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Healthcare Reform Kicks Into Gear

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The Patient Protection and Affordable Care Act President Obama signed on March 23, 2010, set in motion a wide-ranging series of healthcare reforms. Although many of the Act's more sweeping changes won't be fully activated until 2014, several key elements already went live, effective September 23, 2010.

If you have employer-provided health insurance that runs on a calendar year, this means those new features will finally kick in on January 1, 2011, when your plan year begins. If you have individual coverage, you may have already seen the changes; and if your plan's fiscal year starts later, you'll have to wait awhile longer.

Here are a few of the more noteworthy changes:

Extended child coverage. If your medical plan offers dependent coverage, your children may now remain on -- or return to -- your plan until their 26th birthdays, regardless of where they live, or their dependent, income or marriage status. (Your children's spouses and children do not qualify, however.) You will be responsible for paying the additional premium at the plan's already established family or per-child rate.

One notable exception: If your plan is "grandfathered" (that is, already existed on March 23, 2010), the carrier has the right, until 2014, to deny such coverage if your child has other employer-sponsored coverage. However, plans lose their grandfathered status if they significantly cut benefits or increase out-of-pocket expenses, such as copayments, deductibles and premiums. You will receive notice from your insurer if your plan is grandfathered.

Pre-existing conditions for children. Medical plans can no longer deny coverage to your children under age 19 because of preexisting health conditions, unless you have an individually purchased, grandfathered plan. The same provision will go into effect for adults in 2014.

Unfortunately, some insurers have threatened to stop offering individual child policies altogether as a way to avoid having to cover seriously ill children, so double check with your carrier.

Rescinding coverage prohibited. Plans can no longer cancel coverage if you become sick or you made minor or inadvertent mistakes on your application that only later came to light. However, deliberate fraud, such as falsely claiming a dependent, can still result in cancellation.

No more lifetime limits. Non-grandfathered plans can no longer cut off benefits when you reach a lifetime maximum. In addition, annual coverage limits will begin phasing out for non-grandfathered plans. Initially, the annual limit increases to $750,000, then to $1.25 million after September 23, 2011, and $2 million after September 23, 2012. Annual limits will be completely banned starting January 1, 2014.

Important note: Several companies that offer lower-cost, limited-benefit coverage to low-wage workers who otherwise couldn't afford coverage, recently won a one-year exemption from the annual coverage limit. Check with your benefits department if you're unsure about your plan.

Free preventive care. All new plans now must cover certain preventive services such as mammograms and colonoscopies without charging deductibles, copayments or coinsurance. This provision doesn't necessarily apply to existing individual plans and grandfathered group plans. To learn more, click HERE.

New coverage for the uninsured. If you've been refused health insurance because of preexisting medical conditions, you now may be eligible to buy coverage through a new "high-risk pool" program. Although it's a federal program, many states have chosen to run their own plans, with widely varying costs and benefits. A few details:
  • You must be a U.S. citizen or legal resident.
  • You must have been without health insurance for at least six months before you can apply.
  • You must have a qualifying preexisting medical condition and show proof that an insurance company has denied or excluded coverage to you because of it.
  • Go to https://www.pcip.gov/ for information and to apply online; or call your state department of insurance. AARP also has a thorough discussion about how the program works.

New small business credit. To help offset the higher rates typically charged for employees of small businesses, employers that have fewer than 25 employees, pay average annual wages below $50,000 and provide health insurance may now qualify for tax credits worth up to 35 percent of the cost of insurance (up to 25 percent for non-profit employers) for tax years 2010 to 2013. In 2014, the credit rises to 50 percent (35 percent for non-profits). To learn more, click HERE.

These are only a few of the many healthcare changes that will unfold over the next few years. To learn more, please visit the Government's HealthCare.gov website.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

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