Frequently Asked Questions About Health Care Reform

President Obama signed into law a pair of health reform bills Congress developed over a period of 14 months. I have received many questions from Illinoisans about the new law. Here are some common questions and answers.

Table of Contents

Immediate Benefits

 

 

Health Insurance Coverage for Individuals

 

 

Individuals with Pre-Existing Conditions

 

 

Tax Credits

 

 

Small Businesses

 

 

Seniors

 

 

Fiscal Responsibility

 

 

Medicaid

 

 

Miscellaneous

 

 

Immediate Benefits

What does health insurance reform mean for me today? Will it provide any help this year?

 

The new health insurance reform law has a number of provisions that take effect this year.

 

One of the goals of the new law is to put American families and small businesses back in control of their own health care. This law strengthens the rules so that insurance companies can no longer drop you or cut off your coverage when you need it the most.

 

While some reforms will take time, here are some of the changes that may benefit you this year.

 

Within 6 months:

 

  • Health insurance plans offered through employers and new private insurance plans will no longer be able to exclude children under age 18 based on preexisting conditions.

     

  • Adult children will be able to obtain coverage on their parents' plan up to age 26 if they don't have access to employer coverage on their own.

     

  • Insurance companies will be prohibited from rescinding (cutting off) existing health insurance policies when a person gets sick. They can't take your premiums and then change the rules of the game to avoid paying for the care you need when you get sick.

     

  • Health insurers will be prohibited from imposing a lifetime limit on benefits.

     

  • Small businesses will receive tax credits (effective immediately) for up to 35 percent of the employer's contribution to toward health benefits for their employees.

     

  • New funding will make high-risk pools more accessible to people denied coverage due to preexisting conditions. (In 2014, preexisting condition exclusions will be permanently banned.)

     

When can my adult child be covered under my plan?

 

Beginning approximately October 1, 2010, all health plans, including group health insurance plans and plans purchased in the individual market, will be required to provide coverage for adult children on the parent's plan until the child turns 26 years of age.

Health Insurance Coverage for Individuals

Will I be fined if I don't have health insurance?

 

In order to make affordable health insurance available to all Americans, everyone needs to do their share. Otherwise, those with insurance will continue to pay higher prices to make up for those without insurance when those individuals get sick and go to the hospital.

 

So starting in 2014, with certain exemptions, every person in America will be required to have health insurance coverage or face a penalty. The penalty will be $95 in 2014, $325 in 2015, and $695 or up to 2.5 percent of your income in 2016 and beyond.

 

The primary exemptions are:

 

  • If your income is below the poverty level, you will not be penalized for not having insurance. (see chart below for more information on the poverty level)

     

  • If insurance would cost you more than 8% of your income, you will not be penalized for not having insurance.

     

  • If you are eligible for other hardship exemptions that may be established by the Secretary of Health and Human Services, you will not be penalized for not having insurance.

     

Persons in FamilyPoverty Level
1 $10,830
2 14,570
3 18,310
4 22,050
5 25,790
6 29,530
7 33,270
8 37,010

 

How will the new law help me to afford the cost of coverage?

 

The new law will not leave you entirely on your own to meet the insurance requirement. We have taken significant steps to ensure that insurance is affordable for lower and middle class Americans when the requirement to purchase insurance takes effect:

 

  • Tax credits will be provided to individuals and families up to 400 percent of the poverty level to help them afford coverage. Click here to see the eligibility levels.

     

  • Insurance companies will be required to put more of your premium dollars into actual benefits rather than padding their overhead costs and profit.

     

  • Denying coverage due to preexisting conditions will be prohibited and insurance companies won't be able to charge you more just because you are, or have been, sick.

     

  • Access to the Medicaid program will be expanded to provide health insurance to all Americans with incomes up to 133 percent of the poverty line. Click here to see the thresholds.

     

  • Adult children will be able to remain on their parents' health insurance plan up to the age of 26 if they don't have access to employer-provided coverage on their own.

     

  • Individuals under the age of 30 will have access to a low-cost plan that provides only catastrophic coverage.

     

Persons in FamilyPoverty LevelEligibility Level
1 $10,830 $43,320
2 14,570 58,280
3 18,310 73,240
4 22,050 88,200
5 25,790 103,160
6 29,530 118,120
7 33,270 133,080
8 37,010 148,040
For families with more than 8 persons, add $3,740 for each additional person.

