Health care reform is an issue that has divided this country. It’s an issue that forces us to balance the personal freedom that defines this great nation and the social obligation of every country. Today, however, the time for debate is over. The law was passed. It was signed by the President and tested and upheld by the Supreme Court. Whether we agree with the law or not is no longer the issue. Now it’s time to maximize the benefits of this law for you, your family, and your employees and to minimize the cost.

                Whether you have insurance or not, health care reform will affect everyone. The law will have many unintended consequences so everyone needs to make smart, informed decisions. Health care reform implemented the popular stuff first. For example:

·         Health plans no longer have lifetime limits.

·         Children can stay on as dependents through age 26, age 30 in Florida.

·         Insurance companies must maintain a minimum loss ratio of 80 or 85% (if the premiums they charge are more than 15% or 20% of the claims paid, they are forced to refund the money to clients at the end of the year).

·         Insurance companies can no longer underwrite at the time of the claim, they can’t drop insured due to unintentional mistake on applications.


The affordable care act has 5 key provisions:


1.       The Mandate – Starting in 2014, the federal government will be forcing everyone to buy health insurance. If you don’t buy health insurance, the government will penalize you up to the cost of having bought the insurance.

2.       Essential Health Benefits – The government will no longer allow you to only buy the coverage you want. Starting in 2014, you will be forced to buy certain coverages whether or not you need or want them. These coverages are referred to as Essential Health Benefits. For example, you won’t be allowed to purchase a plan that excludes maternity coverage or you won’t be able to purchase only hospitalization coverage like you could before.

3.       Guaranteed Issue - Starting in October of 2013, insurance companies will not be allowed to turn you down when applying for health insurance. There will no longer be exclusions for pre-existing conditions and companies will no longer be allowed to charge higher premiums when they agree to insure unhealthy people. However, by forcing everyone to buy additional benefits they wouldn’t normally buy and forcing insurers to cover everyone regardless of health, premiums will go up dramatically. Generally, everyone not getting a government subsidy will pay more. Young people not getting a subsidy can expect to see their premiums nearly double.

4.       Subsidy – For some, the government will be helping pay for the insurance and will be absorbing future increases in premium. The mechanism used will be a refundable tax credit. Eligibility for the tax credit is a function of your household income and family size. For example, a single individual will be eligible for a tax credit if his income is $45,960 or lower. This is not only true for low income families. You can make over $100,000 and still be eligible for a credit depending on your family size. Your contribution towards the benchmark plan is determined by your household income and family size. The tax credit is the difference between your contribution and the cost of the benchmark plan. The government will be responsible for all future increases in the cost of the benchmark plan. Once the credit is determined, you can use that credit to buy any plan. If you choose to buy a lower benefit plan, your insurance may be free. If you choose a higher benefit plan, you would have to pay the difference.

5.       Standardization of plans – Insurance plans are going to be standardized. All new plans starting in 2014 will fall under one of four categories (Platinum, Gold, Silver, and Bronze).  All four plan types must include all ten of the essential health benefits.  All the plans will have copays, deductibles,  and coinsurance. The platinum plan is expected to pay 90% of all claims, the gold 80%, the silver 70%, and the bronze 60%. Therefore, the premiums should vary by about 10% between each category. The benchmark plan that the government will be using to calculate the refundable tax credit is the second lowest silver plan in your area. 

If you purchased your current health policy before March 23, 2010 and you or your carrier have not changed the coinsurance or significantly increased co-pays (more than $5 or 15% plus inflation) your policy may be eligible to be grandfathered and therefore won’t be forced to purchase the additional benefit or pay for the additional cost. However, if you choose to stay with your grandfathered plan, you will not be eligible for the government subsidy.


Michael Acosta



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