Provisions effective January 1, 2011:
General provisions

• Tax-free health accounts (FSA, HSA, HRA) may no longer be used to purchase OTC drugs without a prescription.
• Health insurers must report the proportion of premiums spent on medical care and healthcare quality improvement. Individual market and small group business must have a minimum MLR of 80% and large groups must have a minimum MLR of 85%. BCBSNC has consistently met these thresholds.
• Health plans are required to revise their internal appeals processes to include additional rights for members:
  
  • Right to review information used to make benefit determination
  • Right to receive certain denial notices in a culturally and linguistically appropriate manner with additional information such as denial and treatment codes.
  • Non-grandfathered, self-funded plans must also have an external review process.

Provisions specific to Medicare beneficiaries:

• Pharmaceutical companies will subsidize brand name drugs 50 percent. Medicare beneficiaries will be responsible for the remaining 50 percent. By 2020, beneficiaries will pay 25 percent of the cost of brand name drugs.
• Medicare Part D plans reduced the beneficiary cost share of generic prescriptions by 7 percent. Beneficiary cost share will reduce an additional 7 percent each year until 2020, when beneficiaries will pay 25 percent of the cost of generic drugs.
• Many preventive services covered with no cost sharing for most Medicare beneficiaries.

Provision effective March 23, 2011:

• Standard menu items at chain restaurants and in vending machines will be required to have nutritional labeling of their content.

• Any changes that apply to your group plan on September 23, 2010, will be made at renewal on or after that date; mid-year changes aren't required.
• Small employers with fewer than 25 employees whose wages average less than $50,000 may qualify for tax credits if they provide health insurance and meet other necessary requirements. Learn more about tax credits for small businesses. 
• Dependents under the age of 26 are eligible to remain on their parent's plans if they are not eligible to buy insurance elsewhere.
• Children under age 19 cannot have insurance coverage denied or delayed because of pre-existing conditions.
• Insurance plans must cover, at no out-of-pocket cost to the individual, qualified preventive services.
• Health insurance plans can no longer limit the amount of health benefits each person receives over his or her lifetime.
• Insurers cannot terminate (or "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
• Early Retirees Reinsurance Program - Early Retirees Reinsurance Program - Employers may qualify to obtain financial help in order to provide coverage to those aged 55 and older but not yet eligible for Medicare - which may provide financial relief to early retirees. Learn more about the program .

These provisions become effective for plan years beginning September 23, 2010 and after, and upon January 1, 2011 for individual coverage.

Employers do not have to offer coverage. However, employers with 50 or more full-time employees may face a penalty when they do not offer coverage, or if the coverage they offer does not meet the minimum requirements.

You can keep your current plan until renewal time. When you renew, you can continue to offer insurance through the same carrier, but new rules may change some parts of the way the plan is structured.

The small business tax credit is a benefit to small businesses that have fewer than 25 full-time employees, pay at least half their employees' health insurance premium costs, and whose employees average $50,000 or less in salary. Learn more about tax credits for small businesses. 

From now until 2014, the tax credit is up to 35% of the employer's costs (25% if tax-exempt). After 2014, with slightly different requirements, the credit will be up to 50% of the employer’s cost (35% if tax-exempt).

The tax credit is not an amount the government pays you; it is an amount you deduct from the taxes you pay the government to help offset the cost of health insurance. The calculation for this deduction will be part of your tax forms.

Beginning in 2014, states must establish American Health Benefit Exchanges as an alternative for people to shop for health insurance from private companies. In each exchange there will be plans available at up to four different levels of price and benefit design. Each exchange will set up rules and communication tools to help people make fair and accurate comparisons. At first, exchanges will serve individual people and small employers. Later, states will have the option of opening them to larger employers.

Exactly how insurance exchanges will work is unknown at this time, but some people think the experience will be similar to how travel plans can be made on websites like Orbitz^® or Expedia^®.

Employers with fewer than 25 employees, who contribute at least 50% of employees' health costs, and whose employees average less than $50,000 in salary, will be eligible for tax credits of up to 50% of their costs (35% if tax-exempt) through the first two years of buying insurance on exchanges.

Effective for the 2011 tax year, the new law prohibits HSAs, HRAs and FSAs from paying for over-the-counter medications unless a doctor has prescribed them. Starting in 2011, the penalty for non-qualified distributions from an HSA doubles from 10% to 20% of the amount withdrawn, and the new law will cap FSA contributions at $2,500 a year starting in 2013.

There's no simple answer - it depends on your insurance status and how much care you need. For some the cost of health insurance will rise while others may see a decrease to their premiums.

We believe that the price of insurance on average will increase, especially plans for individuals and small businesses, as a result of certain provisions in the reform legislation. These provisions guarantee richer levels of benefits than most consumers buy today. Insufficient discounts for the young and healthy will encourage many of them to forgo coverage and pay the penalty instead. New fees and taxes mandated by the new law will also likely increase the cost of premiums as they are phased in. For the millions of individuals and small employers who qualify for subsidies, what they actually pay for insurance themselves may not increase.

As a result of these and other factors, our best estimate is that small business premiums for new policies could increase by 30 percent. BCBSNC will continue to analyze the impact of reform on premiums as more information becomes available.

Some of the factors driving health insurance premiums:

• Increasing use of the health care system due to an aging population, obesity and chronic illnesses
• New treatments
• Prescription drugs
• Expensive new technologies

Changing the way medical care is paid for by insurers and government programs is considered to be the most effective way to address these factors.

While the new law establishes a few new programs aimed at these cost factors, the law doesn't aggressively attempt to control rising health care costs. How do medical costs affect what people pay for health insurance?