Health Care Reform Summary

By Julia Day, MSW

Contributions from Bryon MacDonald
Disability Benefits 101 Information Services
California Work Incentives Initiative; World Institute on Disability
April 5, 2010

In late March of 2010, the U.S. Congress finished passing the Patient Protection and Affordable
Care Act (H.R. 3590) and the Health Care and Education Reconciliation Act of 2010 (H.R.
4872). Soon after, President Obama signed these pieces of legislation into law, creating Public
Law 111-148 (the Patient Protection and Affordable Care Act) and Public Law 111-152 (the
Health Care and Education Reconciliation Act of 2010).

These new laws will result in significant reform of our nation’s health care system, including
extending health care coverage to many more millions of Americans.

When a major bill becomes law, it is understandable that you might have questions or concerns
about how the changes will affect you. It is important to remember that the changes in the new
laws will not happen immediately, but will take effect over a period of years, through 2019.
There will be a lot to learn about the new health care reform laws. We are providing this
timeline, showing when major reforms are expected to take effect, so that you can prioritize what
to focus on first, and learn the details in stages. We will share more information on the reforms
as it becomes available.

Implementation Timeline for Major Health Care Reforms

Within 90 days:
 Starting in late June of 2010, people who can’t get insurance because of pre-existing
conditions will have immediate access to high-risk pools that don’t exclude people with
pre-existing conditions.

 To apply to a high-risk pool, you must be a U.S. citizen or lawfully present in the
United States; have had no health coverage for the last 6 months; and have a pre-
existing condition, which will be defined by the U.S. Department of Health and
Human Services.

 The law says that older people can’t be charged more than four times what
younger people are charged to participate in the plan.

 The law limits premiums to “standard rates”, defined as the average amount
private insurers in the state charge for premiums for similar coverage.

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  There are limits on annual out-of-pocket expenses for participants in the pools
($5,950 for an individual) and plans have to cover at least 65% of the costs
allowed by the plan.

 High-risk pools will most likely be run by the states, and will vary from state to
state. Details of how to apply have not been finalized and will be explained in
further detail as the program develops.
The creation of high-risk pools is a temporary measure; the pools will end on 1/1/2014,
when government-regulated insurance exchanges start operating. By this date, the law
also mandates that insurance companies will no longer be able to deny people coverage
because of pre-existing conditions.

Within Six Months:

 Insurance companies won’t be allowed to drop people’s coverage when they get sick, or
to deny coverage to children under 19 because of pre-existing conditions.

 Insurance companies won’t be allowed to put caps on the amount they will spend on
lifetime coverage costs.

 Children will be able to stay on their parents’ insurance policies until they are 26. Right
now, health plans often drop children from their parents’ plans when they turn 19 or
finish college.

Within a Year:
 Beneficiaries of Medicare’s prescription drug plan who fall into the coverage gap known
as the “donut hole” will get a $250 rebate; over time, the law will close the gap, reducing
out-of-pocket drug costs for people on Medicare Part D.

 All new group health plans and plans in the individual market will have to provide
preventive services, free from deductible or copayment charges.
By 2012:
 People on Medicare will be able to get free prevention and wellness services each year.

 There will be a voluntary long-term care insurance program, known as the Community
Living Assistance Services and Support Act (CLASS Act), that helps pay for long-term
care costs for people with disabilities and elderly people. The insurance will allow people
to receive services in their homes, or will help to pay for nursing home care.

 The Medicaid Community First Choice (CFC) Option will give states the option to allow
people with disabilities who are eligible for institutional care to choose community-based
services instead.

 People on Medicare who fall within the prescription drug coverage gap (the “donut
hole”) will get a 50% discount on brand name prescription drugs.

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By 2014:
 Insurance companies won’t be allowed to deny any person coverage because of pre-
existing conditions, put caps on the amount they will spend on annual coverage costs, or
refuse to renew a person’s policy because of a person’s health condition.

 The law also limits the ability of insurance companies to charge higher rates because of
health status, gender, or other factors. Higher premiums will be permitted based on age
(no more than three times the amount charged for young people), geography, family size,
and tobacco use.

 States will create health insurance exchanges, which will provide a way for individuals
and small businesses to buy more affordable coverage. The exchanges will allow people
to comparison shop for standardized health packages, and will give tax credits to help
people afford coverage.

 Medicaid will expand to cover more low-income people, including adults without
children and adults without a disability. The expansion will include people with incomes
up to 133% of the Federal Poverty Level (about $28,000 for a family of 4).

 Most employers will be required to provide coverage, or pay a fine if they don’t
(although there will be exceptions for small businesses with less than 50 employees).
This will make employer-sponsored health coverage more widely available.

 Most individuals will be required to get coverage, or to pay a fine if they don’t. However,
there will be healthcare subsidies to help people buy coverage if their income is below
400% of the Federal Poverty Level (about $88,000 a year for a family of 4). If affordable
coverage is not available to an individual, they will not be penalized.

By 2019:
 The “donut hole” gap in Medicare Part D drug coverage will be fully phased out,
significantly reducing out-of-pocket costs for people on Medicare.

 Health coverage is expected to have expanded to an additional 32 million people by the

end of 2019, and to cover 95% of non-elderly legal U.S. residents.

Changes Important for People with Disabilities

Some of the changes brought about by these new laws are of particular significance to people
with disabilities:

 By 2014, insurance companies will no longer be able to deny anyone coverage because of
a pre-existing condition, or to cancel coverage because of the onset of a new health
condition. This will allow people with disabilities more access to private health coverage
plans.

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  The ban on lifetime coverage caps means that insurance companies cannot stop paying
for treatment once they reach a certain dollar amount. Costly treatments for ongoing
medical conditions such as cancer, AIDS, or diabetes will be protected from these
coverage caps. This ban goes into effect before the end of 2010.

 Medicaid, which provides health care coverage to low-income people, will become more
widely available. Since rates of unemployment and poverty are disproportionately high
among people with disabilities, it is especially important to people with disabilities that
Medicaid is accessible. In addition, people with disabilities will no longer have to go
through such a complicated disability determination process to become eligible for
Medicaid.

 The Medicaid Community First Choice (CFC) Option will give states the option to allow
people with disabilities who are eligible for institutional care to choose community-based
services instead. This will allow more people with disabilities who are on Medicaid to
stay in their homes, instead of going into an institution. The CFC Option takes effect on
October 1, 2011.

 Starting in 2012, the Community Living Assistance Services and Support Act (CLASS
Act) provides for voluntary, self-funded, long-term care insurance through the workplace.
This insurance will help pay for long-term care costs for people with disabilities. People
with disabilities who participate will be able to start receiving cash benefits from this
insurance after five years, and they will also be able to use their insurance to provide for
their long-term care in the future. This program will make long-term in-home support
services more affordable, and will help people with disabilities remain in their homes and
communities.

Sources:
Patient Protection and Affordable Care Act (Public Law 111-148)
Kaiser Family Foundation
The New York Times
Speaker of the House
McClatchy Newspapers
The National Council on Independent Living
Congressional Budget Office
House Committees on Ways and Means, Energy and Commerce, and Education and Labor

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