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Insurance Rule Changes

Health care reform created new rules for all insurers that will benefit consumers. For example, no one will be excluded from coverage or have to wait for a pre-existing condition to be covered. Benefit plans will be allowed fewer coverage limitations. Young adults will be able to keep dependent coverage until age 26, and there will be even tighter standards for canceling coverage based on the actions of an insured individual (such as fraud).

Policies that were in effect when health care reform was enacted on March 23, 2010, may be granted grandfather status. They’re exempt from many of the law’s near-term and long-term requirements, and other requirements apply to them differently. Learn more about grandfathering. 

Here are some of the basics that will affect individuals:

Preventive Care

Beginning plan years on or after September 23, 2010, the new law requires health insurance plans to cover 100% of the costs of certain preventive care and health screenings which are intended to help people stay healthy and avoid more serious and costly treatments later in life.

Pre-Existing Conditions

Beginning plan years on or after September 23, 2010, people under age 19 can no longer be made to wait for insurance coverage or denied benefits because of a pre-existing health condition. Beginning in 2014, the new law applies more broadly - requiring that all individuals have coverage, and that insurers offer coverage without imposing any pre-existing condition exclusion.

Expanded Dependent Care

Beginning plan years on or after September 23, 2010, young people will be able to stay on their parents' health plans until age 26, regardless of marital status or whether they are in school.

Fewer Limits on Care

Annual or lifetime limits for how much care a person receives will be restricted and later eliminated by 2014.

No Rescissions

Beginning plan years on or after September 23, 2010, insurers cannot terminate ("rescind") existing policies except in cases of fraud, or where information that the insured individual provided in the policy application is intentionally misstated and that information affected:

  • The insurer's decision to issue coverage in the first place
  • The terms of the coverage issued
  • The premium charged

Guarantee Issue

Starting in 2014, insurance companies must accept any applicant who is eligible under the insurance company's rules during open and special enrollment periods. This rule also requires special enrollment periods for persons who have qualifying events.

New Rating Rules

Starting in 2014, health plans will be permitted to alter premium rates only for certain reasons and only to a certain degree. Plans can charge the oldest members no more than three times as much as the youngest. They can charge tobacco users no more than 1.5 times the rate charged to non-users. Differences based on geography and individual vs. family coverage are also permitted.

Medical Loss Ratios

Insurers must spend a minimum percentage of the premiums they receive on health care, or pay rebates to make up the difference. Beginning in 2011, for individual plans, insurers must pay at least 80 percent of the premium dollars on care.

HSA Changes

Starting in 2011, the new law prevents Health Savings Accounts (HSA) from reimbursing people for over-the-counter medications unless a doctor prescribes them. Also, the penalty for non-qualified distributions from HSAs increases from 10 percent of the inappropriately withdrawn funds to 20 percent.