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Make the Most of Health Care Reform
Soon-to-be college grads and people with health issues should follow these strategies to benefit from the new law.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
March 25, 2010
Who will benefit from the new health-care-reform law over the next few months, and how can those people make the most of it?
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Two key groups will benefit from the new law within the next six months. Here’s what they need to know.
Recent grads and young adults. The law requires insurers to let dependent children stay on their parents’ policies until age 26, which will help college graduates who don’t have a job with benefits. However, the new rule won’t take effect until September 23.
About half the states currently have laws permitting grown kids to stay on their parents’ policies until at least age 25 or 26 (see the National Conference of State Legislatures table for a list of each state’s rules). But new grads in other states may still need to find coverage for a few months before the law kicks in.
Until then, they could remain on their parents’ policies under COBRA, but the price can be steep -- often $200 to $300 per month or more, depending on the policy. If they’re healthy, they may get a better deal on their own. In most states, people in their early twenties can buy health insurance for $150 per month. It will be easy to shop for a policy starting in 2014, when the law establishes insurance exchanges to help people buy coverage. But until then, a good place to shop is at eHealthInsurance.com, or find a local agent at www.nahu.org.
And even after the law starts requiring insurers to cover dependents until age 26, it may not help everyone. “The legislation did not specify exactly who will be eligible for coverage through the extension through age 26,” says Tanya Schwartz, policy analyst at the Kaiser Family Foundation. Most states that let grown kids stay on parents’ policies do not require the kids to be claimed as dependents on their parents’ tax returns. But the new law could impose that requirement. The Secretary of Health and Human Services will be creating the regulations over the next few months to spell out those details. Some states may continue to offer more-generous rules.
It will also be important to see how the extended coverage will be priced. Under many state laws now, you do not have to pay extra to keep an adult child on your policy if you would have kept a family policy to insure younger siblings. But if the insurer bases premiums on the number of children, or if you’re insuring only one child and could otherwise switch from family coverage to coverage for a single person or couple, compare that extra cost with the price of buying an individual policy for your young adult. Use the same strategy to determine whether it's a better deal to keep your kids on your policy under the new law or to have them get their own policy.
If your child does buy his or her own coverage, a great way to lower the cost is to raise the deductible -- especially if he or she rarely visits the doctor and needs insurance primarily for catastrophic coverage.
If the deductible is at least $1,200 for self-only coverage, the child can qualify for a health savings account and make tax-deductible contributions that can be used tax-free for medical expenses in any year. People with self-only coverage can contribute up to $3,050 to an HSA in 2010. HSAs still exist under the new law but with a higher penalty (rising from a 10% tax to 20%) on any amount withdrawn for nonmedical expenses before age 65.
People with health issues. The new law appropriates $5 billion to establish a temporary high-risk pool to provide coverage for people with health issues, starting 90 days after the law was signed (June 23) and remaining in effect until 2014, when insurers will be prohibited from rejecting anyone because of preexisting conditions.
The new national high-risk pool will be particularly helpful for people who have trouble finding coverage in states that don’t have open high-risk pools now, including Arizona, Florida and Nevada.
But there is a big catch: You need to be uninsured for at least six months to qualify for the new national high-risk pool. Many state high-risk pools, on the other hand, currently let you in if you’ve been rejected by an insurer and don’t require you to be uninsured.
It’s dangerous to be uninsured, especially if you have medical issues, so exploring your options now is a good idea. See the National Association of State Comprehensive Health Insurance Plans for a list of states with high-risk pools and contact information to see whether you can qualify for coverage as soon as possible.
Some of the states with high-risk pools that work well may be able to continue running their own pools, but new plans (or one national plan) will still need to be set up to cover the states that don't have a working high-risk plan now. The new plans must follow the provisions of the law, which includes consumer protections such as limiting the maximum out-of-pocket spending to $5,950 for individual coverage or $11,900 for families.
How will Obama’s heath care bill affect YOUR small business? Find out by clicking here.
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Reader Comments (17)
POSTED BY: heintz609 (03/27/2010 06:11:35 PM)
How has O'bamba figured to screw the military retireees?
POSTED BY: GB (03/29/2010 12:57:23 PM)
Thanks for looking forward!
POSTED BY: Marty (03/30/2010 10:12:16 AM)
They've done nothing to provide affordable options for the unemployed. What a bunch of spineless thieves they are.