 

Will I have to pay a penalty if I don't purchase health insurance for my children?

 

Yes. The requirement to purchase health insurance extends to adults and children, beginning in 2014. The same exemptions described above will be available. If a family does not obtain insurance coverage for a child, the penalty will be only half as much as it would be for an adult, and no family will be charged more than $2,250 a year.

 

Are the unemployed, students and low income persons required to purchase insurance?

 

While the requirement to purchase health insurance will apply to all Americans beginning in 2014, there are important exemptions:

 

  • If your income is below the poverty level, you will not be penalized for not having insurance.

     

  • If insurance would cost you more than 8% of your income, you will not be penalized for not having insurance.

     

  • If you are eligible for other hardship exemptions that may be established by the Secretary of Health and Human Services, you will not be penalized for not having insurance.

     

The new law will provide assistance to millions of Americans to make insurance more affordable: Click here to see how the law helps people find affordable coverage

 

Can I add my children to my insurance plan?

 

You will be able to purchase family coverage that includes your children, and adult children will be able to stay on their parents' policy until they are 26 years old if they don't have access to employer coverage on their own.

 

I currently receive health insurance from the Illinois AllKids program (which covers some children under the age of 18 and their parents). Will my children over age 18 be allowed to enroll in AllKids? What insurance options are available to my older dependents?

 

AllKids is a State of Illinois insurance program that covers dependent children up to age 18 and their parents. Health care reform does not change the age restrictions for dependent children under this program. However, other options will become available as the health reform law takes effect:

 

  • If your child has a pre-existing condition and has been denied coverage due to health status, that child will be eligible for a high-risk insurance plan that will be available by October 2010.

     

  • Beginning in 2014, insurance companies will not be allowed to deny coverage to anyone - child or adult - due to a pre-existing condition.

     

  • Beginning in 2014, everyone who does not have access to a group insurance plan, including children, will be able to purchase insurance from a exchange, with tax credits to help families below 400% of the poverty level to afford the cost of coverage. Click here for more information on eligibility levels.

     

  • The Medicaid program will be expanded to provide coverage to anyone below 133 percent of the poverty line. (see chart below for more information on the poverty level)

     

Persons in FamilyPoverty Level
1 $10,830
2 14,570
3 18,310
4 22,050
5 25,790
6 29,530
7 33,270
8 37,010

 

Individuals with Pre-Existing Conditions

I have pre-existing conditions and cannot find coverage. Does this law help me?

 

Yes. One of the most important aspects of this reform is that we will finally end the practice of insurance companies denying you coverage based on your health status.

 

It will take a few years to make all the reforms, but here's what you can expect:

 

  • By July 2010, new resources will be provided to states to allow people with pre-existing conditions to join a high-risk insurance plan.

     

  • By October 2010, insurance companies will no longer be allowed to deny coverage to children with pre-existing conditions.

     

  • By 2014, insurance companies will no longer be allowed to deny coverage to anyone based on their pre-existing conditions or health status.

     

I have pre-existing conditions and health coverage but my plan is extremely expensive. Can I drop my insurance and enroll in the high-risk insurance plan this year?

 

The high-risk insurance plan is available to persons who are without insurance and have pre-existing conditions. A condition of eligibility is that you must be without insurance for 6 months prior to enrollment in the plan. The high-risk pool is an alternative for people who have no other option in the insurance marketplace.

 

Starting in 2014, no insurance company will be able to deny you coverage because of your health status and if you purchase insurance in the health insurance exchange you will be able to switch to a new plan in an open season each year.

 

Where do I find information about enrolling in the high risk insurance plan? What insurance company will offer this plan?

 

The U.S. Department of Health and Human Services (HHS) will work with the states to develop these high-risk pools for people with pre-existing conditions. The details will be developed by HHS and the State of Illinois and released in the coming months.

 

My health insurance company sent me a letter stating they will significantly increase my premiums next year. Can the government do anything about this? Can I purchase a new health insurance plan now that won't do this to me?

 

While some of the reforms will take time to implement fully, for the first time in history insurance companies will soon be held accountable for unjustified premium increases.

