Health Care Reform Frequently Asked Questions (FAQ)
Updated September 2010
Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
When will the health care reform law take effect?
The health insurance reforms adopted as part of the Patient Protection and Affordable Care Act (PPACA), and the subsequent reconciliation bill, are phased-in over the next 5 years. Most provisions will not take effect until Jan. 1, 2014. However, some new protections must be implemented when plans renew after Sept. 23, 2010. In addition, a new federal high risk pool program will begin this summer and greater transparency will be required of health care plans in the coming months.
Will I be required to give up my current coverage?
No. Health plans in effect as of March 23, 2010, are grandfathered under the law and will be considered “qualified coverage” that meets the mandate to have health insurance that begins January 2014.
Why does the law require me to purchase health insurance coverage?
The key goal of the health care reform law is to ensure that nobody can be denied coverage or be priced out of coverage due to a health problem. If you allow people to wait until they have a health problem to purchase insurance, the health insurance market simply will not work. There would be a small number of very expensive choices for everyone. So, the law requires that everyone have minimum coverage, creating a larger pool of both sick and healthy individuals.
When can my 21 year old be added to my plan?
The health reform law requires that insurers and employers providing dependent coverage to children make that coverage available to adult children of enrollees up to their 26th birthday. This requirement becomes effective for “plan years” beginning Sept. 23, 2010, so you will be able to enroll your child in group coverage at the first open enrollment period following this date.
If the child is 19 or older, the health plan may exclude coverage of pre-existing conditions for a period of time, as allowed by existing state and federal law until the prohibition on pre-existing condition exclusions takes effect in 2014.
When can I enroll my 10-year-old who has a pre-existing condition?
The health reform law prohibits insurers from excluding coverage of children’s pre-existing conditions for plan years beginning after Sept. 23, 2010. The Obama administration has indicated that it will interpret this provision to require that insurers provide coverage without pre-existing condition exclusions to children if they cover the parents, and the health insurance industry has signaled its intention to comply with this interpretation. More detailed guidance will be forthcoming from the Department of Health and Human Services.
What are “Exchanges”? Can I still purchase coverage through my agent?
Exchanges are the central mechanisms created by the health reform bill to help individuals and small businesses purchase health insurance coverage. Beginning in 2014, an Exchange will be established in each state to help consumers make valid comparisons between plans that are certified to have met benchmarks for quality and affordability. The Exchanges will also administer the new health insurance subsidies and facilitate enrollment in private health insurance, Medicaid and the Children's Health Insurance Program (CHIP). Nobody will be required to purchase health insurance through the Exchange, though subsidies will only be available for plans sold through the Exchange. If you would rather buy your insurance through an insurance agent or broker, you will be free to do so. However, the law's intent is to make purchasing insurance on the Exchange's website easy to do in a matter of minutes.
I have been denied coverage because I have a pre-existing condition. What will this law do for me?
Beginning as early as July 1, 2010, coverage will be available to individuals with pre-existing conditions who have been uninsured for at least six months through high risk pool programs in every state. These programs will provide coverage that immediately covers pre-existing conditions at premiums that are capped at the average cost of private coverage in your state's individual market.
In 2014, when the Exchanges open for business, insurers will be prohibited from discriminating against individuals with pre-existing conditions in offering or pricing health insurance policies. In addition, for those with qualifying incomes, subsidies will be available to reduce premiums and cost-sharing for plans purchased through the Exchange.
I am single, have no children and earn less than $10,000 per year. What coverage choices will be available to me?
Beginning in 2014, single adults earning between $10,830 and $14,400 will be able to choose whether to enroll in Medicaid or to purchase coverage through the Exchange with a generous federal subsidy. Those earning less than $10,830 will be eligible for their state’s Medicaid program, but not for subsidies in the Exchange.
My family income is about $45,000, but my employer does not subsidize our health insurance and we cannot afford it on our own. What will the new law do to make coverage more affordable?
Low- and moderate-income individuals and families whose employers do not subsidize health insurance coverage will be eligible for subsidies that enable them to purchase coverage through the Exchange in their state. The amount of these subsidies, which will reduce premiums and out-of-pocket costs for deductibles, co-payments and coinsurance, will depend upon the size of your family and your household income.
What should I do if my insurance company rescinds my coverage?
If your insurance company “rescinds,” or retroactively cancels, your health insurance coverage, it will be required, in plan years beginning Sept. 23, 2010, to provide advance notice of its intention to do so, and may only do so if you committed fraud or made an intentional misrepresentation of an important fact on your application. If your insurer notifies you that it wants to rescind your policy, and you have not done either of these things, request more information from the company. If you are not satisfied with their explanation, immediately contact the Department of Insurance to file a complaint.
