Know the Facts, Know Your Rights

The Affordable Care Act: Increasing Transparency and Protecting Consumers

The Affordable Care Act includes new patient protections that give you greater control over your health care – as well as new resources to make the health care system more transparent and ensure you are receiving value for your health care dollars.

On December 9, 2010 the Department of Health and Human Services issued new rules that will give consumers more information about their health insurance plan. Under the new rules, health insurers offering “mini-med” plans must notify consumers in plain language that their plan offers extremely limited benefits and direct them to www.HealthCare.gov where they can get more information about other coverage options. The rules require health plans with waivers to tell consumers if their health care coverage is subject to an annual dollar limit lower than what is required under the law. Specifically, the notice must include the dollar amount of the annual limit along with a description of the plan benefits to which the limit applies. HHS has also issued guidance restricting the sale of new mini-med plans except under very limited circumstances.

The Affordable Care Act will end “mini-med” plans in 2014 and provide Americans with affordable, high-quality coverage options. Unfortunately, today, mini-med plans are often the only type of private insurance offered to some workers. In order to protect coverage for these workers, HHS has issued temporary waivers from rules restricting the size of annual limits to some group health plans and health insurance issuers. Waivers only last for one year and are only available if the plan certifies that a waiver is necessary to prevent either a large increase in premiums or a significant decrease in access to coverage.

Key facts about the guidance issued on December 9 include:

• The consumer notice must include the dollar amount of the annual limit along with a description of the plan benefits to which the limit applies. This notice must be prominently displayed in clear, conspicuous 14-point bold type as a part of any informational or education materials, as well as in plan or policy documents provided to enrollees.
• The guidance outlines the very limited circumstances where insurers that have obtained a waiver can continue to sell new mini-med plans. For example, an employer that already offers a mini-med policy with a waiver may buy a new mini-med plan from a different insurer under certain circumstances. The bulletin also allows mini-med policies to be sold in States operating programs that provide health insurance coverage with low annual limits or require issuers to offer coverage with low annual limits, where either the State or the insurer has a waiver.

Other important features of the Affordable Care Act will make the health care system transparent and ensure consumers get a better value for their premium dollars. In 2011, insurance plans will be required to spend at least 80 percent of the premiums they collect from consumers on medical care, rather than on executive salaries and administrative costs. If they don’t, they will be required to provide a rebate to their customers and the percent an insurance company spends on health care must be disclosed to the public. Up to 9 million Americans could be eligible for rebates starting in 2012 that are worth up to $1.4 billion. Average rebates per person could total $164 in the individual market.

The law also requires insurance companies to publicly justify any unreasonable premium increases by publishing the justification on their websites and provides states with $250 million to strengthen their efforts to review proposed premium increases.

And the law implements landmark consumer protections that end the worst insurance company abuses. Under the new law:

• Insurers will be prohibited from denying coverage to children with pre-existing conditions, which will allow up to 72,000 uninsured children to gain coverage. Additionally, up to 90,000 children will no longer have specific benefits denied because of a pre-existing condition.
• Approximately 10,700 people whose coverage is dropped each year because they get sick and made an unintentional mistake on their application will not have their coverage rescinded.
• Before reform, cancer patients and individuals suffering from other serious and chronic diseases were too often forced to limit or go without treatment because of an insurer’s lifetime limit on their coverage. Insurance companies are now banned from placing lifetime limits on coverage. Up to 20,400 people who typically hit their lifetime limits along with nearly 102 million enrollees in plans with lifetime limits can live with the security of knowing that their coverage will be there when they need it most.
• Restrictive annual limits will be banned until all annual limits are prohibited in 2014. The ban on the use of low annual limits will protect care for up to 3,500 people each year who would have hit their annual limit. 18 million people are in plans with annual limits today.
• New insurance plans cannot charge more in cost sharing for emergency services obtained outside of their network. Up to 88 million people will benefit from this new rule.
• Up to 88 million people who enroll in new plans will be guaranteed their choice of any available primary care and pediatric doctor in their plan’s network of providers and women will have the right to see an OB/GYN without having to obtain a referral first.
• Consumers in new insurance plans will have the right to appeal decisions made by their insurance company to an independent third party.

To ensure consumers know their rights, the Administration has launched HealthCare.gov and supported state efforts to inform and protect consumers. New Consumer Assistance Program grants funded by the law will help make sure that consumers receive their new rights and benefits under the Affordable Care Act by providing grant money to States to educate consumers about their health coverage options and new programs, empower consumers to avail themselves of new protections, ensure consumers have access to accurate information, and help consumers navigate the system to find the most affordable and secure coverage that meets their needs.

For more information, read the press release about the new annual limit waiver consumer notice guidance, or you can find the guidance here.

Updated Fact Sheet: The Affordable Care Act: Increasing Transparency, Protecting Consumers.

Posted on: December 9, 2010

Last updated: February 16, 2012