|Wisconsin State AFL-CIO|
FAQ’s about the Health Insurance Reform Act
S M A L L B U S I N E S S E S
Q: What is the small business tax credit and how do I know if I am eligible?
A: Effective January 1, 2010, tax credits are available to qualifying small businesses that offer health insurance to their employees. So if your business qualifies for a tax credit, you are eligible right now.
About 4 million small businesses will be eligible to receive tax credits if they provide insurance.
The tax credit is worth up to 35 percent of the premiums your business pays to cover its workers – 25 percent for nonprofit firms. In 2014, the value of the credit will increase to 50 percent – 35 percent for nonprofits.
Your business qualifies for the credit if you cover at least 50 percent of the cost of health care coverage for your workers, pay average annual wages below $50,000, and have less than the equivalent of 25 full-time workers (for example, a firm with fewer than 50 half-time workers would be eligible).
The size of the credit depends on your average wages and the number of employees you have. The full credit is available to firms with average wages below $25,000 and less than 10 full-time equivalent workers. It phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers. To learn more about the small business tax credit, you can also visit IRS.gov
Q: Am I required to offer insurance to my employees?
A: No. There is not a so-called “employer mandate” in the legislation.
Q: Are there small business tax increases in this new law?
A: No. In fact, small businesses get tax breaks for health insurance rather than tax increases under the law.
Q: What if my small business doesn’t offer insurance today, but I choose to start offering insurance this year. Will I be eligible for these tax credits?
A: Yes. The tax credit is designed to both support those small businesses that provide coverage today as well as those that newly offer such coverage.
Q: Can I join a pool now to lower my costs?
A: Beginning in 2014, reform will create state-based health insurance exchanges that pool small businesses and their employees, which will spark competition and give you the kind of purchasing power that big businesses enjoy today. The exchange will offer the same types of private insurance choices that the President and Members of Congress will have. Increased purchasing power and competition will make premiums more affordable. The exchange will also reduce administrative costs for your businesses and your employees, enabling them to easily and simply compare the prices, benefits, and quality of health plans.
P A R E N T S
Q: What plans are required to extend dependent coverage up to age 26?
A: The Affordable Care Act requires plans and issuers that offer dependent coverage to make the coverage available until a child reaches the age of 26. Both married and unmarried children qualify for this coverage. This rule applies to all plans in the individual market and to new employer plans. It also applies to existing employer plans unless the adult child has another offer of employer-based coverage (such as through his or her job). Beginning in 2014, children up to age 26 can stay on their parent’s employer plan even if they have another offer of coverage through an employer.
Q: I’m a young adult under the age of 26 and I’m on my parents plan now, but I’m scheduled to lose coverage soon. How can I keep my health insurance?
A: You have a number of options. First,check with your insurance company. Private health insurance companies that cover the majority of Americans have volunteered to provide coverage for young adults losing coverage as a result of graduating from college or aging out of dependent coverage on a family policy. This stop-gap coverage, in many cases, is available now. Second, watch for open enrollment. Young adults may qualify for an open enrollment period to join their parents’ family plan or policy on or after September 23, 2010. Insurers and employers are required to provide notice for this special open enrollment period. Watch for it or ask about it. Finally, expect an offer of continued enrollment for plans that begin on or after September 23, 2010. Insurers and employers that sponsor health plans will inform young adults of continued eligibility for coverage until the age of 26. Young adults and their parents need not do anything but sign up and pay for this option.
Q: I’m under the age of 26, and I used to be on my parents’ plan, but I recently lost this coverage because I graduated from college. Can I get coverage?
A: Yes. Check with your insurance company to see if they will provide that coverage to you now. If not, watch for the special open enrollment period and sign up then.
Q: Now that the regulation is published, are plans required to immediately enroll eligible young adults in their parents’ plan?
A: No. The law says that the extension of dependent coverage for children is effective for plan years beginning on or after 6 months after the enactment of the law – that means plan years beginning on or after September 23, 2010. However, the Administration has urged insurance companies and employers to prevent a gap in coverage for young adults aging off of their parents’ policy prior to this effective date. To date, over 65 insurers have volunteered to do so. You should check with your insurance company or employer to see if they are offering this coverage option.
Q: Will young adults be given a special chance to enroll after September 23, 2010?
A. Yes. For plan or policy years beginning on or after September 23, 2010, plans and issuers must give children who qualify an opportunity to enroll that continues for at least 30 days regardless of whether the plan or coverage offers an open enrollment period. This enrollment opportunity and a written notice must be provided not later than the first day of the first plan or policy year beginning on or after September 23, 2010. Some plans may provide the opportunity before September 23, 2010
Q: Will young adults have to pay more for coverage or accept a different benefit package?
A: Any qualified individual must be offered all of the benefit packages available to children who did not lose coverage because of loss of dependent status. The qualified young adult cannot be required to pay more for coverage than similarly situated individuals who did not lose coverage due to the loss of dependent status.
