Health Care Reform And You: A Guide

By Megan Breckenridge, Staff Writer

SULLO & SULLO, LLP

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HOUSTON—On March 23, 2010, after more than a year of passionate debate, partisan politics and substantive policy discussions, President Obama signed his health care overhaul legislation into law. The House of Representatives passed the reform package, which was initially green-lighted by the Sentate, with only a slim margin of 219 to 212.

The bill is the most far-reaching legislation of its kind since the creation of the Medicare and Medicaid programs, and creates sweeping changes to the nation’s health care system. Most of the significant reforms will take years to implement, but many are already being put into place. The following is a comprehensive look at the package and its potential effects on you and your family:

Cost:

• The bill will cost $940 billion over ten years.

Deficit:

• The bill aims to reduce the deficit by $143 billion over the first ten years, and $1.2 trillion in the second ten years.

Coverage:

• Health insurance coverage will be expanded to 32 million Americans who are currently uninsured.

Health Insurance Exchanges:

• Uninsured and self-employed individuals will be able to purchase insurance through state-based exchanges with subsidies available to individuals and families with income between 133 percent and 400 percent of the Federal Poverty Level* (FPL). *Note: The FPL for a family of four is $22,050.
• Separate exchanges will be created for small businesses to purchase coverage (effective 2014).
• Funding will be available to states to establish exchanges within one year of the bill’s enactment and until January 1, 2015.

Subsidies:

• Individuals and families who make between 100 and 400 percent of the FPL and would like to purchase their own health insurance on an exchange will be eligible for subsidies. They cannot be eligible for Medicare or Medicaid, and cannot be covered by an employer. Eligible buyers will receive premium credit cards, and there will be a cap for how much they are required to contribute to their premiums based on a sliding scale.

Funding The Plan:

• Medicare Payroll Tax on investment income: Beginning in 2012, the Medicare Payroll Tax will be expanded to include unearned income. There will be a 3.8 percent tax on investment income for individuals making more than $200,000 per year and families making more than $250,000 per year.
• Excise Tax: Starting in 2018, insurance companies will pay a 40 percent excise tax on “Cadillac” high-end insurance plans worth over $10,200 for individuals and $27,500 for families. Dental and vision plans are exempt and will not be counted in the total cost of the plans.
• Tanning Tax: There will be a 10 percent tax on indoor tanning services.

Medicare:

• The bill will completely close the Medicare Part D donut hole by 2020, through the provision of a $250 rebate to Medicare beneficiaries who hit the gap in 2010, and a 50 percent discount on brand-name drugs in the donut hole beginning in 2011.
• Co-payments and deductibles for preventative services will be eliminated under the Medicare program beginning in 2011.
• The bill also includes $500 billion in Medicare cuts over the next decade.

Medicaid:

• Medicaid will be expanded to include 133 percent of the FPL.
• States will be required to expand Medicaid to include childless adults starting in 2014.
• The Federal Government will pay 100 percent of costs for covering newly eligible individuals through 2016.
• Illegal immigrants will not be eligible for Medicaid.

Insurance Reform:

• Insurance companies will be banned from dropping individuals from coverage if they become sick.
• Health plans will be prohibited from denying coverage to children with pre-existing conditions. Beginning in 2014, this prohibition will apply to all persons.
• Insurance companies will be required to permit young people up to their 26^th birthday to remain on their parents’ policy, if the parents so choose.
• Insurance companies will be prohibited from placing lifetime caps on coverage.
• New plans will be tightly restricted in their use of annual limits to ensure access to needed care. Beginning in 2014, the use of any annual limits will be prohibited for all plans.
• New private plans will be required to cover preventative services with no co-payments and with preventative services being exempt from deductibles. Beginning in 2018, this requirement will apply to all plans.
• Customers purchasing new plans will have access to an effective internal and external appeals process to appeal decisions made by their health insurance provider.
• Beginning in 2011, plans in the individual and small group market will be required to spend at least 80 percent of premium dollars on medical services, and plans in the large group market will be required to spend 85 percent. Insurers that do not meet these thresholds must provide rebates to policyholders.
• Intermediate access to insurance for Americans who are uninsured because of a pre-existing condition will be available through a temporary high-risk pool.
• New group health plans will be prohibited from establishing any eligibility rules for coverage that discriminate in favor of higher wage employees.
• Beginning in 2011, a long-term care insurance policy will be created, that will be financed by voluntary payroll deductions to provide benefits to adults who become functionally disabled.
• Aid will be provided to states in establishing offices of health insurance consumer assistance in order to help individuals with the filing of complaints and appeals.

Access To Care:

• The bill will provide new investment in training programs to increase the number of primary care doctors, nurses and public health professionals.
• Funding for Community Health Centers will be increased to allow for nearly a doubling of the number of patients seen by the centers over the next five years.

Abortion:

• Private and taxpayer health insurance premium funds will be segregated, and individuals will be required to pay for abortion coverage through two separate payments. (Private funds will have to be kept separate from federal and taxpayer funds).
• No health care plan will be required to offer abortion coverage. States will be permitted to pass legislation choosing to opt out of offering coverage through the exchange.

Individual Mandates:

• In 2014, everyone will be required to have health insurance or face a $695 annual fine. There will be exceptions made for some low-income individuals.

Employer Mandates:

• Employers with more than 50 employees will be required to provide health insurance or face an annual fine of $2000 per year, per worker, if any employee receives federal subsidies to purchase private health insurance. The fine will be applied to the total number of workers, with some allowances.
• Small businesses will receive tax credits to make employee coverage more affordable. Credits up to 35 percent of premiums will be immediately available for firms that choose to offer coverage, effective beginning for calendar year 2010. (Starting in 2014, the small business tax credits will cover 50 percent of premiums).
• Until the Exchanges become available in 2014, a temporary re-insurance program will be in place to help offset the costs of expensive health claims for employers that provide health benefits for retirees age 55-64. (Effective 90 days after the enactment of the law).

Illegal Immigrants:

• Illegal immigrants will not be allowed to purchase health insurance in exchanges, regardless of whether or not they can afford to pay the premiums themselves.