Will Health Reform Affect My Plan?

A major goal of health-care reform was to extend coverage to the uninsured. But the majority of Americans, who have insurance through their employer, will see changes, too. A survey by benefits consultant Towers Watson found that 88% of companies plan to pass on health reform's anticipated cost increases via higher co-payments, deductibles or premiums, and 74% plan to reduce health benefits. The first round of mandates could add 2% to 5% to projected 2011 plan costs, according to consultant Hewitt Associates, in addition to the increases already expected.

The new law says that companies currently offering coverage to employees' dependents must make it available to children up to age 26 beginning in plan years that start on or after September 23 (January 1 for plans that work on calendar years). Expect more scrutiny as employers double-check eligibility.

The cost to cover adult children who didn't meet the traditional definition of a dependent used to be counted as taxable income for the employee. That will no longer be the case. Many insurers said they'd offer coverage for some young adults before September 23, but employers aren't so eager: 78% of those surveyed by Towers Watson said they'd wait until 2011. Companies expecting an influx of dependents may charge per dependent rather than having an "employee and family" option.

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Removing lifetime dollar limits on essential benefits, such as hospitalization, prescription drugs and doctor visits, will boost costs. Annual spending caps, yet to be specified, are allowed until 2014. Among the changes that take effect immediately: If you're covered by a plan that begins next year, you won't have to pay for preventive care.

Starting in January, workers who use a health savings, health reimbursement or flexible spending account will no longer be able to use the money for non-prescription products. And the penalty for nonmedical HSA withdrawals will rise to 20%, from 10%.

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.