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Health Care Reform
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Introduction
 Your presenter
 What you’ll learn
• Timeline
• Key provisions
• Resources
Name
XXXXXXXXX
Cell: XXX.XXX.XXXX
Email: XXXXXXXXXX
Legislative Timeline
March 23rd, 2010:
Patient Protection and
Affordable Care Act HR 3590
March 30th, 2010:
Health Care and Education
Reconciliation Act of 2010 HR 4872
Approaches to Expanding Coverage
Requires most US
citizens to have
health insurance
Create
state-based
exchanges for
individuals
Expand
Medicaid to
133% of FPL
Health Care
Reform Bill
New regulations
on health plans
Create employer
exchanges
for small
businesses
2010
 Small Employer Tax Credit
 Pre-Existing Condition
Insurance Plan
 Grandfathered Health Plans
 Preventive Care
 Health Coverage Options
for Children
 No Rescission of Coverage
for Individuals
Small Business Tax Credits
 For employers with up to 25 employees
• 2010-2013 - up to 35% tax credit
• 2014 and 2015 - up to 50% tax credit
- only available if purchased through an exchange
• After 2015, tax credit expires
 Resource: IRS.gov website
‘Grandfathering’ Provision
 Changes Allowed after March 23, 2010:
• Co-Payment Charges – less than $5 (adjusted annually for
medical inflation) or a percentage equal to medical inflation plus
15 percentage points
• Deductibles – less than a percentage equal to medical inflation
plus 15 percentage points
• Employer Contributions - less than 5 percentage points
 Changes Not Allowed
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Cannot Significantly Cut or Reduce Benefits
Cannot Raise Co-Insurance Charges
Cannot Add or Tighten an Annual Limit
Cannot Change Insurance Companies
‘Grandfathering’ Provision
 Applies to all plans, Grandfathered and
Non-Grandfathered as of 2010:
• No lifetime limits
• No rescissions of coverage
• Extension of parents’ coverage to young
adults under 26 years old
• No coverage exclusions for children with
pre-existing conditions
• No “restricted” annual limits
• Notice of Grandfathered Status required
Preventive Care
 Beginning September 23, 2010 all new health plans:
• Must cover preventive services that have strong scientific
evidence of health benefits
• May no longer charge a copayment, coinsurance or deductible
for these services when delivered by a network provider
 Examples of covered preventive services:
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BMI screenings for obesity
Counseling on smoking cessation, healthy eating, weight loss
Both alcohol use and depression treatments
Blood pressure, diabetes, and cholesterol tests
For a complete list, visit: www.healthcare.gov
New options for Children
Beginning September 23, 2010
 Dependent Coverage up to Age 26
• Will be allowed to stay on their parents’ insurance plan,
whether group or individual
• Children can be married. Do not have to be full-time students
or financially dependent on parents and can have children of
their own
• Dependent child cannot be eligible for coverage through their
own employer. This stipulation ends in 2014.
 Guarantee Issue Coverage up to age 19
• No restrictions due to pre-existing health conditions
• Insurers may set-up open enrollment periods
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2011
Medical Loss Ratio
OTC Prescription Exclusion
HSA Distribution Tax
W2 Reporting
Medical Loss Ratio (MLR)
 MLR is the percentage of premium spent on actual
patient care services.
• 85% for large group plans
• 80% for individual and small group plans (100 and below)
 NAIC is required to establish uniform definitions
regarding the MLR and how the rebate is calculated
by December 31, 2010
 Standards and any potential rebates to policyholders
being applied to the 2011 plan year
Individual Tax Consequences
Increase excise
tax on disallowed
distributions from
HSAs to 20%.
