Among the more popular reforms included in the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, (collectively, the Act) are the “immediate health insurance reforms.” These provisions, which affect group health plans and insurers offering group or individual health insurance, become effective for plan years beginning on or after September 23, 2010. This summary addresses the principal immediate health insurance reforms, namely expansion of dependent coverage, prohibition on excluding children based on pre-existing conditions, coverage of preventive health services, limitations on rescission practices, and regulation of annual and lifetime limits on essential health benefits. While insurance policies that were in effect on the date of enactment (March 23, 2010) are generally grandfathered (for both the current term and any renewal terms) from compliance with the general insurance market reforms contained in the Act, four of the five aforementioned provisions are exempt from any grandfathering. Thus, except for the preventive health services coverage requirement, these principal reforms are effective for all plans for plan years beginning on or after September 23, 2010.
Dependent Care Coverage
Presently, parents typically cover their children as dependants through their employer’s health insurance, and most of these plans do not cover dependent children after age 19 if those children are not full-time students. Under the Act, all plans offering dependent care coverage must allow individuals to remain on their parents’ health insurance until the age of 26. An exception available to grandfathered plans until January 1, 2014, allows those plans to deny coverage to adult children if they are eligible to enroll in other employer-sponsored health plans. The Act and subsequent Internal Revenue Service (IRS) guidance in the form of Notice 2010-38 clarify that this coverage is available to children of covered members regardless of marital status, full-time student status or financial support.
Pre-Existing Condition Limitations for Children
The Act prohibits health insurers from excluding payment for coverage of pre-existing conditions for enrollees under age 19. Although the Act is less than clear with regard to children’s access to insurance, upon signing the Act into law, the Obama administration declared that insurers could no longer deny insurance to children based on pre-existing condition exclusions. A firestorm ensued as reports circulated in the press indicating that some in the insurance industry did not consider the pre-existing conditions limitations for children to apply to access. This prompted Representatives Henry A. Waxman, Sander M. Levin and George Miller, the chairmen of the three House committees with jurisdiction over health policy, to issue a joint statement on March 24, 2010, that read, in part, “Under the legislation that Congress passed and the President signed yesterday, plans that include coverage of children cannot deny coverage to a child based upon a pre-existing condition.” On March 29, 2010, Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services (HHS), issued a letter indicating that she would soon promulgate regulations ensuring that the pre-existing condition exclusion for children contained in the Act “applies both to a child’s access to a plan and to his or her benefits once he or she is in the plan.
Beginning in 2014, the Act prohibits pre-existing condition exclusions for all individuals regardless of age. At that time, an issuer may not make health coverage eligibility decisions based on health status; medical condition; claims experience; receipt of health care; medical history; genetic information; evidence of insurability, including domestic violence; or disability.
Coverage of Preventive Health Services
The Act also requires all non-grandfathered plans to cover certain preventive care services and immunizations recommended by the U.S. Preventive Services Task Force (USPSTF), the Centers for Disease Control, and the Health Resources and Services Administration. The legislation’s reliance on guidance from USPSTF was particularly controversial during the national health reform debate, as this regulatory body recently withdrew its recommendation that women under age 50 get regular mammography. As a result, the Act’s final language clarifies that the task force’s recommendations for breast cancer screening, mammography and prevention, issued in November 2009, are to be disregarded.
Limitations on Rescission
The Act also prohibits the practice of rescission, except in cases of fraud or where the insured makes an intentional misrepresentation of material fact. The legislation states that insurance coverage may only be cancelled with prior notice, and clarifies that consistent with current law, a plan may not request or require an individual to undergo genetic testing. The legislation further clarifies that the cancellation or non-renewal of an individual’s health plan purchased on the individual market must comply with the provisions of the Health Insurance Portability and Accountability Act (i.e., such a plan may only be cancelled in cases of nonpayment; fraud by the beneficiary; plan termination; movement by the beneficiary outside of the plan’s service area; and the termination of the beneficiary’s membership in an association, where such membership is a prerequisite to coverage).
Limitations on Annual Benefit Limits
Effective on the first day of the plan year on or after September 23, 2010, plans may no longer establish lifetime dollar limits on so-called “Essential Health Benefits” (EHBs). The Secretary of HHS is charged with determining which services constitute EHBs, although the Act specifies that at a minimum, the following classes of services must be included:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
For plan years beginning before January 1, 2014, plans may establish restricted annual dollar limits on EHBs, as long as the limits are not lower than acceptable levels that are to be established by the Secretary of HHS. In defining acceptable annual dollar limits, the legislation directs the Secretary to ensure that access to necessary services is made available with only a minimal impact on premiums. For plan years beginning on or after January 1, 2014, no annual dollar limits on EHBs may be established.
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