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Monday, July 23, 2012


How will the coming changes in health care coverage affect you?

Now that the U.S. Supreme Court has upheld the controversial law to overhaul health care, millions of Americans are asking the same question: How will it affect me?

“It’s going to affect everyone,” said Jodi Mitchell, executive director of Kentucky Voices for Health, a coalition of health departments and groups. “... People want to know what’s in it.”

The Courier-Journal consulted health care experts, government agencies and others to answer some of the common questions people are raising about the law, which runs more than 2,000 pages, and how it could affect their daily lives, whether they are young people, working-age parents, senior citizens or business owners.

Experts agree the changes will be sweeping. Some provisions have already taken effect, such as one allowing young adults up to age 26 to stay on a parent’s health plan, and another forbidding health insurers from excluding a child from coverage because of a pre-existing health condition. Adults with pre-existing conditions can get insurance through a federal program until 2014, when insurers won’t be able to exclude them, either.

Many more rules are scheduled to take effect in 2014, including one of the most controversial — the individual mandate that people carry health insurance or pay a penalty.

That mandate — which the Supreme Court upheld under the federal government’s taxing power — is at the heart of a divisive debate that continues today.

Many health officials, including Dr. LaQuandra Nesbitt, director of the Louisville Metro Department of Public Health and Wellness, say the law is a step in the right direction, affirming that access to health care is a right and not a privilege. But many others say it’s an assault on individual freedom. Senate Minority Leader Mitch McConnell, R-Ky., has called it “the single worst piece of legislation passed in modern times.”

Earlier this month, the GOP-controlled U.S. House passed a bill to repeal the law, known formally as the Affordable Care Act. But Dewey Clayton, a political science professor at the University of Louisville, said he sees the law surviving in the long run.

“Politics will come into play,” he said. “... But many Americans will say, ‘It’s law; now let’s move on. We’ve got too many other pressing problems.’ ”

Still, some health care experts said it’s unclear what could happen if the political landscape changes.

“That’s the big mystery of the 2012 election,” said Susan Zepeda, president and chief executive officer of the nonprofit Foundation for a Healthy Kentucky, which strives to address unmet health needs of Kentuckians. “If the balance of power in Congress changes, if the person in the White House changes, it’s conceivable that Affordable Care may be repealed.”

Another issue that remains hazy is how many states will expand the Medicaid program for the poor and disabled, as called for in the health care overhaul. The Supreme Court’s June 28 decision said the federal government can’t withhold current Medicaid funds from states that refuse to comply with the expansion.

Officials in seven states have announced plans to opt out of the Medicaid expansion. Kentucky and Indiana officials have not yet decided. States that opt in face a financial burden down the road, since the federal government will reduce its contribution to the expansion costs from 100 percent to 90 percent in 2020 and later years.

“In light of the Supreme Court’s decision, a great deal of questions remain about how an expansion of Medicaid would affect Kentucky, particularly the long-term cost to the state after the three-year period of full federal cost coverage expires,” said Audrey Tayse Haynes, secretary of the Kentucky Cabinet for Health and Family Services.

Zepeda pointed to figures from the Kaiser Family Foundation showing more Kentuckians stand to gain than those in other states from a Medicaid expansion, with about 57 percent of uninsured adults becoming newly eligible for coverage.

As states sort out these unknowns, here are answers to some common questions about the law:

All residents
All residents

What is the “individual mandate”?

A: The mandate means virtually all Americans must have health insurance by 2014 or pay a penalty.

If you already have insurance, you’ve met this requirement. The Congressional Budget Office says about 80 percent of the 272 million Americans under 65 would be insured in 2014 even without the new law.

For individuals, the penalty for not having insurance will start at $95 a year, or up to 1 percent of income, whichever is greater. By 2016, it rises to $695 a year for individuals and $2,085 for families, or 2.5 percent of income.

The law includes a carrot as well as a stick — namely, subsidies to help working-class and middle-class people buy private insurance through new, state-based health insurance exchanges beginning in 2014. These will be available to people with incomes up to 400 percent of the federal poverty level, or about $90,000 for a family of four.

Those who make less will get a bigger subsidy. For example, a family of four earning $33,075 a year will have to pay 4 percent of their income, or $1,323 a year, for insurance premiums — with the remainder paid by the subsidy.

According to the U.S. Census Bureau, an average of 15.5 percent of Kentuckians, or 663,000 residents, lacked health insurance from 2008-2010; and 12.8 percent of Hoosiers, or 813,000 people, were uninsured during that period.

Q: Might I become eligible for Medicaid under the new law?

A: That’s unknown, since Kentucky and Indiana leaders haven’t yet decided whether to participate in the Medicaid expansion. If they opt in, starting in 2014, Medicaid would effectively cover people who earn up to 138 percent of the federal poverty level, which is currently $15,415 for an individual and $31,809 for a family of four.

