Understanding Health Insurance Plans Under Obamacare

Affordable Care Act

Understanding Health Insurance Plans Under Obamacare

Published on June 27, 2013

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understanding obamacareWill your current health insurance plan need to change in 2014?

When the Affordable Care Act (ACA) was signed into law, it effectively created three classes of individually purchased major medical health insurance plans:

    • Grandfathered plans: If you bought health insurance with an effective date before March 23, 2010 – when the ACA was signed into law – you have a grandfathered plan, which does not have to meet all the requirements of the law (unless the plan’s coverage has changed significantly since you purchased it).
    • Non-grandfathered plans: If you bought major medical health insurance after March 23, 2010, with coverage in effect before January 1, 2014, you have a non-grandfathered plan. These purchases took place during the transition to a federally regulated individual health insurance market. All non-grandfathered plans meet some of the new benefit standards required by the ACA, and some plans include them all. Plans that don’t meet all of the new benefit standards may need to be updated at some point in 2014.
    • New plans: If you buy insurance with an effective coverage date of January 1, 2014 or later, your plan meets all of the mandatory benefits required by ACA.

 
The table below shows how the three types of plans differ.

Mandated plan benefits

Grandfathered plans

Non-grandfathered plans

New plans

Access to lost coverage due to exceeded limits:
Those who lost coverage after exceeding a policy’s lifetime limit may re-enroll in the same plan or a comparable one.

Required

NA

NA

Lifetime coverage limits:
No lifetime dollar limits on essential benefits.

Required

Required

Required

Rescission protection:
Insurers cannot rescind coverage unless intentional fraud is committed.

Required

Required

Required

Rescission appeals:
If insurers try to rescind coverage, customers have 30 days to appeal.

Required

Required

Required

Children up to age 25:
Adults under 26 may rejoin a parent’s plan under certain circumstances.

Required

Required

Required

No annual coverage limits:
Annual dollar limits on coverage no longer apply.

Not required

Required

Required

No cost-sharing for preventive services:
Insurers are required to cover certain preventive medical services without cost sharing.

Not required

Required

Required

Community rating:
Plans are no longer priced individually, based on a person’s health.

Not required

Not required

Required

Guaranteed issue:
An individual’s application for insurance can’t be declined because of a pre-existing medical condition.

Not required

Not required

Required

Essential health benefits:
Each plan must cover health benefits in 10 categories deemed to be essential.

Not required

Not required

Required

Actuarial values:
Plans cover at least 60% of the total average annual costs an insurer expects to incur per customer.

Not required

Not required

Required

 

Changes for non-grandfathered policy holders

Although the timing is uncertain, the new health care law requires non-grandfathered plans to be updated to the new benefits standards. The table below outlines how, why, and when some people in non-grandfathered plans may need to update their coverage:

Why: Reasons you may need to change your plan Doesn’t cover all essential health benefits –
Starting in 2014, people on a non-grandfathered plan that does not cover all 10 essential health benefits may be subject to the individual
mandate tax described above.
Doesn’t meet actuarial value requirements –
Starting in 2014, all non-grandfathered plans must cover at least 60% of the total average annual costs an insurer expects to incur per
customer. If a plan doesn’t cover at least 60% of the actuarial value, it may need to be updated for policy holders to avoid the individual
mandate tax.
How: Changes may be implemented in the following ways Passive re-enrollment
– Some insurers may choose to proactively move customers to new plans that meet Affordable Care Act requirements, without requiring a
signature or active re-enrollment into a new plan.
Active re-enrollment –
Some insurers may require customers to actively opt in to a new plan, which may even include acquiring new signatures.
Active communication, non-enrollment –
If possible,some insurers may allow customers keep their existing plan, but make them aware that this plan no longer
keeps themexempt from the individual mandate tax.
When: Timing of plan changes may vary During the Initial Enrollment Period –
Some insurers may use passive re-enrollment or active re-enrollment to transition people from non-grandfathered plans to new plans between
October 1, 2013 and March 31, 2014. This 6-month initial open enrollment period has been put in place because 2014 isthe
first year that major provisions of the law go into effect.
On a plan’s renewal date/anniversary –
Some insurersmayconduct an active or passive re-enrollment when the plan is up for renewal. Adoption of
this approach may vary from insurer to insurer and from state to state, based in part upon that state’s regulations.It appears as if, in some states, a plan bought as late as December 2013 could remain in effect with 2013 benefit levels until December
2014.

 
Visit eHealth to compare plans and get affordable health insurance coverage.

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