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How Individual Health Insurance Plans Will Change Under The Affordable Care Act

2012-02-21

The Affordable Care Act (ACA) is undeniably the most important piece of health care legislation in recent memory. While much has been made of the various ways that the ACA will affect employers, many individual health insurance policy holders are unsure of how they will be affected by the legislation. The ACA will change the way that insurance companies decide their rates, how they offer coverage, and how they approve or deny claims. Before the Affordable Care Act goes into effect, insured individuals should understand the various ways that the bill will affect their coverage.

One of the most significant new changes in the Affordable Care Act affects the way that insurance companies deny claims. The legislation prevents insurance companies from denying payouts unless there is clear evidence that the policy holder purposely misled the insurance provider when applying. This may improve the overall claims experience for many policy buyers in the United States. It may be easier to make a claim, but the claim will still have to fall under the policy owner's terms of coverage. As such, it is important for buyers to understand the terms of their coverage fully.

Existing individual health insurance policies may become more expensive until the controversial tax mandate takes effect in 2015. A tax will be levied against U.S. citizens who do not hold health insurance policies unless they fall below income guidelines set in the bill. The new tax is designed to compel individuals and employers to buy health insurance, as insurance providers insist that rates will rise with the new provisions unless the number of insurance policyholders in the United States increases significantly. If the insurance companies are right, insurance costs might rise regularly until the taxes start. However, the ACA also contains language to prevent insurance companies from changing rates too drastically for existing customers.

The Affordable Care Act will not force individual health insurance policy holders to change doctors, hospitals or insurance companies, as the plan has strong provisions that grandfather in older insurance policies. Health insurance companies cannot legally cut the coverage of grandfathered policies. They cannot raise coinsurance rates or copayment amounts, so individuals who keep their plans won't see many changes. However, individuals who want to change insurance providers will largely benefit under the ACA. The legislation prevents insurance companies from denying coverage to buyers for any reason and contains strict coverage guidelines.

It is difficult to determine whether health insurance rates will rise or fall after the Affordable Care Act takes effect. However, its overall effect on the value of existing individual health insurance policies should be positive unless the law changes dramatically before it is fully enacted.

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