Q: I haven’t been able to get insurance because of a pre-existing condition. Will the law change that?

A: For the next couple of years, people can get coverage from a federal program known as the Pre-Existing Condition Insurance Plan, or PCIP, which began in July 2010. This is separate from a state high-risk pool known as Kentucky Access, which has existed for more than a decade.

To qualify for a PCIP, you must be a U.S. citizen who has been uninsured for at least six months and have a pre-existing condition or have been denied coverage because of a health condition. To apply, go to There are three types of plans — standard, extended and HSA — and the monthly premium for a 45- to 54-year-old getting a standard plan in Kentucky is $226; in Indiana it’s $284.

Both the PCIP and Kentucky Access will stop operating in 2014, when the law says people can no longer be denied coverage or charged higher premiums for having a pre-existing condition.

Q: How will I find health insurance?

A: New state health insurance exchanges will start up in 2014 as marketplaces for affordable coverage — primarily serving individuals buying insurance on their own, and small businesses.

Kentucky Gov. Steve Beshear issued an executive order on Tuesday creating an exchange in Kentucky, but Indiana officials have not committed to creating one, with Gov. Mitch Daniels saying it will be up to the next administration to decide whether to do so. If a state doesn’t create its own exchange, the federal government will step in to establish and operate one.

According to Kentucky’s Office of Health Policy, open enrollment for Kentuckians will begin in October 2013 and will take effect in January 2014.

Beshear said the exchange will enable eligible individuals to receive tax credits and subsidies to help reduce the cost of premiums, and qualify small businesses for tax credits through the Affordable Care Act.

Although the exchange is still being developed, Mitchell of Kentucky Voices for Health said she expects it to be not only a place to shop for insurance, but a clearinghouse for insurance-related information that people can call to ask questions.

The federal government says the exchanges will help make insurance more affordable by offering people choice, and encouraging competition among insurers on a level playing field. People will also be able to find out if they qualify for programs to make insurance more affordable, such as advance payments of the premium tax credit or Medicaid. Also, a Small Business Health Options Program, SHOP for short, aims to give small businesses the clout big businesses have when they buy insurance.

Q: Are any new taxes included in the new law?

A: The Supreme Court upheld the individual mandate under the federal government’s ability to tax, so the penalty for not having health insurance can be viewed as a tax. Also, starting in 2013, people who earn more than $200,000 a year and married couples earning more than $250,000 will pay a Medicare payroll tax of 2.35 percent, up from 1.45 percent. Such high earners will also face a new, 3.8 percent tax on unearned income such as dividends.

Starting in 2018, the law imposes a 40 percent excise tax on the portion of most employer-sponsored health coverage worth more than $10,200 a year for individuals and $27,500 for families, which some have dubbed “Cadillac” plans.

Though there are rumors to the contrary, the law does not contain a real estate sales tax or real estate transfer tax.

Young people
Young people

Q: I’ve heard that young adults can stay on their parents’ health insurance plans. What are the details?

A: Health plans that offer coverage for dependents now must allow young adults to stay on their parents’ insurance until their 26th birthday. So far, 35,600 young adults in Kentucky and 38,400 in Indiana have gotten insurance this way.

At this point, the provision applies to individual plans and new employer-based health plans. If young adults can get insurance through their own jobs, their parents’ existing employer-based plans don’t have to cover them. But that changes in 2014, when they can stay on a parent’s plan even if their employers offer coverage.

Call your insurance company, insurance agent or your company’s human resources department to find out when during the year an adult child can be added to your policy.

Q: What if my young adult child gets married or becomes pregnant?

A: Married young adult children up to age 26 still qualify for coverage. And if the parent’s plan covers pregnancy, the child’s pregnancy should be covered. But the plan doesn’t have to cover the new baby.

Q: How does the law affect coverage for young children still at home?

A: Insurers can no longer exclude children from coverage because of pre-existing conditions, impose lifetime limits on how much they’ll cover or drop them from coverage when they get sick. Starting in 2014, new health plans must cover basic pediatric services as well as dental and vision needs for kids.


Working-age adults

Will my premiums rise if I get my insurance through my job?

A: That’s unclear. The Kentucky Department of Insurance points out that employers will continue to make decisions about plans offered to employees.

“There are some folks who believe that insurance companies have already factored in the higher-risk patients” they’ll have to cover under the law, said Zepeda, of Foundation for a Healthy Kentucky. “I wouldn’t expect premiums to continue to go up.”

Jose Fernandez, an assistant professor of economics at the University of Louisville, said the law’s impact on premiums is largely unknown at this point. He said there are provisions that could push up premiums slightly, such as the elimination of lifetime caps on coverage, but there are also provisions that could push them down, such as the influx of many more healthy young people.

Q: I get my insurance through a large company. Besides possibly affecting my premiums, how else might the law affect me?

