FAQ: How Health Care Reform Will Affect You

Historic Bill Will Change Health Care in the Short Term and Long Term for Consumers and Employers

From the WebMD Archives

March 22, 2010 -- The yearlong, often ugly journey toward health care reform reached a historic milestone late Sunday night, with the House approving legislation that would extend coverage to 32 million more Americans and impose new restrictions on the insurance industry.

Here are answers to some frequent questions about what reform will mean to consumers:

What provisions begin soon?

Starting this year, children up to age 26 would be allowed to remain on their parents' health plan. People with pre-existing medical conditions would be eligible for a new federally funded "high-risk" insurance program. Small businesses could qualify for tax credits of up to 35% of the cost of premiums. Insurance plans would be barred from setting lifetime caps on coverage and would no longer be able to cancel policies when a patient gets sick. Health plans would also be prohibited from excluding pre-existing conditions from coverage for children.

When do the main reform changes kick in?

In 2014. That’s when insurance marketplaces, or exchanges, would be set up in states to offer competitive pricing on health policies for individuals and small businesses that don’t have coverage. People with a pre-existing condition would no longer be denied coverage, and all lifetime and annual limits on coverage would be eliminated. Medicaid would be expanded to cover more low-income Americans.

What are the requirements for individuals to buy insurance?

Starting in 2014, a person who did not obtain coverage would pay a penalty of $95 or 1% of income, whichever is greater. That penalty would rise to $695 or 2.5% of income by 2016. The bill would exempt the lowest-income people from that insurance requirement.

Medicaid would be expanded to cover those under age 65 with an income of up to 133% of the federal poverty level (below $29, 327 for a family of four).

To make coverage more affordable, the legislation would offer premium subsidies for people with incomes more than 133% but less than 400% of the federal poverty level ($29,327 to $88, 200 for a family of four).

In addition, people in their 20s would have the option to buy a lower-cost "catastrophic" health plan.

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How will small employers be affected by the changes?

Employers with 50 or more workers would face fines for not providing insurance coverage. Businesses with smaller workforces, though, would be exempt. Companies would get tax credits to help buy insurance if they have 25 or fewer employees and a workforce with an average wage of up to $50,000.

I’m covered by a large employer. How will it affect me?

Large employers would run their health plans as they do now, so there won’t be much change. Even though they have more insurance-buying clout, large businesses have seen steadily rising insurance premiums over the past decade without reform, as medical costs have increased. That pattern isn’t likely to change much, at least immediately.

How does the bill affect Medicare recipients?

Seniors will get immediate help on the "doughnut hole" - a gap in their coverage for prescription drugs. This year, those reaching that hole would get $250 to help pay their drug costs. Next year, they would receive a 50% discount on the cost of brand-name drugs in the doughnut hole. Meanwhile, preventive screenings would be free to beneficiaries beginning this year.

But federal payments to Medicare Advantage plans would be cut substantially, starting in 2011. So seniors in those plans may lose some extra benefits, such as free eyeglasses.

What changes will occur in Medicaid?

Individuals and families with incomes up to 133% of the federal poverty level (below $29,327 for a family of four) will gain coverage. The federal government will pay all the states’ costs for the newly eligible Medicaid beneficiaries for three years. And primary-care doctors treating Medicaid patients will get an increase in their fees.

Will reform reduce health insurance costs?

Many health care experts say that while it contains some cost-cutting provisions and pilot programs, the legislation doesn’t go far enough to tame rising costs. People with chronic medical problems, though, generally would see their premiums decrease because of the new ban on pre-existing condition discrimination.

How will the $940 billion price tag (over 10 years) be paid for?

Wealthier families will pay more in taxes. Starting in 2013, families with annual incomes above $250,000 (and individuals earning more than $200,000) would pay an additional 3.8% tax on investment income, and also face a higher Medicare payroll tax. Expensive, "Cadillac" insurance plans would draw a new tax starting in 2018. And the Medicare program would receive substantial cuts, including a $132 billion reduction in funding for Advantage plans run by private insurers.

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What are some reform provisions that have gone under the radar?

A new, voluntary long-term care benefit would help people who become disabled. Indoor tanning sessions will face a new tax. And the bill requires chain restaurants with 20 or more outlets to post calorie counts on menus and menu boards.

WebMD Health News Reviewed by Laura J. Martin, MD on March 22, 2010

Sources

SOURCES:

The New York Times: "For Consumers, Clarity on Health Care Changes," "Proposed Changes in the Final Health Care Bill."

The Wall Street Journal: "What's in the Bill."

Kaiser Health News: "Consumers Guide to Health Reform," "Immediate Effects of Health Reform."

The Huffington Post: "The Top Ten Immediate Benefits You'll Get When Health Care Reform Passes."

The Associated Press: "Obama to Sign Health Bill, Take It on the Road."

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