Changes to Private Insurance

Temporary High-Risk Pool

A temporary national high-risk pool is established to provide health coverage to individuals with pre-existing medical conditions. U.S. citizens and legal immigrants who have a pre-existing medical condition and who have been uninsured for at least six months will be eligible to enroll in the high-risk pool and receive subsidized premiums. Premiums for the pool will be established for a standard population and
may vary by no more than 4 to 1 due to age; maximum cost-sharing will be limited to the current law
HSA limit ($5,950/individual and $11,900/family in 2010). $5 billion is appropriated to finance the program.
(Effective within 90 days of enactment until January 1, 2014)

 

Medical Loss Ratio and Premium Rate Reviews

  • Health plans are required to report the proportion of premium dollars spent on clinical services, quality,
    and other costs and provide rebates to consumers for the amount of the premium spent on clinical
    services and quality that is less than 85% for plans in the large group market and 80% for plans in the
    individual and small group markets. (Requirement is to report medical loss ratio effective plan year 2010; requirement to provide rebates effective January 1, 2011)

  • A process for reviewing increases in health plan premiums is established and health plans must justify increases. Require states are required to report on trends in premium increases and recommend whether certain plan should be excluded from the Exchange based on unjustified premium increases. Provide Grants are provided to states to support efforts to review and approve premium increases. (Effective beginning plan year 2010)

Administrative Simplification

Standards for financial and administrative transactions are adopted to promote administrative simplification.
(Effective dates vary)

Dependent Coverage

Provide dependent coverage for children up to age 26 for all individual and group policies. (Effective six
months following enactment)

Insurance Market Rules

  • Individual and group health plans are prohibited from placing lifetime limits on the dollar value of coverage and prohibit insurers are prohibited from rescinding coverage except in cases of fraud. Pre-existing condition exclusions for children are prohibited. (Effective six months following enactment) Beginning in January 2014, prohibit individual and group health plans are prohibited from placing annual limits on the dollar value of coverage. Prior to January 2014, plans may only impose annual limits on coverage as determined by the Secretary.
  • Existing individual and group plans may be grandfathered with respect to new benefit standards, but require these grandfathered plans to extend dependent coverage to adult children up to age 26 and prohibit rescissions of coverage. Grandfathered group plans are required to eliminate lifetime limits on coverage and beginning in 2014, eliminate annual limits on coverage. Prior to 2014, grandfathered group plans may only impose annual limits as determined by the Secretary. Require grandfathered group plans to eliminate pre-existing condition exclusions for children within six months of enactment and by 2014 for adults, and eliminate waiting periods for coverage of greater than 90 days by 2014. (Effective six months following enactment, except where otherwise specified)
  • The same insurance market regulations relating to guarantee issue, premium rating, and prohibitions on pre-existing condition exclusions in the individual market, in the Exchange, and in the small group market are imposed.(See new rating and market rules in Creation of insurance pooling mechanism.) (Effective January 1, 2014)
  • Require all new policies (except stand-alone dental, vision, and long-term care insurance plans),
    including those offered through the Exchanges and those offered outside of the Exchanges must comply
    with one of the four benefit categories. Existing individual and employer-sponsored plans do not have to
    meet the new benefit standards. (See description of benefit categories in Creation of insurance pooling
    mechanism.) (Effective January 1, 2014)
  • Deductibles for health plans in the small group market are limited to $2,000 for individuals and $4,000
    for families unless contributions are offered that offset deductible amounts above these limits. This
    deductible limit will not affect the actuarial value of any plans. (Effective January 1, 2014)
  • Waiting periods for any coverage is limited to 90 days. (Effective January 1, 2014)
  • A temporary reinsurance program is created to collect payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals.
  • The reinsurance program is financed through mandatory contributions by health insurers totaling $25
    billion over three years. (Effective January 1, 2014 through December 2016)
  • States have the option of merging the individual and small group markets. (Effective January 1, 2014)

 

Consumer Protections

  • An internet website is established to help residents identify health coverage options (effective July 1, 2010) and develop a standard format for presenting information on coverage options (effective 60 days
    following enactment).
  • Standards are being developed for insurers to use in providing information on benefits and coverage. (Standards developed within 12 months following enactment; insurer must comply with standards within 24 months following enactment)

 

Health Care Choice Compacts and National Plans

States are permitted to form health care choice compacts and allow insurers to sell policies in any state
participating in the compact. Insurers selling policies through a compact would only be subject to
the laws and regulations of the state where the policy is written or issued, except for rules pertaining
to market conduct, unfair trade practices, network adequacy, and consumer protections. Compacts
may only be approved if it is determined that the compact will provide coverage that is at least as
comprehensive and affordable as coverage provided through the state Exchanges. (Regulations issued
by July 1, 2013, compacts may not take effect before January 1, 2016).

 

Health Insurance Administration

The Health Insurance Reform Implementation Fund is established within the Department of Health and
Human Services and allocate $1 billion to implement health reform policies.

 



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