Subject: RE: Health Care Legislation Overview
Good Afternoon:
If you are a little confused as to what the Health Care Bill singed into
law by Pres. Obama, please see below some pointers that might answer any
questions you might have. Thanks.
* Employer Mandate - "Play or Pay" - Employers with more than 50
employees that do not offer group health coverage and have at least one
full-time employee who receives a premium tax credit would be assessed a
penalty of $750 per full-time employee if the employer fails to offer
qualifying health coverage. Employers with more than 50 employees that
offer group health coverage but have at least one full-time employee
receiving a premium tax credit will pay the lesser of $3,000 for each
employee receiving a premium credit or $750 for each full-time employee.
These provisions are effective beginning in 2014.
* Waiting Period Restrictions - Any employer that imposes a waiting
period before employees can enroll in a group health plan would be
required to pay $400 for any full-time employee in a 30-60 day waiting
period and $600 for any full-time employee in a 60+ day waiting period.
These provisions are effective beginning in 2014.
* Insurance Exchanges - The bill creates state-based American Health
Benefit Exchanges and Small Business Health Options Program ("SHOP")
Exchanges. The goal is that state-based insurance exchanges will provide
a more organized and competitive marketplace for consumers and small
employers to purchase health insurance. The insurance exchanges must be
in place beginning in 2014.
* Individual Mandate - The bill requires individuals to purchase
qualifying health coverage. Those without coverage would be required to
pay a penalty tax of the greater of $750 per year up to a maximum of
three times that amount ($2,250) per family or 2% of household income.
These penalties become effective in 2014.
* Medicaid Expansion - The bill expands Medicaid to all individuals
under age 65 with incomes of up to 133% of the Federal Poverty Level
based on modified adjusted gross income. This change is effective in
2014.
* Changes to Health Care Spending Accounts - The bill contains a change
in the definition of "qualified medical expense" that affects
reimbursements and withdrawals under all types of health care accounts,
such as flexible spending accounts, health reimbursement arrangements,
health savings accounts, and Archer medical savings accounts.
Over-the-counter medications will no longer be a "qualified medical
expense." Additionally, the amount employees could contribute to health
care flexible spending accounts will be capped at $2,500. The effective
dates of these provisions are likely to be modified by the House
reconciliation bill.
* Elimination of Lifetime Caps - The bill eliminates lifetime caps on
essential benefits provided under group health plans. This prohibition
on lifetime caps is effective six months after enactment of the bill
(September 23, 2010).
* Preexisting condition exclusions - Group health plans may not impose
preexisting condition exclusions beginning in 2014. Group health plans
may not impose preexisting condition exclusions for children under the
age of 19 for plan years beginning on or after September 23, 2010. These
requirements will make substantial changes to the Health Insurance
Portability and Accountability Act ("HIPAA") portability requirements
affecting group health plans.
* Dependent Coverage - Effective immediately, group health plans that
offer dependent coverage must allow dependent coverage to continue up to
age 26.
* Subsidies for Small Employers - The bill provides for small employers
(fewer than 25 employees) to receive tax credits for purchasing group
health insurance for their employees. The subsidies shrink as an
employer's size and average pay increase. The subsidy is phased in
beginning this year.
Immediately after passing the Senate's health care reform bill, the
House was quick to also pass the Health Care and Education
Reconciliation Act of 2010 ("Reconciliation Act"), containing the
changes to the Senate's health care reform bill requested by the House.
The Reconciliation Act will make significant changes to the Senate's
health care reform bill, including modifying the tax on "Cadillac"
health plans and removing special carve-out deals for states like
Nebraska. The Senate's health care reform bill would not have passed the
House without the Senate Democratic leadership's assurances that the
House's requested changes would be passed. Debate on the Reconciliation
Act begins in the Senate today and is expected to result in final
legislation before Congress recesses in two weeks. The President will
probably receive a second health care reform bill containing the changes
requested by the House.
Director of Legislative and International Affairs
