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Health Insurance Policy Provisions

Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

Read this lesson to gain an understanding of how the Affordable Care Act impacts health insurance policy provisions You'ill learn what types of benefits your health insurance is required to cover.

Affordable Care Act

In this lesson, we are going to take a look at health insurance provisions. On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act (PPACA). It's commonly referred to as the Affordable Care Act (ACA) or simply Obamacare. The ACA's purpose is to make health insurance affordable to more people and requires insurance companies to accept all applicants regardless of health conditions and gender.

After the ACA was signed into law, many people actually had their health insurance policies canceled because they did not meet the benefit requirements of the ACA. These people then had to find a replacement that met the requirements of the ACA. Sometimes, this resulted in a cheaper health insurance, and sometimes it resulted in health insurance that cost more since it now had to give them a necessary number of benefits.

Guaranteed Coverage

Before the ACA was signed into law, health insurance companies could deny individual applicants who had pre-existing conditions. For example, if Susan has high blood pressure, and she was applying for individual health insurance because she has her own business, she may be denied coverage because she has high blood pressure. If she was working for an employer who offered group health insurance, then she would be accepted. Since the ACA has been signed into law, insurance companies are now required to accept all applicants regardless of pre-existing health conditions. If Susan were to apply for individual health insurance now, the insurance companies are required to accept her and give her coverage.

Cost Sharing

The ACA also created an insurance marketplace through which individuals could search for more affordable health insurance. In this marketplace, insurance policies are separated into these four cost sharing tiers:

  • Bronze: insurance pays 60 percent of medical costs
  • Silver: insurance pays 70 percent of medical costs
  • Gold: insurance pays 80 percent of medical costs
  • Platinum: insurance pays 90 percent of medical costs

Each policy may also have a necessary co-payment that needs to be paid with each medical visit. For example, if Susan purchased a Gold tier health insurance policy with a co-pay of $20 per medical visit, she would pay $20 for a visit to the doctor. If there are additional services provided during the visit, Susan would then need to pay 20 percent of the cost.

Insurance policies sold outside of the marketplace may or may not fall into one of these tiers. They may cover different amounts.

Of course, with any policy, you can choose different deductible amounts. The higher your deductible, the lower your monthly premiums will be. Your deductible is the amount you need to pay before your medical insurance begins to pay.

Limits

Along with the cost-sharing tiers, the ACA has also established limits to the amount people pay with the cost-sharing. This limit to the cost-sharing only applies to medical services that are covered by the plan. For example, in 2015, the maximum out-of-pocket was $6,600 for an individual and $13,200 per family. This means that if Susan has paid $6,600 in cost-sharing for her medical expenses as of October 2015, then she can expect her insurance to cover any additional covered services at 100 percent for the rest of the year. She shouldn't have to pay any more towards her cost-sharing for the remainder of the year. These limits are expected to increase from year to year. In 2014, the individual maximum out-of-pocket cost was $6,350 and $12,700 for families.

Benefits

The ACA requires all insurance policies whether they are sold in the marketplace or not to cover these medical services:

  • Ambulance services
  • Emergency services
  • Hospital services
  • Maternity and newborn care services
  • Mental health services
  • Behavioral health services
  • Prescription drugs
  • Rehabilitation services
  • Lab services
  • Preventive services
  • Pediatric services that include vision and dental care

Also, preventive care is covered at 100 percent under ACA requirements. Even if you have a co-payment, you shouldn't have to pay it when you get preventive care services. This preventive care includes things such as necessary vaccinations and screening tests.

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