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A Guide to Navigating Health Care

Some of you may remember the Temptations’ hit song, “Ball of Confusion,” or maybe Prince’s “Let’s Go Crazy.” Aside from being hits, these songs’ titles also seem to sum up the way many Americans are feeling about Affordable Care Act (ACA)—confused, crazy and, perhaps, a little frustrated.

Considering the numerous delays of the cut-off date for the individual mandate, the delay of the notice of the governmental exchanges and the one-year delay of the employer mandate, it is understandable why many people are confused. Add to that the four new ACA fees that went into effect Jan. 1, and you can understand why many experts in the health insurance industry field have their heads spinning.

Regardless of your political orientation, the rules of ACA are vast and have the potential to affect a large number of people in the United States. But with all the fine details, it’s a topic that proves very confusing.

Whether you’re for or against the new legislation, the reality is the transition to ACA has been somewhat bumpy. Despite the obstacles and delays, many experts view 2014 as a key year for the program largely because several of the new ACA mandates and fees go into effect this year.

Here is a partial list of some of those key changes everyone needs to know, but that studies have shown the majority of people do not know.

Pre-Existing Conditions Eliminated

A pre-existing condition is a condition, injury or illness which was in existence prior to the start of an individual’s new coverage. Since Sept. 23, 2010, limitations on pre-existing conditions were not allowed for children under the age of 19. Beginning Jan. 1, this will now be extended to adults as well. No longer can health insurers restrict or deny benefits based on a pre-existing condition. Everyone and all conditions are to be covered from the day coverage begins.

New-Hire Waiting Periods Restricted

Benefits for full-time employees must start no later than after a 90-day waiting period following the date of hire. Previously, it was common for many companies with high turnover to have waiting periods of the first of the month following six months or first of the month following 90 days. These will no longer be allowed. A company could do first of the month following 60 days or even 30 days, but it must be no more than a 90-day waiting period in total.

Essential Health Benefits

There are 10 categories of benefits health insurers will now have to cover. They include ambulatory patient services; emergency services; hospitalization; lab services; maternity and newborn care; mental health and substance abuse treatment including behavioral health treatment; prescription drugs; preventative services and chronic disease management; pediatric services including dental and vision care to age 19; and rehabilitative care and devices.

Annual Caps Are Eliminated

For the Essential Health Benefits described above, no health insurer may impose an annual dollar cap. This has been being phased out over the last few years and eliminated as of Jan. 1.

Individual Mandate

A major part of ACA is requiring every American to be covered by health insurance either by purchasing coverage on his own, from his employer’s group plan or through a governmental program. An individual may be excused from this requirement based on financial hardship and religious objections. Failure to comply with this mandate results in a penalty in the form of a fee discussed later in this article.

Expansion of the Medicaid Program 

The state/federal program will be expanded to cover individuals whose annual incomes are 138 percent of the federal poverty level established by the federal government. For an individual person, this would be an annual income of $15,586. Many states, though, have decided not to take part in this expansion. Check to find out if your state is participating.

Cost Sharing Limits on Annual Deductible

When health insurance plans begin in 2014, deductibles for the small group market cannot exceed $2,000 for an individual and $4,000 for two or more family members being covered (for example, an employee and spouse). A small group is described as an employer group of 100 or fewer employees. Some states, such as Iowa and South Dakota, define a small group as 1-50 until 2016. It is also important to note certain health insurers were given a one-time, one-year extension to comply with these dollar limits. Some health insurers also will be allowed to have a higher deductible if the plan could not reach the actuarial value of the plan.

Cost-Sharing Limits on Out-of-Pocket Maximums

The out-of-pocket maximums include the deductible and the coinsurance amounts. Under ACA, beginning in 2014, HSA-compatible High Deductible Health Plans have a maximum cap of $6,350 for an individual and $12,700 for two or more family members being covered.

NEW Flexible Spending Account (FSA) Carryover Provision

While not directly part of ACA, it is important to point out that on Oct. 31, 2013, there was a major rule change for people involved with Flexible Spending Account plans. FSA plans always had a “use it or lose it” rule. In other words, the money put into the FSA plan account had to be utilized by the end of the plan year or the money left in the account would be forfeited. Now employers may modify their FSA plans to allow a carryover provision of up to $500 of unused money to the next plan year.

When you consider the new mandates, the new taxes and potential medical cost inflation, it is safe to say, no one is sure what will happen or how the legislation could affect insurance prices.

Fee Name Eff. Date Brief Description Fee Amount
PCORI Fee 10/1/2013 Fee to help support the Patient-Centered Outcomes Research Institute. In 2014, increased to $2 per covered member per year (exp. Family of 4 = $8 fee)
Health Insurance Fee 1/1/2014 Excise tax on the health insurance industry that will be assessed annually. It is believed carriers will pass this fee onto the insureds. Estimated at 1.5 percent to 3 percent of monthly premium
Individual Mandate Fee 1/1/2014 Penalty fee for individuals who do not obtain minimum essential coverage or do not have an exemption. $95 per adult/up to $285 per family or 1 percent of family income (whichever is greater)
Reinsurance Fee 1/1/2014 Health insurance issuers and self-funded group health plans will be required to fund transitional reinsurance program. For 2014, $63 per member per year or $5.25 a month
Risk Adjustment Fee 1/1/2014 Fee to support the Federal Risk Adjustment Program designed to distribute the risk across the individual and group insurance providers. $1 per member per year

NRHA Health Insurance Program

We have heard from the time we were children, there is safety in numbers. This is also the solution to the challenges we are facing with ACA and health care reform. Larger groups and certain types of health insurance plans have a favorable status under ACA. The NRHA Health Care Program is one of these options; many members have already realized its value.

Benefits and Safety in Numbers:
  • Flexibility ranging from plan design to the utilization of various PPO doctor networks for the benefit of you and your employees
  • Not restricted by state boundaries
  • Members’ claim portal
  • Programs in place to contain and manage
  • your costs
  • National pharmacy program which can also be customized to your specific needs
  • Compliance with mandates
Additional Benefits:
  • Dental plans available to groups as small as two employees
  • Vision plans
  • Group life insurance options
  • Disability insurance offerings

About Bill Lee

Bill Lee has been President and CEO of NRHA since 2008. Bill has held various positions during his 18 years with the organization, including Director of Marketing, Vice President of Creative Services and Publisher of Hardware Retailing magazine. As president, Bill helps guide NRHA in its mission to help hardware stores, home centers and lumberyards become better, more profitable retailers. NRHA fulfills this mission by providing retail training, communications, market research and networking opportunities for the independent home improvement market.

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