Affordable Care Act Upheld By US Supreme Court: What Does It Mean?

The United States Supreme Court kept us waiting until the last possible moment to issue its decision regarding the constitutionality of the Patient Protection and Affordable Care Act (ACA), but finally issued its ruling in late June 2012. It was a complicated opinion that struggled to find a majority on certain points and inspired impassioned dissents from certain justices. Ultimately the Court upheld all but one aspect of the federal law relating to Medicaid expansion.

Below is an overview the ACA components that are most likely to affect community members of

Coverage Expansion & Protections:

  • Young adults must be allowed to stay on their parents' insurance policies until age 26. This provision is intended to protect young people as they make the transition between childhood and establishing their own insurance coverage through an employer or other means.
  • Insurance companies can no longer refuse to issue policies to people with pre-existing health conditions. Further, they cannot charge more for people with pre-existing conditions. This policy is already in place with respect to children and will take effect for adults in 2014.
  • The ACA eliminates lifetime or annual caps on spending for medical care. If a covered patient is so sick that he/she needs costly care it will not be barred by policy limits on spending.
  • The ACA also makes it illegal for an insurance company to cancel your policy if you make a mistake on your application. You can't commit fraud, of course, but you cannot be penalized for an accidental mistake or oversight.
  • The law mandates that any insurance company participating in the health care exchanges provide coverage for mental health- and addiction-related services. These benefits will also be included as part of “essential health benefits” under Medicaid.
  • The Medicare prescription drug coverage gap, the so-called donut hole, is being closed. In 2012, for instance, Medicare beneficiaries pay just 50% of the cost of their brand-name prescription medications. Medicare pays 14% of the cost of generic drugs. The percentage Medicare patients pay for brand name drugs will be gradually reduced until the coverage gap is closed in 2020.
  • Starting in 2014 insurance companies will be required to provide maternity benefits.
  • The law affords patients the right to appeal adverse benefits decisions to a neutral third party. Before the ACA, some plans only permitted internal reviews conducted by employees of the insurance company.
  • The law expands Medicaid. People at or below 133% of the poverty level (an income of $14,404 for an individual) will be eligible for Medicaid benefits. However, Medicaid programs are run by the individual states. Congress had written the ACA to provide that states refusing to expand their Medicaid programs would have their federal Medicaid funding cut. The US Supreme Court ruled 7-2 that this would be unconstitutional, effectively making Medicaid expansion optional. This part of the Court's decision may make a big difference in the expansion of coverage for lower income Americans.
  • Finally, businesses with 50 or more employees must provide insurance for their employees or face a penalty.

The other significant change under the ACA is the individual mandate: the law requires, with some exceptions for those with low incomes or religious objections, every American to have private or public health insurance.

There are a few main ways for people to meet this requirement:

  • Through an employer. This is how most insured Americans currently receive health coverage. For these people little about their situation is likely to change.
  • Through the government by way of Medicaid, for low income Americans, or Medicare, for elderly and disabled Americans.
  • Purchase of a private insurance policy on the open market.
  • Utilization of subsidized coverage under the new health care exchanges for Americans with lower incomes that aren't low enough to qualify for Medicaid. These people will receive federal tax credits to help subsidize the cost of their coverage.

Questions about how the law might affect you or someone you love? Please share them in the comments.

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This article represents the opinions, thoughts, and experiences of the author; none of this content has been paid for by any advertiser. The team does not recommend or endorse any products or treatments discussed herein. Learn more about how we maintain editorial integrity here.

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