What you need to know
On March 23, 2010, President Barack Obama signed the Patient Protection and Affordable Care Act into law. Even though many critical benefits will go into effect in 2010, some pieces of the health care law will take longer to go into effect.
Check out the useful health care reform information on NEA’s website, and read more about the provisions of the law and when they will take effect below.
Eliminating lifetime limits - Prohibits insurers from imposing lifetime limits on benefits. Effective six months after enactment and applying to all plans.
Regulating use of annual limits - 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 and applying 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.)
Covering preventive health services - All new group health plans and plans in the individual market must provide first dollar coverage for preventive services. Effective six months after enactment.
Extending coverage for young adults - Requires any group health plan or plan in the individual market that provides dependent coverage for children to continue to make that coverage available until the child turns 26 years of age. Effective six months after enactment.
Bringing down the cost of health care coverage - Health plans, including grandfathered plans, must annually report on the share of premium dollars spent on medical care and provide consumer rebates for excessive medical loss ratios. Effective January 1, 2011.
Reducing the cost of covering early retirees - Creates a new temporary reinsurance program to help companies that provide early retiree health benefits for those ages 55-64 offset the expensive cost of that coverage. Effective 90 days after enactment.
Special deduction for Blue Cross Blue Shield (BCBS) - Requires that non-profit BCBS organizations have a medical loss ratio of 85 percent or higher in order to take advantage of the special tax benefits provided to them under Internal Revenue Code (IRC) Section 833, including the deduction for 25 percent of claims and expenses and the 100 percent deduction for unearned premium reserves. Effective for tax years beginning after December 31, 2009.
Discounts in the Part D ‘Donut Hole’ - Provides a 50 percent discount on all brand-name drugs and biologics in the donut hole and begins phasing in additional discounts on brand-name and generic drugs to completely fill the donut hole by 2020 for all Part D enrollees. Effective January 1, 2011.
Improving preventive health coverage - Provides a free, annual wellness visit and personalized prevention plan services for Medicare beneficiaries and eliminates cost-sharing for preventive services. Effective January 1, 2011.
Increasing reimbursement for primary care - Provides a 10 percent Medicare bonus payment for primary care physicians and general surgeons. Effective January 1, 2011.
Providing new, voluntary options for long-term care insurance - Creates a long-term care insurance programs to be financed by voluntary payroll deductions to provide benefits to adults who become disabled. Effective January 1, 2011.
Transitioning to reformed payments in Medicare Advantage - Freezes 2011 Medicare Advantage payment benchmarks at 2010 levels to begin transition and continues to reduce Medicare Advantage benchmarks in subsequent years relative to current levels. Benchmarks will vary from 95 percent of Medicare spending in high-cost areas to 115 percent of Medicare spending in low-cost areas with higher benchmarks for high-quality plans. Changes are phased-in over three, five or seven years, depending on the level of payment reductions. Effective January 1, 2011.
Reporting health coverage costs on Form W-2 - Requires employers to disclose the value of the benefit provided by the employer for each employee’s health insurance coverage on the employee’s annual Form W-2. Effective for tax years beginning after December 31, 2010.
Standardizing the definition of qualified medical expenses - Conforms the definition of qualified medical expenses for HSAs, FSAs, and HRAs to the definition used for the itemized deduction. An exception to this rule is included so that amounts paid for over-the-counter medicine with a prescription still qualify as medical expenses. Effective for tax years beginning after December 31, 2010.
Increased additional tax for withdrawals from health savings accounts and Archer Medical Savings Account funds for Non-Qualified Medical Expenses - Increases the additional tax for HSA withdrawals prior to age 65 that are not used for qualified medical expenses from 10 to 20 percent. The additional tax for Archer MSA withdrawals not used for qualified medical expenses would increase from 15 to 20 percent. Effective for tax years beginning after December 31, 2010.
Pharmaceutical manufacturers fee - Imposes an annual, non-deductible fee on the pharmaceutical manufacturing industry allocated according to market share and not applying to companies with sales of branded pharmaceuticals of $5 million or less. Effective for tax years beginning after December 31, 2010.
Encouraging integrated health systems - Implements physician payment reforms that enhance payment for primary care services and encourage physicians to join together to form “accountable care organizations” to gain efficiencies and improve quality.
Linking payment to quality outcomes - Establishes a hospital value-based purchasing program to incentivize enhanced quality outcomes for acute care hospitals. Also, requires the Secretary to submit a plan to Congress by 2012 on how to move home health and nursing home providers into a value-based purchasing payment system.
Reducing avoidable hospital readmissions - Directs CMS to track hospital readmission rates for certain high-cost conditions and implements a payment penalty for hospitals with the highest readmission rates.
Limiting health flexible savings account contributions - Limits the amount of contributions to health FSAs to $2,500 per year, indexed by CPI for subsequent years.
Eliminating deduction for Employer Part D subsidy - Eliminates the deduction for the subsidy for employers who maintain prescription drug plans for their Medicare Part D eligible retirees.
Increased threshold for claiming itemized deduction for medical expenses -Increases the income threshold for claiming the itemized deduction for medical expenses from 7.5 to 10 percent. Individuals over 65 would be able to claim the itemized deduction for medical expenses at 7.5 percent of adjusted gross income through 2016.
Additional hospital insurance tax for high wage workers - Increases the hospital insurance tax rate by 0.9 percentage points on wages over $200,000 for an individual ($250,000 for married couples filing jointly). It also expands the tax to include a 3.8 percent tax on net investment income in the case of taxpayers earning over $200,000 ($250,000 for joint returns).
Medical device excise tax - Establishes a 2.3 percent excise tax on the first sale for use of a medical device. Excepted from the tax are eye glasses, contact lenses, hearing aids, and any device of a type that is generally purchased by the public at retail for individual use.
Eliminating annual limits - Prohibits insurers from imposing annual limits on the amount of coverage an individual may receive.
Ensuring choice through a multi-state option - Provides a choice of coverage through a multi-state plan, available nationwide, and offered by private insurance carriers under the supervision of the Office of Personnel Management.
Small business tax credit - Implements the second phase of the small business tax credit for qualified small employers.
Quality reporting for certain providers - Places certain providers – including ambulatory surgical centers, long-term care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, PPS-exempt cancer hospitals and hospice providers – on a path toward value-based purchasing by requiring the Secretary to implement quality measure reporting programs in these areas and also pilot test value-based purchasing for each of these providers in subsequent years.
Health insurance provider fee - Imposes an annual, non-deductible fee on the health insurance sector allocated across the industry according to market share. The fee does not apply to companies whose net premiums written are $25 million or less.
Paying physicians based on value not volume - Creates a physician value-based payment program to promote increased quality of care for Medicare beneficiaries.
High-cost plan excise tax - Imposes an excise tax of 40 percent on insurance companies and plan administrators for any health insurance plan that is above the threshold of $10,200 for self-only coverage and $27,500 for family plans. The tax would apply to the amount of the premium in excess of the threshold. The threshold would be indexed at CPI-U plus one percentage point for 2019 and CPI for years thereafter. An additional threshold amount of $1,650 for singles and $3,450 for families is available for retired individuals over the age of 55 and for plans that cover employees engaged in high risk professions. Employers with higher costs on account of the age or gender demographics of their employees when compared to the age and gender demographics nationally may adjust their thresholds even higher.