insurance

5 key health reforms you need to know

Stethoscope laying on money
Highlights
  • Changes that do away with limits on lifetime caps can prevent bankruptcy.
  • There are welcome reform changes for kids with pre-existing conditions.
  • Some price increases are likely: Free preventive care can increase costs.

The first wave of several health care reform changes is slated to begin Sept. 23, and that's good news for some consumers. Part of the provisions signed into law by President Barack Obama in March offer key relief for young adults, people with serious illnesses and others. For example, kids can't be excluded for pre-existing conditions and there are no lifetime caps for people who've maxed out their coverage.

"Some substantial things are included," says Carrie McLean, a consumer specialist at eHealthInsurance.com. "Insurance companies are scrambling to put them into effect."

And that's not all. States, which are charged with implementing regulations, and the Department of Health and Human Services are also hurriedly hammering out the details that underpin the reform changes slated for Sept. 23.

"It will take some time before everything is in place," says Jennifer Tolbert, a health policy expert at the Kaiser Family Foundation. "There are hiccups along the way."

Given such shifting sands, don't go down this path on your own, says McLean. "There's a lot of information out there." She suggests talking to a licensed agent, going to Healthcare.gov for more information or calling your state Insurance Commissioner's office.

But the payoff can be big. For example, health care reform changes that do away with limits on lifetime caps can literally save people from bankruptcy. And there are welcome reform changes for kids with pre-existing conditions, too. "These changes are a start toward more significant changes in 2014," says Tolbert. "But they offer important protection."

There are some caveats, though. People in group plans with employers won't see as many changes as individuals. These existing plans are grandfathered, which means they don't have to comply with all new rules. "Still, group insurance may be making changes to policies," says McLean. "This is a good time to review your policy and make sure it works for you."

Also, modest price increases are likely for some policies. For example, free preventive care can increase policy costs. "Until more people buy insurance, it's difficult to see prices going down," says McLean.

Here are the five health care reforms to keep tabs on.

Prohibition on rescinding coverage

Having an insurance plan rescinded or canceled is now a thing of the past. For example, insurance companies can't rescind a policy if something wasn't disclosed on an application. The only exception is for fraud.

Coverage for kids with pre-existing conditions

Kids with serious illnesses -- up to age 19 -- can't be turned away by insurance companies. "This helps people who don't have (family) insurance because their child was declined," says McLean. "Now people have options."

But there is a caveat. This reform, like some others, applies only to new insurance plans and ones that begin a new plan year.

Extension of coverage for young adults

Young adults can now stay on their parents' plans until age 26. "They have the highest uninsured rates," says Tolbert. "So it does offer a pathway to coverage."

Parents should note the cost for keeping a child on their plan, though, especially as more employers pass health insurance price hikes onto employees. Also, this provision only kicks in only when your plan is renewed.

No lifetime caps

For people with serious illnesses, this is a big win. Currently, the average lifetime maximum is about $4.6 million, according to eHealthInsurance.

But according to Tolbert, "People with significant illness will see an increase in premiums." She adds, though, that the increase in premiums will probably be modest.

Free preventive care

Besides mammograms and colonoscopies, screenings for high blood pressure, diabetes and high cholesterol or preventive medicine like immunizations are covered. They aren't subject to deductibles or co-pays.

Consumers should take note that the regulations governing these Sept. 23 reforms and others are still being issued, says McLean. "They come in every day," she says. "It's a good idea to contact your insurance company."

Knowing your policy is key. "People need to know when their plan year begins," says Tolbert. "That's when these reforms go into effect."

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