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Health Care Reform Digest
- 1. U.S. Health CareReform Patient Protection and Affordable Care Act of 2010 Implementation Timeline
- 2. 2010 In effect 6months after the signing of the new law (September 23, 2010)
- 3. Extended Coverage forYoung Adults • Group health plans and health insurance issuers offering group or individual health insurance coverage that provides dependent coverage of children must make coverage available for adult children up to age 26. There is no requirement to cover the child of a dependent child. This requirement will apply to grandfathered and new plans. • The Reconciliation Act added a new tax provision related to health insurance coverage for these adult children. Effective March 30, 2010, amounts spent on medical care for an eligible adult child can be excluded from taxable income.
- 4. Grandfathered Plans • Note: a “grandfathered plan” is one in which an individual was enrolled on March 23, 2010, and to which there is no change to existing coverage. Many requirements of the new law do not apply to grandfathered plans and nothing in the law requires individuals terminate coverage in which they were enrolled when the law was passed. A plan can still be a grandfathered plan even if family members or new employees are allowed to join.
- 5. Early Retirees • Thenew law requires the establishment of a temporary reinsurance program to provide reimbursement to participating employment- based plans for a portion of the cost of providing health insurance coverage to early retirees and their spouses, surviving spouses and dependents. This program will end on January 1, 2014.
- 6. Pre-existing Conditions forChildren • Group health plans and health insurance issuers may not impose pre- existing condition exclusions on coverage for children. • This provision will apply to all employer plans and new plans in the individual market. • This provision will also apply to adults in 2014.
- 7. Preventive Health Services •Group health plans and health insurance issuers offering group or individual health insurance coverage must provide coverage for preventive services. These plans also may not impose cost sharing requirements for preventive services.
- 8. Prohibiting Rescissions • The health care reform law is designed to prohibit abusive rescissions of coverage by insurance companies when an individual gets sick as a way of EDITED avoiding covering the cost of the individual’s health care needs. • Group health plans and health insurance issuers offering group or individual insurance coverage may not rescind coverage once the enrollee is covered, except in cases of fraud or intentional misrepresentation. • Plan coverage may not be cancelled without prior notice to the enrollee. This provision applies to all new and existing plans.
- 9. Lifetime and AnnualLimits • In general, group health plans and health insurance issuers offering group or individual health insurance coverage may not establish lifetime limits on the dollar value of benefits for any participant or beneficiary or impose unreasonable annual limits on the dollar value of benefits for any participant or beneficiary. • This requirement applies to all plans.
- 10. Improved Appeals Process • Group health plans and health insurance issuers offering group or individual health insurance coverage must implement an effective appeals process for appeals of coverage determinations and claims. have an internal claims process in effect; provide notice to enrollees, in a culturally and linguistically appropriate manner, of available internal and external appeals processes allow enrollees to review their files, to present evidence and testimony as part of the appeals process, and to receive continued coverage pending the outcome of the appeals process.
- 11. Nondiscrimination Rules •Fully-insured group health plans will now have to satisfy nondiscrimination rules regarding eligibility to participate in the plan and eligibility for benefits. • These rules prohibit discrimination in favor of highly compensated individuals. • This section does not appear to apply to grandfathered plans.
- 13. Rebates for thePart D “Donut Hole” • Currently, there is a gap in Medicare prescription drug coverage. The coverage gap falls between $2,830 and $6,440 in total drug spending. The health care reform bill provides a $250 rebate check for all Medicare Part D enrollees who enter the “donut hole.” • Beginning in 2011, a 50 percent discount on brand-name drugs will be instituted and generic drug coverage will be provided in the donut hole. • The donut hole gap will be filled by 2020.
- 14. Medicaid Flexibility • Statesare given a new option under the health care reform law to cover additional individuals under Medicaid. States will be able to cover parents and childless adults up to 133 percent of the Federal Poverty Level (FPL).
- 15. • The firstphase of the small business tax credit for qualified small employers begins in 2010. • These employers can receive a credit for contributions to purchase health insurance for employees. The credit is up to 35 percent of the employer’s contribution to provide health insurance for employees. HEALTHCARE TAX • There is also up to a 25 percent CREDIT credit for small nonprofit organizations. When health 2010 insurance exchanges are operational, tax credits will increase, up to 50 percent of premiums.
- 16. Tanning Services • One additional tax imposed by the health care reform law is a 10 percent tax on amounts paid for indoor sun tanning services.
- 17. 2011 • Expanded InsuranceCoverage • Health Plan Administration • Medicare / Medicaid • Fees and Taxes
- 18. Expanded Insurance Coverage(2011) Voluntary Long-Term Care Medical Loss Ratios • The health care reform law • Health insurance issuers creates a long-term care offering group or individual insurance program for adults health insurance coverage who become disabled. (including grandfathered Participation will be voluntary health plans) must annually and the program is to be report on the share of funded by voluntary payroll premium dollars spent on deductions to provide benefits health care and provide to adults who become consumer rebates for excessive disabled. medical loss ratios.
- 19. Health Plan Administration(2011) Reporting on Form W-2 Qualified Medical Expenses • Beginning in 2011, employers • The health care reform law will be required to disclose the conforms the definition of value of the health coverage “qualified medical expenses” provided by the employer to for HSAs, FSAs and HRAs to each employee on the the definition used for the itemized tax deduction. employee’s annual Form W-2. Amounts paid for over-the- counter medicine with a prescription still qualify as medical expenses. Costs for over-the-counter medications obtained without a prescription would not qualify.
