Insurance Reform

The ACA creates rules for the health insurance industry designed to improve coverage and protect consumers, including patients with substance use problems. This section is designed to provide information pertaining to the federal, state, and local rules and regulations surrounding the changes in both the private and public insurance systems.

Insurance Reforms

The Affordable Care Act (ACA) includes several insurance market reforms to ensure that all Americans can access quality and affordable health insurance. Several provisions took effect September 23, 2010, while others will be phased in over time.

Pre-existing Conditions

  • Effective September 23, 2010, health insurers are prohibited from denying coverage to children with pre-existing conditions. In 2014, health insurers will be prohibited from denying coverage to any person with a pre-existing condition.

Preventive care and immunizations free of cost-sharing

  • Effective September 23, 2010, an insured consumer may not be required to pay a copayment, co-insurance or deductible to receive recommended preventive health services, such as screenings, vaccinations and counseling. For example, depending on the insured’s age, he may access at no cost preventive services such as:
    • blood pressure, diabetes, and cholesterol tests
    • routine vaccinations and many cancer screenings, including mammograms and colonoscopies
    • counseling on how to quit smoking, lose weight, eat healthfully, treat depression and reduce alcohol use
  • Beginning in 2018, this coverage requirement applies to all insurance plans.

Dependent coverage for children up to the age of 26

  • Effective September 23, 2010, if an insurance plan covers children, an insured can now add or keep child(ren) on an insurance policy until the child(ren) turn 26 years old, regardless of the child’s marital status.
  • Prohibits new group health plans from establishing eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees.

Annual and Lifetime Limits

  • Annual limits are the total benefits an insurance company will pay in a year while an individual is enrolled in a particular health insurance plan. The law restricts and then phases out the annual dollar limits a health plan can place on most benefits — and does away with these limits entirely in 2014. The law also prohibits health plans from putting a lifetime dollar limit on most benefits.

Medical-Loss Ratios

  • Medical-loss refers to the amount expended by insurance companies on actual healthcare costs. For individual or small group plans, at least 80 percent of premium dollars must now be spent on direct medical care and efforts to improve the quality of health care, rather than on administrative costs. For large group plans (usually 50 or more employees), the medical-loss ratio is 85 percent.

Modified Community Rating Provisions

  • Effective in 2014, all carriers in the individual and small group markets will only be able to vary premiums charged to beneficiaries by family size, geography, tobacco use and age.
  • Geography and family size will be fairly standardized while age can be used to vary the price of the premium for the oldest policy holder in a plan by up to three times the premium of the youngest policy holder. Tobacco users may also have their premium adjusted by up to 50 percent higher than a non-tobacco user.
  • Other rating factors will be prohibited. For example, carriers are not allowed to charge women higher rates than men, or very small groups higher rates than larger groups.
  • The ACA also prohibits health status rating, meaning people with serious illnesses, such as cancer or diabetes, cannot be charged higher premiums than healthier people. Carriers cannot use any past or current health events or indicators of health status, such as claims or medical history to charge people higher rates for coverage.