When Does Health Care Reform Take Effect?
(updated 9/5/14)
Insurance companies can no longer:
- Deny health insurance to anyone based on their health status or refuse coverage of a treatment based on pre-existing health conditions.
- Revoke existing policies if people get sick.
- Have an annual limit on coverage.
- Place limits on lifetime caps they’ll pay out.
Insurance companies now have:
- To fully cover preventive services, with no co-pays or deductibles.
- To have an independent appeals process for consumers to contest decisions made by the insurers.
- To allow coverage for dependent children until they turn 26.
- Limits placed on their ability to charge higher rates to people based on age, geography, family size or tobacco use.
Anybody who can’t afford coverage:
- If they don’t already get it through an employer, middle- and lower-income people will receive government subsidies through tax credits to help pay for health insurance.
- Eligibility for Medicaid will be increased to people (except undocumented immigrants) under age 65 with incomes up to 133% of the federal poverty level ($14,404 for individuals and $29,327 for a family of four.) This will create a uniform minimum Medicaid eligibility threshold across states and eliminate a limitation of the program that prohibits most adults without dependent children from enrolling in the program today.
- Tax credits will be offered on an income-based sliding scale for people making up to 400% of the poverty level ($43,320 for individuals and $88,200 for a family of four.)
Health insurance exchange (virtual marketplace):
- The government created the “consumer operated and oriented” plan to foster the creation of nonprofit, member-run health insurance cooperatives in each state that will allow people to comparison shop for standardized health packages.
- Small businesses with up to 100 employees and individuals whose incomes are greater than 133% of the poverty level (who don’t have access to affordable coverage through their employer) are allowed to purchase through the exchange.
Medicare Part D Donut Hole:
- Under current law, prescription expenses between $2,830 and $4,550 are an out-of-pocket expense for Medicare enrollees. That’s the doughnut hole.
- People in the hole now receive a 50% discount on prescriptions.
- The hole will be phased out entirely by 2020.
Medicare changes:
- Free annual wellness visits.
- Little to no cost-sharing for preventive care, like immunizations and cancer screenings.
- Bonuses to primary care doctors and general surgeons.
- A new Center for Medicare and Medicaid Innovation to test ways to provide better, more efficient care.
- The start of a phase-out of overpayments to private Medicare Advantage insurers.
- Medicare has a national pilot program on “payment bundling” — paying hospitals, doctors and other providers based on patient outcome, not services provided.
- In 2015, a new Independent Payment Advisory Board will be formed to come up with ways to lower Medicare costs and promote better care. The recommendations will go to Congress and private insurers.
- By 2019, the new law will cut $136 billion in spending on the Advantage program (which currently pays private plans to administer Medicare benefits and pays them about 14% more than the per-patient cost of the traditional Medicare program.) Plans use that subsidy to lure members with lower premium costs or extra benefits not normally paid for by Medicare, such as vision care or better prescription drug coverage. The three-quarters of beneficiaries who receive traditional Medicare benefits will not be affected by the change, but Advantage plan users may have fewer to choose from.
Small businesses:
- Tax credits up to 50% of the cost of insuring their employees.
- The tax credit is not refundable, so if the business’ tax liability is zero, the credit will be zero.
- Small businesses without coverage are able to purchase it through the insurance exchange.
- Employers with 50 or more workers who do not offer coverage will have to pay annual fees.
Consumer advocacy:
- States will get grants to set up programs that help consumers with health insurance complaints or questions.
- The federal government will set up a website to help people figure out their insurance options.
National insurance program to help cover the cost of long-term care:
- 70% of people over 65 need long-term care at some point.
- The premiums will be much lower than those for private plans.
- You won’t get screened out because you’ve already had health problems.
- Once vested after 5 years, those unable to care for themselves can claim cash benefits for as long as needed.
- The new law could make it possible for more patients to stay at home. If you’re rich, you don’t require much financial help with long-term care. If you’re poor and can no longer fend for yourself, Medicaid pays the bills, often at a nursing home. Everybody else must choose from among some unpleasant options.
Doctors:
- Temporarily raises Medicaid reimbursement rates for primary care doctors.
- New incentives to encourage doctors to join together in “accountable care organizations.”
- Incentives aimed at curbing the shortage by encouraging medical students to go into primary care rather than choosing other specialties, such as cardiology or orthopedics, which are generally more lucrative.
- Special loan repayment programs to students who choose primary care.
Hospitals:
- Government will track and impose penalties on hospitals with the highest re-admission rates.
Tax increases:
- 10% tax on indoor tanning services.
- Households with incomes above $250,000 and individuals above $200,000 will have a Medicare payroll tax increase from 1.45% to 2.35% on earnings above those amounts. Unearned income above those amounts, such as dividends, will now be subject to a 3.8% tax.
- Maximum contributions to pre-tax Flexible Savings Account contributions will be limited to $2,500 a year (down from the current $3,050 for individuals).
- There is a new 2.9% excise tax on medical devices.
- In 2018, a 40% excise tax on insurance companies and plan administrators for “Cadillac” plans above $10,200 for individuals and $27,500 for families. There are higher thresholds for retirees over 55 and plans that cover workers in high-risk jobs. The Joint Committee on Taxation and the Congressional Budget Office believe the tax will boost paychecks. The tax will prompt employers and employees to choose less expensive health plans. In lieu of the higher cost benefits, employers will raise salaries.
Individual mandate:
- Individuals who refuse to sign up for health insurance, despite all of the subsidies and the health insurance exchange, will be required to pay an annual penalty that starts at $95 in 2014 and rises to the greater of $695 per person, up to a maximum of $2,085 per family, or 2.5% of household income, whichever is greater.
- The IRS will not audit taxpayers to verify whether they have insurance. The Department of Health and Human Services, which will work with the insurance companies, will determine that.
- No taxpayer will have to pay any liens, levies or go to jail because of the mandate.
Who will still be uninsured:
- The reform will reduce the number of uninsured by 32 million, according to the CBO.
- That will leave an estimated 23 million uninsured, one-third of them illegal immigrants.
- Coverage of legal residents too young for Medicare (under age 65) will be 94%, up from 83% now.
Download the final bill passed by House and Senate here.
Watch for updates at the White House website.
Sources:
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