Health Care Reform Answers

What does health care reform mean for you? The Patient Protection and Affordability Care Act brings many changes to your health insurance policy. You may be wondering how the new law will impact the cost, your healthcare experience, and maintenance like paying for prescription medications.

Lighthouse is here to simplify this complex change and help you make smart health insurance decisions so you can access plans that are affordable and suit your needs.


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Health Care Reform, Translated

We’ll help you understand what health care reform means for you, and how you can access affordable health insurance that meets your budget while protecting your health.

First, let’s cover the basics of health care reform. What does it mean? What now? Here are some simple answers.

  • Access to care. Thirty-two million Americans will get health insurance. Uninsured citizens will be newly covered through private and public health insurance options. An individual insurance mandate requires you to purchase insurance, or pay a fine. Government subsidies will help Americans afford health insurance coverage in the private market. Medicaid will be expanded. Health insurance exchanges will help people find out if they are eligible for Medicaid, subsidies, and will help people find affordable coverage.
  • Preventive care. Health care reform requires health insurance companies to offer consumers free preventive services including routine check-ups, physicals and wellness care. Seniors will have access to preventive care at no cost.
  • Increased regulations. Health insurance companies will have to follow a national medical loss ratio (MLR) that requires them to spend 80 to 85 [percent of premiums on medical care. Only 15 to 20 percent of premiums can be spent on administrative expenses.
  • State grants. States will receive $250 million in the next five years to help review insurance rates. States can adapt regulations and rules on increasing rates and will have the power to deny any rates that are not justified. Health insurers will be required to post justifications for rate increases online.
  • Purchase or pay. Most Americans must purchase health insurance or pay a fine. The individual mandate will require that individuals purchase health insurance by 2014 or pay a fine. In 2014, the fine is either $95 or 1 percent of income (whichever is greater). In 2015, that fine increases to $325 or 2 percent of income; in 2016 the fine inflates to $695 or 2.5 percent of income. After 2016, the fine will be decided annually by a cost-of-living adjustment.
  • Medicare unchanged. You won’t see changes to Medicare, but seniors with Medicare Advantage may see changes in their benefits and/or rises in their health insurance premiums from health care reform. (Remember, Medicare Advantage plans are purchased through private carriers.)
  • Premiums will rise. Expect higher health insurance premiums as the cost of health care increases. Experts believe that the new laws will drive up premiums by at least 1 percent, but probably more. While there will be new insurance benefits for consumers, those will boost the price of coverage.
  • Elective abortions. The government will no longer pay for elective abortions. Companies can still cover abortions, but funds must be held in separate, private accounts and cannot be paid for with taxpayer funds.
  • Illegal immigrants. Illegal immigrants cannot participate in health care exchanges, even if policies are unsubsidized and paid for completely out of pocket. They will also not be eligible for new Medicaid programs.
  • A federal deficit. The Congressional Budget office estimates that the cost of reform will be about $1 trillion in the next 10 years and is expected to reduce the deficit by more than $100 billion. Reform is also expected to extend the Trust Fund of Medicare by 12 years.
  • Fraud reduction. Health care reform is designed to reduce fraud in private plans and Medicare plans. New systems will be implemented to reduce criminal activity and save on the estimated $100 billion annual costs associated with health care fraud. More legislation to fight fraud is expected to be introduced.
  • Reform approval. Through a procedural rule called “budget reconciliation,” the U.S. Senate approved the health care reform bill with a majority vote and sent it back to the U.S. House of Representatives for final approval. The legislation was approved in House by seven votes—219 (for) vs. 212 (against).

Health Care Reform: What to Know, When

Not sure what parts of health care reform apply right now—and what to look out for on the horizon? We’re here to help with this helpful health care reform timeline. We’ll walk you through the process anytime and help you understand what reform means for you. Plus, we’ll help you get affordable coverage for you and your family.


June 2010

  • Medicare recipients who reach the “donut hole’ are awarded a $250 rebate check.
  • Early retirees can gain more coverage through their employers.

July 2010
  • High-risk pools are established to provide individuals with pre-existing conditions health insurance coverage.

