Written By Elaine Floyd, CFP®
High-risk pools for Americans without health insurance
Individuals who have been denied private health insurance because of a preexisting condition will be able to get temporary coverage through federal high-risk pools. These high-risk pools will be up and running by June 21, 2010, and will eventually phase out by 2014, when private insurers will be required to accept adults with preexisting conditions. (Children with preexisting conditions must be accepted by private insurers starting in 2010.)
Under the new law:
-Applicants must be U.S. citizens who are not covered by another form of insurance, have been denied coverage due to a preexisting condition, and have been without health-care coverage for at least six months.
-Older people can’t be charged more than four times younger ones.
-The plan must cover at least 65% of participants’ health costs and follow annual out-of-pocket limits set in the bill.
-Premiums will be based on standard rates, not the higher rates usually charged to higher-risk individuals.
Dependent coverage to age 26
Starting on September 23, 2010, private insurers that offer dependent coverage to children must allow young adults up to age 26 to remain on their parents’ plans.
Under this provision:
-Dependents may be single or married; however, if they have children, the children are not included under the provision.
-Dependents must not be covered by another employer-sponsored insurance plan. It is not clear how premium costs will be affected by this provision. Since young adults are relatively healthy, the cost should not be as high as adding a spouse, say, to the policy. It is also not clear how young adults with preexisting conditions will be treated before the law changes in 2014 with regard to preexisting conditions for adults.
Closing the doughnut hole
Medicare will undergo a number of changes under the new law. Most of them won’t take effect until 2013 or 2014. However, in 2010, Medicare beneficiaries whose drug expenses are more than $2,830 but less than $6,440 (the dreaded “doughnut hole”) will receive a check for $250 to help pay for their drugs. The $250 check won’t do a lot for your clients, but it represents the start of a 10-year plan to close the coverage gap that began in 2003.
Tax credit for small businesses
Starting with their 2010 tax returns, many small businesses will be able to claim a tax credit to offset insurance premiums. To get the credit, a business must have fewer than 25 full-time workers (or the equivalent; the hours worked by part-timers count), pay an average annual wage of less than $50,000, and cover at least half the cost of health insurance premiums for their workers.