Exclude OTC Rx
in HSA, FSA & HRA
Changes in 2011
 W2 Reporting
• Employers required to disclose
value of benefit provided for health
insurance coverage on each
employee’s annual Form W-2
 SBC and Uniform Glossary
 SMM 60-Day Notification
 PCORI Fees
2012
Changes in 2012
 SBC & Uniform Glossary
• Employers must provide each employee and beneficiary SBC and
Uniform Glossary for any initial enrollment, special enrollment and
upon request
 60-Day Prior Notice of Material Modification
• Employers and health plans required to provide information of any
material modification of the plan or coverage
 Patient-Centered Outcomes Research Institute (PCORI) Fees
• For the plan year ending after September 30, 2012, there will be a
$1 per enrollee tax on fully insured and self-funded group health
plans to fund PCORI. For plan years ending after September 30,
2013, the fee increases to $2 per enrollee. This fee expires
September 30, 2019
 FSA Limit
 Medicare Payroll Tax
 Medical Expense Tax
 Notice of Exchange
 Exchange Open Enrollment
2013
Tax Consequences
Increased
Itemized
Deduction
for Medical
Expenses
to 10%
Increased
Medicare
Payroll Tax
by 0.9%
Limit FSA
contributions
to $2500
per year
Changes in 2013
 Notice of Exchange
• October 1, 2013 and within 14 days of new hire, employers subject to
the Fair Labor Standards Act (FLSA) must inform employees about
how the Exchanges operate and the circumstances under which they
may receive coverage
 Exchange (Marketplace) Open Enrollment
• In California, the Individual Exchange (Covered California) as well as
the SHOP Exchange for small employers will be accepting
enrollments starting on October 1, 2013. May be open to Large
Group employers in 2017.
 Individual Mandate & Penalties
 Guarantee Issue Coverage
and Subsidies
 Employer Mandate
 Essential Health Benefits
 Exchanges
 Changes to Private Insurance
2014
Individual Mandates and Penalties
Individual Mandate
• Requirement of most US citizens and legal residents
to purchase health insurance – exemptions for:
• Financial hardship
• Religious objections
• Native Americans
• Those without coverage less than 3 months
• Undocumented immigrants
• Lowest cost plan option exceeds 8% of income
Individual Penalties
• For non-compliance, individual must pay:
• $95 in 2014
• $325in 2015
• $695in 2016
Guarantee Issue and Subsidies
Guarantee Issue Coverage
• Required for individuals and groups up to 100
• Cannot be turned down due to a pre-existing
health condition
Individual Subsidies
• Income limits for subsidies:
• 133% - 400% of FPL
• Premium credits or cost-sharing subsidies.
Employer Mandate & Penalties
 Employers with 50 or fewer EEs are exempt from
the mandate
 Beginning 2015, 50+ if employer does NOT offer
coverage and has at least one employee receiving a
tax credit
• Must pay a $2,000 penalty per FTE, excluding the
first 30 employees
 Beginning 2015, if employer does offer coverage and
has at least one employee receiving a tax credit
• Must pay the lesser of $3,000 for each tax credited
employee or $2,000 for each employee
Essential Health Benefits
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Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services
Prescription drugs
Rehabilitative and habilitative services and devices.
Laboratory services
Preventive and wellness services and chronic
disease management
 Pediatric services, including oral and vision care
Insurance Exchanges
Effective 2014
Available to individuals and small groups
Can allow large groups beginning 2017
Five plan types offered
GI with rating based on age, area and tobacco use
Changes to Private Insurance 2014
 Deductibles not to exceed 2,000/$4,000
 Limit waiting periods to 60 days
 Allow states to merge IFP and small group
 SG definition changes to 1-50
Changes to Private Insurance 2014
 Require carriers to meet new operating
standards and reporting requirements
 Expand Medicaid to all individuals
under age 65 under 133% FPL
 Impose fees on the health insurance
sector
Timeline for Change – 2015 - 2020
 2015: Employer Shared Responsibility (Play
or Pay) penalties go into effect
 2016: Small Group in California redefined as
1-100
 2018: Impose a 40% excise tax on insurers
of employer-sponsored health plans with
high values.
 2020: Medicare Part D “Donut Hole” closes
Resources for Updates
 Government Sites
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www.IRS.gov
www.HealthCare.gov
www.WhiteHouse.gov
www.UStreas.gov
www.insurance.ca.gov
www.labor.ca.gov
 Other Valuable Resources
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www.CoverageForAll.org
www.NAHU.org
www.NAIC.org
www.SHRM.org
www.KFF.org
Q&A