How will the bill improve access to preventive care?
Beginning Sept. 23, 2010, plans that became effective after March 23, 2010, must, upon renewal, eliminate any cost-sharing for preventive services covered under the contract.
Can I still have a Health Savings Account (HSA)?
Yes, nothing in the legislation would infringe upon the ability of an individual to contribute to a Health Savings Account (HSA), or discourage an individual from doing so. The minimum level of coverage required to meet the individual mandate was specifically designed to allow for the purchase of a qualified high deductible plan that would complement the HSA.
Will my health insurance premiums continue to go up?
Unfortunately, the grim fact is that health care spending is likely to continue rising faster than general inflation well into the future, resulting in higher premiums. While some individuals and families with health problems may see their premiums decrease significantly under the new rating rules, for most Americans premiums will continue to increase from year to year. However, the new regulations are designed to prevent unreasonable and unexpected spikes in premiums and, over time, to slow the growth in health care spending.
How much will this new law cost?
The total cost over 10 years is projected to be $940 billion. This is more than offset by cuts in spending and increased fees and taxes, resulting in a reduction in total spending of $138 billion over 10 years, according to the Congressional Budget Office. Time will tell if these estimates are accurate and whether the offsets materialize.
NOTE: Unless otherwise indicated, the employer responsibilities described below begin on January 1, 2014.
Will large employers be required to provide health insurance coverage to their employees?
Yes. A large employer may be subject to an assessment if the employer: (1) chooses not to offer coverage, (2) offers coverage in which the plan’s share of total allowed costs of benefits provided under the plan is less than 60% of such costs, or (3) offers coverage in which an employee’s share of the premium exceeds 9.5% of his or her household income.
Small employers will not be required to provide health insurance or pay an assessment but may qualify for tax credits provided under the Affordable Care Act if health insurance coverage is provided. More information on the small business tax credit can be found at the Department’s website or by clicking here.
How does the Affordable Care Act define a “large employer”?
A “large employer” is defined as an employer who employed an average of more than 50 full-time employees on business days during the preceding calendar year.
How does the Affordable Care Act define a “full-time employee”?
A “full-time employee” is an employee who is employed on average at least 30 hours per week.
Are part-time employees factored into whether an employer is a “large employer”?
Yes. For purposes of the employer responsibility assessment, an employer’s total number of full-time employees is calculated by adding the number of full-time employees, as defined above, to the number of “full-time equivalent” employees it employs. “Full-time equivalent” employees are calculated by adding the number of hours worked during a month by all employees who are not full-time employees and then dividing that number by 120. For example, if an employer has 10 employees who are not full-time employees who worked a total of 600 hours during a month, the employer would have to add 5 full-time equivalent employees (600 ÷ 120 = 5) to the number of full-time employees it otherwise employs.
How will seasonal employees factor into whether an employer is a “large employer”?
An employer will not be considered a “large employer” under the Affordable Care Act if its workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year and the employees in excess of 50 employed during such 120-day period were seasonal workers. “Seasonal workers” are defined as workers who perform labor or services on a seasonal basis as defined by the Secretary of Labor and include retail workers employed exclusively during holiday seasons.
How much are the employer responsibility assessments under the Affordable Care Act?
If employer does not offer coverage and at least one full-time employee is eligible for a premium subsidy through an Insurance Exchange: $2,000 per full-time employee beyond the first 30. For example, if an employer with 75 full-time employees is subject to the assessment it would be responsible for paying $90,000 ($2,000 x (75-30)). The assessment is calculated on a monthly basis, i.e. if an employer fails to offer coverage for only half of the year, the total assessment would be $1,000 per full-time employee beyond the first 30, or $45,000 ($1,000 x (75-30)).
If an employer does offer coverage but at least one full-time employee is eligible for a premium subsidy through an Insurance Exchange, the employer will be assessed a penalty of $3,000 per employee that receives a subsidy through an Insurance Exchange. This assessment may not exceed $2,000 times the number of full-time employees beyond the first 30 full-time employees. For example, if an employer has 75 full-time employees this assessment cannot exceed $90,000 ($2,000 x (75-30)).
NOTE: An employee who is offered employer-sponsored coverage may be eligible for a premium subsidy through an Insurance Exchange if the employee's household income is between 100% and 400% of the federal poverty level (FPL) and: (1) the required premium contribution for the employer's plan exceeds 9.5% of the employee's household income, or (2) the employer offers coverage in which the plan’s share of total allowed costs of benefits provided under the plan is less than 60% of such costs.
