ObamaCare and You

Grandfathered Health Plans

Under the healthcare reform law, individuals and employers/employees have the right to keep the coverage they had as of March 23, 2010 and are exempt from many reforms. These individual and group health plans are considered "grandfathered plans". Collectively bargained plans that were ratified before the date of enactment are grandfathered until the date that the last collective bargaining agreement related to coverage ends.

Review of Health Plan Premium Increases (federal rate review)

The Department of Health and Human Services (HHS) will establish a process- in conjunction with states - for review of fully insured premium rate increases. The provision also provides grants to states for reviewing premium increases.

Small Business Tax Credits

Provides tax credits to small businesses with fewer than 25 employees and average wages of less than $50,000 for their contributions to buying health insurance for employees. The tax credit starts at up to 35 percent and increases to 50 percent in 2014 when state insurance Exchanges become operational. A full tax credit may be available to small businesses with fewer than 10 employees and average wages of less than $25,000.

Early Retiree Re-insurance Program (ERRP)

Provides re-imbursement to participating employment- based plans for a portion of the costs of health benefits for early retirees.

The federal government will provide $5 billion to fund the program and participating employers or insurers will be reimbursed 80 percent of retiree claims between $15,000 and $90,000. The program will be effective through 2013.

Pre-existing Condition Insurance Plan

Provides a health coverage option if you have been uninsured for at least six months, you have a pre-existing condition or have been denied health coverage because of your health condition, and are a U.S. citizen or are residing here legally. The plan will be operated by the states or the federal government. Enrollment into the federal plan began July 1, 2010; implementation dates for the state-operated plans vary.

Consumer Website

This provision requires the Department of Health and Human Services (HHS) to develop an Internet website for consumers and small businesses to shop for health insurance. To visit the HHS website, please visit healthcare.gov.

Dependent Coverage to Age 26

Requires plans that offer dependent coverage to make the coverage available until a child reaches the age of 26. Both married and unmarried children qualify for this coverage. This rule applies to all plans in the individual market and to new employer plans. It also applies to existing employer plans unless the adult child has another offer of employer-based coverage (such as through his or her job). Beginning in 2014, children up to age 26 can stay on their parent's employer plan even if they have another offer of coverage through an employer.

Lifetime and Annual limits Prohibited

Individual and group health plans may not impose lifetime limits on the dollar value of essential benefits. Annual limits will be restricted until 2014 and eliminated altogether starting in 2014. Restricted annual limits do not apply to grandfathered individual plans. Recissions Prohibited Except for Fraud

Prohibits group health plans and health insurance issuers offering group or individual health insurance coverage from rescinding coverage except in the case of fraud or intentional misrepresentation of material fact.

No Pre-existing Conditions for Children

Plans may no longer impose pre-existing condition exclusions for children under 19 (does not apply to grandfathered individual plans).

Preventive Services With No Cost Sharing

New policies must cover the full cost of preventive care as recommended by the U.S. Preventive Services Task Force: recommended immunizations, preventive care for infants, children and adolescents, and additional preventive care for women.

Insurance Plan Appeals Process

New minimum requirements for internal and external claims appeals processes.

Non-discrimination Rules for Employers

Non-discrimination rules that currently apply to self-funded health plans are expanded to group fully insured health plans. Plans cannot base an employee's eligibility or continued eligibility on hourly or annual salary. Under the new rules, plans may be subject to penalties up to $100 per enrollee per day for violating the requirements.

Patient Protections

Requires group health plans and health insurance issuers offering group or individual health insurance coverage to ensure choice of healthcare professionals and greater access to benefits for emergency services. Plans that require or provide for a primary care provider (PCP) designation must allow each member to designate any in-network PCP, or pediatrician for children, accepting new patients. Plans may no longer require an authorization or referral to an Ob-Gyn. Prior authorization or increased cost-sharing for emergency services is also prohibited.

Medical Loss Ratio

Requires health plans to report the proportion of premium dollars spent on clinical services, quality, and other costs and provide rebates to consumers if the share of the premium spent on clinical services and quality is less than 85% for plans in the large group market and 80% for plans in the individual and small group markets. Requirement to report medical loss ratio effective for 2010; requirement to provide rebates effective beginning January 1, 2011.

OTC Drugs/Spending Accounts

Health savings accounts (HSAs) and flexible spending accounts (FSAs) may no longer be used to purchase over-the-counter drugs unless prescribed by a doctor. Increases tax for nonqualified HSA withdrawals from 10 percent to 20 percent, and for Archer MSA withdrawals from 15 percent to 20 percent.