September 23, 2010
  • Consumers gain access to free preventive care.
  • Coverage for young adults is extended. Children can stay on their parents’ health plans until age 26.
  • Consumers can appeal decisions with an external review process. States set up regulations for the process.
  • Lifetime or annual limits on health insurance coverage are eliminated.
  • Children under age 19 cannot be denied insurance coverage due to medical conditions, and children with pre-existing medical conditions are guaranteed coverage.

January 1, 2011
  • Seniors reaching the donut hole receive a 50 percent discount when buying brand-name prescription drugs that are covered by Medicare Part D.
  • Seniors on Medicare receive free preventive care.
  • Health insurance companies must spend 80 to 85 percent of premium dollars on health care services (not administrative expenses).
  • Seniors considered high-risk receive better coordinated care after hospitalizations with the Community Care Transitions Program.

October 1, 2011
  • Disabled individuals on Medicaid can receive home and community services from the Community First Choice Option.

October 1, 2012
  • Long-term care insurance program, CLASS, provides assistance to adults who become disabled.

January 1, 2014
  • Health insurance exchanges will be implemented across the country to provide consumers and easy way to find health insurance coverage.
  • The individual health insurance mandate will require Americans to purchase health insurance or pay a fine.
  • Tax credits will be given to those who cannot afford insurance.
  • Individuals who participate in clinical trials cannot be dropped or limited by their insurance policy.
  • Individuals are guaranteed health insurance coverage regardless of health status. Insurance companies are not allowed to charge more for gender or health status.


Employers’ Obligations: Offering Coverage

As an employer, you are not required by the Affordable Care Act (ACA) to offer health insurance. But, if your company is classified as “large,’ you could face a tax penalty if you fail to extend health coverage. Not sure what this means for your business. We can explain and suggest options for providing affordable health insurance.

  • Defining ‘large.’ The ACA defines large as 50 or more full-time employees who work at least 30 hours per week. Large businesses that do not provide adequate health insurance coverage will be charged an assessment if any one of their employees receives a tax credit after purchasing their own coverage through a health insurance exchange. So, if any one employee buys his or her own insurance through an exchange, you could be charge a fine if your business meets ‘large’ criteria and fails to provide an adequate plan.
  • The cost of noncompliance. The penalty to large businesses that do not provide adequate insurance is $2,000 per employee beyond the business’s first 30 employees. This penalty is triggered once a single member of their workforce buys insurance through a public health insurance exchange and qualifies for a federal subsidy.
  • The unaffordable fine. You can avoid penalties by offering affordable coverage. Otherwise, your large business could be penalized $3,000 per employee for each employee who purchases coverage through a public exchange and qualifies for a federal subsidy.
  • Small businesses. The ACA defines a small business as one with fewer than 50 full-time employees. Small business owners are not required to make any changes once 2014 rolls around. They are completely exempt from the law and not subject to any tx assessments if they do not offer health insurance coverage to workers. Small business owners that decide to offer health insurance coverage can take advantage of a small business tax credit.
  • Small business tax credit. Small businesses that provide health insurance to employees are eligible for tax credits that work on a sliding scale. The credit applies as long as the business has up to 25 employees and pays average annual wages below $50,000. After 2014, the maximum credit is 50 percent for small business employers, and 35 percent for small, tax-exempt employers.
  • Defined contribution. Businesses are giving health insurance buying power to their own people through defined contribution, a growing trend. Employees are given a fixed sum of money annually to purchase their own health insurance. The employee is responsible for any medical costs that exceed that fixed amount. Employees can buy coverage through a private exchange. Defined contribution plans reduce paperwork and provide a fair system for all workers to obtain coverage.
  • Health Reimbursement Arrangements (HRAs). Employers can fund IRS-approved accounts with tax-deductible dollars. Employees can use these funds for qualified medical expenses. This allows employers to supplement health insurance benefits. Balances can roll over from hear to year. Employees cannot contribute to HRAs (as with HSAs), but there is no limit on employer contribution.

Crunch the Numbers

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