How Is Health Reform Affecting Private Individual Insurance?

When Congress approved national health reform in 2010, new laws were formed that have since changed and continue to change the way private insurers provide health coverage to policyholders. Known as The Affordable Care Act, the law requires private health insurers to expand the coverage rights of patients, as well as accept new applicants with fewer restrictions. Furthermore, the law will continue to affect private insurers for many years to come, though the scope of those effects is yet to be seen.

Coverage and Benefits

• The Affordable Care Act protects health insurance policyholders from the former insurance industry practice of limiting the amount of coverage available per year and overall during an individual's lifetime. The law bans insurers from imposing dollar-amount lifetime limits for essential health treatment on all new and renewed policies as of September 2010, and annual limits will gradually increase until they become unlimited in January 2014. Additionally, private insurers must now provide preventive care to all policyholders free of charge, including regular health exams, vaccinations, blood pressure checks and cancer screenings.

Acceptance

• Private insurers must now accept applications of all children under age 19, regardless of pre-existing conditions or medical history. These pre-existing condition limitations will also extend to all adults in 2014, meaning that no one will apply for health insurance with concern for being denied coverage. The Affordable Care Act also changes the way private health insurance companies provide coverage to young adults. The law requires that all insurers treat the adult children of policyholders as dependents until age 26. These adult dependents receive the same benefits and premiums as younger dependents, and insurers cannot deny coverage to an adult dependent due to marital status, financial independence or state of residence.

Exchanges

• Health reform requires all Americans to carry health insurance by 2014. Because of the mandated coverage requirement, each U.S. state will offer its residents access to a government-regulated health insurance exchange from which individuals and families may choose from multiple private health plans. The exchanges will feature insurance plans from multiple private insurers to encourage competition and better value for the price paid. Individuals and families that purchase insurance through a state health exchange may qualify for government subsidies to help alleviate the cost of monthly premiums. The subsidies will be available to policyholders with incomes of up to 400 percent of the federal poverty limit.

Considerations

• The long term effects of health reform on private health insurance are unknown, as the law doesn't fully go into effect until January 2014. However, speculation from the Society for Human Resource Management and Dr. Jeffrey Kang, chief medical officer at Cigna Healthcare, suggest that individuals and families with existing private health insurance plans can expect to see substantial increases in monthly premiums in the years following the incorporation of federal health reform. Economists attribute these premium hikes to the expansion of limits on coverage in addition to other factors.