There have been some rules that were created under the Affordable Care Act that are designed to protect consumers from some unfair practices that private insurance companies were doing. One of the new regulations defines the percentage of money from premiums that insurers must spend on health care of their customers. Some companies have been given waivers for this rule, which has confused some people.
A law was passed in January of 2011 that required health insurance companies to spend a certain amount of the money that they get from premiums on things that either provide health care to their customers, or that are things that will improve the health of their customers. Insurance companies that sell large employer plans have to spend 85% of their profits this way, and insurers who sell individual insurance plans must spend 80% of their profits on those goals.
Things like administrative costs, employee salaries, certain kinds of taxes, and other things that do not actually focus on the health of their customers cannot be pushed into the 80% or 85% requirement. Another law prevented insurance companies from placing a restrictive dollar limit on the amount of care that a person would be covered for.
As a result, several kinds of employee health insurance plans were now, officially, considered to be below standard. Some large corporations, like McDonald’s, had been offering some of their employees a mini-med health insurance plan. At least some of these corporations decided that upgrading their current health plan to meet the new requirements was going to be too expensive. Instead, they were threatening to simply stop offering their employees any health insurance, whatsoever.
The result would be that a lot of Americans who were getting at least some health insurance coverage would suddenly have no health insurance at all. This group of people did not make enough income to be able to afford private, individual, health insurance. To prevent a situation where a lot of Americans suddenly would be without health insurance coverage, the federal government granted waivers to some of the large corporations who were making these threats. The waivers would allow the company to continue to offer it’s employees substandard health insurance, for a limited time.
At this time, the federal government has granted 1,372 waivers to employers and to health plans in all 50 states. This covers less than 2% of the insurance market (to give you some perspective). The waivers protect more than 3.1 million Americans that would have lost their health insurance when the large corporations were planning on dropping their employee health plans.
The waivers are temporary. They will no longer be available in 2014, when two things are expected to happen. The health insurance exchanges are intended to be up and running in 2014. This will give Americans a way to locate a health insurance plan that they can afford. The other thing that will happen in 2014 is that the annual dollar limit, or cap, that insurance companies currently place on health care, will be banned.
Image by Steven Depolo on Flickr