Tuesday, March 23, 2010

How Health Care Reform Will Affect You

How will health care reform affect your family's health and finances? The very short term effects are limited, and changes are quite progressive over the next 10 years. Here is a summary of what it means to all of us.

How health care will affect your ability to get coverage

If you are now uninsured because of your health, within 6 months you will be able to get coverage until 2014 through new high risk pools, with annual out-of-pocket maximum costs of $5,950 for individuals and $11,900 for families. Starting in 2014, insurers will not be able to deny you coverage because of pre-existing conditions.

Starting in 2014, there is a new way to get coverage through "exchanges", i.e. marketplaces regulated by the government, where you can shop for the right plan. If you are already insured (privately or through your employer), you may keep your coverage, or look for a better one on an exchange.

Starting in 2014, anyone earning less than 133 percent of the poverty level (that is, in 2009, $29,327 for a family of four) may get coverage through (a better) Medicaid.

Sliding scale subsidies will be available under certain income levels (equivalent, in 2009, to $88,200 for a family of four), so that health costs will be restricted to a range of 3% to 9.5% of income.

How health care reform will compel you to obtain coverage

Starting in 2014, you must obtain coverage or pay a penalty, unless (a) you are an American Indian, (b) you have religious objections to health insurance, or (c) you would have to pay more than 8% of your income to get coverage.

In 2014, penalty will start at 1% of income (or $95, whatever is higher), and rise in 2016 to 2.5% of income (or $695, whatever is higher), but will be capped at $2,085 for families.

Starting in 2014, if you are under 30, or exempt from the obligation to obtain coverage, you may purchase a catastrophic insurance policy.

How health care reform will impact insurance plans 

Starting this year (within 6 months):
Plans will not be able to deny coverage to children with pre-existing conditions. Plans will drop lifetime limits on coverage, and  allow children until age 26 to stay on their parents’ policies. Insurers will not be able to cancel policies holders who get sick.

Starting in 2014:
insurers will not be able to deny coverage to adults to adults with pre-existing conditions. All plans will cover at least 60% of health costs, and there will be additional tiers going up to 90% - for higher premiums. Older people shall not pay more than 3 times more than younger people. Insurers will be required to pay at least 80% of premiums into health care

How health care reform will impact Medicare

Medicare will cover more preventive care. Between this year and 2020, Medicare will progressively fill the prescription drug coverage gap ("doughnut hole"). Subsidies will go down for high income earners (over 85,000 for individuals, $170,000 for families). Subsidies for Medicare Advantage plans (provided by private insurers) will go significantly down, and will result in reduced coverage or higher premiums.

How health care reform will impact Medicaid

More preventive services will be covered. Medicaid reimbursements to providers will increase to Medicare levels, in order to encourage more providers to accept Medicaid.

States will not be able to cut anybody presently covered by Medicaid until 2014 when exchanges become available, unless they have a budget shortfall. States will not be able to cut children covered by Medicaid, or by the Children’s Health Insurance Program until 2019.

How health care reform will impact abortion coverage

Health plans may offer abortion coverage, although states may prohibit it. If you receive federal subsidies, you will have to pay separate premiums to pay for abortion coverage.

How health care reform will impact your finances

It is not clear at this stage how premiums will be impacted. The bipartisan Congressional Business Office (CBO) calculates that premiums will rise by 10 to 13% through 2016, although subsidies based primarily on income will be available for many people.

Expensive group plans will get more expensive, as insurance companies will have to pay an extra 40% excise tax on them - everyone expects this tax to be passed through to employees.

Starting in 2013, flexible spending accounts will be limited to $2,500, and will not allow over-the-counter medication.

Starting in 2018, families making more than $250,000 will pay significantly more in Medicare payroll taxes, and their unearned income will be taxed by an additional 3.8% "payroll" tax.

The New York Times' health care reform model lets you can pick exactly which case you fit and shows you what impact you will see.

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