Health Insurance Reform Facts: How Virginia Insurance Agents Lower Health Costs & Track Compliance

Healthcare industry professionals and political pundits are early in the process of assessing the intended and unintended consequences of healthcare reform. One thing is certain: The Patient Protection and Affordable Care Act will radically change the landscape of healthcare in the United States. Somewhat ironically, the reform bill doesn’t directly address affordability. Most provisions focus on access to care and health insurance market reforms rather than underlying cost structures.

When do the provisions take effect? Although many of the provisions have been touted as “effective immediately”, the earliest any of the regulations become effective is September 22, 2010, or the first health insurance plan year on or after September 22, 2010. In essence, insurance companies and employers are given six months from the effective date of the law to make the changes. These generally will be effective October 1, 2010 at the earliest, and September 1, 2011 at the latest. Among the changes effective in this early stage are:

  • Preexisting condition limitations for children are eliminated.
  • Insured parents can cover their children to age 26, regardless of student status.
  • Insurance plans will be banned from imposing lifetime caps on coverage.
  • Temporary high-risk pools for adults with preexisting conditions can be established.
  • Healthcare coverage discrimination based on salary will be outlawed. Higher-wage employees (read: management) may no longer be insured under a separate plan.
  • Employers with fewer than 25 employees meeting certain criteria will be eligible for significant tax credits of up to 35% of the cost of providing coverage.
  • Private health plans will be required to offer preventive care services free to insured employees with no co-pays and no deductibles.
  • Provisions are included that help close the “donut hole” for Medicare Part D.

The more global and far-reaching provisions become effective in 2014:

  • Individuals must have coverage or are subject to a tax penalty.
  • Health Plans must not discriminate against any provider acting within the scope of his or her license. It appears this will have broad impact on the nature and financial structure of networks.
  • Employers will have to either pay-or-play. This involves complex rules that will impose fines and taxes on employers not providing coverage to employees.
  • Certain low-income employees who opt out of employer sponsored coverage must be provided with “free-choice” vouchers by the employer.

A complication to implementing the required reforms has emerged. Virginia Attorney General Kenneth T. Cuccinelli along with 13 other Attorneys General have filed suit in federal court seeking to have the law declared unconstitutional on the grounds that the Federal government can not require citizens to purchase anything- including health insurance. They also assert the law contains billions of dollars in unfunded mandates that fall to State Governments to implement and fund.

The legislation unfortunately imposes much of the regulatory and cost burden on employers without addressing the underlying causes of unsustainable increases in healthcare costs. Until the fundamental “fee for service” basis of reimbursement in American healthcare is reformed, the cost balloon is simply being squeezed by political interests while ignoring the bulge poised to explode on our children´s generation. Aging baby-boomers, a shrinking tax base bruised by the recession, and a lack of affordability reforms are contributing to a “Perfect Storm” of skyrocketing costs. Better access to care is a worthy and necessary goal, but it means little if individuals, employers and the country as a whole can´t afford it.

Benefit Consultants and Advisors will become an even more valuable resource to American business and as navigating the regulations, compliance with the law, and the cost impact on a Company´s budget will become crucial. Your benefits broker or consultant should be in frequent contact concerning the specific steps your company should take to be well-positioned for this new era in Healthcare. Contact Advanced Benefit Strategies of Virginia at (757) 536-4554 for more information.

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