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Most of us don’t know the rules our insurance company must play by.

State and federal insurance law protects and defines your rights and makes sure you have access to the insurance benefits you need — when you need them — at a reasonable price.

Federal law also requires most Americans to have healthcare coverage. But there are exceptions, including the inability to pay for insurance.

There’s lots to say about insurance law. We’ve listed the highlights below.

Rules for Your Insurance Company

A lot of insurance law has to do with money — the way insurance companies make it and how they spend it.

  • Companies must spend at least 80% of the premiums they collect on their customers’ health care. Insurance companies offering policies to large employers must spend 85% of collected premiums on health care.
  • If a company spends less than the required percentage of premiums on healthcare, they must send rebates to all their customers.
  • A company cannot cancel a customer’s coverage unless the customer intentionally misrepresented a material fact or failed to pay their bill.
  • Companies cannot put a lifetime or yearly dollar limit on what the company will spend on healthcare in ten core areas of healthcare coverage.
  • Companies cannot refuse to sell insurance to anyone, regardless of a current or past medical condition. Companies cannot refuse to cover pre-existing conditions or charge you more because of a current or past medical condition.
  • Companies can still charge some people higher rates, but only based on three factors: tobacco use, age and geography. However, federal law puts limits on the amount companies can increase rates based on these factors.
  • Companies must extend coverage for children to age 26, even if they are married or no longer financially dependent on you.
  • By state law, the prices of all insurance plans sold in Montana must be submitted to this office for review. Insurance Department staff analyze all rates and determine if any increases are unreasonable. If we determine increases are unreasonable, the Commissioner can — and has — negotiated lower rates for Montanans.

Insurance companies are also required to sell plans that offer coverage in at least ten core areas, known as essential health benefits:

  1. Hospital visits and surgery
  2. Doctor’s office visits
  3. Prescription drugs
  4. Maternity and newborn services
  5. Mental health and chemical dependency services
  6. Lab work and imaging
  7. Rehabilitation services and services intended for skill acquisition, like speech therapy for a child who is currently non-verbal
  8. Dental and vision care for children
  9. Preventive care and management of chronic diseases, like diabetes
  10. Emergency services

The law does allow some exceptions to these requirements. If you are buying insurance for yourself, your family or for the employees of your small business through healthcare.gov, every policy must cover these essential health benefits. However, large employers — defined in the law as a business with 50 or more employees — do not have to offer insurance that necessarily covers services in all ten areas to be considered adequate insurance. It is possible you may have insurance that does not cover services in all ten areas.

If you are dissatisfied with your insurance for this — or any other reason — contact the Montana Insurance Commissioner’s office at 1-800-332-6148..

Rules for You

Federal health insurance law now requires that most Americans have healthcare coverage. This requirement creates a tax penalty for those who do not have healthcare coverage, unless they can prove that coverage is unaffordable for them.

How Do I Satisfy the Requirement to have health insurance

If you already have healthcare coverage through any of the following sources, you have met the requirement of the individual mandate and you will not pay a tax penalty:

  • Medicare;
  • Medicaid or Healthy Montana Kids (sometimes known as the Childrens Health Insurance Program or CHIP);
  • TRICARE (for members of the U.S. military, retirees, and their families);
  • Certain veteran’s health coverage;
  • A plan offered by an employer that offers “minimum essential coverage” and is affordable; or
  • Insurance bought on your own that meets the “minimum essential coverage” standard.

Exemptions

There are exemptions from the individual mandate, which means many Montanans will not pay a penalty if they choose not to buy insurance. You are exempt from the individual mandate if:

  • You have to pay more than 8% of your income for health insurance, after taking into account any employer contributions or tax credits;
  • Your family income is below the threshold for filing a tax return;
  • You are part of a religion opposed to acceptance of benefits from a health insurance policy or your are a member of a recognized healthcare sharing ministry;
  • You are an American Indian, an Alaska Native, or your are married to an American Indian or Alaska Native;
  • Your are not a citizen or not lawfully present in the U.S.;
  • You are incarcerated.
  • You can learn more about exemptions here

Penalties

Individuals who can afford health insurance but choose not to buy it face tax penalties enforced by the IRS.

  • In 2016 and beyond the penalty is $695 per adult and $347.50 per child (up to $2,085 for a family) or 2.5% of family income, whichever is greater.