Newsletter

Annual and Lifetime Caps: 2010

Beginning six months after passage of the Act, plans will not be permitted to impose lifetime limits on coverage. The law also restricts the use of annual limits. Beginning in 2014, plans may not impose annual limits on coverage.

Extended Child Coverage: 2010

Beginning six months from passage of the law, dependent adult children will be eligible for coverage under their parents' health plan up to age 26. For plan years beginning before Jan. 1, 2014, grandfathered health plans offering dependent coverage will not need to make this coverage available if the adult child is eligible to enroll in another employer-sponsored health plan. Grandfathered plans are those plans that were in place on March 23, 2010. In addition, effective March 30, 2010, the law extends the income tax exclusion of employer-provided health benefits to employees' covered children who do not turn 27 by the end of the tax year. Click here for more.

Rescission of Coverage: 2010

Beginning six months from passage, insurers will not be permitted to rescind coverage except in cases of fraud.

Grandfathering

Grandfathering may relate to individual and group plans existing on March 23, 2010 with respect to new benefit standards. However, these grandfathered plans must extend dependent coverage to certain adult children up to age 26 and prohibit rescission of coverage. In addition, grandfathered group plans are required to eliminate lifetime limits on coverage, and beginning in 2014, eliminate annual limits on coverage. Grandfathered group plans must eliminate pre-existing condition exclusions for children within six months and by 2014 for adults. Click here for more.

Medicare Tax Increase for High Earners: 2013

Beginning 2013, individuals making $200,000 and joint filers making $250,000 must pay an increase of 0.9% in the Medicare tax. A 3.8% tax on unearned income for high-income individuals will also take effect.

Individual Mandate: 2014

Starting in 2014, the law will require most U.S. citizens and legal residents to obtain health insurance. Increasing levels of penalties will be assessed on certain individuals who do not obtain coverage.

Pre-existing Conditions: 2014

Starting in 2014, plans will not be permitted to exclude individuals from coverage on the basis of pre-existing medical conditions. The prohibition on exclusions of children on the basis of pre-existing conditions would begin 6 months from the date the law was enacted.

Establishment of State Exchanges to Obtain Health Insurance: 2014

Starting in 2014, people without employer-sponsored coverage will be able to buy insurance on state-administered "exchanges." State-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges will be administered by a government agency or non-profit organization, and allow individuals and small businesses with up to 100 employees to buy certain coverage.

Premium Subsidies: 2014

In 2014, the law will provide tax credits to individuals and families with incomes above Medicaid eligibility and below 400% of the Federal Poverty Level to buy coverage through state-based Exchanges. These individuals and families would be entitled to the credits if they are not eligible for or offered other "acceptable coverage".

Age Differences: 2014

Starting in 2014, the law would prohibit premiums of older individuals from being more than 3 times the cost of younger peoples' premiums.

For Businesses

Tax Credits for Some Small Businesses: 2010-2013

For tax years 2010-2013, employers of 25 or fewer employees with average annual wages of less than $50,000 may be able to receive a tax credit if they contribute at least 50% of total premium costs. Employers of 10 or fewer employees with average annual wages of less than $25,000 may be able to receive a full tax credit for their contributions. Click here for more.

Temporary Reinsurance Program: 2010-2013

Within 90 days of enactment of the law and until Jan.1, 2014, a temporary reinsurance program will provide coverage for retirees who are over age 55 but not eligible for Medicare. The reinsurance program will reimburse employer plans 80% of retirees' claims that are between $15,000 and $90,000. Click here for more.

Preventive Coverage: 2010

Six months from enactment, group health plans and issuers that offer health insurance coverage will be required to provide preventive coverage. Plans and insurance providers will also be prohibited from imposing any cost sharing requirements for preventive coverage. Some of the preventive coverage includes certain immunizations and preventive care for children, adolescents and women.

Salary Nondiscrimination for Eligibility: 2010-2011

Six months from passage (but Jan. 1, 2011, for calendar year plans), plan sponsors of group health plans, except self-insured plans, will not be permitted to establish rules relating to coverage eligibility for full-time employees that are based on the total hourly or annual salary of the employee, or otherwise have the effect of discriminating in favor of higher wage employees.

Prohibition on Discrimination in Favor of Highly Compensated Individuals: 2010-2011

Six months from enactment, group health plans (other than self-insured plans) must satisfy the Internal Revenue Code's requirements relating to the prohibition on discrimination in favor of highly compensated individuals.

Notification of Material Modifications

The Act requires group health plans and issuers to provide notice to enrollees at least 60 days before implementation of any material change that is not reflected in the most recently provided summary of benefits. Effective date TBD.

Appeals Process: 2010-2011

Six months from passage (but Jan. 1, 2011, for calendar year plans), group health plans and health insurance issuers will be required to have effective appeals processes for challenges to coverage and claims determinations.

