Health care reform won't make individual health insurance better until 2014

Health care checkupIf you've shopped for health insurance as an individual, you've likely found it very difficult, if not impossible, to get that insurance unless you are in perfect health. Or once you're over the age of 50, you may find that even if you can get insurance, you won't be able to afford it.

I'm going to take a look at key provisions in the proposed health care reform that will be particularly helpful to those of us who shop in the individual health care marketplace. I've used the comparison tool on health care reform at The Henry J. Kaiser Family Foundation for this story. Even if the bill passes these provisions will not be available until January 1, 2014.
Temporary high-risk pool

People without insurance because of pre-existing conditions will be able to tap into a temporary, high-risk pool that will be available within 90 days after a bill is signed into law and be effective until the new health insurance rules take effect on Jan. 1, 2014. Any U.S. citizen or legal immigrant who has pre-existing conditions and who has been uninsured for at least six months will be able to tap into this temporary, high-risk pool.

Both the Senate bill and the President's bill provide the same provisions. All will receive subsidized premiums. The pool will be established based on a the rates for a standard population and may vary no more than 4 to 1 due to age. Maximum cost sharing will be limited to current Health Savings Account (HSA) law: $5,950 for an individual and $11,900 for a family in 2010.

The House bill makes this pool more affordable with premiums set no higher than 125% of the prevailing rate for comparable coverage in the state in which the person resides. The premiums can vary no more than 2:1 because of age. Annual deductibles will be limited to $1,500 for an individual and maximum out-of-pocket will be limited to $5,000 for individuals

Pre-existing conditions can't knock you out of health coverage

Individuals, who can not get access to a group plan either through their employer or their union, will find it much easier and more affordable to get insurance under the health-care reform legislation now making its way through Congress. All plans will be guaranteed issue and require renewability, which means you can't be denied health insurance because of pre-existing condition or you can't be kicked out of a health plan because you got sick.

Plans will only be allowed to rate people based on age, and that premium difference will only be able to vary by a 3-to-1 ratio, if the final bill includes provisions of President Obama's plan or provisions in the Senate bill. That difference will be limited to a 2-to-1 ratio difference if the House prevails on this topic.

Benefit Tiers

All three versions of the health bill provide for four benefit categories for health insurance plan designs. The President's bill and the Senate bill provide for a catastrophic plan as well. The President's version and the Senate version are the same, starting with a Bronze plan that will cover 60% of the benefit costs of the plan with an out-of-pocket limit equal to the Health Savings Account (HSA) current law limit of $5,950 for individuals and $11,900 for families. The House version calls the first plan a Basic plan that covers 70% of the benefit costs with no cap on expenses.

The second tier is a Silver plan, which covers 70% of the benefit costs of the plan with the HSA out-of-pocket limits. The House version calls this second tier the Enhanced plan, which covers 85% of the benefit costs with no cap on out-of-pocket limits.

Next comes the Gold plan, which provides 80% of the benefit costs of the plan with the HSA out-of-pocket limits. The House plan calls the third version the Premium plan, which covers 95% of the benefit costs covered with no cap on out-of-pocket limits.

The most comprehensive is the Platinum plan, which covers 90% of the benefit costs of the plan with the HSA out-of-pocket limits. The House calls this the Premium Plus plan that includes additional benefits, such as dentists and visions care, but with the same level of coverage as the Premium plan otherwise.

Out-of-Pocket limits will be reduced in the President's version and the Senate version for those with incomes up to 400% of the Federal Poverty Level (FPL). If you earn at 100% to 200% of the FPL, than your out-of-pocket limits will be one-third of HSA or $1,983 for an individual and $3,967 for a family. Those earning between 200% and 300% FPL will see their out-of-pocket limits lowered to one-half of the HSA limits. Those earning between 300% and 400% FPL will see their out-of-pocket limits reduced to two-thirds of the HSA limits. There are no out-of-pocket limits in the House version of the bill.

Health Tax Credits To Make Insurance More Affordable

Depending on your income, you may be eligible for tax credits that are refundable if you meet the income requirements. These credits will be available on a sliding scale and limit the premiums you'll need to pay. The President's version of the bill set these credits based on limiting the percentage you can spend on health insurance at specified income levels. For example, if you earn between $22,000 and $29,000, your premium cannot be any more than 2% to 3% of your income for a plan in the Silver tier (see above). Tax credits continue on a sliding scale until earnings top $88,000. People earning between $66,000 and $88,000 will not have to pay more than 9.5% of their income for a health plan.

The Senate plan also provides refundable and advanceable premium tax credits for families with incomes between 100% and 400% FPL and they are also based on the costs of the Silver plan. Premiums are on a sliding scale starting at no higher than 2.8% of income for those at the 100% FPL and ranging to 9.8% of income between the 300% and 400% FPL.

The House bill provides affordability premium credits for eligible individuals and families with incomes up to 400% FPL. Its income tiers start with 133% to 150% FPL with a limit of 1.5% to 3% of income to be paid toward health insurance premiums up to 350% to 400% with a limit of 11% to 12% of income to be paid in premiums.

Creation of Health Insurance Exchanges

Both President Obama's bill and the Senate bill call for creating state-based American Health Benefit Exchanges and Small Business Health Options Program Exchanges that will be administered by a governmental agency or non-profit organization. Individuals and small businesses up to 100 people will be able to purchase insurance through these exchanges.

The House bill calls for a National Health Insurance Exchange where individuals and employers can purchase qualified insurance from both private health plans and a public health insurance option. Only the House bill provides for a public plan option at this time. The House bill does allow states to opt out of the national exchange if they can demonstrate they have the capacity to administer the exchange.

This list is not meant to summarize all the provisions of the health reform legislation, but instead highlights some key provisions that will help individuals get health insurance. You can read a detailed comparison of the bills at The Henry J. Kaiser Foundation's website.

Lita Epstein has written more than 25 books including The Complete Idiot's Guide to Social Security and Medicare and The Pocket Idiot's Guide to Medicare Part D.
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