POSTED BY: James Hirsch (03/30/2010 08:05:05 PM)
My wife will be retiring the first of June, 2010 will be 63 years old and is in excellent health. We are looking for affordable health insurance for her for the next 2 years at which time she will be eligible for medicare. Any suggestions?? We have already looked into putting here on my employers health insurance but the premiums are very expensive....Help!
POSTED BY: concerned (03/31/2010 10:08:07 AM)
they have done nothing to help an average family. a thousand a month for insurance is a joke
POSTED BY: Brad Roth (03/31/2010 11:30:21 AM)
Just how strongly will this reform adress the need for Long Term care services? $50 a day seems to be a JOKE when current averages are near $300 per day.
POSTED BY: Bill Watson (03/31/2010 01:13:10 PM)
The President I voted for has mastered Orwellian speak and deception to continue the sellout of the American people and the United States Treasury that both Republicans and Democrats are wallowing in. When he mouths glowing praises of this health care fraud that will cause such catastrophic damages to people who desperately need accessible and fiscally responsible health care he sinks to a new low in political treachery. "This day affirms our ability to overcome the challenges of our politics and meet the challenges of our time," Obama, in triumphant mode, told the NoVa audience. "When I took office, one of the questions we needed to answer was whether it was still possible to make government responsive to the needs of everyday people . . . or whether the special interests and their lobbyists would continue to hold sway." The political and financial corruption that has overtaken our country is now being lead by the Commander in Chief that we elected to throw out the looters and pirates. This is a very dark hour for the United States. We elected President Obama with a mandate to fix the messes he had the clout to deliver the PublicOption he preached in the campaign instead he sold-out to the healthcare industry. A PublicOption amendment for healthcare reform could eliminate insurance by using sales taxes and it could give all government funded care free delivered from government hospitals to everyone who wants to use them and taxpayers will save $1trillion annually.
POSTED BY: N. SCHULTE (03/31/2010 05:05:53 PM)
HOW CAN SENIORS 65 YEARS AND OLDER BENEFIT FROM THE NEW LONG TERM HEALTH CARE BENEFIT? IS THERE A BUY-IN POSSIBILITY?
POSTED BY: VA Benefits over age 65 (03/31/2010 05:51:25 PM)
How are benefits being changed for prescriptions and health care through the VA for veterans compared to the present time? Is it true that those currently receiving prescription drug benefits will discontinue if annual income is in excess of $25,000?
POSTED BY: Susan (04/05/2010 10:41:56 AM)
I think Senator Chuck Grassley had it right when he proposed the Presidnent AND Legislators be required to use the same health care coverage as the rest of us. America supposedly have no aristocrate or blue blood like they do in Europe so why the different coverages? Theirs and ours. I think the Legislators should be INCLUDED in the health care reform giving them a "vested" interest, Likely both sides would get along better and truly make it work for everyone.
POSTED BY: austin oski (04/06/2010 03:19:57 PM)
@concerned - You only pay $1000/month for your family? You're lucky. I pay $1400 for three of us. Two adults and a 16 month old in perfect health. I have to make nearly $20k a year just to pay for health coverage, exluding actual medical expenses. We had a baby 16 months ago, no coverage because Texas does not require insurers to offer it to individuals, so they mostly don't, so that was another $20k out of pocket. So, I paid $35k in medical expense that year. For all you who think we don't need changes to our current health system and the free market is working fine, where is the freedom in $20k or $30k a year in medical expenses? Doesn't make me feel very free...
POSTED BY: Dot (04/07/2010 09:42:29 AM)
From my understanding in this report. If I had wages of over $200,000.00 I think I'd be delighted to pay some taxes on it. Whomever would object I'd consider a mighty greedy person!! Wages does not include our SS monthly pay , never has, income means money earned by work of some kind. P.S. Military doesn't get yearly income over the requirement, so where is the screw up?
Posted by: Suzy Smith at 04/07/2010 03:28:27 PM
Change was and is definitley needed. I am an oncology nurse and I hear the horror and hard luck stories surrounding the patient's effort to afford their COBRA or losing their insurance and running out of the COBRA coverage. And it doesn't stop there, they loose their jobs and sometimes their homes. Let's face it we are our brother/sister's keeper and for the grace of God there go I. Any change isn't going to be easy and not all of it is going to be easy to take. We are the mighty nation of the United States of America and our people need to have affordable health coverage.