In this report
Overview
2 big changes will affect Medicare

Health reform: Your next steps

Last reviewed: June 2010
Illustration of a man at the crossroads
Illustration by Shout

The long-debated Patient Protection and Affordable Care Act is now the law of the land. The sweeping new law extends coverage to many previously denied and adds benefits for others.

The biggest reforms don't start until 2014. That's when insurers will no longer be able to turn down anyone with a pre-existing condition, when almost everyone will be required to carry health insurance or pay a penalty, and when, in turn, Americans of modest means will start getting tax credits to help them pay for that insurance.

But a few changes, some of them significant, start soon. In this report, we tell you what we know and what you need to do—or watch for. New rules and regulations probably won't be formalized until June at the earliest, so some things are still uncertain. (For the latest updates, go to www.ConsumerReportsHealth.org.)

Our information is based on what's in the bill itself, along with interpretation by experts on the health-care system. You could be affected by one or more of these reforms, depending on your work, health, or family circumstances:

If you have any kind of public or private health insurance

Medicare, Medicaid, and all new group and individual health plans will have to start covering 100 percent of the cost of proven preventive care. That means no co-pays, co-insurance, or deductibles. Examples of covered services: immunizations, colonoscopies, and mammograms. Existing plans that don't change do not have to offer this benefit. But it's unclear how big or small a change in a plan could trigger this requirement. The government is expected to issue new guidelines soon.

What to do

Check to see whether your plan has or intends to add those features, and be sure to schedule preventive care.

If you have a pre-existing medical condition

By late June the government has to set up a temporary high-risk insurance pool for people who can't get coverage on the individual market because of pre-existing conditions. This is meant to tide people over until 2014, when they will be able to buy any insurance that's for sale. Coverage in the high-risk pool will be comprehensive and more affordable. Premiums can't be any higher than "standard" rates for the same coverage. You won't be liable for more than $5,950 a year for in-network, out-of-pocket costs for an individual or $11,900 for a family. The bad news is that to get into the pool, you have to have been uninsured for six months, no exceptions.

There are still some uncertainties about the pool. The law doesn't specify what constitutes a "standard" rate or who is going to run the pool. It also doesn't address the situation of people whose current insurance permanently excludes coverage of their pre-existing condition. Are they considered uninsured or not? The law leaves it up to Kathleen Sebelius, Secretary of Health and Human Services.

Congress set aside $5 billion to subsidize the pool or pools until the major reforms take effect in 2014. Based on costs for the 35 existing state high-risk pools (which are expected to stay in business), experts say the $5 billion may not last that long, and the law says that when it's gone, the pool stops taking new members unless Congress comes up with extra money.

What to do

If you have a pre-existing condition and have insurance, no matter how expensive or meager, stay put. Don't even think about dropping it for six months so that you can get into the pool. The risks to your health and pocketbook are too great. If you're uninsured, sign up for the pool as soon as you're eligible.

If you have a child with a pre-existing condition

For children age 18 and under, the major immediate reform was intended to enable parents to freely buy for their children whatever insurance they wanted and could afford. But disagreements quickly erupted about whether the new law requires insurers to sell to new customers or to simply start covering the pre-existing conditions of customers they already have. At press time, it appeared that insurers were agreeing to cover pre-existing conditions for children whether the plans were old or new. But even so, there's nothing to stop them from raising premiums to cover the added costs. After 2014, they can't.

What to do

If you currently have coverage for your children, hold onto it until you have found better coverage at a lower price. If your child has been denied coverage altogether, look for new options starting in late September and compare them with the new high-risk pool option that will become available in late June.

If you are a young adult or the parent of one

Starting with the first plan renewal after Sept. 23, group plans must allow adult children to stay on their parent's insurance up to their 26th birthday if they don't have access to job-based coverage of their own. But employers have a lot of flexibility in designing their plans and may charge extra for the coverage.

What to do

If your employer offers a choice of plans at open-enrollment time and you know your child will be living far from home, check the availability of in-network care where he or she will be. If it's not good, try switching to a plan with a national provider network. Otherwise your child may have to come home for non-emergency care or pay more for out-of-network treatment. Young adults graduating this spring can sign up for COBRA or an individual policy to tide them over until they can get back on the parental plan.

If you develop a serious illness while on a plan

Rescission is the insurance company practice of canceling someone's coverage after the person comes down with a condition that is expensive to treat, such as HIV/AIDS or cancer. Insurers comb through patients' medical records to see whether they left anything off their applications, no matter how minor or unrelated to the medical problem. Patients have lost coverage for failing to disclose pre-existing conditions they didn't even know they had or for clerical errors in their records. Starting with your next policy renewal after Sept. 23, insurers can't do that. They can rescind a policy only when the patient has deliberately concealed knowledge of a pre-existing condition, such as a positive HIV test or a history of frequent chest pain.

What to do

The ban on rescissions is in no way a license for you to omit information on your insurance application. Come clean on everything that you know about. It's the best way to avoid trouble down the road. You'll also have to keep up with your premiums, because insurers can still cancel coverage for nonpayment.

If you get into a dispute with your health insurer

Right now, only customers of some insurance plans in some states have the right to appeal a denial of a claim to an impartial outside entity. Starting in 2011, everyone will be able to do so. This is an especially important new protection for people who have coverage through large employers. Most businesses with more than a few hundred employees are self-insured, meaning they pay employees' health costs directly, rather than buying insurance. (Your human resources department can tell you whether your company is self-insured.) Until now, self-insured plans haven't had to provide an avenue for external appeal of claims disputes.

What to do

Know your rights. Watch for notices from your health plan about updated procedures for appeals.

If you fear you may use up your policy's coverage maximum

Starting with the next policy renewal after Sept. 23, health plans will no longer be allowed to put a lifetime cap on coverage. Many plans now have such limits, especially low-cost plans with skimpy coverage. A serious illness can put you at the limit, so that sounds like a major improvement. But until 2014, it isn't, because insurers will still be allowed to put annual limits on the dollar value of benefits. The language in the law is vague about how restrictive those annual limits can be; policies are supposed to provide "access to needed services" with a "minimal impact on premiums." In practice, insurance experts say, that probably means that people with "junk" insurance will be stuck with their loophole-ridden policies until 2014.

What to do

If you have a policy with low annual caps, switch if you can afford it and if a new insurer will accept you. Otherwise, know the limits of your coverage and try to stay within them.

If you are shopping for insurance for yourself

Starting in July 2010, all states are supposed to have Web sites where you can look up available health-coverage choices, including private plans, Medicaid, Children's Health Insurance Programs, and high-risk pools. Information is supposed to use standard terms and include rates, co-pays, co-insurance, deductibles, and the percentage the plan spends on nonmedical items such as marketing, paperwork, and executive salaries.

What to do

If set up properly, those sites will be valuable tools for consumers to do the kind of comparison shopping for insurance plans that has been impossible in most states. Use yours to find the plan with the best balance of premiums and out-of-pocket costs for your medical situation and pocketbook.