 

Starting in 2011, there will be an annual review of requested increases in premiums to prevent insurance companies from increasing premiums without justification. Insurance companies will be required to disclose publicly the percentage of premiums applied to overhead costs, so that you can be certain you are getting the best value for your premium dollars. If they spend more than 20% of their premium dollars on overhead and profit, they will be required to give you a rebate. And insurance companies that raise rates arbitrarily will not be allowed to sell policies in the new insurance marketplace known as the exchange.

 

Over time, as the new exchange is put in place in 2014, insurance companies will face stronger competition and will be pressed to reduce their administrative costs if they want people's business. The exchange will make it easier for companies to market their products, which should reduce their administrative expenses. The rate reviews will pressure them to pass on the savings to consumers. And consumers will be able to vote with their feet by switching plans in an open season held every year. These steps are based on free-market principles like competition and choice and should help hold down premiums.

Tax Credits

When will the tax credits for purchasing health insurance be available?

 

Starting in 2014, tax credits will be available to individuals and families whose employers do not help out with the cost of insurance, to make their premiums more affordable.

 

Even before 2014, you may see improvements. Beginning in 2011, health insurers in the individual and small group markets will be required to spend at least 80% of premium dollars on health care services. This means that no more than 20% of your premium costs will be going to the insurance company's overhead and profit. Health plans that do not meet this standard will be required to provide rebates to their policyholders.

 

Will I be eligible for the tax credits?

 

The tax credits will be available to individuals and families with incomes between 133% and 400% of the poverty level if they do not have access to affordable employer-sponsored insurance or coverage through Medicaid or another program.

 

Specifically, the tax credit is available for individual with incomes up to $43,320 and for a family of four with up to $88,200 in income, as the following chart shows:

 

Persons in FamilyPoverty LevelEligibility Level
1 $10,830 $43,320
2 14,570 58,280
3 18,310 73,240
4 22,050 88,200
5 25,790 103,160
6 29,530 118,120
7 33,270 133,080
8 37,010 148,040
For families with more than 8 persons, add $3,740 for each additional person.

 

How much will the tax credit be?

 

The tax credit is provided on a sliding scale, depending on your income. The size of the credit is set so that the amount you have to spend on premiums for your health insurance coverage will be no more than 2% of income for those with the lowest incomes, rising to no more than 9.5% of income for those at 400% of poverty, as the following table shows:

 

Income as a Percentage
of the Poverty Level
Maximum Percentage of Income
Devoted to Insurance Premiums
Up to 133% 2%
133-150% 3 - 4%
150-200% 4 - 6.3%
200-250% 6.3 - 8.05%
250-300% 8.05 - 9.5%
300-400% 9.5%

 

Here are some examples of the maximum you will pay in premiums after you are credited with the tax credit (note: these amounts are in today's dollars and will rise with inflation between now and 2014):

 

For an individual:

 

  • If your income is less than $14,400, you will pay no more than $24 per month.
  • If your income is less than $21,600, you will pay no more than $114 per month.
  • If your income is less than $32,400, you will pay no more than $257 per month.
  • If your income is less than $43,300, you will pay no more than $343 per month.

 

For a family of four:

 

  • If your income is less than $29,300, you will pay no more than $49 per month.
  • If your income is less than $44,100, you will pay no more than $232 per month.
  • If your income is less than $66,100, you will pay no more than $524 per month.
  • If your income is less than $88,200, you will pay no more than $700 per month.

 

Also starting in 2014, there will be additional credits to help these individuals and families to afford the out-of-pocket cost sharing they will face in co-payments and deductibles.

Small Businesses

I am a small business owner. What penalties will I face if I don't offer my employees insurance?

 

The law requires that employers with more than 50 employees (counted on a full-time equivalent or "FTE" basis) provide health benefits to their full-time employees. So starting in 2014, if you have more than 50 employees and you do not offer coverage, you will be subject to a penalty (called the shared responsibility payment) if you have at least one full-time employee receiving a tax credit to help them afford their premiums.

 

The payment will be equal to $2000 per full-time employee, but the calculation will exclude the first 30 full-time employees and will not count any part-time employees.