- 20. Medicare / Medicaid(2011) Part D Discounts Preventive Health Coverage • In order to make prescription • The new law provides a free, drug coverage more affordable annual wellness visit and for Medicare enrollees, the personalized prevention plan new law will provide a 50 services for Medicare percent discount on all brand- beneficiaries and eliminates name drugs and biologics in cost-sharing for preventive the “donut hole.” It also begins services beginning in 2011. phasing in additional discounts on brand-name and generic drugs to completely fill the donut hole by 2020 for all Part D enrollees.
- 21. Tax on Withdrawals(2011) • The health care reform law will increase the additional tax on HSA withdrawals prior to age 65 that are not used for qualified medical expenses from 10 to 20 percent. The additional tax for Archer MSA withdrawals not used for qualified medical expenses would increase from 15 to 20 percent.
- 22. 2013 • HealthPlan Administration • Medicare / Medicaid • Fees and Taxes
- 23. Health Plan Administration(2013) Simplification Limiting Contributions • Beginning in 2013, health • The new health care law will plans must adopt and limit the amount of implement uniform standards contributions to health FSAs and business rules for the to $2,500 per year, indexed by electronic exchange of health CPI for subsequent years. information to reduce paperwork and administrative burdens and costs.
- 24. Fees and Taxes(2013) Medicare Part D Medical Expense Deductions • Currently, employers that • The health care reform law maintain prescription drug increases the income threshold for claiming the itemized plans for their Medicare Part deduction for medical expenses D eligible retirees are entitled from 7.5 percent of income to 10 to a tax deduction. percent. • This deduction will be • However, individuals over 65 eliminated in 2013. would be able to claim the itemized deduction for medical expenses at 7.5 percent of adjusted gross income through 2016.
- 25. New Taxes (2013) HospitalInsurance Tax Medical Device Excise Tax • The new law increases the • The law also establishes a 2.3 hospital insurance tax rate by percent excise tax on the first 0.9 percentage points on sale for use of a medical wages over $200,000 for an device. Eye glasses, contact individual ($250,000 for lenses, hearing aids, and any married couples filing jointly). device of a type that is The tax is also expanded to generally purchased by the include a 3.8 percent tax on public at retail for individual net investment income in the use are excepted from the tax. case of taxpayers earning over $200,000 ($250,000 for joint returns).
- 26. 2014 • CoverageMandates • Health Insurance Exchanges • Health Insurance Reform • Fees and Taxes
- 27. Coverage Mandates (2014) IndividualCoverage Employer Coverage • The health care reform legislation requires • Employers with 50 or more employees that most individuals to obtain acceptable health do not offer coverage to their employees will insurance coverage or pay a penalty, be subject to penalties if one employee beginning in 2014. The penalty will start at receives a government subsidy for health $95 per person for 2014 and increase each coverage. year. • The penalty amount is up to $2,000 • The penalty amount increases to $325 in annually for each full-time employee, 2015 and to $695 (or up to 2.5 percent of excluding the first 30 employees. income) in 2016, up to a cap of the national average bronze plan premium. • Employers who offer coverage, but whose employees receive tax credits, will be subject • After 2016, dollar amounts are indexed. to a fine of $3,000 for each worker receiving Families will pay half the penalty amount a tax credit, up to an aggregate cap of for children, up to a cap of $2,250 per $2,000 per full-time employee. family. • Employers will be required to report to the • Individuals may be eligible for an exemption federal government on health coverage they from the penalty if they cannot obtain provide. affordable coverage.
- 28. Exchanges (2014) • Thehealth care reform • Large employers with over 100 legislation provides for health employees are to be allowed into insurance exchanges to be the exchanges in 2017. established in each state in 2014. • Workers who qualify for an affordability exemption to the • Individuals and small employers coverage mandate, but do not will be able to shop for qualify for tax credits, can use insurance through the their employer contribution to exchanges. join an exchange plan. • Small employers are those with no more than 100 employees. If a small employer later grows above 100 employees, it may still be treated as a small employer.
- 29. 2014 Health insurancecompanies will no longer be permitted to: • Refuse to sell or renew policies due to an individual’s health status; • Exclude coverage for treatments based on pre-existing health conditions; • Charge higher rates due to heath status, gender or other factors (premiums will be able to vary based only on age (no more than 3:1), geography, family size, and tobacco use); • Impose annual limits on the amount of coverage an individual may receive; • Drop coverage because an individual chooses to participate in a clinical trial for cancer or other life-threatening diseases or deny coverage for routine care that they would otherwise provide just because an individual is enrolled in such a clinical trial.
- 30. Tax Credits (2014) IndividualTax Credits Small Business Tax Credit • The new law makes premium • The second phase of the small tax credits available through the exchanges to ensure people can business tax credit for obtain affordable coverage. qualified small employers will be implemented in 2014. • Credits are available for people with incomes above Medicaid eligibility and below 400 • These employers can receive a percent of poverty level who are credit for contributions to not eligible for or offered other purchase health insurance for acceptable coverage. employees, up to 50 percent of • The credits apply to both premiums. premiums and cost-sharing.
- 31. Provider Fee (2014) •The health care reform law imposes an annual, non-deductible fee on the health insurance sector, allocated across the industry according to market share. • The fee does not apply to companies whose net premiums written are $25 million or less.
- 32. 2018 High-Cost PlanExcise Tax • A 40 percent excise tax is to be imposed on the excess benefit of high cost employer-sponsored health insurance (also known as a “Cadillac tax”). • The annual limit for purposes of calculating the excess benefits is $10,200 for individuals and $27,500 for other than individual coverage. • Responsibility for the tax is on the “coverage provider” which can be the insurer, the employer, or a third-party administrator. • There are a number of exceptions and special rules for high coverage cost states and different job classifications.
- 33. Thank You! MarcusNewman, CBC Fred Lussenhop Vice President – GCG Financial Associate – GCG Financial 847.457.3058 847. 457.3206 [email protected] [email protected]