Remember going to bed the night before your 10th birthday?
If you were like most kids, you fell asleep believing you'd be different in the morning. Everybody knows that 10-year-olds are faster, taller and smarter than 9-year-olds. Your 9-year-old self was bound to be transformed overnight.
That's how a lot of people have been thinking about the Patient Protection and Affordable Care Act – an impending transformation.
For those folks, 2014 is seen as the year when an avalanche of health care-related changes will suddenly come crashing down from the federal government.
But while many businesses have been busy dreading next year, myriad changes already have taken effect in the same way that 9-year-olds gradually grow into being 10-year-olds.
And more health care-related changes are scheduled for 2013.
We thought the time was right to look at health care and what you need to know now.
Q. Which parts of the Affordable Care Act have already kicked in?
A. Some of the act's most popular provisions are now law.
For example, small businesses can claim a new tax credit for offering health insurance to employees. More money is available for community health center expansions. And nursing students have access to more financial aid.
Insurance companies must spend the vast majority of money collected on health care services as opposed to administration or profits. And they have to adopt standard billing practices and electronic medical records.
Hospitals have to report patient data to an organization that monitors quality.
Other new laws crack down on health care fraud and offer seniors free preventive medical care.
The act, signed into law March 23, 2010, established a timeline with specific milestones and deadlines for each.
The first milestone was six months after the bill was signed by the president. That's when the patient's bill of rights became effective.
Q. What is the patient's bill of rights?
A. The rules commonly referred to as the patient's bill of rights provides various protections to consumers.
In general, insurance companies are required to extend coverage to more people for longer periods of time.
The bill of rights prohibits insurers from denying coverage because someone 19 or younger has a pre-existing medical condition that could require expensive treatment. (The act bans denials based on pre-existing conditions for all consumers as of 2014.) And it says an insurance company can't place a dollar limit on the benefits a consumer uses over his lifetime.
Bonita Hatchett, a partner with Barnes & Thornburg, has studied the act. The Chicago attorney will present information about the Affordable Care Act at a seminar Feb. 28 in Warsaw.
Offering free preventive care and dropping exclusions for pre-existing conditions are going to increase the amount insurance companies charge employers to offer health insurance, Hatchett said.
That's on top of extra expense from eliminating annual and lifetime benefits, "which means coverage is endless," she said.
Because most companies pass along a portion of health insurance premiums to employees, the amount workers pay could also rise.
Q. Are most employers ready to deal with the new health care requirements?
A. No. They've been ignoring it and hoping it would go away, Hatchett said.
Many companies counted on the Supreme Court to rescue them by overturning the Affordable Care Act. But in a landmark decision last June, Chief Justice John Roberts wrote that most of the law is constitutional.
Many employers then prayed the presidential election would save them. But President Obama, architect of the health care overhaul, was re-elected.
"Now employers are scrambling to figure out what they should be doing," Hatchett said.
A January survey by Newtek Business Services, a New York firm that offers payroll processing and other services, found that 65 percent of participating small-business owners haven't decided how to manage their health care costs over the next 12 months – much less how to deal with next year's mandate.
The company announced this month that it surveyed 1,200 of its more than 100,000 small-business customers nationwide.
Doug Powers, a local attorney who practices employee benefits law, believes the employers most affected will be large ones – even if they already provide health insurance.
"There are still some substantial compliance burdens they have to meet," he said.
Any company with 50 or more full-time equivalent employees in 2014 will have to offer health insurance that meets the minimum standards for coverage or pay a penalty of $2,000 for each full-time employee – excluding the first 30.
Q. How will access to insurance coverage change?
A. Residents of every state – including Indiana – will have access to health insurance through a state exchange or marketplace. Exchanges will become active in October, with insurance policies bought there taking effect on Jan. 1, 2014.
States can choose to oversee a health insurance marketplace, work cooperatively with federal officials on one or abdicate all control to the feds.
Gov. Mike Pence has left Indiana's program up to the federal government to oversee. He could decide to leave it up to the feds for the first year or two and then choose to take state control after federal and various state officials work out kinks in the system.
"There are going to be lots of screw-ups and hiccups and bumps in the road" as the exchanges get up and running, said Powers, who is with Beckman Lawson, a Fort Wayne law firm.
So far, 18 states and the District of Columbia have received approval to run their own exchanges in 2014, including New York, California, Massachusetts and Kentucky. Seven states have requested partnerships, including Michigan and Illinois. And 25 states – including Indiana and Ohio – are relying on the federal government to operate their health insurance marketplaces.
Anyone who has booked airline tickets online has a basic idea of what the health insurance exchanges will be like.
Individuals and small businesses up to 100 full-time equivalent employees will be able to go to a website and compare costs and benefits of various plans before enrolling in the one that best suits their needs and budgets.
"The exchange is designed to standardize things as much as possible," Powers said.
The idea of allowing states to create and operate separate exchanges appealed to states' rights advocates, Powers said.
Q. Will big insurance companies see huge profits because people are being forced to buy health insurance?
A. No. As of 2011, insurers selling coverage to large employers must spend at least 85 percent of premium dollars on health care services rather than administration or profit. The rate falls to 80 percent for health plans sold to small employers and individuals.
Any premiums paid over the allowed percentage must be refunded to individual policyholders or employers, who can choose to put it toward future health care premiums. In 2012, this provision resulted in more than $1.1 billion in rebates.
Steve Smith, CEO of Allied Physicians Inc. – known to patients as Fort Wayne Neurological Center – applauds the new limits on insurer profits.
Insurance providers started as mutual organizations that redistributed profits to their member-customers, he said. Only in recent decades have they become publicly traded corporations focused on generating progressively higher profits, he said.