 

EXAMPLE: So if you have 51 full-time employees and 15 part-time employees throughout the year, and one full-time employee is receiving a tax credit to help them buy health insurance, your business will have to pay:

 

  51 (the number of full time employees)
- 30 (the first 30 employees are excluded)
  21 x $ 2,000 = $ 42,000

 

In recognition that payrolls rise and fall from month to month, all calculations will be made on a monthly basis using a payment of 1/12 of $2,000. Also, employers will be allowed to impose a 90-day waiting period before health benefits are provided.

 

Why are employers with more than 50 employees required to make these payments?

 

For too long, those who had health insurance bore an unfair burden in higher premiums to subsidize those without health insurance. The new health reform law breaks that pattern and is based on the principle of shared responsibility. The law is built on the premise that employers with more than 50 employees should provide health benefits to their full-time employees if the alternative is that taxpayers will have to subsidize those workers so that they can obtain affordable coverage in the exchange.

 

How much of a tax credit will I receive if I provide health insurance to my employees?

 

Starting right now in 2010, many small businesses are eligible for a tax credit of up to 35% of the premiums if they choose to offer health insurance to their employees. The full credit is available to businesses with 10 or fewer employees with average annual wages of $25,000 or less. Reduced credits are available above those limits, and the credit is phased out when the business reaches 25 employees and average annual wages of $50,000.

 

Once the exchange is up and running in 2014, tax credits will be available for two additional years. In those years, the credit will be available for up to 50 percent of the premiums paid.

 

Senator Durbin first introduced legislation in 2004 to provide tax credits to small businesses that offer health benefits, and he worked to ensure that this assistance was available to small businesses in the health reform bill.

 

How much of the health insurance costs do I have to cover in order to be eligible for the small business tax credit?

 

To be eligible for the tax credit, the employer must contribute at least 50 percent of the total premium cost.

 

EXAMPLE: Your business employs 6 people with average annual wages of $24,000. Health insurance premiums for these employees total $40,000 per year and you contribute half of that amount ($20,000.) You would qualify for the full 35% tax credit, or $7,000 per year.

 

Do I have to provide both full-time and part-time employees with health insurance?

 

While employers are encouraged to cover part-time workers, the penalty for not providing health insurance to your employees only applies to full-time employees and only applies to employers with more than 50 full-time equivalent employees.

 

How does the legislation define a full-time employee?

 

A full-time employee is an employee who is employed on average at least 30 hours per week.

 

I have more than 50 seasonal employees at certain times of the year. Am I required to provide them with health insurance during the months they work for me? If so, do I have to cover them all year?

 

The new law includes an exclusion for certain businesses that have seasonal employees. Unless the employer is eligible for this exclusion, the employer is subject to a penalty beginning in 2014. Click here for more information about the penalty

 

The exclusion is as follows: an employer is not considered to employ more than 50 employees if

 

  • the employer's workforce exceeds 50 full-time employees for no more than 120 days during the calendar year, and

     

  • the employees that exceeded the 50 employee threshold during that 120-day period were seasonal workers.

     

All calculations are made on a monthly basis, so an employer is not responsible to provide health insurance benefits or pay penalties for workers in months they do not work.

 

I would like to provide coverage if I can afford it. Will it be any easier to find affordable coverage than it is today?

 

Yes. The new health insurance exchange will have a special section specifically for small businesses. It is called SHOP, the Small Business Health Options Program, and it was created by Senator Durbin in bipartisan legislation he introduced in 2008.

 

Starting in 2014, it will allow small employers and their employees to choose from a range of health plans that compete for your business in an open market called the exchange. Prices should be more competitive because of the exchange, and you should have more choices - including new multi-state plans offered exclusively through the exchange.

 

Even before 2014, you may see improvements. Beginning in 2011, health insurers in the individual and small group markets will be required to spend at least 80% of premium dollars on health care, with no more than 20% of premium costs going to overhead and profit. Health plans that do not meet this standard will be required to provide rebates to their policyholders.

 

Will my employees be able to buy coverage if I cannot afford to provide it?

