The Patient Protection and Affordable Care Act was signed into law on March 23, 2010. Everybody calls it Obamacare. With a name like that, you might think Obamacare is a new government insurance program.
The heart of Obamacare is insurance regulation.
Insurance Industry Reforms
Many insurance reforms were designed to put an end to insurance company practices that hurt customers. Now, insurers:
- 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.
- Must send rebates to customers if they spend less than the required percentage of premiums on health care.
- Cannot rescind a customer’s coverage unless the customer submitted fraudulent information or intentionally misrepresented a material fact.
- Cannot impose lifetime limits on insurance benefits or annual limits on what the insurer will spend on healthcare in ten categories called “essential health benefits,” (see below).
- Cannot refuse insurance to anyone, regardless of age, or because of their medical history. Coverage for pre-existing conditions cannot be excluded.
- Must extend coverage for dependent children to age 26
The Montana legislature has also taken steps independent of Obamacare to make health insurance more transparent. In 2013, Montana passed a law requiring health insurance companies to submit their premium rates to the Commissioner of Insurance before the rates take effect. The law gives Commissioner Lindeen an opportunity to review any rate increase and determine if they are reasonable. If the insurer doesn’t provide justification for the rate increase, the Commissioner can negotiate a smaller rate for customers in Montana.
Insurance Benefit Reforms
Obamacare also requires health insurance to cover a basic range of services, reducing the likelihood that customers will fall into unexpected gaps in coverage. By 2014, all insurance products must cover services in the following ten categories, known as essential health benefits:
- Hospital visits and surgery
- Doctor’s office visits
- Prescription drugs
- Maternity and newborn services
- Mental health and chemical dependency services
- Lab work and imaging
- Rehabilitation services and services intended for skill acquisition, like speech therapy for a child who is currently non-verbal
- Dental and vision care for children
- Preventive care and management of chronic diseases, like diabetes
- 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 in the Marketplace, 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. Obamacare is a federal law and Commissioner Lindeen was not involved in writing it. However, she seeks to ensure that the law is working for Montanans. Feedback from Montanans helps Commissioner Lindeen and her office know which parts of the law are and are not meeting the needs of the people of our state.
Insurance Access & Affordability Reforms
Before Obamacare, nearly 2 out of 5 Montanans who applied for health insurance coverage were denied. Those who were approved often ended up with “riders” that excluded coverage for past health problems (an example of a rider is when an insurance plan won’t cover treatment of a leg injury if the person had a knee problem in the past even if it was cured). Even with coverage, many Montanans had an increasingly hard time keeping up with premium increases. Under Obamacare, several market reforms have been put into place which are designed to increase access to and health insurance and make it more affordable. These include:
- Guaranteed issue. This means no insurance company can refuse to sell insurance to you based on your current state of health.
- Ending pre-existing condition exclusions. This means your insurance company cannot refuse to pay for certain services based on your medical history.
- Rating limits. This means an insurance company cannot charge you a higher rate based on your current health.
- Limited rating factors. There are three factors on which insurance companies can charge people higher rates: Tobacco use, age, and geography. However, Obamacare limits the amount insurance companies can increase their rates for these factors.
- Minimum loss ratio. This limits a health insurance company’s profits.
History of the Mandate
Beginning in 2014, Obamacare prohibits health insurance companies from denying coverage for people who have preexisting conditions, like diabetes or high blood pressure. Insurance companies rely on premiums paid by both healthy and unhealthy people to “spread the risk” and enable companies to pay high claims. If people aren’t paying premiums until they develop a health problem, insurers may not have enough money to pay all their claims.
As Congress was drafting the Affordable Care Act, the insurance industry argued it needed some assurance that people would be buying insurance and paying premiums before they got sick. The answer from Congress was the individual mandate. The rationale is that if every American is in the health insurance market, companies can afford the new consumer protections Obamacare mandates, like no longer charging unhealthy people more for coverage or refusing to sell insurance altogether to people who have had a serious illness like cancer.
Fulfilling the Individual Mandate
If you already have health coverage through any of the following sources, you have met the requirement of the individual mandate and you will not pay a penalty:
- 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);
- The veteran’s health program;
- 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.
Obamacare includes significant 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.
Individuals who choose to go without healthcare coverage face tax penalties enforced by the IRS. The penalty is phased in over time as follows:
- In 2014 the penalty is $95 per adult and $47.50 per child (up to $285 for a family) or 1% of family income, whichever is greater.
- In 2015 the penalty is $325 per adult and $162.50 per child (up to $975 for a family) or 2% of income, whichever is greater.
- 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.
Medicare and Obamacare
All Medicare benefits remain the same under Obamacare, with the exception of several new benefits. These new benefits include:
- Discounts on prescription drugs under Medicare Part D (read more at HealthCare.gov);
- Closing the “donut hole” for prescription drug coverage;
- Annual wellness exams at no cost to you; and
- Preventative services, like flu shots and cancer screenings, at no cost to you.
If I have Medicare, what do I need to do?
In short, nothing. If you are receiving Medicare benefits, whether through Original Medicare or Medicare Advantage, your benefits will remain the same. You do not need to purchase insurance. You automatically fulfill the requirements of the individual mandate.
Medicaid and Obamacare
Medicaid is a state and federal partnership that provides coverage to people with lower incomes, people with disabilities, and some families and children. Each state operates a Medicaid program with varying eligibility rules. In Montana, the Department of Public Health and Human Services (DPHHS) manages Medicaid.
Obamacare originally required states to expand their Medicaid programs to include all individuals and families making less than 133% of the federal poverty level. The federal government would pay all of the medical claims for people covered under the Medicaid expansion the first two years. Over the following years, the federal government would gradually reduce its share of the costs. From 2020 on, the federal government would pay 90% of the medical costs and states would pay 10%.
The U.S. Supreme Court, however, ruled that the federal government couldn’t require states to expand their Medicaid programs. As a result of the court’s decision, each state was free to expand their Medicaid program with federal money or leave their Medicaid program in its current form.
A majority of legislators in Montana’s 2013 legislative session decided not to expand Medicaid. Montana’s current eligibility standards will remain, and the state will not receive additional federal money to cover low-income Montanans. If you are curious if you qualify for Medicaid or would like to enroll, Montana’s eligibility information and online application are available here.
What If I Don’t Qualify for Medicaid?
If your income is at or above the federal poverty line, you should buy insurance through the Marketplace, an online market for private health insurance. You may be eligible for federal tax credits and cost-sharing subsidies to make coverage affordable.
If your income is below the federal poverty level and you do not qualify for Montana Medicaid, no assistance will be available to you in the Marketplace. (Download a visual PDF explaining the Medicaid Gap.) Although you may not be able to afford health insurance, you may be eligible for discounted health care at community health centers across Montana. Click here to search for a health center near you.