Many attempts have been made at Health Care Reform in the U.S. The most recent – The 2010 Patient Protection and Affordable Care Act – is usually referred to as the Affordable Care Act (ACA) or Obamacare. The long, complex piece of legislation is reforming the health insurance industry by providing more Americans with affordable coverage with the ultimate goal of curbing health care spending growth in the U.S. Among the ACA reforms, are new benefits and protections, rules for insurance companies, taxes changes and more. To fully understand how health care reform affects you, read on.
The ACA health care reform was enacted to make it easier for you to get affordable medical treatment, prescription drugs and preventive care. The Act may have had a rocky start, but the ACA did make it financially possible to get health insurance for millions of Americans who could not afford care before. By mid-2014, the ACA has achieved the following:
- 3 million young adults who were previously ineligible to get coverage through their parents’ health insurance can now do so.
- 3 million seniors have access to better coverage for prescription drugs.
- Millions of adults and children have access to no-cost preventive care to ward off or identify health issues early on.
Here are some of the major reforms to the health care system provided by or accelerated by the Affordable Care Act:
Changes That Affect You (and Everyone Else)
Ending Limits on Care – In the past, medical insurers put dollar limits on how much money could be spent annually and lifetime on care. Which meant, if you had a transplant or expensive illness, you might run out of insurance for the year or possibly forever. The ACA eliminated lifetime and annual limits on health benefits. There can still be limits as to how many times you may access certain services in a given year, such as chiropractic or physical therapy, but no care can be denied for the rest of your life.
Free Preventive Services – All plans now cover certain preventive services, like mammograms and colonoscopies, for free. The idea is to keep you healthy, screening for serious conditions like cancer and heart disease, offering flu shots, contraceptives and more to allow you to better manage your health.
Eliminating Discrimination Against Those with Pre-Existing Conditions – Health insurers can no longer deny you coverage or charge more to someone with a pre-existing condition.
Coverage for Young Adults – In the past, many young adults who finished school and did not have health insurance through an employer went without coverage. Now, if you are under age 26, in most states, you can be on a parent’s health insurance plan, even if you are no longer a full-time student.
More Businesses Offering Health Insurance to Their Employees – Employers must now provide health insurance to employees who regularly work 30 or more hours a week. In the past, many restricted insurance coverage to those who worked full-time and many small businesses did not offer insurance to their staff. That said, employers are turning away from the increasingly expensive and confusing Group insurance plans, turning instead to the more popular Defined-Contribution plans.
New Funding Approaches – Many companies are considering a defined contribution approach to health insurance where they contribute a set amount toward employees’ coverage. The idea is that companies can control their benefits costs by budgeting a set amount per employees. The employees then get the freedom to purchase a plan that meets their needs. This is quickly becoming the most popular plan for small business owners.
Health Savings Accounts and High Deductibles Plans Offering Greater Value Proposition – High deductible health insurance plans traditionally have considerably lower premiums than others. Health Savings Accounts allow people to save tax-advantaged money to pay for health care costs until the deductible is met. The combination offers people more flexibility to make choices about their care and increasing awareness of true costs of care, thereby encouraging a more consumer approach to purchasing care.
Reducing Costs for the Uninsured – Some estimates say that families typically spent $1,000 extra a year in health care costs to cover care given to the uninsured in the U.S. Now, with health insurance required, the numbers of uninsured are falling. Some argue that tax dollars, in the form of subsidies, are paying for that coverage, but the costs are expected to be less than covering the uninsured.
Advantages for Small Businesses
Small Business Tax Credits – Historically, because of economies of scale and bargaining power, larger employers paid less for health coverage than smaller businesses. Now, businesses with 25 or fewer full-time-equivalent employees and average wages of $50,000 or less may be eligible for a tax credit for providing insurance to their staff, thereby reducing their costs considerably.
Greater Options for Small Businesses – The ACA created the Small Business Health Options Program (SHOP) Marketplace to help smaller-sized companies purchase health coverage to their employees. This is different from the Health Insurance Marketplace where people like you can purchase individual coverage. Due to many confusing changes in group insurance, however, many employers are looking to Defined-Contribution plans as an affordable insurance solution for their organizations.