 

If you cannot provide coverage, your employees will be able to purchase health insurance in a new exchange - an internet-based marketplace where private health insurance plans compete in an open forum for customers. People with an income of up to 400% of the poverty level (see chart below) will be eligible for tax credits to help them afford the coverage. However, if you have more than 50 full-time equivalent employees, you will be expected to provide health insurance for your employees or pay a penalty. Click here for more information about the penalty

 

Persons in FamilyPoverty LevelEligibility Level
1 $ 10,830 $ 43,320
2 14,570 58,280
3 18,310 73,240
4 22,050 88,200
5 25,790 103,160
6 29,530 118,120
7 33,270 133,080
8 37,010 148,040
For families with more than 8 persons, add $3,740 for each additional person.

 

Seniors

Will this new law reduce my Medicare benefits?

 

No. Reform does not cut any guaranteed Medicare benefits. In fact, the new law improves your Medicare benefits.

 

Medicare beneficiaries will have access to a free yearly physical exam and free preventive care, cheaper brand-name drugs, and the closing of the Medicare prescription drug gap in coverage known as the "donut hole."

 

The new law will also strengthen Medicare in the long term, extending its solvency for nearly another full decade.

 

I am a senior on Medicare. Can I keep my supplemental insurance plan?

 

Yes. You will be able to keep your supplemental insurance plan. In addition, you will benefit from the improvements in Medicare described above.

 

Will this new law help me pay for my prescription drugs? Will this new law close the Medicare Part D donut hole?

 

Yes, this new law will help you better afford your medications.

 

This year, the new law will give a $250 rebate to all Part D enrollees who have prescription drug expenses high enough to push them into the donut hole. Beginning in 2011, the new law will give seniors in the donut hole a 50% discount on brand-name drugs. By 2020, the donut hole will be closed and seniors will have the same 75% discounts on brand-name and generic drugs in the donut hole as they have in the rest of the Part D program.

 

A typical senior who hits the donut hole will save more than $700 in 2011, and upwards of $3,000 by 2020, because of this law.

 

This will also keep seniors healthier. Right now, evidence suggests that the donut hole coverage gap reduces seniors' use of drugs prescribed by their doctors by an average of 14%, posing a real health threat to seniors who need, but simply cannot afford, essential medications.

 

Does the new law do anything to help people deal with or prepare for long-term care costs?

 

Yes, the law includes the CLASS Act (Community Living Assistance Services and Supports), which creates a new national voluntary disability insurance program.

 

Participation in the CLASS plan is entirely voluntary. If you choose to enroll, you must be working and pay premiums. If, after paying into the system for at least 5 years, you become disabled, you will qualify to receive benefits. The benefits come in the form of a flexible cash payment, which could be used for a variety of approved services and supports, like installing a wheel chair ramp or paying for a personal care attendant.

 

This is a fiscally responsible program that will help people who become disabled continue to live in their homes and communities.

 

I'm on Medicare. Are doctors still going to be willing to see me?

 

Yes. Health reform will make it easier for a doctor to take Medicare patients.

 

The new law will offer incentives for primary care doctors who provide primary care services for physicians who practice mainly in areas where there is a shortage of doctors. In addition, the health reform law will expand the number of trained doctors in our country, to help ensure that access to doctors is not a problem. Scholarships, loans, and loan repayment programs will be made available to help recruit new doctors and nurses into the medical profession -especially primary care providers.

 

The new law will make sure we are training the right kinds of doctors to meet our country's needs and provide incentives for them to better coordinate your care.

 

I have a Medicare Advantage plan. Will the new law eliminate my health plan?

 

No. Private Medicare Advantage plans will still be available under health care reform.

 

Currently, about 10% of Illinois seniors are in Medicare Advantage plans rather than in traditional Medicare. Since 2003, these plans have cost taxpayers more than traditional Medicare, because they overpay private insurance companies by an average of 14%, and in some regions of the country as much as 20%.

 

Those excess payments cost all Medicare enrollees more. In fact, a typical older couple enrolled in traditional Medicare will pay $90 extra in premiums this year to help pay for profits to the Medicare Advantage private insurance companies.

 

The new law significantly reduces these overpayments to Medicare Advantage plans by creating a new payment system for Medicare Advantage plans. The plans that are able to operate efficiently and provide extra value to their enrollees through care coordination will continue to offer a good product to their enrollees. In addition, high-quality Medicare Advantage plans will be able to earn bonus payments, which will encourage all Medicare Advantage plans to move toward higher quality and better care for their enrollees.

