Do you have a health insurance policy cover, and does your plan conform to regulations outlined in the ACA? The Affordable Care Act (ACA), commonly known as Obamacare, is probably one of the most influential and contentious pieces of health care legislation in the U.S. It is essential to understand the different health coverage plans that are ACA-compliant and the non-compliant ones with their benefits and limits.
To learn more about this, read our blog “Does Your Health Insurance Conform to ACA Standards?”
Does Your Health Insurance Conform to ACA Standards?
The Affordable Care Act (ACA) has continued to be at the center of public policy discussion since its inception in 2010. The Affordable Care Act has significantly increased the number of Americans eligible for Medicaid. The Act has shifted eligibility such that qualification is based on income levels rather than individual considerations such as pregnancy, age, or disability. The ACA effectively compels states to cover all citizens with incomes at or below 138% of the federal poverty threshold ($35,535 for a family of four) via incentives and penalties.
However, not all health insurance plans are compliant with ACA policies. A Professional Employer Organization can provide your organization with medical insurance to help you avoid errors. Otherwise, it is necessary to determine which plans are fully compliant and just partly compliant.
What is ACA-compliant coverage?
ACA-compliant refers to a significant medical health insurance coverage that complies with the Affordable Care Act’s rules. Employers provide the majority of private health insurance in the United States. Almost half of all Americans are covered by employer-sponsored health insurance. Moreover, a third of the remaining population is covered by government-run programs (Medicare and Medicaid). The provisions of the ACA extend to employer-sponsored health plans, and the majority of individual or family health plans and employer-sponsored health plans comply with the ACA.
Characteristics of ACA-compliant health insurance
Individual and small-group insurance that complies with the ACA must offer coverage for the ten essential health benefits with no annual or lifetime limits. They are assured issue during open enrollment; hence, pre-existing conditions do not affect eligibility. Coverage cannot be revoked arbitrarily. Insurers must comply with the medical loss ratio (MLR) requirements. The medical loss ratio regulations apply to fully insured big group plans.
Regardless of whether they are marketed on or off-exchange, all newly acquired individual and small group health insurance plans must comply with the Affordable Care Act. Employees may still enroll in pre-2014 small-group programs, but if a small company acquires a new program, it must be compatible with the ACA.
The ACA’s requirements for large groups vary across states; hence, ACA compliance varies. Still, from the employee’s standpoint, the coverage remains consistent with the ACA, and the employee complies with the individual mandate. The same holds for those with Medicare or Medicaid.
What are Grandfathered and Grandmothered plans?
Grandfathered schemes were already in place before the ACA’s enaction in March 2010 and are notably mentioned in the legislation. Individual, family, small group, and big group markets have grandfathered health plans. They may continue in force forever as long as no significant modifications are made, though insurers can opt to cancel them and replace them with ACA-compliant coverage.
Grandmothered plans, sometimes known as transitional plans, went into effect after the Affordable Care Act was passed into law but before 2014. These plans are available in most states in individual, family, and small group marketplaces. However, some states no longer allow them or have never authorized them. In contrast, insurers in other states have opted to cease their transitional plans and replace them with ACA-compliant policies.
In terms of ACA compliance, the following ACA requirements apply to grandfathered and grandmothered plans:
- Grandmothered plans must pay the total cost of some preventive care (as do fully ACA-compliant policies), but grandfathered plans don’t.
- Grandmothered plans and employer-sponsored grandfathered plans are barred from placing annual benefit caps on any essential health benefits they provide.
- Individual or family plans that have been grandfathered, on the other hand, may continue to impose annual benefit caps.
- Both forms of coverage are necessary to enable young individuals to continue with their parent’s plans until they reach the age of 26.
- The medical loss ratio regulations apply to both grandfathered and grandmothered plans.
What is short-term health insurance?
Most states provide short-term health insurance, which is a sort of minimally regulated temporary medical coverage. These non-major medical insurance plans are not regulated by the ACA and hence are not obliged to meet the ACA’s guidelines. Short-term health insurance is far less costly than regular major care coverage. The following situations may be ideal for you to purchase short-term plans.
- You have new coverage with an impending start date, such as from an employer, or an ACA-compliant plan that begins at the beginning of the year, but you need a plan to fill the gap before it begins.
- You cannot afford an Affordable Care Act-compliant plan.
- You are healthy, so medical underwriting and pre-existing condition exclusions won’t be an issue.
Before acquiring a short-term plan, double-check your eligibility for financial aid with an ACA-compliant plan, as it may be far more inexpensive than you anticipated.
What is a Fixed Indemnity Plan?
Fixed indemnity health insurance is a policy that pays the insured a specific amount of money depending on the medical treatment received, regardless of the actual cost of the care. The plan may pay a set sum based on the kind of service given, or it can pay a fixed amount based on the period during which care is provided; depending on the circumstances, some fixed indemnity plans utilize both techniques. You can purchase fixed indemnity plans all year instead of ACA-compliant policies with an open enrollment period.
Conclusions
You should check the type of plan you have and whether it entirely, partially, or doesn’t comply with ACA guidelines. For instance, grandmothered plans must pay the total cost of some preventive care, as do fully ACA-compliant policies, but grandfathered programs don’t. However, you may have health insurance plans that aren’t ACA-complaint, like short-term temporary and fixed indemnity plans that you can access annually.
