Healthy Habits: How the Health Care Ruling Will Affect You

I had an opportunity to interview Kim Lankford, editor at Kiplinger’s Personal Finance Magazine about the recent health care ruling.
1)    What are some of the biggest changes that will happen in regards to health care?
 
The Supreme Court upheld the individual mandate requiring everyone to buy insurance – but said that the penalty people must pay if they decide not to buy coverage is a “tax” rather than a penalty. The court also said that states can opt out of the expansion of Medicaid without losing any federal funds, other than the funds to cover the expansion.
         This means that the health-care reform law will continue to be implemented as is for now, and becomes a big election issue in the fall. States that had been waiting for the court’s decision now need to act quickly to prepare for the next set of deadlines – for example, they must start setting up insurance exchanges, where individuals and employees of small businesses can buy coverage starting in 2014. Low- to middle-income people will qualify for subsidies to help them pay for the coverage, which will automatically be applied to their premiums if they buy the coverage through the exchanges. Also, by 2014, insurers will no longer be able to reject people or charge them higher rates because of their health, and everyone must get coverage or pay a penalty tax.
 
2)    What are the "consumer rebates" that are part of the new plan?
 
The health care law requires insurers to use at least 80% of their premiums for medical care and quality improvements (or 85% for large-group plans), a figure called the “medical loss ratio.” Companies that didn’t meet these standards for 2011 have to pay rebates to consumers starting on August 1, 2012.  Employers will generally receive the rebates for group plans, but you could receive a check from your insurer or discount on future premiums if you have individual coverage, and you may be hearing from your insurer this summer.
 
3)    How does the new health care plan impact coverage for people with pre-existing conditions?
 
         Starting in 2014, insurers will no longer be able to reject people or charge them higher rates because of their medical condition. Until then insurers in most states can deny coverage or charge higher rates for people with health conditions, if they buy their coverage on their own. If you have a health problem and need coverage now, you may be able to find it through your state high-risk insurance pool. Many states currently have two kids of high-risk pools: The Pre-Existing Condition Plans, which were created as part of the health care law but require that you be uninsured for at least six months before you can get the coverage, and the already established state high-risk pools, which tend to charge higher premiums but may not require that you be uninsured for six months first. See HealthCare.gov and CoverageForAll.org for more information about the high-risk pools available in your state and coverage options for people with pre-existing conditions.
 
4)    Are there changes to the way many families currently work with insurance, in particular preventive care and flexible-spending accounts?
 
The law requires most policies to provide some preventive care with no out-of-pocket expenses, regardless of the deductible. This provision makes high-deductible policies an even better deal than they once were, especially for relatively healthy people who visit the doctor primarily for their annual check-ups and tests, but who need high coverage limits for unexpected illnesses and emergencies.
One change that takes effect in 2013 is the new limit for flexible-spending account contributions. Many employers currently let you set aside $3,000 to $4,000 of pretax money in a flexible spending account for out-of-pocket medical expenses. That maximum will shrink to $2,500 for medical FSAs in 2012. If you expect to have any major uninsured medical expenses soon and have saved enough money in your FSA this year to cover them, use the money for those expenses and save the less-costly procedures for next year, when the limit shrinks.