aids and gym memberships that they now provide.

Q. Will I have to pay more for my health care because of the law?

A. No one knows for sure. Even supporters of the law acknowledge its steps to control health care costs, such as incentives to coordinate care better, may take a while to show significant savings.

Opponents say the law’s additional coverage requirements will make health insurance more expensive for individuals and for the government.

That said, there are some new taxes and fees.

For example, starting in 2013, individuals with earnings above $200,000 and married couples making more than $250,000 will pay a Medicare payroll tax of 2.35%, up from the current 1.45%, on income over those thresholds. In addition, higher-income people will face a 3.8% tax on unearned income, such as dividends and interest.

Starting in 2018, the law will also impose a 40% excise tax on the portion of most employer-sponsored health coverage (excluding dental and vision) that exceeds $10,200 a year and $27,500 for families. The tax has been dubbed a “Cadillac” tax because it hits the most generous plans.

Q. Has the health care law hit some bumps in the road?

A. Some aspects have not worked out as well as its authors intended.

For example, the health care law created high-risk insurance pools to help people purchase health insurance.

But enrollment in the pools has been less than expected. As of March 31, 61,619 people had signed up for the high-risk pools, but the program, which began in June 2010, was initially expected to enroll between 200,000 to 400,000 people. The cost and the requirements have been difficult for some to meet.

For example, applicants must be uninsured for six months because of a pre-existing medical condition before they can join a pool. And because participants are sicker than the general population, the premiums are higher.

Enrollment has increased since the summer, after the premiums were lowered in some states by as much as 40% and some states stepped up advertising.

A long-term care provision of the law is dead for now.

The Community Living Assistance Services and Supports program (CLASS Act) was designed for people to buy federally guaranteed insurance that would have helped consumers eventually cover some long-term-care costs. But last fall, federal officials effectively suspended the program even before it was slated to begin, saying they could not find a way to make it work financially.

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