Healthcare Reform Law Changes- Are you Informed?
Whether you have heard it called PPACA, ACA, HCR or ObamaCare, healthcare reform legislation will impact the cost and your healthcare options as carriers scramble to implement changes that are being phased in over the next few years.
The first wave of changes came in September of 2010, and all carriers will have implemented the first phase by January 1st 2011 or on the health plan renewal. In addition to federal changes, California required additional changes. The legislation became a lightening rod for the November 2010 elections and as result, a new congress will undoubtedly try to make further changes to the new laws.
Here is a brief summary of the key healthcare reform changes that occurred in 2010.
- Lifetime maximum benefit limitation was removed, but certain coverage benefits can still be limited.
- Preventative Benefits are covered at 100% for all plans at no cost to the insured. What is a preventative service has been defined by the federal government.
- Dependents up to age 26 can remain on or be added to a health plan
- Dependent children under age 19 will not have a pre-existing limitation restriction.
- A tax credit is available until 2016 for businesses that provide qualified health coverage. Credits and eligibility vary depending on the size of your business, average employee pay and premium contribution:
- Firms with 10 or fewer employees can deduct 35% of the premium cost. Firms 11 to 25 employees, they can deduct less. Firms over 25 employees are not eligible for the tax credit. Tax-exempt firms have yet another schedule of deductibility.
- Employers must pay the employees $25,000 or less to be eligible for the full credit. The credit is reduced for businesses with higher average wages. If the average pay reaches $50,000, then the business is no longer eligible for any of this tax credit.
- Lastly, employers must pay for at least 50% of the health insurance cost of the employee. Most group plans already have this as a requirement. And in 2014, you must purchase your plan from the state exchange (more on that later)
For 2011, there are additional changes to be imposed
-In California, AB119 requires that carriers use a gender-neutral rating strategy. Males and females will be charged the same amount based on their age. Plans that have implemented this rating strategy will see increases.
-Employers are required to be report the value of employee health benefits on the employees W-2.
-Prescriptions are required for over-the-counter drugs in order for them to be deductible on FSAs and consumer-driven policies like HSAs.
-The penalty for non-qualified purchased for HSAs doubles to 20%.
There are other changes scheduled for 2012 through 2016 such as; employers being required to send Form 1099 to all business to business transactions totaling $600 or more; fines on employers who do not pay their share of health insurance premiums for their employees – up to $2000 or $3000; fines (taxes) proposed on individuals who do not pay their share for insurance. Many of these provisions will be challenged by the new congress and possibly a new administration, in addition to the current lawsuits brought by the states.
Until the law changes, the health carriers must plans as if it will be implemented, but many businesses believe it is pre-mature to plan for full implementation. As recently as December 13, 2010, a federal judge ruled that it is unconstitutional for the federal government to require individuals to purchase healthcare.
I will let you know the direction the legislation takes as it begins to solidify over the next few years. However, if you have any questions, please contact me: Gene Furr Mike Menath Insurance 831-3132 x1124
