The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010 and has changed and will continue to change many aspects of the health care industry in the United States through 2018 when all provisions of the law become effective. The changes apply to employers and insurers. Ultimately, all the changes will affect the general public, so everyone needs to know how this will in turn impact their health care coverage.
PPACA put in place important insurance reforms . Existing health plans and policies must satisfy specific requirements that affect coverage, eligibility, and cost-sharing to ensure a minimum level and quality of health coverage. Insurers must conform to new consumer protection requirements including guaranteed availability and renewability of coverage, review and disclosure of rate increases, and medical loss ratio standards. PPACA changed the definition of a child to extend to age 26 for any health plan that included coverage for dependents. Beginning in 2014 no annual or lifetime limits are benefits are permitted.
Some individual plans and employer-sponsored health plans are exempt from certain requirements if they qualify as “grandfathered health plans.” This means plans that were in effect as of March 2010 do not have to meet some of PPACA’s requirements including the elimination of preexisting condition exclusions and lifetime limits, dependent coverage for adult children, and first-dollar coverage of preventive services.
PPACA provides for a shared responsibility also referred to as the Employer and Individual Mandate. Employers must provide health coverage and individuals must obtain health coverage for themselves and their families. Effective in 2014, individuals are assessed a tax penalty (with some exceptions) if they do not maintain a certain minimum level of health insurance. Starting in 2015, employers may be assessed a tax penalty if they do not provide coverage meeting specified standards to full-time employees.
Beginning in January of 2014 all states offer online Exchanges/Marketplaces to make it easier for individuals to obtain coverage and some individuals may receive subsidies to help pay for the coverage. Employers and insurers must adopt PPACA’s new administrative and reporting requirements. This includes annual distribution of a summary of benefits and coverage to help consumers compare coverages and costs; enhanced claims and appeals standards; W-2 reporting of the value of health coverage, and automatic enrollment.
PPACA placed a $2,500 (indexed annually) cap on the contribution an employee may make to a Medical Flexible Spending Account (MFSA; however, because of the cap the IRS has since made it possible for individuals to carry forward up to $500 from one plan year to the next. Under PPACA certain over-the-counter drugs may only be reimbursed through a tax-favored type account with a prescription.
PPACA has put in place new enforcement rules with respect to HIPAA’s portability and security rules to provide better coordination of patient records in the health care industry while also assuring tighter security over protected health information.
PPACA changes will continue to be implemented from now until 2018, and the Learning Center will keep you up-to-date on when they go into effect and how they will affect you.
This article is intended to provide accurate and authoritative information on the subject matter covered. It is distributed with the understanding that FBMC is not rendering professional or medical advice and assumes no liability in connection with its use.