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Health Care Reform - Supplemental Government Insurance

Health Care Reform in Oregon

Soon the United States government will require all US citizens to pick out a health plan or pay serious fines for not doing so. It is important to know how Health Care Reform will affect us in Oregon.
While our lawmakers decide the best avenue to make health care reform a reality, you should know that many of these changes are real & happening quickly on a daily basis. We encourage you to contact SmartHealth for the most up-to-date information regarding your health plans and your family health coverage. We can find a solution to best fit your specific needs & budget.

Health Reform - History

Summer 2010

With no mandate yet in place for healthy individuals to purchase health care insurance, expansions in coverage for higher risk individuals will likely result in a deteriorating payer mix and little impact on reducing costs. Changes include:

  • Hospital payment cuts for Medicare patients resulting in an added cost-shift to the commercial market
  • Modest increases in Medicare and Medicaid payments to providers, which will help maintain provider access for these patients
  • New insurance market rules including the extension of over-age dependent coverage to age 26
  • New taxes on high income earners
  • Medicare payment reform initiatives rewarding quality and efficiency

2014 to 2017: estimated 32 million newly insured Americans

Half of the great influx of newly insured members will come from Medicaid and the other half will come through individual and employer mandates. Changes include:

  • Medicaid expanded to 133 percent of the federal poverty level, resulting in a reduction in charity care and a potential reduction in cost-shifting to the commercial market
  • Individual mandate to purchase coverage and subsidies to 400 percent of the federal poverty level, including penalties that may encourage young, healthy individuals to enter the insurance pool
  • Guaranteed-issue plans with no underwriting, resulting in higher medical costs for insurers
  • Employer mandate for businesses with more than 50 employees
  • State-based exchanges providing information on options to health insurance purchasers

Supplemental Government Insurance

Many individuals, families, self employed & small business owners are very concerned with the government mandated health insurance. In other countries throughout the world who use a government “baseline” plan, individuals will opt to pick out a “supplemental” health plan from a private carrier to fill in the gaps that the government plans will not fully cover.

Health Care Reform and Oregonians like you

Health Care and Reform seem to be the topic of the day. At SmartHealth, the topic of insurance reform has been in our vocabulary for a lot longer than just the last year. We have been helping promote the discussion of real reform, actual health costs and the importance of asset protection. This is hardly a new discussion for us. Did you know all policies sold from March 23rd to September 23rd 2010 are called “transitory policies?” Health Care reform is real and it is already happening. While all of the fine print and underlying details are still drying on the paper, this is not a time to let a policy lapse or disregard the real, often dangerous option of not having Health Insurance. If you get sick or have an injury/accident, you are still responsible for your own personal private medical costs. Even with new reform law and mandated benefits, you will still have to purchase your own health insurance policy. Buying a policy now makes sense as there are still many carriers in the market place thus giving you more options, plan choices and deductible scenarios to best fit your budget and needs. Do not wait to see “what might or could” happen in DC to protect your health and assets today.

These rulings and mandates change on a near daily basis/ Do not wait or delay in the very serious nature of protecting your health. Remember, in Oregon a self employed female age 40 can have a full choice, affordable health plan for as low as $120 to $250 per month. All plans in Oregon have annual women’s wellness (pap, pelvic & mamm) included! Do not delay, accidents can & do happen. To find the best plan that works for your specific needs & budget, please call us locally at 503-287-8808. Remember, we know Oregon, we live here!

Although the Patient Protection and Affordable Care Act was passed back in March, the provisions were set to go into effect on a rolling basis. However, according to the National Association of Insurance Commissioners, many consumers are confused about the reform’s implementation date. When asked to choose from four dates on which the first of the health care reform provisions officially take effect, only 14 percent correctly identified Sept. 23, 2010.

So what can you do to help? The answer is simple – pick up the phone, send an email, or contact your clients in some way to let them know about the health reform provisions that begin in September. Then, if they still have questions, be prepared to answer them to the best of your knowledge, and hunt down any answers that you don’t immediately know.

To help you answer the questions that may arise, here is a list of the provisions that kick in on Sept. 23. The complete list of PPACA provisions, categorized by effective date, can be viewed on ASJ’s reform timeline.

