Answers about Healthcare Reform
People continue to watch the developments with healthcare reform. One thing is clear that much or most of the “Patient Protection and Affordable Care Act” (PPACA), will be enacted though interpretation of the Secretary of Health & Human Services (HHS). Elections this fall and in 2012 have the potential to have a great affect on the future of healthcare. That being said, the following may have an impact on you:
As of September 23, under Healthcare Reform children up to age 26 can be covered by their parent’s health insurance plan. Importantly: Illinois has a similar law which is currently in effect. So please know – you may be able to insure your dependent children up to age 26 (30 if they are in the military) on your health plan. The exception may be for self funded groups and group plans in existence prior to 3/23/10 that may exclude working adult children who have access to insurance through another employee sponsored group plan (such as coverage through their own job).
It is noteworthy that a major Illinois insurance company, is not allowing clients to downgrade their coverage to a different plan. In addition, applications to add dependents were held for several weeks, requesting clarification on issues regarding Healthcare Reform from HHS. Therefore, as an unintended effect, there will be limitations in an insured person’s options due to Healthcare Reform and many more delays due to insurance companies asking for clarifications. Once again, many of these situations are a direct result of a loosely written law that calls for interpretation by the Secretary of HHS.
Starting this year some businesses will get tax credits based on size and payroll. If the business has 10 or fewer employees, and they earn less than $25,000 on average, the business may qualify for a 35% tax credit. Businesses that have 25 or fewer employees with an average wage $50,000 or less may qualify for a smaller tax credit. Businesses don’t get a tax credit if they have more than 25 employees. Also, any employee who earns more than $80,000/year will be excluded. Check with your CPA.
PPACA also includes the Community Living Assistance Services and Supports (CLASS) provisions has recognized the need for long term care protection (LTC). It appears that in 2012 (or 2013), employers will be required to automatically enroll their employees in the Class Act unless the employee opts out. Employees will pay a monthly premium, through payroll deduction. While the deduction amount has yet been determined, it appears it will be around $200.00 - $250.00 monthly. Employees will be covered on a guaranteed-issue basis. Benefits can begin to be paid for their long-term care needs after the employee pays premiums for the first 60 months. (that’s right – benefits could start upon qualification in 2017 [or 2018]) A lifetime cash benefit may also become available. The benefits are expected to average about $75/day or more than $27,000 per year and is payable as long as the claimant remains disabled. Importantly: Enrollees will be offered coverage through their employers and will be automatically covered unless they opt out. At this time, it appears to this writer that healthy people may be far better off buying coverage from private insurance companies.
Health insurance rate increases have been in the news. The question is whether or not they are appropriate. Rate increases is a complicated issue and the following are two components. First, people are currently having more medical services due to future uncertainties. More services now mean more insurance benefits being paid than expected. Secondly, if you were to sell their car and set a fair price, then you were told you needed to throw in 4 news tires – would you need to raise the price for which you are selling the car? This is what is happening to the insurance companies. Individual states and PPACA has mandated additional coverage such as dependant coverage and preventative care, yet the insurance companies has been chastised for filing for rate increases. The rate increase requests must be reviewed on their own merit. For those that think all insurance companies have outlandish profits, Blue Cross Blue Shield of Illinois over age 65 division had a 2% profit in 2009.