Can't afford health care? Wait 'til June

NEW YORK (CNNMoney.com) -- For millions of uninsured or underinsured Americans, health reform legislation will soon remove some of the barriers preventing them from getting the coverage they need.

The most immediate changes affecting those who don't have health insurance, or are not buying enough insurance to meet their needs, start in about 81 days.

Many other longer term measures will be phased in over the next few years.

Underinsured consumers are those who incur high out-of-pocket costs - excluding premiums - relative to their income, despite having coverage all year. By one estimate, about 25 million Americans can't afford to cover the gap between what their insurance covers and what their medical bills demand.

And more than 46 million Americans currently don't have any health insurance.

As the number of underinsured and uninsured Americans continues to rise, experts say the legislation's short-term fixes could provide immediate benefits.

Here's what to expect in 2010 and 2011.

Federal "high risk" pool coverage for adults, kids : Among the first measures to be instituted, the government will create a temporary Federal "high risk" pool to provide affordable coverage for uninsured adults and kids.

The pool is expected to be established by late June.

Several states already have high risk insurance pools. High risk pools offer insurance at lower rates than the premiums offered to people with pre-existing conditions in the individual market.

If an individual with a pre-existing condition is denied coverage by an insurer, he or she can apply to this new pool, said Deborah Chollet, health economist and senior fellow with Washington-based Mathematica Policy Research. "The government will charge a standard premium rate [market rate] which won't be any higher than the premium that would be charged to you if you were healthy," she said.

However, individuals already in a state-funded high risk pool can't immediately switch over to the federal pool, said Chollet. These individuals can drop out of their state high risk pool, go uninsured for six months and then apply for the federal pool, according to the legislation, "but that's a high risk proposition," she said.

The federal high risk pool will exist until 2014 after which time individuals will have to buy into federally created health insurance exchanges or get their own insurance.

Coverage for kids: Two of the most significant changes impacting young and adult children will take place by September.

First, insurers will no longer be able to deny coverage to a child because he or she has a pre-existing condition. Also, insurers will no longer be able to insure a child but exclude treatment for a pre-existing condition.

Experts say the legislation doesn't seem to place restrictions yet on the rates that insurers can charge this group of consumers.

"So insurers can conceivably charge higher premiums for a policy that covers children with pre-existing conditions," said Chollet.

Second, with regard to adult children, the legislation mandates that insurers will now have to provide dependent coverage up to age 26 for all individual and group policies. However, some states already mandate dependent coverage until age 28 or 29 and are exempt from this new rule.

No lifetime caps on coverage: Also expected to go into effect in September is the measure to prohibit health plans from placing any lifetime caps on coverage.

Early retirees: To encourage companies facing higher costs in providing insurance, the legislation will jumpstart a temporary reinsurance program for employers who provide coverage to retired workers between the ages of 55 and 64, who are too young for Medicare.

Without this incentive, this demographic would have to go uninsured, or buy their own insurance - usually at higher rates - if they were dropped by their employer's plan. The measure is expected to take effect in late June.

"The government will refund all claims up to 80% of retiree claims valued between $15,000 and $90,000," said Michael Sturm, principal and consulting actuary with consulting firm Milliman Inc.

The reinsurance program will exist until 2014 or until the $5 billion set aside for the program is exhausted, Sturm said.

Medicare rebate: The legislation provides a $250 rebate in 2010 to Medicare beneficiaries who hit a Medicare Part D prescription drug coverage gap, also called the "doughnut hole" in which Medicare stops paying for drug coverage and patients can't afford to pay for drugs out-of-pocket.

Beginning in 2011, the reform measures will implement a 50% discount on prescription drugs that are in a doughnut hole for a beneficiary. The legislation aims to close the hole by 2020.

Free preventive care: The legislation eliminates co-payments and co-insurance in 2011 for preventive services and exempts preventive services from deductibles under the Medicare program.