  • Dependents will be permitted to remain on their parents' insurance plan until their 26th birthday. Under the rules, plans must cover the dependents regardless of whether the dependent lives with their parents, is a dependent for income-tax purposes, receives financial support from their parents, is no longer a student, or is married.
  • Insurers are prohibited from excluding pre-existing medical conditions (except in grandfathered individual health insurance plans) for those younger than 19.
  • Insurers are prohibited from charging copayments or deductibles for Level A or B preventive care and medical screenings on all new insurance plans.
  • All individuals affected by the Medicare Part D coverage gap will receive a $250 rebate. The first round of checks was mailed on June 10, 2010. Fifty percent of the gap will be eliminated in 2011; the gap will be completely eliminated by 2020.
  • Insurers will be restricted on their ability to enforce annual spending caps, and completely prohibited from doing so by 2014.
  • Insurers are prohibited from rescissions, or dropping policyholders when they get sick.
  • Insurers are required to share details about administrative and executive expenditures.
  • Insurers are required to implement an appeals process for coverage determination and claims on all new plans.
  • Indoor tanning services are subject to a 10 percent tax.
  • Fraud detection efforts are expanded.
  • Medicare is expanded to small, rural hospitals and facilities.
  • Nonprofit Blue Cross insurers are required to maintain a loss ratio (money spent on procedures over money incoming) of 85 percent or higher to take advantage of IRS tax benefits.
  • Companies that provide early-retiree benefits for people aged 55 to 64 are eligible to participate in a temporary program that reduces premium costs.
  • A new website installed by the Secretary of Health and Human Services will provide consumer insurance information for individuals and small businesses in all states.
  • A temporary credit program will encourage private investment in new therapies for disease treatment and prevention.

Here is a day by day Timeline of HealthCare reform: Health Care Reform Timeline

At nearly 2,000 pages, the health care reform bill can take a little getting used to. Buried in its sections are the provisions that will shape the way health care is offered and consumed in America over the next decade. But misconceptions abound — about when implementation will occur, about the agent’s role in the health care marketplace, and about what consumers will see over the next few years.

Luckily, there’s plenty of information designed to help consumers understand the bill — and agents might do well to take a look at that material, too, as their own awareness can go a long way toward helping clients and prospects understand the most pertinent parts of this legislation. Here, then, is a timeline of implementation based on information from the Kaiser Family Foundation — and make sure to check out the full timeline, including changes that affect Medicare and Medicaid.

And for more information on how the short-term provisions of the health care reform bill will begin affecting your practice, visit our podcast page for ASJ’s exclusive interview with Kathy Donovan, senior compliance counsel of the Insurance Compliance Solutions group of Wolters Kluwer Financial Services.


  • Ninety days after the bill’s enactment, a temporary national high-risk pool will be in effect until Jan. 1, 2014 to provide health coverage to individuals with pre-existing medical conditions.
  • Adult children up to age 26 will be eligible for dependent coverage on all individual and group policies beginning Sept. 23, 2010.
  • Individual and group health plans will be prohibited from placing lifetime limits on the dollar value of coverage, and until 2014, plans may only impose annual limits on coverage as determined by the secretary. Insurers will also be prohibited from rescinding coverage except in cases of fraud and will not be able to deny children for having pre-existing conditions.
  • Qualified health plans will be required to provide, at a minimum, coverage without cost-sharing for preventive services rated A or B by the U.S. Preventive Services Task Force; recommended immunizations; preventive care for infants, children, and adolescents; and additional preventive care and screenings for women.
  • Tax credits will be granted to small employers (those with no more than 25 employees and average annual wages of less than $50,000) if they purchase health insurance for employees.
  • Ninety days after enactment, a temporary reinsurance program will be in effect until Jan. 1, 2014 for employers providing health insurance coverage to retirees older than 55 who are not eligible for Medicare.
  • Effective for the 2010 plan year, health plans will be required to report the proportion of premium dollars spent on clinical services, quality, and other costs. Beginning Jan. 1, 2011, health plans will be required to provide rebates to consumers for the amount of the premium spent on clinical services and quality that is less than 85 percent for plans in the large group market and 80 percent for plans in the individual and small group markets.
  • There will be a process for reviewing increases in health plan premiums; plans will be required to justify increases. States will also be required to report on trends in premium increases and recommend whether certain plans should be excluded from the exchange based on unjustified premium increases.

