Life Care Plans and the Patient Protection & Affordable Care Act

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Future medical expenses often represent a significant portion of damage awards in medical malpractice and personal injury actions. Often, following trial, the injured party will require medical care and treatment into the foreseeable future. Consequently, medical experts and life care planners attempt to quantify the medical needs and associated costs in a line item fashion as an element of economic damages. These itemized life care plans, detailing each individual cost, typically result in a monetary figure exceeding the millions of dollars range.

However, under the Patient Protection & Affordable Care Act (ACA), the injured party will now be in a position to cover a majority of the health care needs through a health insurance plan, thereby extinguishing the necessity of this itemization of varying health care needs in a life care plan in civil litigation. The mandates of ACA serve to significantly reduce the monetary value of a life care plan and limit the economic recovery for future medical expenses in future medical malpractice and personal injury actions. As such, it is imperative that those defending these types of cases utilize the ACA in the defense of future damage claims.

The ACA introduced several changes to the health insurance market, which will impact the future of civil litigation. First, ACA prohibits discrimination based on pre-existing conditions and bans annual and lifetime expenditure limits. “Potential Effects of the Affordable Care Act on the Award of Life Care Expenses” College of the Holy Cross, Department of Economics, Faculty Research Series, Paper No. 12-01. Under the ACA any victim or injured party will be able to purchase health insurance at the same price as any other individual regardless of the type of injury, the enormity of the health care costs, or the ability to obtain employer provided health insurance. Further, ACA sets the minimum standards for covered services and maximum out-of-pocket expenditures for health insurance plans. These qualified health insurance plans must provide essential health benefits that include items and services within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. Id. The covered services typically mimic the type of health care costs itemized in a standard life care plan.

Importantly, to the defense of future damage claims, the new out of pocket limit. As of 2013, this limit is $6,250 per year for individuals and $12,500 for families. Therefore, the pre-existing condition provision of ACA and the quality of insurance requirements serve to limit the annual out of pocket costs for any injured party to a maximum of $6,250 plus the cost of a typical health insurance policy in the individual market per year. Id.

Next, ACA provides subsidies for insurance premiums and health care costs to those with low incomes and those that do not receive health insurance through the government or a family member’s employer. These provisions will serve to further cap the expenditures for medical care for any victim/injured person to an amount that potentially could be less than the maximum of $6,250 plus the cost of a health insurance policy and could be significantly lower than the sum of identifiable medical costs in an itemized life care plan.

In addition, ACA also includes an individual mandate provision. This provision requires all persons to provide proof of adequate insurance, either through their employer, public health insurance or the individual policy market. The failure to purchase insurance subjects the individual to a fine. In light of this mandate, the injured party would have been required to hold medical insurance prior to the accident/negligence, and due to the prohibition of discrimination based on health status, the injured party’s health insurance costs would be exactly the same regardless of the accident/ negligence. Thus, if the injured party had purchased insurance from the individual market before the accident, the change in covered medical care costs would be at most the out-of-pocket limit for health care plans or $6,250 per year.

Considering the above analysis, educating the bench and experts with regard to the mandates of ACA will prove beneficial in limiting the monetary amount claimed for future medical expenditures in medical negligence and personal injury actions. If applied, an injured party will suffer a maximum monetary damage of $6,250 for future medical expenditures. The injured party would have been required to obtain insurance via the individual mandate provision regardless of the accident/negligence. Likewise, the prohibition against exclusions and lifetime minimums guarantees future care to be provided. In reality, only those expenditures for out-of-pocket medical expenses that are not covered by minimum insurance requirements of ACA would be recoverable as a future medical expense in civil litigation in excess of the maximum of $6,250.

Bret C. Perry

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