2010 Health Care Reform Bill

Below are highlights of the provisions that take effect in 2010:

Increased Medicaid Subsidies
Families of four making up to $29,327 can receive increased benefits.

Tax Credits
New tax credit for purchasing health insurance. Households of four making up to $88,200 may be eligible for the new credit.

Dependent Coverage to Age 26
Dependent children, not covered by another plan must be covered. Takes effect Sept. 23, 2010.

Pre-existing Conditions
No pre-existing conditions limitations for children under age 19.

No lifetime benefit limitations

High Risk Insured’s Pool
Pools to be established by June 23, 2010. People ages 55 to 64 are eligible. The act is vague on how individuals can take advantage of this pool.

Emergency Room Coverage Mandated
Effective Sept. 23, 2010

Part D – Prescription Drugs
Will receive $250 rebate for 2010. In 2011 the cost of drugs in the coverage gap will decrease by 50%.

Medicare Advantage Programs
Will see significant changes.

Ten % tax imposed on Indoor Tanning

Small business Credit
Businesses with 10 or fewer employees earning less than $25,000 a year are eligible for tax credits up to 35% of health insurance costs. Partial credits for companies with 11-25 employees.

Small Non-profit Organizations
Credit against payroll tax is available.

Provisions Effective In 2011 Through 2013:

New Taxes
Starting in 2011, the pharmaceutical industry will be subject to annual excise tax based on the company’s market share and is non-deductible for federal tax purposes.
The sale of medical devices will be subject to a 2.3% excise tax after December 31,2012.

Fighting Fraud:
Increased penalties and more money to fight fraud in Medicare, Medicaid, or CHIP’s.

Reporting Health Care Benefits:
Employers must include the value of the health care benefits they provide to employees on W-2’s. This begins with health care benefits provided in 2011 that will be reported on W-2’s issues in 2012. This reporting applies to persons receiving post-retirement medical coverage and person on COBRA.

Community Living Assistance Services and Support (CLASS):
“[T]o establish a national voluntary insurance program for purchasing community living assistance services and supports” Persons will be automatically enrolled unless they opt out. Designed to help defray cost of in home long-term care. Participants will pay monthly premiums, and after a five-year vesting period, they receive benefits if they need care.

New Medicare Taxes:
Tax on persons making $200,000 ($250,000 filing joint) will see an increase from 1.45% to 2.35% and there is a new tax on net investment income of 3.8%. The tax applies to distributions from annuities but not qualified retirement plans. The new tax will also affect estates and trusts.

Employer Provided Coverage:
Companies with 50 or more employees must provide affordable health insurance or pay a fine of $2,000 per employee, the first 30 employees are excluded. If a small business with 50 or fewer employees does offer coverage to employees paid less than 400% of the Federal Poverty Level, may be required to offer a voucher for them to buy on the state-based individual exchange.

New Simple Cafeteria Plans Begin in 2011:
Starting in 2011 small employers will be allowed to adopt a new SIMPLE cafeteria plan. Small employer is 100 or fewer employees.

Grants For Wellness Programs:
Small employers, 100 or fewer employees, can apply for grants to provide wellness programs for employees.

Vendor 1099 Reporting Begins in 2012:
Beginning in 2012 any payments to vendors, including corporations, for property or service must be reported on form 1099.

Itemized Medical Deductions:
The floor for medical expenses changes to 10% from 7.5% in 2013.

2014- A key Implementation Year:

• Risk Pooling: Insurance providers are required to pool the risk of all individual enrollees in all plans.
• Health Insurance Exchanges: By 2014 individual states must establish American Health Benefit Exchanges and Small Business Health
• Options Programs through which small businesses will be able to pool together to by insurance.
• Penalties For Uninsured Americans: Starting in 2014, Americans failing to acquire health insurance must pay a penalty. The penalty would start at $9S or up to 1% of income, whichever is greater, and rise to a cap of $695 or 2.5% of income by 2016.

Waiting Periods for coverage are limited to 90 days.

Four Basic Plans:
The plans are Bronze, Silver, Gold, and Platinum. Each has various degrees of coverage. A catastrophic plan only is available to person under age 30.

Reforms beyond 2014:

• Penalty tax on “Cadillac Plans” effective 2018.
• Mandatory compliance with essential benefits package in 2018.
• Increased Discounts on Medicare Part D outpatient drugs in 2020.

These reforms were over 2,000 pages of detailed legal language and this outline is not intended to fully explain this legislation. It’s purpose is to give you an overview so you can research the sections that interest you. If you have questions do not hesitate to contact me.