The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Albuquerque, New Mexico Special Needs Alliance member Nell Graham Sale. Nell’s practice concentrates on taxation, estate planning, estate administration, business succession, disability planning and elder law. She is a Certified Elder Law Attorney as designated by the National Elder Law Foundation. The recipient of much recognition from her peers, Nell is a fellow in the American College of Trust and Estate Counsel and since 2007 has consistently been selected for inclusion in Super Lawyers. Not least importantly, Nell is a regular contributor to the blog at her firm, Pregenzer, Baysinger, Wideman and Sale.
The Patient Protection and Affordable Care Act of 2010 (ACA) embodies many reforms of the health insurance industry in the United States. The principal objective of the ACA is to ensure access to health insurance for everyone. As of 2014, almost everyone in the United States will be required to have health insurance. In addition, no one may be denied coverage by health insurance companies, regardless of age, preexisting conditions, or the amount of coverage that may be subsequently needed. The rationale for these reforms is that if all Americans are members of the insured pool, the risks for insurance companies will be spread across a larger group of persons so that the cost of private insurance will be less.
The ACA is in some respects similar to Medicare, a health insurance system run by the federal government, funded by a 2.9% tax imposed on everyone who earns wages, with 1.45% each paid by the worker and the employer. Medicare provides health insurance coverage for all individuals who are over age 65 and eligible for Social Security or Railroad Retirement benefits and for those who have received Social Security Disability Insurance benefits for two years or more. There are no exclusions for preexisting conditions, degree of health need, or age after 65. The pool of the insured under Medicare includes those who are healthy and those who are not.
The ACA provides that, by 2014, the pool for private health insurance coverage will be expanded to include nearly everyone. The pool will include younger, healthier citizens than the current Medicare pool. The Congressional Budget Office worked over the numbers daily during the legislative deliberations on the ACA, and the conclusion was that this should work.
Beginning in 2014, health insurance exchanges will be created through the ACA to provide a mechanism for access to health insurance with sufficient coverage — that is, hospitalization, prescription drug coverage, rehabilitation, mental health services, substance abuse treatment, preventive and wellness health coverage, chronic disease management, pediatric coverage (including dental and vision for children) and maternity coverage.
The health insurance exchanges will provide a marketplace in which to compare plans. The four types of plans that will be available will be labeled Bronze, Silver, Gold and Platinum. Health insurance companies that intend to participate in the exchanges must offer at least one Silver and one Gold plan. The Bronze plan will pay 60% of the insured’s costs, the Silver 70%, the Gold 80% and the Platinum 90%. Bronze plans will have a $5,950 annual limit for out of pocket expenses.
Small businesses will be able to access health insurance for their employees through the exchanges. As noted earlier, health insurance companies will not be able to exclude anyone from coverage for a preexisting condition or set a cap for the amount of coverage.
Beginning in 2014, all individuals in the United States who do not have health insurance coverage will pay a penalty. There is a sliding scale of assistance and premium credits to make health insurance affordable. The term “affordable” means that the premiums may not exceed 8% of the family’s annual income.
If an individual refuses to obtain health insurance, a penalty of the greater of $95 or 1% of his or her annual taxable income will be charged in 2014. In 2015, the penalty is $325 or 2% of taxable income, and in 2016, $695 or 2.5% up to a maximum of $2,085. If a person’s income is too low, there is an exemption from the penalty. In 2014, employers with more than 50 employees will be required to provide health insurance coverage for employees or the employer will be penalized.
There will be a uniform enrollment form for health coverage through the exchanges. The exchanges can be a clearinghouse to determine eligibility for Medicaid, the Children’s Health Insurance Program, or premium credits using this uniform enrollment form. Moreover, the exchanges can screen for families that may be exempt from tax penalties.
Until the ACA, the only health care coverage available to persons with disabilities has been either Medicare or Medicaid. Medicare is only available to workers (and certain dependents of workers) who have a sufficient work history to be eligible for Social Security benefits. For persons with disabilities who have a limited work history, unless they became disabled before age 22 and later qualified for Medicare upon the worker parent’s retirement, disability or death, Medicaid has been the only available source of health care coverage.
Because Medicaid provides health coverage only to the poor, disabled individuals often require special needs trusts in order to shelter so-called excess resources. For special needs planners, assuring access to Medicaid has been a primary focus of planning.
Because the ACA eliminates the option for health insurance companies to deny coverage for a preexisting condition, new health insurance options will open up for some folks with disabilities. As of September 23, 2010, health insurers are no longer permitted to deny coverage to children under the age of 19 who have a preexisting condition.
Depending on the disability, a disabled child who has recovered a personal injury settlement does not necessarily have to plan exclusively for continuing eligibility for Medicaid by transferring the recovery to a special needs trust. Parents who have health insurance through employer-sponsored group health plans can now add a disabled child to their coverage, and can enroll a child up to age 26 as a dependent on the parent’s health plan if the child is without alternative coverage. Thus, there is significant relief here.
Although the ACA will provide near universal access to health insurance in 2014, it does not expand the services available for the long term care needs of people with disabilities or long term chronic diseases. It is still the case that these types of services are available only through private resources or Medicaid.
Look for future Voice articles that will cover some of the ACA’s provisions in greater detail. For example, we plan to discuss one provision in the ACA called the CLASS Act, which may provide some relief for long term care needs, and the extension of Medicaid eligibility to adults who have less income than 133% of the federal poverty guidelines ($14,412 for a single person in 2010).
We will also describe coverage available to persons with preexisting conditions that would otherwise make them uninsurable. These provisions also will open up health coverage for some disabled individuals.
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