A: New health plans have to cover preventive services, such as cancer screenings, with no co-pays. They also can’t drop you from health coverage if you get sick, and they cannot deny your child coverage because of a pre-existing condition. If you have a Health Savings Account, you can keep it.

In 2014, insurers won’t be able to deny coverage to adults with medical conditions or refuse to renew their policies. They also won’t be able to limit coverage based on pre-existing conditions or charge higher rates to people in poor health.

Q: What if I work for a small company?

A: If you have insurance through your job, the provisions listed above would apply. Also, starting in 2014, insurance deductibles for small groups (50 employees or less) will be limited to $2,000 for individuals and $4,000 for families.

If you work for a small company that doesn’t offer health insurance, there’s no requirement that the company start offering it. Employers with fewer than 25 employees may be able to get tax credits for providing coverage, but they don’t have to do so and aren’t penalized if they don’t.

If you don’t get insurance at work, you can shop for it in the insurance exchange.

Q: Are there any insurance plans that aren’t affected by the new law?

A: Yes. The law “grandfathers” existing health insurance plans, meaning that if a person was enrolled in a plan on March 23, 2010, that plan has been grandfathered. It’s unclear whether changes to a health plan, such as what is covered, make it a new plan rather than a grandfathered plan.

Grandfathered plans are exempt from the vast majority of insurance changes under the law, but they do have to abide by some, such as bans on lifetime limits on essential health benefits, bans on health plan terminations and the requirement to allow children to stay on parents’ insurance up to age 26.

In 2014, grandfathered plans also won’t be able to make someone wait more than 90 days to be eligible to enroll in health benefits, and those providing group coverage won’t be able to exclude people based on pre-existing conditions.


Senior citizens

Q: Does the law affect my Medicare coverage?

A: Medicare benefits haven’t changed, but co-pays have been eliminated for preventive services such as mammograms and prostate cancer screenings, a provision that has affected more than 1.2 million seniors in Kentucky and Indiana so far. Seniors can still enroll in a Medicare HMO or Medicare Advantage plan, but the Advantage programs could change.

The law reduces payments to Medicare Advantage plans while rewarding high-quality plans. Experts say insurers may respond by charging higher premiums, reducing their network of health care providers or getting out of the market altogether.

Q: Does the law address the “doughnut hole” gap in Medicare drug coverage?

A: In 2010, seniors who had reached the doughnut hole (which in 2010 meant they had spent $2,830 on prescriptions) got $250 rebates. Last year, people in the doughnut hole received a 50 percent discount on brand-name drugs. In 2020, the doughnut hole is slated to be eliminated, although seniors will still have to pay the standard 25 percent of drug costs until they reach the threshold for Medicare catastrophic coverage, when co-pays drop to 5 percent.


Business owners

Q: How does the law affect me if I own a small business?

A: A lot depends on the size of your business.

Small firms with fewer than 50 employees aren’t required to offer health insurance.

Very small businesses can get tax credits — although just for two years. Those with fewer than 25 full-timers and average annual wages of less than $50,000 and which pay at least half the cost of health insurance for employees are eligible for credits. Through 2013, the maximum credit is 35 percent for small businesses and 25 percent for small charities — rising to 50 percent and 35 percent, respectively, the next year.

“It’s a way of giving a Groupon to these small employers,” said U of L’s Fernandez.

But there’s a potential penalty for small businesses with more than 50 employees. They’ll have to start paying a fee in 2014 if any employee receives a federal subsidy to buy private coverage through the health insurance exchange. The penalty, which rises over time, initially equals $2,000 multiplied by the number of workers in excess of 30. For example, an employer with 75 workers would pay a penalty of $90,000, or $2,000 times 45 employees.

Q: What if I own a larger business?

A: Businesses with fewer than 100 workers will be able to buy coverage starting in 2014 through a program in the health insurance exchange called Small Business Health Options, or SHOP.

Starting in 2014, businesses with more than 200 employees must automatically enroll workers in a health plan and won’t be able to impose a waiting period of more than 90 days. Employees can opt out if they choose.

Also, large employers could face penalties if their coverage is deemed inadequate or too expensive, with premiums higher than 9.5 percent of a worker’s income.

Before 2014, firms may be eligible to take part in an early retiree program that provides financial assistance to employers and unions to help them cover early retirees ages 55 to 64. The U.S. Department of Health and Human Services has received applications from more than half of Fortune 500 companies, all major unions, and government entities in all 50 states. Approved sponsors in Kentucky include Brown-Forman., Humana and others. The program ends in 2014, when early retirees can find insurance through the exchanges.

Sources: Kentucky Voices for Health, Foundation for a Healthy Kentucky, Kentucky Department of Insurance, Kentucky Cabinet for Health and Family Services, U.S. Department of Health and Human Services, the White House, Kaiser Family Foundation, The Urban Institute, Congressional Budget Office, Congressional Research Service, U.S. Census Bureau, National Association of Realtors, Internal Revenue Service

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