One of the challenges of trying to plan for the consequences of the health care bill (or, to call it by its formal name, the Health Care and Education Affordability Reconciliation Act of 2010) is simply sorting out when its various provisions will kick in.
Here is an overview of the timeline as I understand it:
• A ban on lifetime benefit limits.
• A $250 rebate for those affected by the Medicare Part D “donut hole.”
• Effective June 30, the creation of a temporary insurance program for workers over 55.
• Effective June 30, the creation of a temporary high-risk pool for those with preexisting conditions.
• Effective September 23, a requirement to cover children up to the age of 26 on parents’ policies. It’s unclear whether the children must qualify as dependents on the parents’ 1040 tax forms.
• Tax credits to small firms (10 or fewer workers and average annual wages of less than $25,000) of up to 35% of their annual health insurance premium costs. The credit is phased out for larger firms. Beginning in 2014, this will change to a credit for firms that sign up with one of the new health insurance exchanges.
• All new group health plans and plans in the individual market must provide first dollar coverage for preventive services.
• Creates a new temporary reinsurance program to help companies offset the cost if they provide early retiree health benefits for those ages 55 through 64.
• Establishes a private, non-profit institute to identify national priorities and provide for research to compare the effectiveness of health treatments and strategies.
• Expands and improves low-interest student loan programs, scholarships, and loan repayments for health students and professionals.
• Effective July 1, imposes a ten percent tax on amounts paid for indoor tanning services in lieu of the tax on cosmetic surgery.
• W-2 forms must list the value of health benefits received by employees.
• For those on Medicare Part D who reach the “donut hole” a 50% discount on the total cost of brand-name drugs while in the gap.
• Provides a free, annual wellness visit and personalized prevention plan services for Medicare beneficiaries and requires new plans to cover preventive services with no co-pay cost.
• Provides a ten-percent Medicare bonus payment for primary care physicians and general surgeons.
• Chain restaurants and vending machines must disclose nutritional information.
• Small businesses need to begin making software changes to accommodate new reporting requirements.
• Changes to flexible spending accounts (FSA’s), health reimbursement arrangements (HRA’s), and health savings accounts (HSA’s): these funds can no longer be used for over-the-counter medications, and the penalty for non-qualifying distributions doubles to 20%.
• Creates a SIMPLE Cafeteria Plan to provide a vehicle through which small businesses can provide tax-free benefits to their employees.
• Medicare Advantage payment benchmarks are frozen at 2010 levels to begin the transition; in subsequent years the benchmarks will continue to be reduced.
There are none. Apparently 2012 is a chance for consumers to take a break while the President and members of Congress are running for re-election.
• A significant increase in Medicare taxes for single taxpayers with incomes over $200,000 and married filers with incomes over $250,000. Earned income will be taxed at 0.9%, and a 3.8% surtax will apply to unearned income (interest, dividends, capital gains, annuities, royalties, and rents). Tax-exempt income and distributions from qualified retirement plans will be excluded.
• A cap of $2,500 will apply to HSA’s and FSA’s.
• The floor on itemized medical deductions increases from 7.5% to 10%. Those over 65 are exempt from the increase through 2016.
• Establishes a 2.9 percent excise tax on the first sale for use of a medical device. Excepted from the tax are class I devices, eye glasses, contact lenses, hearing aids, and any device of a type that is generally purchased by the public at retail for individual use.
• Anyone who does not buy health insurance is taxed/penalized the greater of $95 or 1% of income.
• Health exchanges will be created to help small businesses and individuals obtain health insurance.
• Tax credits will apply to small firms that sign up with one of the new health exchanges.
• Tax credits to help subsidize health insurance premiums will apply to individuals earning under $44,000 and families earning under $88,000.
• Deductibles on employer plans will be limited to $2,000 for individuals and $4,000 for families; deductibles on personal plans will be limited to $5,000 for individuals and $10,000 for families.
• Requires employers with 50 or more employees who do not offer coverage to their employees to pay $2,000 annually for each full-time employee over the first 30 as long as one of their employees receives a tax credit.
• Medicaid eligibility for the non-elderly will increase to 133 percent of the poverty level. States will receive increased federal funding to cover the new recipients.
The penalty for not buying health insurance increases to the greater of $325 or 2% of income.
The penalty for not buying health insurance increases to the greater of $695 or 2.5% of income.
A 40% tax begins on the portion of health insurance premium costs exceeding $10,200 for individuals or $27,500 for families, excluding coverage for eyeglasses and dental care.
Those on Medicare Part D will be responsible for 25% of all prescription drug costs, thus eliminating the “donut hole.”
Stay tuned for more details; other changes are sure to come as the bill is put into effect over the next few years.