Gear Up for Health Reform

You have more choices, but also more rules.

May 1, 2010

Love it or hate it, health insurance reform is now the law of the land. Here are some answers to questions about how it will impact you.

Can I keep my existing policy?

If you buy your own coverage and have a policy you like, your coverage is grandfathered, so you’re set and need to do nothing.

If you’re a broker and you already offer health insurance to your salaried workers, you may continue to offer your existing plan. It’s also grandfathered.

What if I have a preexisting condition?

The law creates a uniform, national set of insurance ratings and underwriting standards that spell out the criteria that insurers can use when evaluating applications for individual and small-business coverage.

The goal is to create a set of rules that more closely resemble what today are generally the rules applicable to large group policies. Insurers can still charge different premiums based on the risk factors you bring to the table such as age, type of policy, and geographic area, but the cost differentials are greatly curtailed.

Also, insurers can no longer deny coverage or base premiums on a preexisting condition or your claims history or gender.

If I am shopping for a new policy, what will my selection be like?

The law seeks to expand the individual and small-business insurance markets, which are the markets through which sales associates and real estate brokers principally shop for coverage.

The goal is to increase access to affordable coverage by increasing competition among insurers. It seeks to do that by expanding the pools of insureds, encouraging insurers to enter new markets, and allowing the markets to cross state lines.

As an independent contractor, you’ll be able to shop for coverage in both the individual and the small-business markets. The eventual goal is to merge the individual and small-group markets into one larger market.

What are the 'exchanges' I’ve heard so much about?

These are, in effect, the new marketplaces through which you shop for coverage. Because insurance ratings and underwriting standards are made more uniform, shopping for coverage is simplified, at least in theory, because comparison between plans is made easier.

Must I get insurance, or provide it to employees?

The law requires you, as an individual, to buy health insurance—that’s how the pools of insureds are to be increased—and gives incentives to businesses to make health insurance available to their employees.

That means you’ll have to buy coverage if you don’t already have it or face a penalty unless you can show you can’t get coverage for less than a certain percentage of your income—10 percent—or would otherwise face a financial hardship.

The employer mandate covers businesses with more than 50 employees. Most real estate brokerages, as small businesses with fewer than 50 employees (sales associates, as independent contractors, aren’t part of the employee total), are expected to be exempted from the mandate. Large employers that fail to comply face a penalty.

Affordability credits to help offset costs are available to individuals and very small employers, including very small nonprofit associations that are employers. So, some local associations of Realtors® could be eligible for the tax credits, too.

When do the reforms go into effect?

It will be years before you feel the full effect of the changes. The new law weighs in at about 1,000 pages, so there’s a lot to it and not all of the provisions kick in at once. NATIONAL ASSOCIATION OF REALTORS® analysts will be monitoring the changes as they occur and will be keeping lawmakers and administration officials aware of concerns as problems become apparent. Here are some key dates to keep your eyes on:

  • Late 2010. Coverage extended to dependents up to age 26; insurers prohibited from excluding children with preexisting conditions and from cancelling policies.
  • 2011. Rebates provided to Medicare Part D enrollees (those subject to the prescription-drug gap in coverage).
  • Early 2014. Exchanges launched; individual and small-business tax credits made available; individual and em-ployer mandates, along with penalties, begin; underwriting and rating changes take effect; insurers can no longer exclude anyone with preexisting conditions.

What Types of Coverage Will Be Available?

The new health reform law creates individual and small-business insurance exchanges, which will be the new marketplaces for buying coverage for you or your employees if you’re in the individual market or run a small business.

The two exchanges will eventually be merged into one. Even before that happens, though, here’s what the marketplaces will look like:

Will there be a government-run health plan?


Who will be eligible to purchase on the exchanges?

Individuals without employer coverage and their dependents, self-employed individuals and their dependents, and owners and employees of small business (100 employers or fewer) and their dependents.

Will insurers be able to turn applicants down?


Will insurers be able to cancel policies?


Will insurers be able to turn you down for a preexisting condition?


Will insurers be able to charge you more for a preexisting condition?


Will you face a longer waiting period for a preexisting condition?


Will you be charged more for making a lot of medical claims in the past?


Will insurers be able to charge women more than men?


Will insurers be able to charge older persons as high a premium as they want?


Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.