Health care legislation is an important concern in the California health insurance market. It affects both the cost of health insurance and coverage options significantly. A recent study shows that 20% of the recent increases in health insurance premium is a result of legislation (primarily State). California is probably the most regulated State in the U.S. when it comes to health care and health insurance. Let's look at the some of the major bills passed, upcoming bills, and future trends.
This is the big one
driving all changes of the
California health market.
Below are key points and you
can find updates here.
Key Points for Health Reform
3/23/2010. Demarcation point between Grandfathered and newer plans which are subject to new mandates.
3/23/2010. First wave of new mandates. Preventative benefits to be covered at 100%. Children policies are guaranteed issue regardless of health. Life time maxes go away. Dependent children can remain on parent's plan till age 26. MLR requirements dictate a percentage of gross premium goes to benefits. Establishment of PCIP plan for people unable to qualify for individual/family.
7/1/2012 Maternity is covered on all plans for both grandfathered and non-grandfathered plans in California.
8/2012. Rebates go out to Californians based on MLR requirements.
10/1/2012 New requirements for benefits notification to employees with standardized benefit explanation.
Effective Jan 1st 2014, there will be four plans (platinum, gold, silver, and bronze) plus a lower priced option for young adults on both the individual and family market. Kaiser $30 Copay no-deductible plan is used as benchmark for metallics.
Fall of 2013, we should have benefit details and pricing since people can begin to enroll for coverage then for a Jan 1st, effective date.
Coverage will be guaranteed issue (regardless of health) for most Californians.
Between 130% (expanded Medi-Cal basis) of poverty and 400%, most Californians will receive an immediate subsidy when they purchase health insurance through the Exchange (online shopping market which we'll have access to from calhealth.net). Tiers (higher rates based on health) will go away on both individual and group markets.
We expect band compression since oldest age band can not be more expensive than 3 times the youngest age band. Age 40 and below will likely rise as a result.
Individuals that do not have adequate insurance will be levied a penalty (most likely through taxes)
Jan 1st, 2013, 3% tax on passive source of income for individuals making over $200K or couples making over $250K including real estate gains, dividends, etc.
Small Group will now be 1-100 employees but fines/mandates primarily affect groups over 50 employee (equivalent hours).
Most current plans will end on Jan 1st 2014 except for grandfathered plans (which will be few and far between especially on the group market).
Our take on Health Reform. There are many aspects we like. Our major concern is that of cost since the bill primarily addresses universal coverage but not efforts to keep cost down.
As we get more information, we'll continue to add it.
Additional Reading for Health Reform:
Maternity on all Plans
Health Reform Rebates
Guaranteed Issue for Children
Women's Preventative Coverage
Mental health parity essentially states that mental health benefits should match medical bills. California is one of the first States to pass such a bill and the US will likely follow suit on a Federal Level. This bill has greatly expanded coverage for important conditions and has also significantly increased insurance premiums. The brand-name medication coverage for depression, anxiety, and other qualified conditions alone is a significant factor due to the high cost and prevalence of these drugs. Let's take a quick look at the rough sketches of this bill:
Health & Safety Code 1374.72; Insurance Code 10144.5. Effective for contracts issued, amended, or renewed on or after 7/1/00. Does not apply to Medi-Cal HMOs.
Health plans must provide coverage for the diagnosis and medically necessary treatment of severe mental illness in any person or serious emotional disturbance of a child. The health plan may provide the required services through a separate or specialized health care service plan.
The benefits must include:
inpatient hospital services;
partial hospital services;
prescription drugs, if the plan covers prescription drugs.
Benefits that must be applied equally to all benefits under the health plan contract include:
maximum life benefits (caps);
individual and family deductibles.
Severe mental illness includes:
bipolar disorder (manic-depressive illness);
major depressive disorders;
pervasive developmental disorder or autism;
Serious emotional disturbance of a child is defined as a child who:
(1) has one or more mental disorders identified in the DSM, other than a primary substance abuse disorder or developmental disorder, that results in behavior inappropriate to the child's age according to expected developmental norms, AND
(2) meets the criteria specified in Welfare & Institutions code 5600.3 (a)(2) -- as a result of the mental disorder, ONE of the following occurs:
(A) The child has substantial impairment in at least two of the following areas: self-care, school functioning, family relationships, or ability to function in the community; AND either of the following occur:
(i) the child is at risk of removal from home or has already been removed from the home, or
(ii) the mental disorder and impairments have been present for more than six months or are likely to continue for more than one year without treatment, OR
(B) The child displays one of the following: psychotic features, risk of suicide or risk of violence due to a mental disorder, OR
(C) The child meets special education eligibility requirements (is an "individual with exceptional needs" identified by an individualized education program team as a child with a disability, and the child's impairment requires instruction, services, or both, which cannot be provided with modification of the regular school program).
California expanded the privacy requirements at the Federal level enacted effective March 24, 2003. This bill has created another level of documentation and procedure above and beyond the new Federal guidelines. Calhealth.net and Goodacre Insurance Services fully comply with Cal-GLBA and you can find more information on our Privacy statement.
SCHIP's Plan for Children
The State Children's Health Insurance Program (SCHIP) began in 1997. Also know as Title XXI, SCHIP was part of the federal Balanced Budget Act of 1997. SCHIP provides a capped amount of funds to states on a matching basis for federal fiscal years (FY) 1008 through 2007 to provide coverage to low-income uninsured children. SCHIP represents the most comprehensive federal effort to ensure health insurance coverage of children since the creation of Medicaid. Since the states have several options as to how they can develop programs to provide coverage to the children in their states, different parts of the country have been more successful than others in reaching out to low-income kids.
SCHIP will expire on September 30, 2007 unless it is reauthorized by Congress. The program enjoys wide bipartisan support but there are differences of opinion regarding the reauthorization. Some members of Congress would like to expand the program. Among the policy changes under consideration include formally allowing adults into the program, changing the program from a block grant to an entitlement and raising the eligibility criteria.
HSA or Health Savings Accounts
Health Savings Accounts are tax-advantaged personal savings accounts used in conjunction with a qualified high-deductible health plan (HDHPs) to help pay for unreimbursed medical expenses. Contributions to HSAs may be received from employers, individuals or any combination of both. Employer contributions are excludable from income and individual contributions are deductible, regardless of whether or not a taxpayer itemizes deductions. Annual contributions are limited to a statuary level and out-of-pocket maximums are limited, but individuals age 55 and over with accounts can make additional contributions. HSAs are portable and funds carry over to subsequent years.
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