Affordable Care Act (ACA) Summary and Updates
By Julia Day, MSW
Contributions from Bryon MacDonald
Disability Benefits 101 Information Services
California Work Incentives Initiative, World Institute on Disability
March 4, 2011
The Affordable Care Act (ACA) of 2010 (1) will lead to significant changes in our nation’s health care system, including extending health care coverage to many more Americans.
Many of the changes in the new law do not happen right away, but will take effect over the course of many years, through 2020. This summary timeline shows when major reforms that will affect the general public are expected to go into effect, so that you can prioritize what to learn about first. This timeline is designed to give you more detailed information about changes that have happened already, or will happen soon. The timeline summarizes changes that you can expect down the road. We will continue to keep track of health care changes and update this timeline as more information on the reforms becomes available.
Changes Important for People with Disabilities
Many changes brought about by this new law are of particular significance to people with disabilities.
⇒ These items important to people with disabilities will be marked using this arrow bullet.
Implementation Timeline for Major Health Care Reforms
In Progress Now:
⇒ Creation of High-Risk Pools (called the Pre-Existing Condition Insurance Plan)
- People who can’t get insurance because of pre-existing medical conditions, including mental health conditions, can join the Pre-Existing Condition Insurance Plan (PCIP).
- The federal government gave states the option to run the PCIPs on their own, with federal funding, or to have people in their state use a federal PCIP that the federal government will run.
- PCIPs in each state operate under the standards described in the law. However, the plans may be different in each state.
- All states now have PCIPs in operation.
- The PCIPs are meant to be temporary; they will end on January 1, 2014, when government-regulated insurance exchanges start operating. By this date, the law also says that insurance companies won’t be allowed to deny people coverage because of pre-existing conditions.
How the Pre-Existing Condition Insurance Plans (PCIPs) Work
- For people who live in states where the PCIP is run by the federal government, there are now three options for plans: a standard plan, an extended plan, and a health savings account plan. For more information about these plans, go to: http://www.healthcare.gov/news/factsheets/new_plan_options_2011.html.
- The federal PCIP will now offer a special child-only rate for children under 18.
- People have to pay premiums to participate in the PCIPs. The law limits premiums to “standard rates”, or the average amount private insurers in the state charge for premiums for similar coverage.
- Older people can’t be charged more than four times what younger people are charged to participate in the plan.
- There are limits on out-of-pocket expenses for participants in the PCIP ($5,950/year for an individual and $11,900/year for a family).
How to Apply
- To apply to a PCIP you must be a U.S. citizen or lawfully present in the United States; have had no health coverage for the last 6 months; and have a pre-existing condition, which will be defined by each PCIP. You can apply no matter what your income is.
- People living in states that are letting the federal government run their PCIP can apply online and get coverage within a month.
- Residents of states running their own plans have different application and enrollment dates.
- To learn more about what is happening in your state and find out how to apply, go to: www.HealthCare.Gov/law/about/provisions/pcip/index.html.
⇒ Medicaid’s Money Follows the Person Grants Extended
- Currently, Medicaid’s Money Follows the Person grants provide flexible funding that lets a person who needs long-term care services get services that are most appropriate to what they need and want. As a person’s needs change over time, this funding gives them the flexibility to move from institutional to community-based services and still keep their funding.
- Health care reform extends these grants until September 2016 and broadens the eligibility standards.
- ACA also adds $2.25 billion in funding to help states pay for the cost of moving someone from an institution to the community.
⇒ Rescission Outlawed
- Insurance companies aren’t allowed to drop people’s coverage when they get sick (this is known as “rescission”), something that was happening to thousands of Americans each year.
⇒ New Coverage Options for Children
- Insurance companies aren’t allowed to deny coverage to children under 19 because of pre-existing conditions. Insurance companies may decide to restrict enrollment to specific enrollment periods; children would have to be enrolled during those periods to get coverage.
- Children can to stay on (or be added to) their parents’ insurance policies until they turn 26, if they can’t get insurance through a job. This applies to insurance plans that provide dependent coverage. The first open enrollment period for this coverage started on September 23, 2010.
⇒ Ban on Lifetime Coverage Limits
- For new individual insurance plans that start after September 23, 2010, and all group plans, insurance companies aren’t allowed to put caps on the amount they will spend on lifetime coverage costs on “essential benefits”. Essential benefits include things like hospital stays, doctor visits, and prescription drugs.
- Annual limits are restricted in all group plans and new individual plans, and will be phased out until 2014, when annual limits are banned completely.
♦ More Preventive Services Covered by Private Health Coverage
- For new plans beginning after September 23, 2010, insurance companies have to cover certain recommended preventive services, like cancer and diabetes screenings. Insurance companies are required to offer these services free to the patient - without deductible, coinsurance, or copayment charges.
- The law ensures that many preventive health services for children are free, including well-baby and well-child visits up to age 21, and many vaccines.
♦ Consumers Can Appeal Insurance Company Decisions
- For new plans beginning after September 23, 2010, consumers can appeal the decisions that their insurance company makes, including claims that are denied.