Long term care

  • A national voluntary insurance program will be established for purchasing community living assistance services and supports (CLASS program).


  • Small employers will be provided grants for up to five years for establishing wellness programs.
  • The National Prevention, Health Promotion and Public Health Council will be established for the purpose of developing a national strategy to improve the health of Americans.

Tax changes

  • Costs for over-the-counter drugs not prescribed by a doctor will no longer be eligible for reimbursement through a health reimbursement arrangement or health flexible spending account, and will no longer be eligible for tax-free reimbursement through a health savings account or Archer Medical Savings Account (MSA).
  • The tax on distributions from a health savings account or an Archer MSA that are not used for qualified medical expenses will be increased to 20 percent of the disbursed amount.

Insurance reforms

  • The Consumer Operated and Oriented Plan (CO-OP) program will be created to foster the creation of nonprofit, member-run health insurance companies in all 50 states and the District of Columbia to offer qualified health plans. About $6 billion will be provided to finance the program and award loans and grants to establish CO-OPs by July 1, 2013.

Tax changes

  • The threshold for the itemized deduction for unreimbursed medical expenses will be increased from 7.5 percent of adjusted gross income to 10 percent of adjusted gross income for regular tax purposes. Through 2016, the increase will be waived for individuals age 65 and older.
  • The amount of contributions to a flexible spending account for medical expenses will be limited to $2,500 per year, increased annually by the cost-of-living adjustment.

Individual and employer mandates

  • U.S. citizens and legal residents will be required to have qualifying health coverage or will be assessed a phased-in tax penalty.
  • Employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will be assessed a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment. Employers with more than 50 employees that offer coverage but have at least one full-time employee receiving a premium tax credit will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee. Employers with more than 200 employees will be required to automatically enroll employees into health insurance plans offered by the employer. Employees may opt out of coverage.

Insurance reforms

  • State-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges will begin operating under administration by a governmental agency or nonprofit organization. Through these exchanges, individuals and small businesses with up to 100 employees will be able to purchase qualified coverage.
  • Guaranteed issue and renewability will be required, and rating variation in the individual and small-group markets and exchanges will only be allowed based on age (limited to a 3-to-1 ratio), premium rating area, family composition, and tobacco use (limited to 1.5-to-1 ratio).
  • The out-of-pocket limits for those with incomes up to 400 percent of the federal poverty limit (FPL) will be reduced to the following levels:
    • 100-200 percent FPL: One-third of the HSA limits ($1,983/individual and $3,967/family)
    • 200-300 percent FPL: One-half of the HSA limits ($2,975/individual and $5,950/family)
    • 300-400 percent FPL: Two-thirds of the HSA limits ($3,987/individual and $7,973/family)
  • Deductibles for health plans in the small group market will be limited to $2,000 for individuals and $4,000 for families unless contributions are offered that offset deductible amounts above these limits.
  • Waiting periods for coverage will be limited to 90 days.
  • An essential health benefits package will be created that provides a comprehensive set of services, covers at least 60 percent of the actuarial value of the covered benefits, limits annual cost-sharing to the current law HSA limits ($5,950 per individual and $11,900 per family in 2010), and is not more extensive than the typical employer plan.
  • The Office of Personnel Management will be required to contract with insurers to offer at least two multi-state plans in each exchange. At least one plan must be offered by a nonprofit entity, and at least one plan must not provide coverage for abortions beyond those permitted by federal law.
  • States will be allowed to create a basic health plan for uninsured individuals with incomes between 133 and 200 percent of the FPL who would otherwise be eligible to receive premium subsidies in the exchange.
  • As of Jan. 1, states will be allowed to merge the individual and small group markets.
  • A temporary reinsurance program will begin collecting payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals.

2015 & After
Insurance reforms

  • States will be permitted to form health care choice compacts and allow insurers to sell policies in any state participating in the compact. These compacts may not take effect before Jan. 1, 2016.

Tax changes

  • Effective Jan. 1, 2018, insurers will be assessed an excise tax for employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage.

Information & data provided from Agent Sales Journal 9-2010

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