Q: Can plans or issuers who offer dependent coverage continue to impose limits on who qualifies based upon financial dependency, marital status, enrollment in school, residency or other factors?
A: No. Plans and issuers that offer dependent coverage must provide coverage until a child reaches the age of 26. There is one exception for group plans in existence on March 23, 2010. Those group plans may exclude adult children who are eligible to enroll in an employer-sponsored health plan, unless it is the group health plan of their parent. This exception is no longer applicable for plan years beginning on or after January 1, 2014.
Q: Are both married and unmarried young adults covered?
Q: I understand that there are tax benefits related to the extension of dependent coverage. Can you explain these benefits?
A. Under a change in tax law included in the Affordable Care Act, the value of any employer-provided health coverage for an employee's child is excluded from the employee’s income through the end of the taxable year in which the child turns 26. This tax benefit applies regardless of whether the plan or the insurer is required by law to extend health care coverage to the adult child or the plan or insurer voluntarily extends the coverage. To read IRS Guidance, go here: http://www.whitehouse.gov/sites/default/files/rss_viewer/fact_sheet_young_adult_tax_treatment.pdf
Q: When does this tax benefit go into effect?
A: The tax benefit is effective March 30, 2010. Consequently, the exclusion applies to any coverage that is provided to an adult child from that date through the end of the taxable year in which the child turns 26.
Q: How do I get my 21 year old onto my plan?
A: Six months from now, insurers will be required to permit children to stay on family policies until age 26. This applies to all plans in the individual market, new employer plans, and existing employer plans, unless your adult child has an offer of coverage through his or her employer. This requirement will take effect the next time your plan comes up for renewal. Adult children who are on their parents’ plan now but who lose that coverage when they graduate from college will have the option of rejoining their parents’ policy in the new plan year beginning 6 months from now. Those whose parents work at self-insured companies will also be eligible if they do not have an offer of employer-sponsored insurance.
Both married and unmarried dependents qualify for this dependent coverage.
Beginning in 2014, children up to age 26 can stay on their parent’s employer plan even if they have an offer of coverage through their employer.
Q: Can I now get coverage for my 6-year-old who has a pre-existing condition?
A: Yes. Effective 6 months from now it will be illegal for health insurance companies that cover children to deny coverage to your child based on a pre-existing condition. This applies to all new employer plans, new plans in the individual market, and existing employer plans.
C O N S U M E R S
Q: What consumer protections will I get this year if I buy coverage in the individual market?
A: In 6 months, insurers will be prohibited from placing lifetime limits on what they will pay for your medical care, and they can only apply restricted annual benefit limits. Insurers will no longer be able to arbitrarily cancel your insurance policy when you get sick, except in cases of fraud.
Insurance companies will be prohibited from denying coverage to children with pre-existing conditions. This applies to all new plans in the individual market.
In 6 months, all new individual market health plans must provide coverage for preventive services. Recommended prevention and vaccination services will be covered without any deductibles or copayments. They must also have a straightforward and independent appeals process so you can appeal decisions by your health insurance plan.
Beginning on January 1, 2011, insurance companies will be required to spend most of your premium dollars on your care, not on profits and overhead—75% in the individual market – and rebate any excessive overhead to enrollees.
Similarly, starting in plan year 2011, companies that sell insurance in the individual market that jack up rates will have to disclose requested premium increases publicly. If that rate increase is found to be unreasonable, the insurer may be prohibited competing for your business in the new state-based exchange that will begin operating in 2014.
Q: I have a pre-existing condition. How can I get coverage this year?
A: This year, if you have been uninsured for 6 months and have a pre-existing condition, you will gain access to health insurance that was not previously available to you. ..
A new program – known as a high-risk pool – will provide affordable insurance for Americans who are uninsured and have a pre-existing condition. This program will provide temporary protection for people with pre-existing conditions until 2014, when insurance companies can no longer deny you coverage based on your health.
Q: My insurance company wants to raise my rates. What recourse do I have?
A: For most consumers today, it is hard to figure out how to challenge a rate increase. The new health insurance reform law will create a clear pathway for consumers to hold insurance companies accountable.
In 6 months, all new health plans will be required to have implemented a clear and effective process under which policy holders can appeal coverage determinations and claims. States must also have an external appeals process to ensure a fair and objective review of coverage disputes.
Additionally, millions of dollars in grants will be made available this year to states to help create a health insurance consumer assistance office where consumers can learn how to enroll in a plan or file a complaint. There will also be a new website that will begin operating this year, which will help consumers identify and compare health coverage options. Information will be presented in a standardized, easy-to-understand format to ensure that individuals and families understand their options and purchase the right coverage for their needs.