As a result, Smith said, insurance companies hike premiums for an entire workplace if one or more employees racked up big medical bills the previous year. He considers that business model unfair to policyholders, but he expects health care costs to fall under the new law.
Q. Will I be forced to buy insurance through Indiana's exchange?
A. No, not if you're offered insurance through your employer – or you find a policy on the open market that fits your needs and meets the government's minimum coverage requirements.
The one exception to the minimum coverage rule is for grandfathered insurance policies that were in place when the act was passed in 2010.
If you have coverage you like, you can keep it. But any change to that policy, such as adding mental health coverage, means it has to be updated to meet all the minimum requirements.
Q. What if I'm an employer and don't want to offer health insurance to my workers?
A. Employers with less than 50 full-time-equivalent workers are off the hook.
Any business with 50 or more full-time equivalent workers must offer health care insurance to those who work 30 hours a week or more – or pay a penalty. The federal government considers anyone who works 30 or more hours a week full-time employees.
Some people have predicted that industries, such as restaurants, that traditionally rely on part-time workers will limit most workers' hours to less than 30 to keep from triggering the requirement.
Even those employers that go over the 50-employee threshold will need to provide health care insurance only for those who are employed full time.
Not even the most gung-ho health insurance advocate thinks most part-time workers will be offered coverage.
Q. What if my employer doesn't offer health insurance or I'm self-employed?
A. You can buy a policy through a state exchange or directly from an insurance provider.
If you already had an individual policy, you'll be able to continue it – assuming it meets minimum coverage requirements.
If not, you can turn to the online exchange for more options.
Q. What if my employer offers coverage that I don't like? Can I decline it and choose insurance through the exchange instead?
A. Yes, but your employer may be slapped with a penalty.
By choosing a policy from the marketplace because your employer's plan is too expensive or doesn't offer good enough coverage, you'd be saying that your employer's offering is inadequate and should be subject to penalty. Federal officials want to discourage companies from adopting bare-bones coverage.
To fulfill federal requirements, employer-sponsored policies will have to meet minimum standards.
Starting Jan. 1, coverage must include doctor visits, emergency room visits, in-patient hospital care, maternity and newborn care, mental health and addiction services, prescription drugs, laboratory services, preventive and wellness care and chronic disease management.
Covered services include therapy to help stroke victims relearn to walk and delayed children learn to speak. Also on the minimum coverage list: Dental and vision care must be included for children but not adults.
Employers have at least two additional mandates. Individual employee coverage must cost 9.5 percent – or less – of the employee's household income. And the plan must pay for 60 percent or more of covered expenses.
Employers who fail to meet the requirements will be fined. The penalty could add up fast: $3,000 for every employee who spurns employer-sponsored coverage or $2,000 for each full-time employee – whichever is less.
Q. What if I'm young and healthy and don't want health insurance?
A. The law mandates that you get a policy anyway, beginning Jan. 1, 2014. And there's a reason for that.
Insurance companies are no longer allowed to deny coverage to people 19 and younger with pre-existing conditions. In 2014, the rule expands to cover everyone. That's great news for recipients of kidney transplants and people with diabetes or congestive heart failure.
But if insurance companies only added those people to their plans, costs would skyrocket. To help offset those additional costs, insurance companies will also add millions of healthy people – and the premiums they pay – to their plans.
Without all the young, healthy people joining the pool, premium costs would go through the roof for everyone else.
The reality is that young, healthy people will bear much of the financial brunt of the health care overhaul, said Powers, the attorney.
The Affordable Care Act limits the disparity in premiums that insurers can charge. The highest individual premiums can't be more than three times the cost of the lowest-priced ones.
The current disparity of 8-to-1 was determined by market forces.
Powers said it's unlikely that insurance companies will lower premiums for its riskiest policyholders to close that gap. Therefore, the cost to insure a healthy 21-year-old will likely increase to bring rates within a 3-to-1 range.
Q. What's the worst that can happen to me if I just don't want insurance?
A. Well, you're in luck if you're opposed on religious grounds or if you're an illegal immigrant, a prisoner or an Indian. Those groups are exempt.
The Indian Health Care Improvement Act, which was reauthorized in the Affordable Care Act, authorizes health care services for American Indians and Alaska Natives through the Indian Health Service. It was originally approved by Congress in 1976 and last reauthorized in 2000.
The Affordable Care Act also grants an exemption if it would create a financial hardship.
If you're younger than 30, you could opt for low-cost catastrophic coverage, which wouldn't cover common doctor visits but could kick in if you were seriously injured in an auto accident, for example. Such policies would meet the insurance mandate.
But if you're just being stubborn, the Affordable Care Act spells out fines.
Officials plan to track who's got health insurance and who doesn't with questions on federal tax returns. The individual penalty starts at $95 or up to 1 percent of income, whichever is greater. By 2016, the individual penalty increase to $695 or 2.5 percent of income, whichever is greater.
For families without health insurance, the penalty would be $2,085 or 2.5 percent of household income, whichever is greater.
But any cost analysis should include the fact that by paying the penalty, the individual is tempting fate. One broken leg or bout of pneumonia could wipe out those presumed savings and then some.
Q. What if I can't afford health insurance?
A. The law includes financial aid to help low-income families pay for coverage. Tax credits will be offered to individuals and families earning up to 400 percent of the poverty line. That amount in 2012 was $44,680 for individuals, $60,520 for families of two and $92,200 for families of four. (Pregnant women count as two people.)
Because of incorrect information provided to The Journal Gazette, the wrong year was included in a previous online version of this story. Insurance coverage cannot be denied for adults with pre-existing medical conditions beginning in 2014.