Yesterday President Obama signed into law a piece of legislation that will transform America’s Healthcare system. Over the last year, Congress has discussed many different healthcare reform ideas, and now we can start to focus on what is included in the 2000+ pages of actual legislation.
Below is a brief timeline of when certain provisions of the bill will take effect. This is only a highlight of the provisions that are going to affect many mainstream employers who sponsor a Health Plan.
Please understand that even though the law has passed, there are going to be
changes(primarily the reconciliation act that is going to be taken up by the Senate shortly). Also, the law now has to go through the regulatory process where the actual rules will be written so that the law is followed. As more information becomes available, we will continue to keep you updated.
Health Reform Implementation Timeline:
Within 6 months of enactment:
•Regulations prohibiting insurance contracts containing lifetime limits, rescission (canceling of medical policies already issued), and excessive waiting periods go into effect.
•Coverage available for children up to age 26 on their parents plan.
•Employer tax credit (sliding scale) for employers with fewer than 25 employees who offer coverage.
Fee on Name Brand Drugs implemented (costs are expected to be passed along to consumers)
FSA Limits‐ annual contribution limit of $2,500 for Flexible Spending Accounts
Medicare Tax Increase‐ Imposes an additional 0.9% tax on income in excess of $200,000 (individual)/ $250,000 (couple) and a 3.8% tax on investment income for taxpayers with an adjusted gross income of more than $250,000
Health Insurance Exchanges‐ Each state is required to create a marketplace where individuals and small business (under 50 employees) can buy coverage and possibly be eligible for a Premium subsidy.
Individual Obligation- Individuals will be required to carry Health insurance. The fully phased in penalty for not carrying insurance is $695 or 2.5% of income
Employer Obligation‐ Employers with 50 or more employees (part time employees count) who do not offer health coverage will be assessed penalties up to $2000 per employee. For Employers who provide coverage, but the coverage is deemed too expensive, they could be fined up to $3,000 for each employee who obtains a premium credit from the government.
Fees on Health Insurance Providers‐ $8 billion will be assessed in 2014, $11.3 billion in 2015 and 2016, and 13.9 billion in 2017, and $14.3 billion in 2018.(Most experts believe these “fees” will be passed directly to the consumer).
Pre-Existing Conditions Exclusions prohibited
Annual Limits on contracts prohibited
State may allow Large Employers (over 50 lives) to participate in the Exchanges
High Premium Excise Tax‐ the “Cadillac tax” takes effect. This tax imposes a 40% tax on health coverage in excess of $10,200 for a single employee or $27,500 for a family.