What/who are “exempted” employees for purposes of the assessment?
No employees are "exempted" per se under the employer responsibility assessment provisions of the Affordable Care Act. However, as described above, the first 30 full-time employees are excluded when calculating the penalty for employers not offering coverage, or when calculating the cap for employers that do offer coverage.
There are “exempted” employees for purposes of the small business tax credit, such as sole proprietors, partners, shareholders owning more than two percent of an S corporation, and owners of more than five percent of other corporations. More information on the small business tax credit can be found at the Department’s website or by clicking here.
Will a large employer be required to contribute a minimum amount of an employee’s salary to health insurance coverage?
The Affordable Care Act does not set a minimum employer contribution based strictly on an employee’s salary. However, if any full-time employees are eligible for premium subsidies through an Insurance Exchange (see note above) the employer may be subject to an assessment.
If low income employees decline coverage that is offered by an employer, will an employer be subject to an assessment?
No, if the employer's plan is affordable and provides minimum value as defined by the Affordable Care Act. In other words, if each full-time employee with a household income between 100% and 400% of FPL is ineligible for a premium subsidy through an Insurance Exchange (see note above), an employer will not have to pay an assessment, regardless of whether any such employee declines the employer's offer of health insurance coverage.
If an employer offers health insurance coverage, will it also be required to offer dependent or family coverage?
No. The Affordable Care Act does not require employers to offer dependent coverage.
Will an employer be required to provide both full-time and part-time employees with health insurance?
Employers are encouraged to provide health insurance coverage to part-time workers, but will not be assessed a penalty under the Affordable Care Act for failing to provide part-time employees coverage.
If an employer has 75 full-time employees, and 30 obtain coverage elsewhere, will the employer still be required to provide health insurance coverage?
Yes, the employer would still be considered a “large employer” based on the number of full-time employees it employs.
Does the Affordable Care Act restrict the annual coverage limits an employer’s plan can impose per employee?
Yes. Insurers and group health plans cannot impose annual limits on essential health benefits beginning in 2014. Before that time, the minimum annual limit allowed on essential health benefits is as follows:
- $750,000 for plan years beginning on or after September 23, 2010, but before September 23, 2011;
- $1,250,000 for plan years beginning on or after September 23, 2011, but before September 23, 2012; and
- $2,000,000 for plan years beginning on or after September 23, 2012, but before January 1, 2014.
Will an employer who purchases health insurance coverage through an insurance agent be required to go to an Insurance Exchange to purchase insurance?
No, the Affordable Care Act specifically states that employers are not required to purchase health insurance coverage through an Insurance Exchange.
Will an employer be able to continue providing assistance to its employees through flexible spending accounts?
Yes, the Affordable Care Act does not eliminate or discourage these options.
What is the reinsurance program for early retirees?
From June 23, 2010, until January 1, 2014, the Affordable Care Act creates a reinsurance program for employers who provide insurance to early retirees from age 55 to 65 that are not otherwise eligible for Medicare. Employers must apply to HHS to participate in the program.
Will my Medicare benefits be cut under the new law?
No, the Patient Protection and Affordable Care Act (PPACA) does not eliminate or reduce benefits provided under Medicare.
I currently have a Medicare Advantage plan. Will I be able to keep it?
Yes. The PPACA does not require individuals to drop their Medicare Advantage coverage. It should be noted, however, that Medicare Advantage plans are not guaranteed renewable. Carriers may pull out of a market at the end of the year, forcing enrollees to change carriers or return to Medicare. The PPACA does cut payments to Medicare Advantage plans, which could result in carriers pulling out of more areas.
My prescription drug costs push me into the “doughnut hole” every year. Will I receive any relief under the new law?
Seniors who reach the gap in prescription drug coverage known as the “doughnut hole” will receive a $250 rebate in 2010. Beginning in 2011, those in the “doughnut hole” will receive a 50% discount on prescription drugs and the gap will be phased out until it is eliminated in 2020.
When will the new preventive care improvements begin?
Under the PPACA, all Medicare beneficiaries will receive preventive services without cost-sharing beginning Jan. 1, 2011. In addition, an annual wellness visit to create a personalized prevention plan will now be provided under Medicare.
I have a Medicare Supplement (Medigap) plan. Must I make any changes to my plan under the new law?
No, the PPACA does not require seniors to change their Medigap coverage. However, the law will be adding cost-sharing requirements to plans C and F that are sold after Jan. 1, 2015.
For More Information
Call the Office of Consumer Health Insurance Toll Free at (877) 527-9431 or visit us on our website at http://insurance.illinois.gov