The latest issue simply re-states the application of provisions in the law.
-Health insurance policies can not be rescinded by insurance companies after September 23, 2010, for any reason but for the more egregious acts of fraud.
-Health insurance policies can not have lifetime maximum benefits after September 23, 2010.
-Children under age 19 can not be excluded from coverage due to a pre-existing health condition.
-Dependents are allowed to remain on parents’ coverage until age 26 regardless of marital and student status.
These rules apply to individually purchased plans of insurance as well as group plans. Grandfathered plans are not exempt from these items.
As the weeks turn into months and months into years, prevailing thought seems to suggest that the small group health plans (group plans under 50 primary insured lives) and individual plans will become virtually indistinguishable. That is, each plan type will look identical and the only difference will be how the plan premium is billed.
Because small group plans have already operated under stricter regulation such as guaranteed issue, we can develop an idea of the future premiums of individual insurance from the small group market when it began to operate under strict controls.
Contrary to expectations, the premiums did not rise as much as expected. However, the ACA does insert other issues that will undoubtedly impact future premiums. As mentioned previously, the Medical Loss Ratio is likely to have the most significant impact. As you may recall, the MLR is the requirement that insurance companies in the “under 50 market” must hold claims to no less than 80% of premiums paid. This can result in premium rebates or potentially large increases.
A second factor that will place upward pressure on premiums is the guarantee issue. Small group plans are guaranteed issue and pre-existing conditions are covered from day one as long as the individual has maintained ongoing coverage for the past 12 months. Otherwise, pre-existing conditions are subject to a waiting period.
ACA does not contain any language related to waiting periods for pre-existing health conditions in the small group market or individual market. HHS is expected to address this concern before January 1, 2014. Insurance companies see this oversight as a big concern, especially since the law will require guarantee issue with no serious mandate for individuals to enroll in insurance other than a “modest” penalty.
Another factor likely to exert pressure on individual plans is the new age rating schedule as set forth by ACA. The premium for the older adults can not be more than four times the rate for the youngest adult. The age rating schedule varies from one insurance company to another, but on average, the current range is about six to one.
Because insurance companies are not likely to lower the premiums for older adults, young adults should expect significant increases in premiums as insurance companies try to close that gap by January 1, 2014.
At that time every individual will be required to buy health insurance or face a penalty. The penalty will be $695 per person per year, up to a maximum of three per family ($2085 total), or 2.5% of household income by 2016. From January 1, 2014, the penalty is $95 (X 3 per family) and in 2015, $325 (3 X per family).