Tuesday, November 24, 2009

How will the ‘‘Affordable Health Care for America Act’’ ensure lower health care premiums‘‘?

The Act provides that a individual or group market plan’s “medical loss ratio” cannot be less that 85%, if it is, the Act allows for rebates back to the enrollees. However, the Secretary is permitted to apply an exception to individual market plans if such rebates “destabilize” that market. Some carriers currently allow for similar rebates under certain contract or plan conditions. Furthermore, the Secretary is empowered by the ACT to establish a definition for medical loss ratios and the methodology for their calculations, excluding State taxes and licensing/regulatory fees. Provisions for rebates do expire once Health Insurance Exchanges are established, currently expected to place by 2012.

Rescission is the process by which a carrier declines renewal of either an individual or group health care plan. The Act allows for rescission only in cases of fraud and only then after the individual or group policy holder has been informed of such proposed rescission and after a “third party review” process has taken place. While the “rescission process” is under review, individual or group health care coverage remains in force.

The Act requires the Secretary, in conjunction with States, to review annual premium increases proposed by the various insurance carriers, who then must justify such increases. A typical employer based heath care group plan that renews on January 1 or each year will start that renewal process in the July-August-September time frame. This means that an additional amount of time will need to be built into the renewal to allow for the Secretary’s review process. So, even after the employer’s broker/consultant has negotiated the best possible renewal rate, that rate may not pass muster with the Secretary’s review.

Coverage for a Qualified Child, the Act allows for continued coverage of an uninsured dependent through the age of 26 within group and individual plans. The individual must be a dependent as defined by the plan and must be uninsured.