The new health care overhaul, made official on Tuesday, March 23, 2010 by President Obama, is expected to tighten regulation of insurance companies as well as extend health coverage to over 30 million uninsured Americans.   Some changes will appear to reduce current benefits for some groups, with people who earn more paying more towards health insurance premiums.  However, the new health reform goals are designed to make health care more accessible to everyone in the long run.   Although the reforms  are fairly complicated and difficult to detail, below are how some major changes and how they will affect certain groups of people:

Health Care Reform Saves Piggy Bank

* Married couples with a disabled spouse, insured through Medicare

Good: The current threats of Medicare coverage cuts due to the troubling economy will be eliminated until 2014 for adults and 2019 for children.  In addition, the disabled spouse could receive more services and support through state incentives.

* Single mother who is employed but uninsured with a dependent who has asthma

The Dilemma: The current insurance dilemma for this group is that they don’t make enough to qualify for private insurance and they make too much to qualify for public options. In addition, because her current employer does not offer health benefits and she can’t afford private insurance because of coverage denial for conditions such as asthma or require higher premiums, this family struggles to obtain good health coverage. In addition, the family isn’t eligible for public programs because their income level is too high.

Good: The new reforms will not allow private insurance to refuse coverage for a child’s pre-existing medical condition.  By 2014, they can receive help to buy state health insurance with caps on premiums and out-of-pocket expenses based on the mother’s income.

* Married couples insured through Medicare

Good: They will receive more discounts and rebates for prescription drugs, which is one of their major problems, currently.

Bad: In 2010, subsidies to the more expensive Medicare Advantage plan will be cut which will result in higher premiums or benefit reduction to those who have this plan.

* Older couples who are married and currently insured making more than $500K combined annually

Good: Current benefits cannot drop coverage if they get sick or put caps on lifetime limits.

Bad: By 2013: They will contribute almost 1% more of their income to medicare. Flexible spending accounts will be reduced from as much as $5,000 to $2,500 and will not cover over-the-counter drugs.

Brought to you by direct payday lender, Pay1Day.com.

February 25, 2010. The implementation of the Card Act of 2009 and the Overdraft Fee Legislation marks an increasingly shifted focus from traditional loan products to payday loan type services by big banks , observes a Bloomberg article and Solomon Finance.  Although the new reforms have made it difficult to sustain profitability from credit card and overdraft fees, two of banks’ most profitable products, questions arise whether the recent push for short term small cash loans, more commonly called checking advance products, will be successful for national banks while competing with direct payday loan lenders.

Recession Piggy Bank

Checking advance products are cash loans usually ranging from $100 – $500 with annual interest rates at about 120% if paid within 30 days.  These products are not new to big banks: Wells Fargo have had these loans as part of their offerings since 1994 and in 2008 by Fifth Third Bank.  These offerings are similar to payday loans with comparable interest rates and repayment time frames, usually occurring on the borrower’s next pay period with the added convenience of automatic payment withdrawals due to the issuance of the borrower’s account by the corresponding bank.

By getting into the payday loan business, big banks face two major issues: competition from established payday lenders with years and even decades of experience, and the real-life ability to profit from $500 loans with existing big-bank overhead.

Established payday lenders, whether it be online payday lenders or brick-and-mortar paycheck cashing stores, have gotten quick cash loans down to a customer service-oriented science where loans can be approved within seconds and cash can be delivered to the customer within hours; with an online payday loan lender, the entire process  can be done from the customer’s computer at practically any place in the world with an internet connection; in addition, the flexibility and added convenience such as faster customer support via multiple methods such as email, phone, fax, and the ability to customize loan features that stem from the smaller scale nature of payday loan lenders, presents a niche-barrier that may be difficult for national banks to overcome.

Replicating the payday loans business model while searching to fulfill the gap caused by the Overdraft Fee Legislation and Card Act of 2009, will prove to be an obstacle for traditional banks, interesting to follow throughout the rest of 2010.