Private Individual Health Insurance and the Affordable Care Act
Three years ago, the Congress passed the Affordable Care Act, signed into law by President Obama on March 23, 2010. Since then, consumers have been flooded with all kinds of information and misinformation about the sweeping changes mandated by the Affordable Care Act.
How will it affect your private health insurance? Will you gain or lose benefits? Will premiums go up or down? What's the bottom line here? To help you cut through the noise and settle on the facts, EINSURANCE presents this brief guide to how your individual health insurance may change in the future.
What Has Changed for Private Individual Health Insurance Since 2010?
The Affordable Care Act (ACA) triggered big changes in private health insurance almost immediately, putting in place new regulations designed to protect consumers and lower the cost of private insurance.
In 2010, four major changes went into effect:
- Young adults can stay on their parents' policies until the age of 26.
- Lifetime coverage caps were eliminated.
- Medicare drug prescription costs were lowered.
- Preventative care was made mandatory for new private health insurance plans.
In addition to these immediate changes, the ACA further regulated the health insurance industry by mandating that insurers must spend 80 percent of premiums on medical care (85 percent for large group plans) or return the difference to consumers in the form of reduced premiums or refunds. In 2012, the first year this regulation was made law, the industry paid almost 13 million policyholders more than $1 billion in rebates. However, as insurance companies adapt to the new law, they will in all likelihood lower their administrative costs, so that rebates do not have to be issued every year. Given that, customers shouldn’t expect a rebate every year for the rest of their lives.
Other recent changes brought about by the Affordable Care Act include standardized disclosure forms to cut through some of the confusion many consumers feel when studying their private health insurance plans.
What Changes Are Coming for Private Individual Health Insurance in 2014?
To give individuals, employers, and insurance companies time to adjust, many changes were staggered, going into effect at predetermined dates, so many major features in the ACA do not become law until January 1, 2014, especially regarding private individual health insurance policies.
On that date, the following rules and regulations will go into effect and become the law of the land:
- The individual mandate requires that everyone have health insurance or face a penalty: $95 per year for individuals; $285 per year per family or 1 percent of income, whichever is greater. The individual mandate is one of the ACA's most controversial provisions, but if you already have health insurance, it has no bearing on you. Rather, it's designed to lower premiums across the board because everyone will be in the same pool.
- On the other hand, health insurers must guarantee coverage to everyone, regardless of pre-existing conditions or gender. This provision is one of the ACA's most popular, designed to move more people onto private health insurance plans. States will be required to offer high-risk pools for people previously denied health insurance. Because insurance companies will be required to charge the same amount for every citizen, regardless of preexisting conditions, most people’s premiums are likely to rise.
- To further help you find the best private individual health insurance, every state will have an online health insurance marketplace by October 1, 2013. These marketplaces are modeled after Health Connector, the state-run Website in Massachusetts and intended to help you find the best individual healthcare plans because they will all be posted in one handy online forum.
- The ACA also makes it easier for low-income people to afford individual health insurance by providing for individual subsidies. If your income is between 100 and 400 percent of the federal poverty level, you can deduct the cost of your private health insurance from your income taxes. Your state's online marketplace will help you determine if you are qualified.
EINSURANCE has a finger on the pulse of these coming changes. Visit our Website today for free insurance quotes and more information.