Health Care Federal Legislation

Understanding the Immediate Impact on Business

The Legislation:

• H.R. 3590 Patient Protection and Affordable Care Act was signed into effect on March 32, 2010.
  
• H.R.4872 Health Care and Education Affordability Reconciliation Act of 2010 was signed into effect on March 30, 2010. This legislation contained “fixes” or changes to H.R. 3590.

It's important to note:

• The recently passed healthcare and health insurance reform legislation will take effect over a number of years. This legislation includes mandates on individuals and employers as well as tax law changes, changes to Medicare, and government subsidies.
• Many of these changes require additional clarification, definition, and guidelines yet to be released by government agencies, primarily the Department of Health and Human Services (HHS).
• With the effective dates stretching out over a multi-year period, it is safe to assume that there may be changes to both the implementation and the effective dates of the legislation.

To help you better understand and prepare for the changes resulting from this legislation, the following is an overview of the changes and the timeframes they are currently scheduled to take effect.

Within the first year:

• No denial of coverage to children with pre-existing conditions
• Young adults can stay on their parent’s plan up to  age 26
• Tax credit for businesses with <25 employees
• Lifetime and restrictive annual limits prohibited
• Seniors with  get a  $250 rebate to help fill the “doughnut hole” in Medicare Part D prescription drug coverage
• New group and individual plans must provide first-dollar coverage for preventative services
• Create a temporary reinsurance program to subsidize employer costs for early retiree health benefits, ages 55-64 ($5 B allocated)
• Create a national high risk insurance pool for those who can’t obtain individual coverage due to preexisting conditions (90 days) ($5 B allocated)
• State and Federal review of health insurance premium rates
• No policy rescissions, except for cases of fraud
• Group and individual policies must establish an appeals process
• 10% sales tax on indoor tanning

Year 2011

• Additional tax penalty for use of HSA money for non-qualified medical expenses
• New national MLR requirements (80% ind/small group and 85% for large group)
• OTC drugs removed from the 213(d) list of eligible expenses for FSA/HRA/HSA
• Imposes $2.3 billion annual fee on pharmaceutical manufacturers, increases over time
• Employers must disclose value of health benefits on W-2
• CLASS Act begins- auto enrollment, can opt-out

Years 2012-2013

• Medical FSA contributions limited to $2,500
• Health plans must standardize paperwork and electronic exchange of information
• Program to create a nonprofit insurance co-op for small businesses
• Medicare payroll tax increase for individual earning more than $200,00 and married filing jointly over $250,000

Year 2014

• Employer mandate to offer coverage
• Individuals required to have coverage
• States establish health insurance exchanges
• Employers will be subject to penalties if employees receive subsidized insurance
• Employers (200+) required to automatically enroll employees in coverage
• All insurance plans guaranteed issue and renewal
• Individual and small group market rating reforms
• Employer mandate to offer coverage
• Individuals required to have coverage
• States establish health insurance exchanges
• Employers will be subject to penalties if employees receive subsidized insurance
• Employers (200+) required to automatically enroll employees in coverage
• All insurance plans guaranteed issue and renewal
• Individual and small group market rating reforms

We will continue to provide updates through direct mail, our CenterState CEO newsletter and the website.

Please call us at 315-470-1930 if you have any questions. Thank you.