Healthcare Reform Update – March 2010

The House passed the Senate’s Healthcare Reform Bill (see below for highlights) on Sunday, and the President signed it into law on Monday. The House then passed a companion bill that would bring changes to the Senate bill.  Some of these changes include:

More subsidies for lower income individuals and families to help purchase health insurance.
A push back from 2014 to 2018 on the tax to be imposed on expensive “Cadillac” health insurance plans; the premium level establishing a plan as a “Cadillac” plan has been increased, as well.

The slow reduction of the Medicare Prescription Drug benefit “donut hole” beginning this year; seniors who hit this gap in 2010 would receive $250 to offset costs.

A cut of $200 billion in subsidies that go to insurers who offer private alternatives to Medicare.

An increase in Medicaid payments to doctors to align with Medicare rates to help ensure there will be enough doctors to handle the newly insured.

An increase to the Medicare tax for individuals earning over $200,000 and couples earning over $250,000 annually. This tax would also apply to investment earnings such as dividends.

Removal of the, “Cornhusker Kickback” provision that has angered many.

An additional tax for taxpayers with adjusted income more than $200,000 ($250,000 for joint filers) of 3.8% tax on net investment income (such as interest, dividends, capital gains).

At the beginning of the year, we sent a comparison of the highlights of the House and Senate bills. Below is a recap of the Senate bill with possible changes passed by the House highlighted in yellow.

Senate Bill

States must establish an “American Health Benefit Exchange” to facilitate the purchase of qualified health plans.

Health Insurers are able to offer coverage outside of an “Exchange”.

Puts forth the ability for insurers to allow the purchase of individual insurance across state lines.

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.

Also requires guarantee issue, but issuers may establish special enrollment periods and not accept applicants outside of this period.

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 26.

Plans may not establish lifetime benefit limits.

Plans may not impose cost-sharing on preventive care services.

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 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. Increased to $2,000 per full-time employee annually.

 

Fees imposed if waiting periods are longer than 30 days.

Some tax credit available for smaller employers.

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 voluntary community health insurance option will be available through “Exchanges”.

Starting in 2014, individuals who fail to maintain coverage anytime during the year will have a $95 penalty imposed increasing to $750 in 2016.  Changed to the greater of $695 per year or 2.5% of income.

Beginning January 2011, expenses for over-the-counter medications will be prohibited for reimbursement under HSAs and FSAs.

FSAs are limited to $2,500 for unreimbursed medical spending accounts.

Imposes a five percent excise tax on voluntary cosmetic surgery and medical procedures.

 

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