Health Care Reform Update

May, 2010

On March 23, 2010, President Obama signed The Patient Protection and Affordable Care Act (PPACA; P.L. 111-148) into law. One week later, he signed the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152), which made numerous changes to PPACA. The health care reforms in these laws aim to expand coverage to millions of Americans and will require a large number of changes to health insurance products and the regulations that govern them.

The health insurance reforms adopted as part of the Patient Protection and Affordable Care Act (PPACA), and the subsequent reconciliation bill, is phased-in over the next five years. Most provisions will not take effect until January 1, 2014. However, some new protections must be implemented when plans renew after September 23, 2010. In addition, a new federal high risk pool program will begin this summer and greater transparency will be required of health care plans in the coming months.

Key Provisions Effective Six Months after Enactment (for new and renewing plans, with several exceptions for grandfathered plans)

  • Plans that provide dependent coverage must extend coverage to adult children up to age 26. A couple of carriers have indicated they will begin implementing this provision effective June 1, 2010.
  • Requires guarantee issue (guidelines to be provided by U.S. Department of Health and Human Services) and eliminates exclusions for pre-existing conditions for children under 19 years of age.
  • Prohibits rescissions except in case of fraud or intentional misrepresentation of material facts.
  • Prohibits lifetime limits on specified essential health benefits.
  • Restricts annual dollar limits on specified essential health benefits.

Exceptions for Grandfathered Plans

A "grandfathered" plan is a group or individual health plan or insurance coverage in which a person was enrolled on March 23, 2010. Grandfathered plans are subject to only some of the reforms. For instance, for plan renewals on and after September 23, 2010 (six months from the legislation’s enactment), grandfathered plans will be required to comply with the prohibition on lifetime limits or annual dollar restrictions (group only) on essential health benefits, the prohibition on rescissions, the requirement to extend dependent coverage to children until age 26 (if not they are not eligible for other group coverage), and the prohibition on coverage exclusions for pre-existing health conditions for children under age 19 (group only).


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