 

If a Medicare Advantage plan chooses to leave the market, people will have choices of other plans in their community as well as the choice of a stronger traditional fee-for-service Medicare program.

 

What about the death panels? And denying me the ability to get the treatment I need?

 

There are no death panels. There never were any death panels. Opponents of reform invented the idea to try to kill reform. Fortunately, they didn't succeed and we have a new law that will help seniors with prescription drug costs, preventive care and other health needs.

 

Decisions about your health will still be made by you, your doctor, and your family. There's nothing in the new law that will affect your decision-making about end-of-life care.

 

Earlier versions of the bill would have compensated your Medicare doctor if you wanted to have a conversation about how you might be treated. But because of the firestorm about so-called "death panels," that extra benefit was removed.

 

Some scare tactics have focused on "comparative effectiveness research" in the bill to try to claim government panels would decide what care you can get. This research is designed to help determine which treatments work and which don't, so that you and your doctor can make wise choices. The bill explicitly prohibits using this research to deny treatments or services. In reality, this research will provide your doctors with the best information on what treatments work - to make them smarter so that they can better treat your illness and help you get well.

Fiscal Responsibility

How much will health reform cost our country?

 

It will actually save the nation money. The nonpartisan Congressional Budget Office (CBO) reports that the new health reform law will reduce the deficit by more than any single measure since we balanced the federal budget under President Clinton.

 

The Congressional Budget Office estimates that the bill will cut the deficit by $143 billion over the next 10 years and by $1.2 trillion in the following decade.

 

CBO also estimates that premiums for comparable coverage will be lower under reform than they would be without reform and that individuals and families could save $500-$1,000 a year once the reforms are fully phased in.

 

All of the costs associated with specific provisions of the new law are more than covered by the overall saving. These provisions include:

 

  • Nearly $500 billion in tax credits and other assistance to lower and middle class families and small businesses, to help millions of Americans pay for coverage that is prohibitively expensive today.

     

  • Expanded access to the Medicaid program click here for more information about the Medicaid program.

     

  • Improvements in Medicare such as the closure of the prescription drug coverage gap for senior citizens (the "donut hole").

     

  • Expanded efforts to treat and prevent disease.

     

Who determined that the law will reduce the federal budget deficit?

 

The nonpartisan Congressional Budget Office (CBO) determined that the law will reduce the federal budget deficit by $143 billion over the next 10 years and by $1.2 trillion in the following decade.

 

CBO's job is to provide the Congress with objective, nonpartisan, and timely analysis of every bill and amendment. CBO is like Congress's umpire; its job is to call the balls and strikes:

 

  • CBO employees are beholden to no one - not the President, not the Speaker or Majority Leader, not the Democratic or the Republican Parties. CBO is an independent office staffed by nonpartisan professionals.

     

  • They decide how much every bill or amendment will cost, based on the best information available.

     

  • Whether we agree with them or not, Congress uses them as the final judge of the cost of every bill.

     

How are we paying for the tax credits and other new programs in this law?

 

Roughly half of the cost of the law is paid for by targeting waste, fraud, and inefficiency in Medicare and Medicaid.

 

  • The law targets wasteful spending by significantly reducing overpayments to private Medicare Advantage plans - saving taxpayers over $130 billion over the next 10 years. These are the plans that, according to the nonpartisan Medicare Payment Advisory Commission, receive payments that cost the government, on average, 14 percent more than traditional Medicare and lead to increased Medicare Part B premiums for all Medicare beneficiaries.

     

  • The law will also crack down on fraud and abuse in Medicare and Medicaid. More details are provided below.

     

  • The law will implement reforms to squeeze waste out of the system; for example, by cutting out duplicative paperwork and tests.

     

  • It will prevent dangerous hospital readmissions by ensuring that hospitals provide follow-up care that will help individuals safely get well at home after a hospital stay.

     

The new law asks the wealthiest 2 percent of Americans to make a greater contribution to the Medicare program.

 

  • The new law slightly increases the tax rate, by 0.9%, on the portion of wages and self-employment income above $200,000 for individuals and $250,000 for married couples.

