Health Care Reform: What You Should Do to Prepare Now

Now that the health care overhaul is law, when will you start to see a difference? Some    changes kick in immediately, but the rest trickle out over the next few years, with a few  provisions not taking hold until the end of the decade. While you’re probably aware of some  of the bill’s major changes, we’ve sorted through the nitty gritty details to help you start  planning. Here’s a look at some of the key measures that you can — and should — prepare for in the coming months and beyond.

Expanded Coverage for Dependents

What the change is: Kids will now be able to stay on their parents’ health plans until their 26th birthday, unless they’re already covered by their own employer-provided plan (currently, many insurers drop coverage when children reach age 19 or graduate from college). Even if your children are married, they may still be eligible for insurance under your policy if they qualify as your dependents.

When it will take effect: September 23, 2010

What you can do to prepare: If an adult child age 25 or younger has been dropped from your plan, ask your insurer’s benefits manager or your firm’s HR department how to get him or her reinstated. And check to see if your premiums would rise. If so, compare the cost to that of policies sold on the individual market. In most cases, your employer plan will be the better deal and will offer better benefits. Also, if you already have dependent coverage for your spouse or other children, adding another one to your plan may even be free.

Reducing the Medicare ‘Doughnut Hole’

What the change is: Seniors who get their prescription drugs through Medicare Part D will get a $250 rebate if they fall into the costly coverage gap known as the “doughnut hole.” Currently, the gap begins after you’ve spent $2,830 on prescription drugs. You then have to pay the next $3,610 in prescription bills out-of-pocket until coverage kicks in again at $6,440.

It’s Official Folks - We’re In A Recession

According to MarketWatch, the U.S. has been in the midst of a recession for the last 12 months:

The U.S. economy entered a recession in December 2007, a committee of economists at the private National Bureau of Economic Research said Monday. The economy reached a peak in December and has been declining since, according to the business cycle dating committee of the NBER. The committee does not judge a recession as two consecutive quarterly declines in gross domestic product; rather, it looks at four key monthly economic indicators, including employment, industrial output and sales.

While this news probably doesn’t come as a surprise for many of you, I’m personally glad that it’s finally been confirmed. The first step to resolving a problem is admitting we have one, right?

So What Should You Do Now?

1. Chill out emotionally.
   Look, we’ve experienced recessions before. We’ve come out of them in one piece and we’ll do the same this time around. There’s no reason to work yourself into a tizzy over factors that are clearly out of your control. The important thing to keep in mind is to not panic. Contrary to what the media would like you to believe, the sky is not falling. We will get through this.
2. Chill out financially.
   Obviously December isn’t the best time to adjust your budget and curtail your spending, but if you’re worried about the recession, your job, or your investments, now is the time act like a grown up and make some tough decisions. You may want to consider cutting back on gifts this year either by not spending as much or by just purchasing gifts for immediate family members and cut back on friends and co-workers.
3. Bolster your emergency fund.
   In times as crazy as these, it’s impossible to predict what’s going to happen next. To ease the burden of dealing with unexpected events such as layoffs or family emergencies, you should consider keeping 3 to 6 months worth of living expenses in a savings account or money market fund. Wherever you stash the cash, it’s important to keep the money liquid - you want easy access to it in the event of an emergency. If you don’t already have an emergency fund, I highly recommend setting one up with ING Direct - their website is a breeze to use and they’re currently paying a 2.75% APY.

Image courtesy of: Dr. Stephen Dann