Healthcare Reform Update

As many of you are aware, the House and the Senate have each passed their own Healthcare Reform bills. Their next goal is to combine these two bills into one final bill that will pass.

Each bill includes many provisions, including what entity will regulate insurers, what type of sanctions may be imposed, what requirements employers will face, what minimum benefits health plans must include, and individual coverage mandates.  Below is a brief review of some of the more employer-related aspects of the two bills and how they compare.  This is by far not a comprehensive summary, just bullet points to cover some areas of interest.

House Bill Senate Bill
A national “Health Insurance Exchange” will be established. States must establish an “American Health Benefit Exchange” to facilitate the purchase of qualified health plans.
After January 2013, all individual health insurance must be offered through the “Exchange”. Health Insurers are able to offer coverage outside of an “Exchange”.
Both bills put forth the ability for insurers to allow the purchase of individual insurance across state lines.
Rebates to enrollees if loss ratio is below level specified by the Secretary (not less than 85%) Rebate for enrollees if more than 20% for group and 25% for individual of premium revenue is spent on non-claims costs.

Hospitals need to make public a list of the hospital’s standard charges.

All plans must include minimum criteria, or “Essential Health Benefits”.
Plans may not impose preexisting condition limitations.
Requires guarantee issue for all who apply. Also requires guarantee issue, but issuers may establish special enrollment periods and not accept applicants outside of this period.
Qualified health plan’s premium rates may only vary by:

  • age
  • area
  • family enrollment
Individual and small group health plan’s rates may vary only by:

  • family structure
  • community rating area
  • actuarial value of the benefit
  • age (not more than 3 to 1)
  • tobacco use (not more than 1.5 to 1)
Requires plans to offer coverage to dependents to age 27. Requires plans to offer coverage for dependents to age 26.
Plans may not establish lifetime benefit limits.
Plans may not impose cost-sharing on preventive care services.
Annual out-of-pocket expenses are limited to $5,000 individual/$10,000 family. Employer-sponsored plans may not impose deductibles over $2,000 individual/$4,000 family.  This limit may be increased annually by reimbursement amount available under FSA and an amount calculated under the Act.
Employers must offer employees a qualified health benefits plan, pay ~72.5% of the individual coverage of the lowest cost plan and ~65% of the family coverage, and pay a fee to the “Exchange” if an employee opts out and obtains coverage through the “Exchange” (generally 8% of wages).

Employer must provide automatic enrollment in employer-sponsored plan, but also allow opt out.

Employers with less than $500,000 payroll are exempt from fees.

Employers with more than 200 employees that offer coverage must automatically enroll new full-time employees.

Employers must include cost of employer-sponsored coverage on an employee’s W-2.

Employers with more than 50 employees who do not offer qualifying coverage and has at least one employee receiving premium assistance must pay $750 annually for each full-time employee.

Fees imposed if waiting periods are longer than 30 days.

Some tax credit available for smaller employers.
Agents and brokers may offer exchange-participating health benefits plans. Agents and brokers are permitted to serve as Navigators and may continue to enroll individuals in qualified health plans offered in an “Exchange” and assist in applying for premium tax credits and cost-sharing credits.
A public health insurance option will be offered through the “Exchange” and enrollment is voluntary. A voluntary community health insurance option will be available through “Exchanges”.
Individuals who do not have coverage any time during the tax year will have a 2.5% tax imposed on the excess of modified adjusted gross income. Starting in 2014, individuals who fail to maintain coverage anytime during the year will have a $95 penalty imposed increasing to $750 in 2016.
Beginning January 2011, expenses for over-the-counter medications will be prohibited for reimbursement under HSA’S and FSA’s.
FSA’s are limited to $2,500 for unreimbursed medical spending accounts.
Imposes a five percent excise tax on voluntary cosmetic surgery and medical procedures.

If you would like to discuss Health Care Reform and how it may affect your business, please don’t hesitate to call us.

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