Tax Increase on Nonqualified Medical Expense Distributions from HSAs: 2011

Starting in 2011, the law would increase the excise tax on distributions from a Health Savings Account or Archer MSA if the distributions are not for a qualified medical expense. The tax on these distributions would increase to 20%, from 10% for HSAs and 15% for Archer MSAs. The threshold to itemize unreimbursed medical expenses as a deduction on tax returns would increase from 7.5% to 10% of adjusted gross income. The law also prohibits reimbursement of costs for over-the-counter drugs if they are not prescribed by a doctor, in relation to HSAs, Archer MSAs, FSAs and HRAs.

New Requirement on Form W-2 to Report Cost of Employer-Provided Health Coverage: 2011

Starting for the 2011 tax year, employers must report on Form W-2 the aggregate cost of employer-sponsored health coverage. This reporting requirement will not apply to salary reduction contributions to FSAs, or the amount contributed to any HSA or Archer MSA of an employee or employee's spouse.

FSA Contribution Limits: 2013

Starting in 2013, the law also limits the amount of contributions to a flexible spending account (FSA) to $2,500 annually.

Small Business Tax Credit: 2014

For 2 years starting in 2014, eligible small businesses that buy health coverage on new state insurance exchanges may receive a tax credit of up to 50% of the contribution if the employer contributes at least 50% of the total premium cost.

State Exchanges to Obtain Health Coverage: 2014

Starting in 2014, small businesses with up to 100 employees will be able to buy insurance on state-administered "exchanges." State-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges will be administered by a government agency or non-profit organization. A qualified health plan, to be offered through the new American Health Benefit Exchange, must provide essential health benefits which include cost sharing limits. No out-of-pocket requirements can exceed those in Health Savings Accounts, and deductibles in the small group market cannot exceed $2,000 for an individual and $4,000 for a family. Plans participating in the Exchanges will be accredited for quality, will present their benefit options in a standardized manner for comparison, and will use one enrollment form. Individuals qualified to receive tax credits for Exchange coverage must be ineligible for affordable, employer-sponsored insurance or any form of public insurance coverage.

Vouchers: 2014

Starting in 2014, employers who offer coverage to their employees will be required to provide a voucher for purchasing health care to employees with incomes less than 400% of Federal Poverty Level whose share of the premium exceeds 8% but does not exceed 9.8% of the employee's income. This 9.8% figure may be adjusted to 9.5% in the future. Any technical changes will be reported. These vouchers are for enrolling in a plan in the Exchange. The voucher amount is equal to the premium amount for coverage of the employee under the employer's plan and will be used to offset the premium costs for the plan in which the employee is enrolled.

Penalties for Businesses with 50+ Employees: 2014

Starting in 2014, employers of at least 50 full-time employees that have employees receiving premium subsidies created by the legislation will be assessed fees. Such employers could face fines of $2,000 per full-time employee, with some exceptions.

Automatic Enrollment by Large Businesses Offering Health Coverage

Employers with more than 200 full-time employees that offer health coverage must automatically enroll employees in a plan. Employees will be able to opt out of enrollment. Effective date to be determined.

Excise Tax on High Cost Employer-Provided Health Coverage: 2018

In 2018, insurers and plan administrators will pay a 40% tax for any health insurance plan that is above the threshold of $10,200 for singles and $27,500 for families. This excise tax would apply to the amount of the premium that is above these thresholds.

Medical Loss Ratio: 2010-2011

Effective for plan year 2010, health plans are required to report the percentage of premium dollars spent on health care services. As of Jan. 1, 2011, enrollees will receive rebates for the amount of the premium spent on health care services that is less than 85% for large group plans, and 80% for individual and small group plans.

Medicare Part D: 2010

In 2010, the law closes the Medicare prescription drug coverage gap by $500, and provides a 50% discount on brand name drugs for beneficiaries who fall into the coverage gap. There is a current gap in coverage for total drug costs between $2,700 and $6,154. After being amended, the law authorizes a $250 rebate to all Medicare Part D enrollees who enter the "donut hole" in 2010.

Expanded Medicaid and CHIP: 2014

By 2014, states would be required to extend Medicaid coverage to all individuals under 65 who have incomes up to 133% of the federal poverty level. The law would also fund the Children's Health Insurance Program through 2015, and require states to maintain the current eligibility levels for children in the Medicaid and CHIP programs.

Community Living Assistance Services and Supports

The law creates a voluntary long-term care insurance program called the CLASS Independence Benefit Plan. The program will permit individuals to purchase community living assistance services and supports. The coverage would have a 5-year vesting period for eligibility of benefits and provide an average cash benefit of at least $50 per day.

Federal Loan Program

The Health Care and Education Reconciliation Act of 2010 also overhauls the federal student loan program and expands access to Pell Grants. For more information on this bill, please click here.

Sources: The Kaiser Family Foundation; NY Times; Democratic Policy Committee; H.R. 3590; H.R. 4872