The Affordable Care Act (ACA) has created an environment where personal coverage for an individual or an entire family is much more accessible than it was prior to the legislation. Personal coverage is now a viable alternative as compared to coverage secured through an employer.
Prior to ACA, personal health insurance coverage was not as attractive as employer-sponsored group coverage. Personal health insurance coverage was not guaranteed issue, which meant the application could be declined, the policy could be subject to riders which could exclude or limit benefits related to a specific health condition, and the benefits were not as robust as benefits offered by employer-sponsored group coverage.
Before passage of the ACA, health insurance carriers could use an individual’s health history or medical condition to determine whether an application would be approved, and coverage issued. Even with prescreening applications, Stateside Insurance Services found that 10% of all applications would be rejected by the health insurance carrier due to medical history. Beginning October 1, 2013 for coverage issued with a January 1, 2014 effective date or later, carriers no longer use health information to make enrollment decisions. Applications with January 1, 2014 effective dates or later will be considered guaranteed issue i.e., the application cannot be declined.
Guaranteed issue offered under ACA was the reason the individual mandate was included in the legislation. Without the individual mandate requiring most individuals to have creditable coverage or be subject to a tax, guaranteed issue would not be feasible because individuals would wait until they needed coverage before they purchased coverage. This situation is referred to as adverse selection: only those needing coverage would pay premium, which would not be enough to support the benefits paid out for the claims submitted.
Guaranteed issue is one of the most significant provisions of ACA and will remove a major barrier for Texas consumers to secure personal health insurance.
Riders Were Used to Modify Benefits
Prior to ACA, if an applicant’s policy was issued and included a medical condition that was not significant enough to be declined, the health insurance carrier could add riders to the policy, which would restrict or eliminate benefits related to that condition. A rider is a temporary or permanent alteration of the health insurance contract which modifies the plan benefits related to a specific condition. These modifications to a health insurance policy were allowed to help health insurance carriers issue more policies at the premium amount approved by the Texas Department of Insurance. In the past, a personal health insurance application that included more than a typical health history would either be approved with a rider or declined.
ACA has removed the practice of adding riders to a policy. All applications submitted after October 1, 2013 for effective dates on or after January 1, 2014 will be issued with no riders and no waiting period for preexisting conditions.
Personal Health Insurance Now Offers Essential Benefits
Even though personal health insurance policies in Texas had over 60 mandated benefits, there were several benefits that were not offered. For example, maternity coverage has not been available in the personal health insurance market in Texas for many years. The last coverage that offered comprehensive maternity benefits required an additional $300 of premium per month for a personal health insurance policy. Benefits related to mental health or substance use issues have not been very comprehensive or offered at all in the personal health insurance market. Beginning January 1, 2014, a list of essential benefits, which include maternity benefits, must be offered on all personal health insurance policies.
The essential health benefits offered by ACA included:
- Promote consistency across plans,
- Provide consumers protection by ensuring that plans cover a core package of benefits that are equal in scope to those offered by a typical employer plan, and
- Limit the consumer’s out of pocket expenses.
In addition to maternity benefits offered under personal health insurance, essential benefits must also include:
- Ambulatory patient services
- Emergency services
- Mental health and substance abuse treatment
- Prescription drugs
- Rehabilitative services and devices
- Laboratory Services
- Preventative and wellness services and chronic disease management
- Pediatric services
With the changes adopted under ACA, personal health insurance can now offer Texas individuals and families an attractive option to employer-sponsored group coverage, from a standpoint of both competitive premiums and comprehensive benefits.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.