Health Insurance Reform Update

Besides the benefits that debuted in 2010, such as allowing parents to keep their adult children on their health insurance until age 26, and requiring insurers to accept children under the age of 19 with all of their pre-existing conditions, and prohibiting insurers from cancelling coverage when people get sick (except in cases of fraud), there are nine ways the healthcare reform law may affect you in 2011.

1. Starting this year, health insurers are required to spend at least 80% of their premium dollars on medical care or give rebates to consumers. The goal is to restrain executive salaries, administrative and marketing costs, and overall profits of insurers. Also, regulators have proposed that beginning July 1 premium increases of 10% or more be subject to review by state and federal government. Although the Insurance Commissioner in California has the authority to question rate increases, this additional oversight would be helpful in states where there is no such authority.
2. In 2011 the law begins to close the notorious doughnut hole gap in prescription drug coverage for Medicare recipients. Starting in January, drug companies will give seniors 50% off brand drugs while in the doughnut hole.
3. Chain restaurants and vending machine operators will now have to display calorie content on menus and drive-thru signs, as well as provide diners with a brochure detailing nutritional information and fat content of their dishes.
4. Wealthier Medicare beneficiaries will pay higher Part B premiums in 2011 but the income threshold was adjusted to prevent more people from inclusion into this affected group. The law freezes the threshold at the current level of incomes of $85,000 or above for individuals or $170,000 for couples.
5. Over the counter drugs can no longer qualify for Flexible Spending Accounts (FSA), Health Reimbursement Arrangements (HRA), Health Savings Accounts (HSA), or Medical Savings Accounts (MSA) unless there is a doctor's prescription.
6. Medicare is increasing payments by 10% to primary care physicians as an incentive to address the shortage of primary care providers. The bonus will run from January 1 until the end of 2015.
7. Medicare beneficiaries will be able to get free preventive services, eliminating any cost sharing such as copays or deductibles, beginning in January. They can also get a free annual wellness exam from their doctor who will give them a personalized prevention screening schedule for the next decade. The law also eliminates any cost sharing for the Welcome to Medicare physical exam that previously was subject to a 20% copay. For small employers with fewer than 100 employees the law authorizes the federal government to issue grants to companies that establish wellness programs focused on nutrition, smoking cessation, physical fitness, and stress management.
8. Payments for Medicare Advantage Plans (HMOs) are being restructured. Rates will be frozen at 2010 levels with lower rates phased in beginning in 2012. Some plans may respond by eliminating ancillary benefits like dental and vision.
9. Starting in July, Medicaid will stop paying claims for treatment of some hospital acquired infections, following the ban of payments by Medicare and private insurers. It is estimated that about 1.7 million patients pick up life threatening but preventable infections while hospitalized.