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How Healthcare Reform Affects You Today

My ex-health insurance provider sent me this in an email today (obviously I’m still on the mailing list).I have found it a surprisingly pithy summary of the Health Care bill.  Here is the complete email:

Immediate Benefits

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act include health insurance market reforms that will bring immediate benefits to millions of Americans, including those who currently have coverage. The following benefits will be available in the first year after enactment of the two bills.

Small Business Tax Credits

Offers tax credits to small businesses beginning in 2010 to make employee coverage more affordable. Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage. The full credit will be available to firms with 10 or fewer employees with average annual wages of $25,000, while firms with up to 25 or fewer employees and average annual wages of up to $50,000 will also be eligible for the credit.Effective calendar year 2010.Later, when Exchanges are operational, tax credits will be up to 50 percent of premiums

No Pre-existing Coverage Exclusions for Children

Prohibits health insurers from excluding coverage of pre-existing conditions for children.Effective six months after enactment, applies to all employer plans and new plans in the individual market.(This provision will apply to all people in 2014).

Access to Affordable Coverage for the Uninsured with Pre-existing Conditions

Provides $5 billion in immediate federal support for a new program to provide affordable coverage to uninsured Americans with pre-existing conditions until new Exchanges are operational in 2014.Effective 90 days after enactment.

Closing the Coverage Gap in the Medicare (Part D) Drug Benefit

Provides a $250 rebate check for Medicare beneficiaries who hit the ‘donut hole’ in 2010.Effective calendar year 2010.(Beginning in 2011, institutes a 50 percent discount on brand-name drugs in the donut hole; also fills the donut hole by 2020.)

Patient Protections

Protects patients’ choice of doctors by allowing plan members to pick any participating primary care provider, prohibiting insurers from requiring prior authorization before a woman sees an ob-gyn, and ensuring access to emergency care. This provision applies to all new plans.Effective six months after enactment.

Re-insurance for Retiree Health Benefit Plans

Creates immediate access to re-insurance for employer health plans providing coverage for early retirees, helping to protect coverage while reducing premiums for employers and retirees.Effective 90 days after enactment.

Extension of Coverage for Young Adults

Requires insurers to permit children to stay on family policies until age 26.Effective six months after enactment,applies to all plans in the individual market,new employer plans, and existing employer plans if a young adult is not eligible for employer coverage.

Free Prevention Benefits

Requires coverage of prevention and wellness benefits in all new plans and exempts these benefits from deductibles and other cost-sharing requirements in public and private insurance coverage.Effective six months after enactment.

Free Prevention and Wellness Visits in Medicare

Medicare beneficiaries will receive a free, annual wellness visit and will have all cost-sharing waived for preventive services.Effective January 1, 2011.

Access to Quality Care for Vulnerable Populations

Makes $11 billion investment over five years in Community Health Centers to provide the funding needed to expand access to health care in communities where it is needed most.Effective Fiscal Year 2010.

Ensuring Value for Premium Payments

Establishes standards for insurance overhead and requires public disclosure to ensure that enrollees get value for their premium dollars, requiring plans in the individual and small group market to spend 80 percent of premium dollars on clinical services and quality activities, and 85 percent for plans in the large group market. Health insurance plans that do not meet these thresholds will provide rebates to their policyholders.Effective January 1, 2011.This provision applies to all plans, including grandfathered plans, with the exception of self-insured plans.

No Lifetime Limits on Coverage

Prohibits insurers from imposing lifetime limits on benefits.Effective six months after enactment, applies to all plans.

Regulated Annual Limits on Coverage

Tightly regulates plans’ use of annual limits to ensure access to needed care in all group plans and all new individual plans. These tight restrictions will be defined by the Secretary of Health and Human Services.Effective six month after enactment, applies to new plans in the individual market and all employer plans.(When the Exchanges are operational in 2014, the use of annual limits will be banned for new plans in the individual market and all employer plans.)

Protection from Rescissions of Existing Coverage

Stops insurers from rescinding insurance when claims are filed, except in cases of fraud or intentional misrepresentation of material fact.Effective six months after enactment, applies to all new and existing plans.

Prohibits Discrimination Based on Salary

Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees.Effective six months after enactment.

Public Access to Comparable Information on Insurance Options

Enables creation of a new website to provide information on and facilitate informed consumer choice of insurance options.Effective not later than July 1, 2010.

Health Insurance Consumer Information

Provides assistance to States in establishing offices of health insurance consumer assistance or health insurance ombudsman programs to assist individuals with the filing of complaints and appeals, enrollment in a health plan, and, eventually, to assist consumers with resolving problems with tax credit eligibility.Effective Fiscal Year 2010.

Appeals Process

Requires all new health plans to implement an effective process for appeals of coverage determinations and claims. And, states will provide an external appeals process to ensure an independent review.Effective six months after enactment.

Increasing the Number of Primary Care Providers

Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals.Effective Fiscal Year 2010.

New, Voluntary, Long-Term Care Insurance Program

Creates a long-term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become disabled.Effective January 1, 2011.

