Health Insurance Reforms Full Details

The new law contains numerous provisions that prohibit insurers from engaging in certain harmful practices detrimental to insurance consumers discussed earlier. Important provisions that apply to health insurers include the following;

  • Retention of coverage until age 26. Insurers must allow young adults to remain on their parents policies until age 26. This provision is now in effect and is especially helpful to adult children who typically lost their coverage under their parents policy when they graduated from college or reached a limiting age of coverage.
  • Lifetime limits and annual limits prohibited. Insurers are prohibited from imposing lifetime limits on benefits. This provision is now in effect. Beginning in 2014, annual limits on benefits are also prohibited. Prior to 2014, annual limits can be imposed as determined by the secretary of Health and Human Services.
  • Preexisting conditions prohibited. Insurers are prohibited from denying claims or excluding coverage for preexisting conditions for children under age 19. This provisions applies to all job related health plans as well as individuals health insurance policies issued after March 23, 2010.
  • Recession of insurance policies prohibited. The new law prohibits insurers from retroactively rescinding insurance policies because of unintentional errors on the application except in cases of fraud or intestinal misrepresentation of a material effect.
  • Guaranteed access to health insurance. Charging females higher premiums for coverage is prohibited.
  • Grandfathered plans. Grandfathered plans are individual plans and employer sponsored group plans that existed on March 23, 2010 and have not made any prohibited changes. Grandfather plans generally can remain the same and are subject only to certain provisions of the Affordable Care Act, All health insurance plans-whether grandfather or not- must provide certain benefits for plan years starting on after September 23, 2010. These benefits include no lifetime limits on coverage for all plans, no rescissions of coverage when people get sick and have previously made an unintentional and honest mistakes in the application, and extension of parents’ coverage to young adults under age 26.

In addition, employer sponsored group plans must provide additional benefits which include no exclusions for preexisting conditions for children under age 19, and no restricted annual limits on benefits that is annual dollar limits on coverage are below the amounts determined by the secretary of Health and Human Services prior to 2014.

Finally, to maintain it’s grandfathers status, a grandfather plan cannot significantly plan cannot significantly cut or reduce benefits increase coinsurance charges, significantly lower employer contribution add or tighten any annual limit on the amount the insurer pays, and change insurers and keep a grandfathered status for the new plan.

Rebates must be paid to enrolls if the loss ratios are not met because of high profits or high administrative expenses. This provision is now in effect. In 2012, insurers that did not meet the minimum loss ratio rules paid out more than 1.7 billion in rebates to nearly 13 million people or an average rebate chech of $151 per household.

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