It is commonplace to either not know or forget that the Affordable Care Act (ACA) is the shortened name for the Patient Protection and Affordable Care Act signed into law on March 23, 2010. Lest anyone believes the full name of the law is a misnomer, there are some key ACA provisions that are worth reviewing and understanding.
The act requires health plans to provide essential health benefits. Essential health benefits are certain categories of coverage considered to be basic to people’s needs. Essential health benefits include the following:
- Outpatient services (including doctor visits)
- Emergency services
- Laboratory services
- Mental health services
- Maternity and newborn services
- Pediatric services
- Prescription drug coverage
- Treatment for substance abuse
According to the law, preventive services must be free of charge and not subject to copayment, deductibles or coinsurance.
Pre-existing condition exclusion
One of the most heralded provisions of the law is the one that abolishes the pre-existing exclusion practice. It is a strategy which insurance companies have used down through the years to cherry pick. Prior to this provision, insurance companies were able to deny, exclude, cancel, or inflate coverage of specified conditions that were determined to have been present prior to a policy’s start date.
Forgiveness for application mistakes
Another part of the law stops insurance companies from canceling coverage because of an honest mistake a patient might make on the application. This change reminds me of the days when almost immediately after sending in a claim for services provided to a new patient the insurance company would request that patient’s old records. It would later inform me that it was denying payment of the claim because the service I provided was for a pre-existing condition.
The insurance company would base its decision on the patient’s answer to a question in the application about whether or not he or she had ever experienced a symptom or symptoms of a certain disease before. It would then review my medical history and physical report to see if the patient had reported to me any prior symptoms or signs of an excluded condition. If it discovered that the patient had, it would then deny payment of the services based on that information. One main problem with the decision would be the insurance company’s assumption that the patient should have known or did know that the signs or symptoms were those of a certain disease. The assumptions would be rather foolish since most patients don’t have any medical training.
Another major area of patient protection which the Affordable Care Act (ACA) provides is a dollar limit on annual out-of-pocket expenses. Out-of-pocket expenses are the portion of the costs of covered benefits which patients have to pay before the insurance company starts covering 100% of the charges. They are comprised of copayments, deductibles and coinsurance. Many health plans have traditionally limited those expenses to a maximum dollar amount annually. Under the Affordable Care Act that limit is now mandatory for all healthcare plans sold in the United States. It is termed annual out-of-pocket expenses. For 2015 it is limited to $6600 for an individual and $13,200 for a family.
Annual out-of-pocket expenses are even less for individuals and families whose incomes are less than 250% of the federal poverty level. The thresholds for 2014 are as listed in the table below.
Grandfathered plans are not required to have annual out-of-pocket expense limits though. Grandfathered plans are those that were in existence before March 23, 2010, and which have not substantially reduced benefits or raised premiums.
Lifetime and dollar amount insurance limits
Placement of lifetime dollar amount limits on covered benefits by insurance companies has been a major cause of the increased number of medical bankruptcy filings in recent years. But, thanks to the Affordable Care Act it is now illegal for insurance companies to stop paying for most covered benefits because policyholders have reached their lifetime dollar spending limits.
Because health insurance can be somewhat complex and health literacy of in general is lacking many have difficulty making good decisions in choosing health insurance. Add to that the previous unfair practices of many insurance companies and it is easy to see why the provisions of the Affordable Care Act discussed are a breath of fresh air to many.