How to Prepare for Health-Care Changes - WSJ.com

Steps You Can Take Ahead of Changes in Coverage, Taxes


By ANNA WILDE MATHEWS

After years of debate, a health overhaul is finally becoming a reality. Now what?

Many big provisions don't kick in until 2014, including the mandate for most folks to have health insurance and many new requirements for health-plan designs. Before then, you'll see a mishmash of other things go into effect at various times—and of course some of the changes depend on the Senate passing the House's so-called sidecar, or reconciliation, bill of changes.

Taylor Wilhite and her mom, Amy, visited Capitol Hill in May 2009 with American Cancer Society Cancer Action Network volunteers.

Here are some ways you can start dealing with the new health-care landscape.

Do your homework. This legislation will almost certainly affect your wallet and your health coverage, so you need to understand it. The Kaiser Family Foundation's site, kff.org, has a side-by-side bill comparison tool featured on the main page, and you can choose the Senate and reconciliation bills, selecting only the parts you care about.

Congressional Democrats offer their own explainers, including a timeline, at energycommerce.house.gov. Click on the "Affordable health care for America" button on the right.

Much of the bill will be implemented only once federal regulators write rules. One place to look for tools and information in coming months will be the Department of Health and Human Services' Web site, hhs.gov, along with associated sites like healthreform.gov and medicare.gov.

House Speaker Nancy Pelosi and House Conference Chairman Rep. John Larson addressed the media at the stakeout position.

Watch for coverage changes. If you're uninsured and have health problems, you may become eligible for a special new federal high-risk insurance pool this year. This is likely to be a good deal, so don't miss out: Watch for more information on hhs.gov and associated sites.

If you have coverage, insurance that was in effect before the bill becomes law is grandfathered in. Still, some provisions in the sidecar bill, like bans on lifetime benefit caps, would apply even to those plans.

That would solve a big problem for people such as Amy Wilhite of Marblehead, Ohio. Her family is insured through her husband's employer, but her 12-year-old daughter, Taylor, a leukemia survivor, has already gone through more than $1 million of medical care in her life and is approaching a $1.5 million cap. Taylor has been delaying or forgoing some care to stretch out coverage as long as possible.

"We shouldn't have to pick and choose what we want to do," Ms. Wilhite said.

This change, as well as rules against insurers' yanking policies if you get sick, and forcing family policies to generally include kids up to age 26, takes effect six months after the bill becomes law.
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Find a doctor. There could be shortages. Including the reconciliation package, the bill is ultimately expected to add around 32 million people to the insured population, with the big influx starting in 2014. Provisions aimed at boosting the supply of primary-care physicians likely won't kick in fast enough to keep up with the flood of new patients, at least in certain parts of the country. Make sure you are on a doctor's dance card before he or she stops taking new patients.

Consider long-term-care coverage. One of the underlying bill's biggest and least-understood provisions is a new voluntary long-term care benefit that would pay cash to people who become disabled. You get the benefit only if you pay premiums into the program for at least five years. You will likely not be able to opt to do this until 2011 at the earliest, but start factoring it into your planning now and watch for information on the hhs.gov sites. Insurers will likely develop supplemental products for the benefit, which isn't expected to cover round-the-clock care, says John Rother, executive vice president of AARP, the big seniors group.

Plan for new tax rules. One of the earliest is a new 10% levy on indoor tanning services, starting in July, under the sidecar package. For those making more than $200,000, or $250,000 for a couple, the Senate bill means a boost in the Medicare payroll tax beginning in 2013. That same year, the reconciliation bill adds a tax of 3.8% on unearned income, which includes interest and dividends, above those same thresholds.
Health Overhaul in Congress


Also, the sidecar package caps the amount you can put in a tax-free flexible spending account at $2,500 a year in 2013 (it's 2011 in the original Senate bill). There is currently no legal cap on the amount that people can put in their flexible spending accounts, although many employers impose their own limits.

Prepare for Medicare changes. If you are a beneficiary, the bill has sweeteners for your budget. Under the sidecar package, those who pay for drugs in the doughnut-hole coverage gap are eligible for a $250 rebate in 2010.

In 2011, that group gets a 50% discount on brand-name drugs, and after that the hole will get a little smaller each year, until in 2020 it's effectively zeroed out. Starting next year, certain preventive care is free.

Retiree Daniel O'Connell of Greenville, S.C., said closing the doughnut hole was "very beneficial to me." Mr. O'Connell—who lives on a fixed income of about $40,000 a year—hit the coverage gap in August last year, and said he incurred about $1,500 in out-of-pocket costs.

"At a certain point you're not covered, even though you're paying the premium," he said.

Brace for 2014. If you are uninsured, know that starting in 2014, you will likely be required to have insurance or pay a penalty—and you should start planning now for the cost, though many details aren't yet clear. Medicaid will expand to include more of those with the lowest incomes. For those who make less than around $43,000, or about $88,000 for a family of four, there will be government help to buy a plan. The kff.org site has a calculator that estimates what you might pay. The bill summary on the same site spells out penalties under the sidecar package, which start out at $95 or 1% of income, whichever is greater.

In 2014, insurance will have to meet new requirements that will result in plans that are richer than many available today, particularly in the individual market. These include caps on out-of-pocket costs. If you're buying a new plan for yourself, these nice extras may come with a cost: higher premiums.

—Amy Dockser Marcus and Louise Radnofsky contributed to this article.

Write to Anna Wilde Mathews at anna.mathews@wsj.com

How to Prepare for Health-Care Changes - WSJ.com.