- People have the right to appeal the decisions through the insurance company’s own internal process. This internal review process has to meet certain standards of fairness.
- If a person goes through the insurance company’s appeals process and is still denied, they can appeal decisions to an independent outside decision-maker.
⇒ Improvements to Medicaid Home and Community-Based Services (HCBS)
- In 2005, there was a section added to the Social Security Act called 1915(i), which gave state Medicaid programs the option to provide Home and Community-Based Services (HCBS) to people with disabilities before they need an institutional level of care, and also to people with mental health and substance use disorders.
- Many states did not choose to provide these services. While it is still optional for states to provide these services, the ACA changes and adds to Section 1915(i) to remove many of the barriers to states to offering these services, and improves quality of services and access to HCBS for people with disabilities.
- As long as people meet a state’s eligibility requirements, the state can’t limit the number of people who can get HCBS. HCBS have to be offered to every eligible person in the state.
- The amount of money that someone can make and still be eligible for HCBS has gone up, and states can now provide services to people with incomes up to 300% of the Supplemental Security Income (SSI) Federal Benefit Rate (in 2011 this is $2,022 per month).
- States are encouraged to let people who get HCBS choose what services the money goes to. This means that people with disabilities can take a more active role in making choices about the services they get. The details about which services a person will choose have to be named in the plan of care.
- The ACA expands the types of services that a state can offer as part of HCBS. It also allows states to extend full Medicaid benefits to people who are using HCBS.
♦ Prescription Drug Discounts for People who Fall in Medicare’s Donut Hole
- Medicare Part D has a gap in prescription drug coverage called the “donut hole”. Under Medicare Part D, when a person’s prescription drug costs reach a certain amount ($2,840 in 2011), Medicare stops paying for any of their prescription drug costs. The person has to pay for their drugs out-of-pocket, until they reach the maximum out-of-pocket amount. Once they reach this maximum, they are out of the donut hole - Catastrophic Coverage begins, and Medicare starts to help cover the costs again.
- Before the ACA, a person had to pay for 100% of their prescription drug costs while in the donut hole.
- Since January 1, 2011, people on Medicare who fall within the prescription drug coverage gap (the “donut hole”) get a 50% discount on brand name prescription drugs and a 7% discount on generics.
- The full cost of the drugs (rather than the discounted amount) will still count towards the person’s out-of-pocket maximum, the amount at which Medicare starts to cover some prescription drug costs again.
- This discount will continue to grow until 2020, when the donut hole coverage gap is closed completely.
♦ More Preventive Services Covered by Medicare
- Starting January 1, 2011, people on Medicare are able get a free wellness visit and personalized prevention plan each year.
- There are no copayment, deductible, or coinsurance charges for recommended preventive services, like certain vaccines and cancer screening.
♦ Improvements to Medicare Advantage
- Right now, because of how the system was set up, Medicare has to pay much higher rates to insurance companies for people on Medicare Advantage than for people on Original Medicare. To help pay for this difference, all people on Medicare pay higher premiums, including the more than 75% of people on Medicare who are not part of a Medicare Advantage plan.
- The ACA will reduce these Medicare Advantage overpayments over time, so they are more equal to Original Medicare payments.
- People with Medicare Advantage plans will continue to get all guaranteed Medicare benefits.
♦ New Regulations on Insurance Companies
- Starting January 1, 2011 insurance companies are required to spend at least 85% of all the money they get from premium payments on health care services and quality improvement, for large employer plans (80% for individual and small employer plans). If insurance companies don’t meet these percentages because their administrative costs or profits are too high, they have to pay rebates to their customers.
- If insurance companies want to raise premium rates, they have to turn in an explanation to the government. If their rate increases are excessive, they may not be allowed to take part in the State Health Insurance Exchanges.
- New plans and all plans in the State Health Insurance Exchanges will have limits on what insurance companies can charge customers for out-of-pockets costs, like copayments and deductibles.
⇒Medicaid’s Community First Choice Option Begins
- The ACA has incentives to encourage states to adopt the Medicaid Community First Choice (CFC) Option. Choosing the CFC Option means that state Medicaid plans offer home and community-based services as a rule, instead of the exception. The CFC Option begins on October 1, 2011.
- In states that adopt this policy, people with disabilities who are on Medicaid, have income below 150% of the Federal Poverty Level, and are eligible for institutional care, can choose community-based services instead of institutional care.
⇒ The CLASS Act Begins
- The Community Living Assistance Services and Support Act (CLASS Act) provides for voluntary, self-funded, long-term care insurance through the workplace. This insurance will help pay for long-term care costs for people with disabilities and elderly people.
- Employers decide whether they want to participate. If an employer decides to participate, the employees are automatically enrolled and premium payments are made through automatic payroll deductions. Employees can opt out.
- For people who are self-employed, or work for employers who don’t choose to offer the program, there will be a way to choose to enroll as an individual.
