Obamacare in Plain English
How it Affects Individuals and Families
by Rabeh M. A. Soofi
On June 28, 2012, the United States Supreme Court upheld the Patient Protection and Affordable Care Act (“PPACA”), first enacted by Congress and signed into law by President Obama in 2010. The Supreme Court’s ruling now affirms the myriad of positive benefits that PPACA will provide individuals and families. Under PPACA, health insurance will be more accessible and affordable for American families, and less fraught with loopholes and coverage gaps commonly used by health insurance companies to deny coverage.
That being said, the Supreme Court’s 193-page opinion and PPACA’s 900+ pages and hundreds of provisions are not exactly easy reading. To give individuals and consumers a “plain English” overview of the PPACA’s provisions, a summary of the notable highlights are below.
· High Risk Pool for Adults with Pre-Existing Conditions. PPACA makes it easier for adults who have pre-existing conditions to get affordable health insurance. It creates a “high-risk pool” which allows adults with pre-existing conditions who have been uninsured for the past 6 months to qualify for coverage.
· No More Denial of Pre-Existing Conditions for Children. PPACA prohibits insurance companies from denying health coverage to children under 19 years of age due to “pre-existing conditions” (unless in individual health insurance plans that were grandfathered in). End of Pre-Existing Conditions by 2014. After January 1, 2014, insurance companies will no longer be able to deny coverage for medical treatments based on the fact that such treatment was for “pre-existing conditions.” All Americans will be able to get coverage for pre-existing conditions.
· Expanding Healthcare Coverage for Americans
Exchanges & Rebates. Starting January 1, 2014, PPACA will establish health insurance exchanges and rebates intended to make it easier for lower and middle-class individuals to obtain affordable health insurance. Pro-Consumer Provisions
· Dropping Policyholders. PPACA now prohibits health insurance companies from dropping policyholders from coverage just for getting sick.
· Limit on Deductibles.Starting January 1, 2014, PPACA will limit how high of a deductible can be charged against policyholders under employer-sponsored plans.
· Prohibition Against Discrimination. Starting January 1, 2014, PPACA will make it unlawful for health insurance companies to discriminate against individuals seeking health care coverage based on disabilities or if they were victims of domestic abuse in the past.
· No More “Lifetime Limits” in New Policies. Most health insurance policies have “lifetime limits,” meaning that the health insurance companies give individuals a limit of how much insurance they can use under the policy over the course of their lives. PPACA makes this unlawful and prohibits insurance companies from telling policyholders they have used up the amount of insurance “for their lifetime” for essential benefits, such as hospital stays, on new policies.
· No More Annual Caps. PPACA also reduces the health insurance companies’ ability to put annual spending caps on the use of health coverage benefits. By 2014, annual spending caps will be completely prohibited.
· Appeals Process. For anyone who has ever had a health insurance company deny coverage for medical treatment, it can be a frustrating experience wrangling with the insurance company to explain why it should be covered. No more. PPACA requires insurance companies to have an appeal process for when they turn down claims under new policies, so policyholders have another avenue of being heard, other than being forced to bring a lawsuit.
· Employer-Required Insurance. Businesses with more than 50 employees must offer health insurance for their full-time employees, or be penalized $2,000 per employee.
· Preventative Care. By August 1, 2012, new health insurance plans must provide coverage for preventative care (mammograms, colonscopies, etc.) without making policyholders pay more through co-payments, deductibles, or additional charges. By 2012, all existing health insurance plans must cover preventative care and check-ups without co-payment.
Health & Safety Provisions
· Tanning Tax.PPACA created a new 10% tax on indoor tanning booths, that has already taken effect.
· Nutritional Value. PPACA requires chain restaurants with 20+ locations to provide the nutritional value of all of their foods on menus, drive-throughs, and vending machines, so it is easier for consumers to make healthier choices when ordering. These disclosures may not appear until 2013 or 2014, because the U.S. Food and Drug Administration (FDA) has to prepare regulations first.
· Healthcare.gov.PPACA will create a new website to give Americans insurance and health information.
· FDA Approval of Generic Drugs. PPACA allows the Food and Drug Administration to approve more generic drugs. The purpose of this provision was to allow more competition to presumably drive down market prices.
· Anti-Fraud Spending.More funding is set aside to detect and combat insurance fraud.
· Employer Reporting. Employers need to list the value of the benefits they provide to employees on the employers’ tax forms (W-2s).
Medicare & Medicaid
· Medicare Rebates. PPACA will increase the drug rebates that individuals can get through Medicare.
· Medicare Gap. Individuals in Medicare Gaps (Part D) are now provided with additional rebates to reimburse them for the extra money they would have to spend. The Medicare gap will be completely eliminated by 2020.
· Medicare Expanded. Medicare is expanded to extend to smaller hospitals and facilities.
· Expansion of Medicaid.Another important part of PPACA involves an expansion of Medicaid, which offers federal funding to states to assist pregnant women, children, needy families, the blind, elderly, and disabled. PPACA expands Medicaid to reach more needy individuals and families. Individual states can opt-out of that expansion, however.
· Closer Regulation of Insurance Companies
Spending Disclosures. PPACA requires health insurance companies to disclose specific information about the administrative and executive expenditures they spend money on.
· Market-Share Based Taxes on Insurance Companies. Starting January 1, 2014, PPACA will tax insurance companies based on their market-share. The more of the health insurance market they control, the more taxes they will have to pay.
· Individual Mandate. Individuals not covered by an insurance plan will be required to purchase insurance, unless they are in an exempt religious sect or in financial hardship, or they will be required to pay a tax.
· Wealthy Individuals/Families. Starting in January 1, 2013, individuals who make over $200,000 (and married couples making over $250,000) a year will pay an additional.09% in taxes.
· State Opt-Out. If states can come up with their own insurance plans that will give citizens the same level of health care at the same price as the PPACA, then those states can opt-out of PPACA.
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The above are only summaries of the notable highlights of PPACA. A full digest of the PPACA is available from the Congressional Research Service.
Although most of the focus of the political commentary about PPACA has centered on the “individual mandate,” that is but a fragment of the numerous pro-consumer provisions of PPACA, which expand healthcare coverage for Americans and close a number of loopholes commonly used by insurance companies to deny coverage. In time, the PPACA contemplates affordable and adequate healthcare for all Americans, regardless of age, prior medical conditions, or medical history.
Rabeh M. A. Soofi is an award-winning attorney in Los Angeles, California, with nearly a decade of experience, and represents individuals, families, and consumers in numerous types of lawsuits and disputes.