What changes now, or in 2011?

Although existing group health plans will be “grandfathered,” several requirements will now be effective for plan years beginning six months after the date of enactment.

Changing between now and next year:

  • No lifetime benefit limits and only limited annual benefit limits.
  • Coverage for dependent children up to age 26, as long as they do not have access to other employer-sponsored health coverage (the reconciliation bill also assures that this coverage can be provided on a tax-free basis).
  • No preexisting conditions for children under age 19.
  • No cancellation of health coverage, except in cases of fraud (primarily an individual insurance policy issue).

Other items that are immediately effective include a Medicare Part D provision that provides that beneficiaries who are in a Prescription Drug Plan and who reach the doughnut hole in 2010 would receive a one-time $250 rebate, as well as a reinsurance program for pre-Medicare retirees (more on changes to retiree plans below).

In 2011, FSAs, HRAs and HSAs can only reimburse participants for over-the-counter drugs with a prescription written by their health care provider.

What changes in 2014 and beyond?

  • The Health Insurance Exchanges, individual mandates, subsidies to purchase insurance coverage take effect.
  • The employer “free-rider” mandate begins, requiring that employers with over 50 employees with an employee that obtains subsidies for coverage in an Exchange pay a financial penalty. The penalties, detailed in the senate summary, are changed and increased in the reconciliation bill.
  • In 2018, the excise tax on health plans above a certain threshold would take effect.

Keep reading for more on the changes to your plans and who pays below.

How will this affect my plan and how much it costs?

Employers are not required to provide health insurance coverage. However, automatic enrollment in health insurance plans sponsored by large employers is mandated.

Large employers (50 or more employees) that fail to offer minimum essential coverage during any month for which a full-time employee has enrolled in a qualified plan and receives a premium assistance tax credit or cost-sharing reductions will be liable for an additional tax. That penalty will equal the product of the applicable payment amount (defined as, with respect to any month, 1/12 of $750) and the number of full-time employees employed by the employer during such month.

Large employers offering coverage to employees who qualify for premium assistance tax credits or cost-sharing reductions also will be liable for an additional tax equal to the product of the number of full-time employees for the month and 400 percent of the applicable payment amount. Large employers with extended enrollment waiting periods (generally those exceeding 90 days) will be liable for an additional tax of $600 for each full-time employee for whom the extended waiting period applies. Special rules would apply to construction employers.

The reconciliation legislation would improve the transition to the employer responsibility policy for employers with 50 or more full-time equivalent workers by subtracting the first 30 full time employees from the payment calculation (e.g., a firm with 51 workers that does not offer coverage will pay an amount equal to 51 minus 30, or 21 times the applicable per employee payment amount).

The provision would also change the applicable payment amount for firms with more than 50 full-time workers that do not offer coverage up to $2,000 per full-time employee. It would also eliminate the assessment for workers in a waiting period, while maintaining the 90-day limit on the length of any waiting period beginning in 2014.

Information returns.

Employers and other entities providing minimum essential coverage will be required to file information returns with the IRS identifying the individual, the coverage and the amount of premium, if any, paid by the individual. Penalties will be imposed for failure to file an information return.

Flexible spending arrangements.

FSAs contributions are capped at $2,500 (indexed for inflation). The use of FSA funds for over-the-counter medications is not allowed. These changes apply to distributions and reimbursements for taxable years beginning after December 31, 2010.

The Reconciliation bill would delay the implementation of the limitations on FSAs until December 31, 2012. To prevent an end-run around the new FSA restrictions using cafeteria plan rules, the measure provides that, if a benefit is available under a cafeteria plan through employer provided contributions to a health FSA, the benefit will not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to the arrangement.

Health savings accounts.

Individuals under age 65 must pay an additional tax for nonqualified distributions from a health savings account (HSA) and increases the additional tax from 10% to 20%. (The additional tax on Archer medical savings accounts would increase from 15% to 20%.)

Cafeteria plans.

The cafeteria plan rules are relaxed under the Affordable Care Act to encourage more small employers to offer tax-free benefits to employees, including those related to health insurance coverage. A safe harbor is carved out from the nondiscrimination requirements for cafeteria plans for qualified small employers.

What changes for retiree medical plans?

Retiree reinsurance program: A program that will take effect within 90 days of enactment will reimburse plan sponsors for 80% of claims between $15,000 and $90,000 for pre-Medicare retirees age 55-64. The program is funded with $5 billion and is designed to be a bridge to the exchanges in 2014.

Medicare Part D: Beneficiaries who are in a Prescription Drug Plan and who reach the doughnut hole in 2010 would receive a one-time $250 rebate. In 2011, the reconciliation bill provides a 50% discount on brand-name drugs in doughnut hole for retirees in a Prescription Drug Plan; 75% discount on generics. The measure is designed to eliminate the doughnut hole by 2020.

For employers with a tax liability, the Retiree Drug Subsidy will become taxable in 2013. These employers should immediately consult with their actuaries and accountants as to the implication of this tax change. This change will not generally affect multiemployer plans or governmental plans.


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