- People who participate in the program will have to pay premiums for five years before they are eligible to collect benefits. There will be no income or asset limit in order for people to participate in this program or collect payments.
- There will be no screening for pre-existing conditions. People with disabilities who participate will be able to start getting cash benefits from this insurance after five years, and they will also be able to use their insurance to pay for their long-term care in the future.
- After five years, if they meet the eligibility criteria, people can start collecting payments, which will be a minimum average of $50 a day. There will be no lifetime benefit limit. This benefit will not count as income when determining eligibility for benefit programs like SSI or SSDI.
- People will be able to use the cash benefit to pay for their choice of a wide variety of long-term care services, including home health care workers, assistive technology, adult day care, transportation, or the cost of assisted living.
- The program will be run by Departments of Health and Human Services, which will write the rules about how much the premiums will cost and what disabilities qualify for the insurance benefits. These rules must be written by October 1, 2012.
- This program will make long-term in-home support services more affordable, and will help people with disabilities stay in their homes and communities.
- People who are currently using Medicaid and are institutionalized in a nursing home or other institutional setting will not be able to sign up.
⇒ New Accessibility Standards for Medical Equipment
- The Access Board develops accessibility standards in many settings, to meet the requirements of the Americans with Disabilities Act (ADA) and other laws. The Access Board has been authorized to come up with new accessibility standards for medical equipment. These new standards will be developed by 2014.
- The new standards should provide for independent access to medical equipment as much as possible.
⇒ Ban on Pre-Existing Condition Rejections
- Insurance companies will no longer be able to deny anyone coverage or charge someone more because of a pre-existing condition, or to cancel coverage because of a new health condition.
⇒ Ban on Annual Coverage Limits
- For new individual insurance plans that start after January 1, 2014, and all group plans, insurance companies won’t be allowed to put caps on the amount they will spend on annual coverage costs.
⇒ Expansion of Medicaid Eligibility
- Medicaid, which provides health care coverage to low-income people, will become available to more people. It will expand to cover more low-income people, including adults without children, and adults without a disability.
- Because Medicaid will include low-income adults without disabilities, people with disabilities won’t have to go through a complicated disability determination process anymore to become eligible for Medicaid. This will also help people with disabilities who did not meet the old Medicaid definition of disability.
- The expansion will include people with incomes up to 133% of the Federal Poverty Level (about $28,000 for a family of 4).
♦ Limits on Insurance Company Rates
- Insurance companies will be limited in their ability to charge higher rates because of health status, gender, or other factors.
- Higher premiums will be allowed based on age (no more than three times the amount charged for young people), geography, family size, and tobacco use.
♦ State Health Insurance Exchanges Begin
- States will create health insurance exchanges, which will provide a way for individuals and small businesses to buy more affordable coverage. The exchanges will allow people to comparison shop for standardized health packages, and will give tax credits to help people afford coverage. People will also be able to join together in groups to negotiate more affordable group insurance.
- The law requires that state exchange packages include essential health benefits:
• Ambulatory patient services (outpatient care like doctor’s visits)
• Emergency services
• Maternity and newborn care
• Mental health and substance use disorder services
• Prescription drugs
• (Re)habilitative services and devices
• Laboratory services
• Preventive services and chronic disease management
• Pediatric services, including oral and vision care
♦ Employers Required to Provide Coverage
- Most employers will be required to provide coverage, or pay a fine if they don’t (there will be exceptions for small businesses with less than 50 employees). This will make employer-sponsored health coverage more widely available.
♦ Individuals Required to Get Coverage
- Most individuals will be required to get coverage, or to pay a fine if they don’t. However, there will be healthcare subsidies to help people buy coverage if their income is below 400% of the Federal Poverty Level (about $88,000 a year for a family of 4).
- If affordable coverage is not available to an individual, they will not be penalized.
♦ Medicare’s Donut Hole Phased Out
- The “donut hole” gap in Medicare Part D drug coverage will be phased out, significantly lowering out-of-pocket costs for people on Medicare.
♦ Health Coverage Expanded
- Health coverage is expected to have expanded to an additional 32 million people by the end of 2019, and to cover 95% of non-elderly legal U.S. residents.
Patient Protection and Affordable Care Act (Public Law 111-148)
Kaiser Family Foundation
The New York Times
Centers for Medicare & Medicaid Services
Departments of Health and Human Services
The National Council on Independent Living
California HealthCare Foundation
California Health Advocates
Congressional Budget Office
House Committees on Ways and Means, Energy and Commerce, and Education and Labor
For additional information and updates on health care reform: www.HealthCare.Gov.
(1) In March of 2010, U.S. Congress finished passing the Patient Protection and Affordable Care Act (H.R. 3590) and the Health Care and Education Reconciliation Act of 2010 (H.R. 4872). Soon after, President Obama signed these pieces of legislation into law, creating Public Law 111-148 (the Patient Protection and Affordable Care Act) and Public Law 111-152 (the Health Care and Education Reconciliation Act of 2010). Together, these are commonly known as the Affordable Care Act (ACA) of 2010.