     

  • It also collects a Medicare contribution on unearned income, for those with incomes above $200,000 for individuals and $250,000 for married couples. This provision broadens the tax base of the Medicare program so that it is not reliant just on people whose incomes come from wages. It will extend the life of the Medicare program by ensuring that people with incomes primarily from unearned sources pay their fair share.

     

  • In extending the financing to unearned income, the law explicitly exempts income actively earned by people running a small, closely-held business (for example, active income earned from shares in an S corporation).

     

The new law also collects additional fees from health care industries that will benefit from reform, including health insurance companies, pharmaceutical manufacturers, and medical device manufacturers.

 

The health reform law includes a fee on insurance companies that sell high-cost health insurance plans. The fee is designed to encourage smarter, more cost-effective health coverage. This new excise tax will apply only to plans with an annual premium that is above the threshold of $10,200 for single coverage and $27,500 for family coverage. The provision does not take effect until 2018, giving health plans plenty of time to become more efficient and avoid paying the tax. By targeting most expensive plans, this provision will help to slow the growth of health care costs over the long term.

 

What taxes will this law impose on middle-class Americans?

 

The new law imposes no new taxes on middle-class Americans. If your income is below $200,000 for an individual and $250,000 for a married couple, you will not see your tax rates change at all.

 

If your income is below $43,000 as an individual, or $88,000 for a family of 4, and your employer does not offer health insurance benefits, you might be eligible for a tax credit to help you purchase health insurance. Because of these tax credits, the new health reform law provides the largest middle-class tax cut for healthcare in the history of our country.

 

What is the government doing to combat fraud in the health care system?

 

Experts have estimated that up to 20 percent of Medicare spending, and a similar proportion of private healthcare spending, is lost to waste, inefficiency, fraud, and unnecessary procedures. This is the unnecessary spending that is targeted for elimination in the bill.

 

Health reform will provide new tools and resources to fight fraud.

 

  • The new law will strengthen Medicare and Medicaid's existing compliance and enforcement tools in order to reduce fraud and abuse and save billions of taxpayer dollars.

     

  • It will establish a new screening process to verify the eligibility of all health care providers and suppliers before they can receive payments. Medicare will be allowed to conduct background checks, site visits, and other enhanced oversight to weed out fraudulent providers before they start billing the program.

     

  • It will put more resources into detecting and preventing inappropriate billing by providers, with stiffer penalties for those who fraudulently bill Medicare.

     

  • The Health Care Fraud and Abuse Control Fund and the Medicaid and Medicare Integrity Programs - the government watchdog offices charged with dealing with fraud and abuse - will be given new resources.

     

  • The law also establishes new penalties for submitting false data on applications, making false claims for payment, or obstructing audits or investigations related to Medicare or Medicaid.

     

Medicaid

Does health reform eliminate the Medicaid insurance program?

 

No, the new law does not eliminate Medicaid. In fact, it strengthens the Medicaid program and makes it available to more people.

 

Health reform will expand eligibility for Medicaid to include all non-elderly Americans with incomes below 133% of poverty starting in 2014. This means that if you are a single person making less than $14,400 or a family of four making less than $29,300, you will be able to count on the broad coverage of Medicaid and the security of knowing that your out-of-pocket costs will be very limited. (see chart below for more information on eligibility levels)

 

The law also maintains the Children's Health Insurance Program (CHIP) and extends its funding at the current level for an additional two years, through 2015.

 

Persons in FamilyPoverty LevelEligibility Level
1 $10,830 $14,404
2 14,570 19,378
3 18,310 24,352
4 22,050 29,327
5 25,790 34,301
6 29,530 39,275
7 33,270 44,249
8 37,010 49,223

 

I am having difficulty finding a doctor that will take Medicaid. Will this law help?

 

Doctors are often frustrated by the low reimbursement they receive from Medicaid for the services they provide to Medicaid patients - a rate lower than reimbursement rates for Medicare patients or those with private insurance. As a result, many doctors limited their number of Medicaid patients.

 

The new law increases payments to primary care doctors in Medicaid in 2013 and 2014. The increases will bring Medicaid payment rates up the level paid by Medicare.

 

While doctors are not required to take Medicaid patients, this change will provide a greater incentive for doctors to do so.

