Health care reform stands: How it impacts your coverage

@CNNMoney June 29, 2012: 12:41 PM ET
health-care-consumer-insurance

The Supreme Court upheld health care reform Thursday, which includes a mandate that consumers have to buy coverage by 2014 or pay a penalty.

NEW YORK (CNNMoney) -- The Supreme Court's ruling Thursday to uphold health care reform has widespread implications for both insured and uninsured consumers.

Beginning in 2014, uninsured individuals must buy coverage -- either on their own, through an employer's plan or through a health insurance exchange -- or else pay a tax penalty. Meanwhile, insured consumers will continue to enjoy key mandates of the law, such as free preventive care and coverage of adult dependents up to age 26, but at the expense of higher out-of -pocket costs.

In the United States, more than half of the population -- or 160 million people -- gets health insurance directly through their employers, while 50 million people have no insurance, according to the government. Tens of millions more consumers either buy their own private insurance or are covered by government programs, such as Medicaid and Medicare.

Several key mandates of health reform have already gone into effect since the law passed in 2010. Here's a rundown of those provisions and new mandates rolling out over the next two years that will impact almost all of these consumers.

If you have insurance through your employer: Employees will continue to enjoy key benefits mandated by health reform that have already gone into effect.

"For consumers who are insured through their employers, this is good news," said Mike Thompson, principal with PwC's Global Human Resources Services.

Among the main provisions: Employers must provide coverage for adult dependents of workers up to age 26; health plans must cover certain preventive services, such as mammograms and colonoscopies, without charging a deductible, co-pay or coinsurance; and insurers can't impose a maximum lifetime dollar limit on a customer's medical care.

In 2013, eight additional preventive care services for women, including HIV and HPV (Human Papillomavirus) screening, will be covered under health reform.

But some industry experts also said that employers who offer insurance will now be even more focused on controlling their health care costs, especially since the individual mandate is expected to add more people -- including more high-risk individuals -- to their plans.

This means employees could see further increases in premiums and deductibles.

Also starting in 2013, the health care law will limit employee contributions to flexible spending accounts to a maximum of $2,500 a year. Many employers have their own caps on FSA contributions and the cap for federal employees is $5,000.

"Come open enrollment, it's very important that employees pay careful attention to their benefits packages and take a good look at options and incentives that companies are offering them to lower their out-of-pocket costs," said Tracy Watts, senior health care consultant with benefits consulting firm Mercer.

If you buy your own insurance: About 15 million consumers in the United States buy health insurance directly from private insurers or work for businesses that do so.

Under health reform, insurers must also allow policyholders to add adult dependents up to age 26 to their plan. Also, beginning in 2014, insurers can't drop an individual if they become sick and they cannot refuse coverage for a pre-existing condition. Insurers also can't set annual or lifetime limits on the amount of care.

If you're uninsured: Come 2014, if you don't have health coverage, you will have to pay a penalty.

In 2014, the fee is capped at $285 per family, or 1% of income, whichever is greater. By 2016, it will jump sharply to $2,085 per family, or 2.5% of income, whichever is greater. Individuals will pay penalties of $95 in 2014 that will climb to $625 in 2016.

The law mandates that states set up health insurance exchanges -- an online marketplace where consumers can buy subsidized health plans -- by 2014. These exchanges are geared towards making health insurance affordable to underinsured and uninsured individuals.

Subsidies are determined by individuals' income levels. Uninsured consumers with incomes between 139% and 400% of poverty will be eligible for tax credits to offset the cost of buying coverage through exchanges.

According to the Congressional Budget Office, the average subsidy per enrollee in the exchange will be $4,780 in 2014, rising to $5,780 in 2018.

If you work for a small business: By 2014, companies with 50 or more full-time employees must start providing health insurance or face penalties.

For most small businesses, that means a new way to shop for less expensive health insurance on the exchanges where they can buy plans for their workers.

But Sandy Ageloff, an analyst with Towers Watson, a leading benefits consulting firm for Fortune 1000 companies, expects several businesses could still opt out of providing health care coverage and instead send workers to exchanges.

"For these businesses who buy insurance coverage directly from private insurers, they often have higher premiums," said Ageloff.

"So they may find it more cost effective. despite the penalties, to eliminate their company insurance benefits and send workers to exchanges," she said.

Mercer's Watts said health insurance exchanges are a welcome provision for early retirees as well.

"There are many individuals who want to retire early but don't because they don't want to lose their health insurance," she said. "These exchanges will allow them to retire and still be able to buy affordable health insurance."

If you're insured through Medicare or Medicaid: For Medicare beneficiaries, health reform mandates that the Part D donut hole -- the gap in drug coverage during which beneficiaries have to pay the cost of prescriptions entirely out of pocket -- will be phased out by 2020.

The government said Medicare recipients have saved $3.7 billion on drug costs as a result of provisions which went into effect after health reform passed in 2010. To help afford their prescriptions, those who have fallen into the donut hole have received a one-time tax rebate and discounts on name-brand and generic drugs.

Those who currently receive Medicaid won't be impacted much by health care reform. It's less certain after Thursday's ruling, however, whether all states will expand the program come 2014.

Initially, health care reform mandated that states expand Medicaid coverage or lose federal funding for the program. The new Medicaid guidelines were to expand coverage to anyone under 65 whose income was up to 133% of the federal poverty level by 2014.

On Thursday, the Supreme Court struck down that provision, saying it should be up to the states to decide whether or not they want to expand the program, without any threat of losing federal funding.

"This is the one piece that impacts some individuals," said Ageloff. "If a state decides not to expand the program, some individuals now may not be able to get Medicaid coverage."

More on health care reform:

What health reform could cost

20-somethings celebrate: 'I can pay my rent'

Exchanges: Health insurance models of the future

Health reform: What companies need to know To top of page

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