Obamacare: What’s already in effect

By John Williams

            As explained in my first article, the U.S. Supreme Court has upheld the constitutionality of the Patient Protection and Affordable Care Act (“ACA”), popularly known as Obamacare.  In the current Presidential and Congressional campaigns, the candidates are debating the merits of Obamacare and whether to repeal the law.

In the midst of this legal and political maelstrom, however, many key components of the ACA have already been implemented.  This article summarizes the provisions of the ACA which became effective in 2010, 2011, or 2012.

Young Adults

            The most popular provision currently in effect is the requirement that individual and group health insurance policies allow young adults (up to age 26) to remain covered as dependents on their parents’ policies.  The overall goal of the ACA is to ensure that everyone in America has health insurance coverage.  Young adults frequently do not buy health insurance policies because they cannot afford the premiums or think they don’t need health insurance.  Allowing them to remain covered on their parents’ policies up to age 26 is a good way to ensure that a large group of young adults have health insurance.  This section of the ACA applies to all insurance plans which took effect or were renewed after September 23, 2010.

Prohibition of Restrictive Insurance Provisions

            The ACA prohibits insurance companies from utilizing certain restrictive measures which deny insurance coverage to people that need coverage the most.  Beginning with policies issued or renewed after September 23, 2010, a health insurance plan shall not:

1)        Place a lifetime limit on the amount of coverage available to an individual;

2)        Eliminate coverage for a person after the person gets sick (except in cases of fraud); or

3)        Deny coverage for a child based on a pre-existing condition.

The Department of Health and Human Services has also limited, by rule, the extent to which an insurance plan may impose annual limits on coverage for an individual.  These provisions of the ACA are intended to eliminate the most abusive practices of insurance companies in furtherance of the goal of making sure every person in America has health insurance.

If the ACA is not amended or repealed after the new Congress and the new President take office next year, insurance companies will be further prohibited (beginning in 2014) from denying coverage to adults who have a pre-existing condition.  In the interim (2010-2014), the ACA has created a temporary government-run program that allows adults who have been without coverage for at least six months to purchase insurance through a subsidized high-risk pool.

Tax Credits for Small Businesses

            The ACA allows a small employer (defined as a business with no more than 25 employees whose annual wages average $50,000 or less) to take a federal income tax credit up to 35% of the costs incurred by the business in providing health insurance for its employees.  This tax credit is intended to encourage small businesses to provide health coverage for their employees.

Preventive Care

            In an effort to promote preventive care, the ACA requires insurance plans to cover preventive services without charging a deductible or co-payment that must be paid by the patient.  The Department of Health and Human Services has issued rules specifying the preventive services that are covered by this provision of the law.  Beginning on January 1, 2011, the ACA also eliminated all cost-sharing required of patients receiving Medicare-covered preventive services.

Use of Premium Dollars by Insurance Companies

            Another important ACA provision which took effect last year requires each insurance company to report the percentage of insurance premium dollars it spent on clinical services and quality control.  If this percentage falls below 85% for large group plans or 80% for small group and individual plans on an annual basis, the company has to pay rebates to its subscribers.  This provision was intended to force insurance companies to use the bulk of premium dollars they receive from their subscribers for health care services rather than for internal administrative costs or to bolster their profits.

In all, there are 52 sections of the ACA which have already taken effect.  More detailed information about the ACA can be found at the following websites:

www.kff.org/healthreform/8061.cfm?source=QL

(website of the Kaiser Family Foundation)

www.healthcare.gov (website of the federal government)