Resources

Health Care Reform Summary Update

March 29, 2010

Health care reform passed this week on a party-line vote known as the “Patient Protection and Affordable Care Act.” While many provisions of this legislation will be debated and litigated in the months ahead, the following is a synopsis of what is known:

2010 requirements: The first 6-months after enactment

  • Coverage for dependents up to age 26
  • No lifetime maximum benefit limits
  • No cost sharing on preventative care for certain policy holders
  • Temporary federal high risk pools
  • Tax credits for small employers
  • No pre-existing condition exclusions for children starting 6-months after enactment

January 1, 2011

  • Tax credits for small employers
  • Individual and small group carriers must spend 80% of premium dollars on medical services
  • Large group carrier plans must spend 85% of premium dollars on medical services
  • Employers with 25 and fewer employees are eligible for wellness grants for a period of up to 5-years
  • Employers must report value of health benefits on W-2 IRS forms
  • No cost preventative services for Medicare beneficiaries
  • New taxes on pharmaceutical and medical device manufacturers
  • Temporary re-insurance program for early retirees
  • One year after enactment
    • 10% tax on indoor tanning businesses
    • Insurers are required to report shared premium dollars to the Secretary of Health and Human Services
    • Seniors will receive $250 to help fill the prescription drug gap known as the “donut hole”
  • Over the counter medications no longer reimbursable under the FSA, HSA or HRA unless prescribed by a physician
  • Increase in the tax penalty to 20% for non-medical HSA withdrawals
  • Employer plans must have an Health Human Services approved external review process for appeals

January 1, 2012

  • Executive compensation deductibility would be limited to $500,000 per applicable individual for health insurance providers

January 1, 2013

  • Flexible Spending Accounts (FSA) will be limited to $2,500 annually
  • Hospital insurance tax of .50 percent on individual incomes of $200,000 and $250,000 for couples
  • Medicare payroll tax increase to include dividends, interest income and other
  • “unearned” income, $200,000 for individuals and $250,000 for couples projected at 3.80%
  • Additional taxes projected at $210 billion
  • Non-profit health cooperatives to receive $6 billion in appropriations
  • Surcharge on wages of .90%

January 1, 2014

  • All individuals are required to carry health care coverage
  • Subsidies for families earning 400 percent of the federal poverty level (FPL)
  • to purchase health care, equates to approximately $88,000 per year
  • State health insurance exchanges enacted
  • Employers with 50 employees or more must offer health care coverage
  • Employers with 200 or more employees are required to automatically enroll every new hire on to the company health care plan
  • Wellness programs may be incentivized up to 30 percent of the cost of employees health care costs
  • State wellness programs
  • Eliminates all pre-existing conditions
  • Penalties for employers not offering “affordable” coverage ($750 senate-House bill, $2,000 on a separate bill to be voted on in the House)
  • Medicaid expansion to 133% of the FPL

2015

  • Penalties for failure to obtain mandated health care coverage

2017

  • Employer plans can participate in state-based insurance pools

2018

  • 40% excise tax on health plans that exceed $10,200 for individuals and $27,500 for families

Retiree Plans

  • No lifetime maximums
  • Re-insurance for 80% of costs $15,000-$90,000 for pre-65 retirees o Cut backs to Medicare providers
  • Elimination of Medicare Part D “donut hole”
  • Taxation of Medicare Part D retiree drug subsidy