The elimination of lifetime dollar maximums and extending coverage of adult children to age 26 are two of the first provisions of the Patient Protection and Affordable Coverage Act (PPACA) and Reconciliation Bill that will take effect on September 23, 2010.
In the past, it was common for insurers to end coverage for the children of Laborers when they reached a certain age (often 21) and to set limits on the amount that the insurer would pay over a lifetime for care for a particular fund participant.
Lifetime dollar maximums help health and welfare funds control costs to the plan for large claims. However, depending on the dollar amount, the lifetime limit on coverage could impose significant hardships on individuals with serious, chronic or catastrophic illnesses. If participants are not aware of the limits in their plans, they may assume that their care could continue indefinitely.
Extending coverage for adult children to age 26 helps cover an American population – young adults – that has often chosen not to purchase coverage for themselves. That is not an entirely unreasonable decision, as young adults are the healthiest segment of society and the cost of health insurance may weigh more heavily on their newly-employed earning capabilities.
While the extension of adult children coverage and the elimination of lifetime dollar maximums may benefit Laborers’ families, the changes do not come without increased cost for LIUNA’s health and welfare funds. Initial estimates project a 10-15 percent increase in costs, mostly because funds must purchase stop-loss insurance policies to protect themselves against catastrophic claims that could otherwise leave them bankrupt. That increased cost may become an issue in future wage and benefit negotiations between the union and its signatory employers.
Under the new regulations, all health plans and issuers are required to give written notice of the changes no later than the first day of the first plan year beginning on or after September 23, 2010, or January 1, 2011, for calendar year plans. The regulations (lifetime limits and adult child coverage) provide model language that will satisfy the notice requirement.
The LHSFNA’s Health Promotion Division is monitoring the implementation phase of health care reform in the U.S., a phase which is currently planned to extend through 2018. It has established a Heath Care Reform Updates page on the LHSFNA website and sends email alerts to LIFELINES ONLINE subscribers whenever new updates are announced. To sign up for a free subscription, go to the subscription service.
The Division will also present two workshops at this month’s LIUNA’s Tri-Funds Conference. The titles are H&W Fund Compliance with the Patient Protection and Affordable Care Act and Health Care Reform: How It Will Impact LIUNA Members. Conference goers are urged to attend. In addition, Division staff is available to assist LIUNA health and welfare funds in assessing how best to manage changes imposed by the new health care regulations. To inquire about such assistance, contact the Division at 202-628-5465.