Grants to Small Business Establishing Wellness Programs

Beginning in 2011, the law authorizes grants totaling $200 million over five years for small companies that start wellness programs focused on efforts such as nutrition, smoking cessation, physical fitness and stress management. The grants will be available to companies with fewer than 100 employees but only new wellness initiatives- those launched after March 23, 2010, the date the heathcare reform bill was enacted -are eligible. Additionally, employers can offer higher incentives to employees who participate in group-sponsored wellness programs beginning in 2014.

Funding for Health Insurance Exchanges

Provides grants to states to begin planning for the establishment of insurance Exchanges and Small Business Health Options Program Exchanges (SHOP), which will facilitate the purchase of insurance by individuals and small employers.

Comparative Effectiveness Fee

Starting in 2012, employers sponsoring group health plans must pay $1 per participant. The fee increases to $2 per participant in 2013, then to an amount indexed to national health expenditures thereafter. The comparative effectiveness fee phases out by 2019. Revenue from this fee will fund research to determine the effectiveness of various forms of medical treatment.

Flexible Spending Account Contributions

Starting in 2013 Contributions to flexible spending accounts for medical expenses are limited to $2,500 a year.

Health Insurance Exchanges

As of 2014, creates state-based insurance Exchanges (on-line market places) and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization. In 2014, individuals and small businesses with up to 100 employees can purchase health insurance on the Exchanges. States can allow large employers to participate beginning in 2017.

Individual Requirement to Have Insurance

As of 2014, requires U.S. citizens and legal residents to have qualifying health insurance. There is a phased-in tax penalty for those without coverage, with certain exemptions.

Pre-existing Conditions

As of 2014, individual and group health plans can no longer impose pre-existing condition exclusions for any person of any age (does not apply to grandfathered individual plans).

No Annual limits on Coverage

As of 2014, annual limits on essential health benefits are prohibited (does not apply to grandfathered individual plans).

Guaranteed Availability of Insurance (Guaranteed Issue)

As of 2014, health insurers must accept every individual and employer who applies for coverage.

Rating Restrictions

As of 2014, rating restrictions go into effect for new individual and fully insured small group plans. Insurance companies cannot base premiums on health status, claims experience or gender. Premiums can only vary by:

  • Age
  • Geography
  • Family size
  • Tobacco use (no more than 1.5:1)

Merged Markets

As of 2014, states are allowed to merge the individual and small group markets.


As of 2014, HHS will establish procedures, which may include rate schedules for broker commissions, for a state to allow brokers to:

  • Enroll individuals in any qualified health plans in the individual or small group market as soon as the plan is offered through an exchange in the state
  • Assist individuals in applying for premium tax credits and cost-sharing assistance for plans sold through an exchange

Essential Benefits

As of 2014, an essential benefit plan is created, which mandates the level of benefits that must be included in plans offered on the insurance Exchanges, as well as in the individual and small group markets outside the Exchange. Deductibles are limited to $2,000 for individuals and $4,000 for families in the small group market (self-funded plans and grandfathered plans are exempt from this requirement).

Cost-sharing Limits

As of 2014, cost sharing imposed under health plans is limited to current health savings account amounts (does not apply to grandfathered plans).

Wellness Programs

As of 2014, this provision permits employers to offer employees rewards of up to 30%, potentially increasing to 50%, of the cost of coverage for participating in a wellness program and meeting certain health-related standards.

Temporary Reinsurance Program

As of 2014, a temporary reinsurance program will be established for the individual market and funded by individual and group health plan assessments ($25 billion in 2014-2016) to provide payments to plans in the individual market that cover high-risk individuals.

Summary of Benefits and Coverage (SBC)

As of 9/23/12, group health plans and health insurance issuers must provide a Summary of Benefits and Coverage (SBC) document to applicants, policyholders or certificate holders, and enrollees. The SBC document must meet the format and content criteria of the final regulations, in order to provide consumers with a clear, concise summary of their plan benefits and allow them to compare coverage across plans and/or carriers. The SBC must be provided at specified timeframes upon enrollment and at renewal.

For self-insured plans, the employer is responsible to provide the SBC. An employer offering a self-insured plan may make arrangements with the carrier providing administrative services to produce the document.

If a material modification is made to a plan, other than in conjunction with a renewal or reissuance of coverage, and the content of the SBC is changed, notice of the change or an updated SBC document is required to be provided at least 60 days prior to the effective date of such material modification.