Part 3

September 24, 2010 is exactly six months after the federal health insurance reform legislation was passed. There are many provisions in the law that will take affect at this time. Many of these provisions will undoubtedly increase health insurance premiums for all Utahans. There are many provisions so I will get right to it: 

Six Months from Enactment
Varying Health Plan Rules Based on Salary:  The law now requires all group health plans to comply with the Internal Revenue Section 105(h) rules that prohibit discrimination in favor of highly compensated individuals.  This provision starts either plan years beginning on or after six months after date of enactment (September 24, 2010), or six months from the date of enactment. However, grandfathered status applies.  So if you have a highly compensated employee and want to pay more for their benefits than a lay employee–forget it–it is not allowed.  

Lifetime Benefit Limits:  The law now prohibits lifetime limits on the dollar value of benefits for any participant or beneficiary, for fully-insured and self-insured group and individual health plans including health plans with grandfathered status.  This provision starts plan years beginning on or after six months after date of enactment (September 2010).  This provision will increase premiums on just about every plan.  Most health insurance plans have a lifetime maximum benefit of $2 Million/person.  The feds now mandate that insurers have to pay an unlimited amount of benefits for the lifetime of the policy–ouch.  

Annual Benefit Limits: The law now requires the annual benefit limits on coverage would be limited to DHHS-defined non-essential benefits for plan years beginning prior to January 1, 2014, for fully-insured group and self-insured group and individual health plans, including health plans with grandfathered status (Annual limits would be prohibited entirely for subsequent plan years.).  Some plans (not all) have annual benefit limits on certain services.  Those annual limits will be restricted initially and then in 2014 they will be eliminated.  This is yet another provision that will increase the cost of your health insurance policy. 

Mom, I'm moving in...

Increased Dependent Coverage: The law now requires increases the age of a dependent for health plan coverage to up to age 26.  This is not new for Utah since we already allow dependents to stay on a parent’s plan up to age 26.  The difference is that dependents can be married and the group health insurance income tax exclusion (future article I will explain this) would apply to value of the benefits provided for these dependents for fully-insured and self-insured group and individual health plans, including health plans with grandfathered status.  If the “dependents” have the option of group coverage with their employer–they will not be able to go on their parent’s plan.  

What I don’t understand is how you are still considered a dependent of your parents if you are married–gives a whole new meaning to the term ”boomerang kids”.  I know my wife would not be happy if I stayed on my parents plan.  She would tell me to cut the umbilical cord already! 

Coverage for Preventative Care: The law now mandates coverage of specific preventive services with no cost sharing for fully-insured group and self-insured group and individual health plans.  The services that must be covered at minimum include: 

• Evidence-based items or services with a rating of `A’ or `B’ in the current recommendations of the United States Preventive Services Task Force;
• Immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved;
• For infants, children, and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration.
• For women, additional preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration.
• For women, the recommendations issued by the United States Preventive Service Task Force regarding breast cancer screening, mammography, and prevention shall be considered the most current other than those issued in or around November 2009.

The reality is that you can buy health insurance plans in just about every market in the USA that offers these preventative benefits.  Currently, you can also buy plans that do not cover preventative benefits.  Once this provision takes effect, you will only be able to purchase a policy that covers preventative care with no cost sharing (no deductibles, coinsurance, copays, etc…)  This provision will increase the health insurance premiums for most Americans. 

ER Coverage

Coverage of Emergency Services: The law now mandates coverage of emergency services paid at the in-network level regardless of provider.  This provision makes sense but insurance carriers should already be doing this.  This provision may attribute to increased cost of your health insurance premiums. 

Preexisting Condition Coverage for Children: The law now requires to insure preexisting conditions for children 19 and under for all group and individual health plans, including self-insured plans.  In other words children 19 and under cannot be denied health insurance coverage for health conditions.  This is called guarantee issue coverage an is a prelude to what will apply to all Americans in 2014.  This provision sounds great on the surface but the reality is that it will increase the cost of health insurance dramatically, especially for individual plans.  Eventually (2014) this law will prohibit medical underwriting on anyone and that is when health insurance ceases to be health insurance and it will truly become socialized because insurance companies will not be able to rate policies based on risk of the individual.  It’s the same idea as not allowing a bank to ask for employment info, past pay stubs, verification of income and assets to get a loan.  Isn’t it that type of reckless lending that lead to the financial crisis? I digress…cross your fingers this law doesn’t crash the health insurance system! 

Going Broke!

There are two possible outcomes from the majority of these health insurance provisions: further increases in health insurance premiums and/or health care rationing.  As always, my goal is to make sure my clients are informed and prepared.  I will continue to make sure my clients understand their options and are on the best plans at the best price.  If you have any questions or comments please let me know.  Don’t for get to visit my web site at www.uthealthplans.com.  Check out my vlog on this subject below.