Miscellaneous
Is the health reform bill constitutional? Can the federal government require that I have health insurance?

 

Yes, the new law is constitutional. While opponents will undoubtedly challenge it in court, they are unlikely to prevail.

 

Some who object to the new law claim that Congress lacks the authority to compel people to purchase health insurance or pay a tax or fine. If you'll forgive me for using legal talk for a moment, the law itself is very clear on this point. The individual responsibility requirement "is commercial and economic in nature, and substantially affects interstate commerce." Congress has the power to regulate interstate commerce.

 

Furthermore, Congress has the constitutional power to impose taxes and decide who will pay a tax and how much the tax will be. In this case, Congress established a fine for people who could afford to buy health insurance but choose not to. If those individuals were to get sick, they would end up in a hospital where their care would be subsidized by other taxpayers or other policyholders. That unfair burden, where those with health insurance pay more in premiums to subsidize those who are not insured, is a huge drag on the healthcare system and one of the reasons it needed to be changed. It's only fair - and constitutional - to require everyone to pay their fair share, either through insurance or a penalty.

 

Does the health reform law address tort reform?

 

The new law promotes medical liability or tort reform by providing grants to states to help them find new ways to address this problem. States can use the money for pilot programs to figure out what works and evaluate promising medical liability reform ideas. The goals are to put patient safety first, prevent medical errors, and reduce liability premiums for doctors and other health care providers.

 

What is a health insurance exchange? Why would I want to buy insurance through an exchange?

 

The new law will create state-based health insurance exchanges which are on-line marketplaces in which you can find the best private health insurance for you and your family. The exchanges will make health insurance more affordable and accessible for small businesses and individuals.

 

Today, if you want to purchase health insurance and don't have employer coverage, it is a challenging process. Similarly, small businesses have difficulty finding an affordable plan that covers the right benefits for their employees. There is little competition, it's almost impossible to compare one rate quote to another and people often feel like they don't really know what they are getting.

 

The exchange will have an online website where you can go to compare and purchase health insurance at competitive prices. Every plan will be required to show their rates and benefits, along with information about the quality of their services. You will be able to choose from several different benefit packages, all of which will include a minimum set of essential benefits.

 

You can choose a plan with a higher premium and lower out-of-pocket costs, or a plan with lower premiums but higher copayments and deductibles if you get sick. All of the plans will have a limit on out-of-pocket costs so that people will no longer be forced into bankruptcy if they have a heart attack or are involved in a serious accident.

 

To ensure that your rights are protected, state insurance commissioners will continue to enforce state laws that protect consumers, ensure the solvency of the insurance company, and provide an appeals process if you think your health plan is mistreating you.

 

Will I be able to purchase health insurance across state lines on the exchange?

 

Yes. Beginning in 2014, there will be two mechanisms for purchasing insurance across state lines:

 

  • States can join into interstate compacts to allow interstate sales while preserving their own state's consumer protections.

     

  • Private insurers will be able to create new multistate plans, like those already available to federal employees, and offer those plans in the exchange in every state.

     

Both of these approaches will increase competition and help to hold down premiums by allowing you to purchase insurance from an insurer in another state, and you'll have the benefit of keeping the important consumer protections that you might want if your insurer doesn't treat you right.

 

If everyone is required to purchase health insurance, will there be enough doctors to accommodate the increase in patients?

 

Right now, our country has a shortage of primary care doctors. These are the doctors who see you when you need a check-up or have a fever, or when your child needs a physical exam for a school sport.

 

Primary care doctors are often frustrated by the low reimbursement they receive for the services they provide. They aren't paid as well as surgeons or some other specialties, and fewer medical school students choose to go into primary care.

 

The new health reform law will encourage more medical students to become primary care doctors by offering incentives to those physicians who provide primary care services to Medicare patients and those who predominantly practice in areas with few primary care doctors (such as rural areas and medically underserved urban areas). Private insurance companies often model their payments after Medicare, so we expect that private insurance companies will also improve their payments to these doctors. The new law will also increase payments to primary care doctors in Medicaid.

 

We will also begin to address the shortage in the number of doctors by investing in scholarship and loan repayment programs through the National Health Service Corps to expand the health care workforce. These investments in the educational pipeline will help train the additional doctors we need.

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