Finally, new standards for the amount an insurance company must pay out in benefits as opposed to profits and administrative expenses will go into effect in 2011. Insurance companies will be required to give money back to consumers if they do not meet those standards. In addition, requested premium increases will be made publicly available, and in 2014, plans that have arbitrarily raised rates previously may not be able to participate in the new health insurance exchanges.
Q: My insurance company just withdrew my coverage, claiming I had a previous illness. Can I fight back?
A: Effective six months from now, insurance companies will be prohibited from dropping your coverage when you get sick. This will apply to all new and existing insurance plans.
Q: When does free preventive care start and will it affect my plan?
A: In 6 months, all new group health plans and new plans in the individual market must provide coverage for preventive services. Recommended prevention and vaccination services will be covered without any deductibles or copayments. Seniors enrolled in Medicare will also no longer have to pay for proven preventive services.
Q: What information about insurance companies is going to be posted on the web?
A: Consumers will immediately have more opportunities to take control of their health insurance choices. Effective July 1, 2010, a website will provide information to help consumers choose the plan that is best for them. The Secretary of HHS will establish an Internet website through which residents of any State may identify affordable health insurance coverage options in that State. The website will include information on coverage options for small businesses as well.
Effective January 1, 2011, health plans, including existing plans, must annually report on what percentage of premium dollars they spend on medical care, as opposed to profits, marketing, and administrative expenses. You will be able to see that information online and may be entitled to a rebate if your plan spent too much on overhead and profits. Health insurers must also post unreasonable rate increases along with a justification for them.
S E N I O R S
Q: My prescription drug spending will push me into the donut hole this year. What relief will I get?
A: Seniors who hit the gap in Medicare prescription drug coverage known as the donut hole will be provided with a $250 rebate in 2010.
Beginning in 2011, seniors in the donut hole will receive a 50 percent discount on prescription drugs. In addition, the Medicare share of costs will increase so that the donut hole will be completely closed in 2020.
Q: When does my free preventive care start and what does it cover?
A: Effective January 1, 2011, proven preventive services will be free. In addition, a new annual wellness visit that provides a personalized prevention plan services, including a health risk assessment, will be provided under Medicare.
Q: Can you define the doughnut hole?
A: Medicare Part D provides prescription drug benefits to Americans on Medicare. This benefit comes with a $310 deductible. After you’ve spent $310, you pay 25 percent of the cost of your prescriptions until the total cost of all the medicine you have received in a year hits $2,830. Then, you are stuck with 100 percent of the bill until the total cost of your medicines hits $6,440. The gap when Medicare does not cover the cost of your prescription drugs is known as the doughnut hole.
Health reform will close the donut hole. Reform also offers immediate relief by providing a $250 rebate this year to seniors who hit the doughnut hole.
Q: How will the $250 benefit toward coverage gap cost be received by beneficiaries? What’s the Eligibility?
A: Once you have hit the prescription drug doughnut hole, you will eligible for a $250 rebate. That check will be sent directly to you from Medicare. There’s no application process and no private company will be involved in getting your rebate check to you.
Q: I’m covered by a Medicare HMO which served my health very well. Will I be able to maintain the same coverage I have after health insurance reform is implemented?
A: Unfortunately there has been a lot of misinformation about Medicare Advantage plans. Seniors have a choice when they turn 65 and beyond, enroll in the traditional Medicare plan or enroll in a Medicare HMO or Medicare Advantage Plan. Medicare Advantage plans will continue to offer services to beneficiaries. Companies right now choose whether to offer Medicare Advantage plans. Some may make the business decision to exit the market, but nothing in health reform forces these plans to stop offering benefits and services.
Q: I cannot get Medicare until I am 62. I do not have health coverage. I cannot get health coverage because I have a pre-existing condition. Do I get a piece of this new health care plan?
A: Absolutely. Beginning this year, you will be eligible to receive coverage through the new high-risk pools. Today, too many insurance companies reject Americans with pre-existing conditions or charge exorbitant rates. High-risk pools will offer these individuals access to affordable insurance and in 2014 there will be a new market that will prevent insurance companies from eliminating anyone with preexisting conditions. We will have more details regarding the high-risk pools in the weeks ahead. You can read about the first step we have taken here: http://www.hhs.gov/news/press/2010pres/04/20100402b.html
Q: Leonard from CA asks: How will the new health care law affect those of us who are under age 65 but still disabled and on Medicare? Is there anything that is different for us than those on Medicare due to age? For people who are disabled, how does the new law impact them?
A: If you’re on Medicare, nothing will change for you. You will continue to receive your Medicare benefits and reform makes Medicare stronger. Today, Medicare beneficiaries must pay 20 percent of the cost of many preventive services and office visits. Reform eliminates deductibles, copayments, and other cost-sharing for recommended preventive care, and provides free annual wellness check-ups starting in 2011. Reform will also improve the quality of care you receive, fight Medicare fraud and extend the financial health of Medicare by 9 years.
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