The specific timing of the implementation of the health care reform laws can be confusing. The starting points are the enactment dates of the laws, both of which were enacted in late March 2010. The PPACA enactment date was March 23, 2010. The HCERA enactment date was March 30, 2010.
These are important dates because various provisions of the health care reform laws are implemented over time using these dates as starting points. Some provisions of the take effect immediately or within a few months of enactment. Other significant provisions will not be implemented for several years, including the implementation of the state-based Health Benefit Exchanges, which are not slated to go into effect until 2014.
Throughout this document, the dates of enactment and other aspects of the timing of the new laws are addressed.
Improving Consumer Information Through the Web – www.healthcare.gov
The health care reform laws required the U.S. Department of Health and Human Services to establish an Internet website through which residents of a state can identify affordable health insurance options in that state. The website, now available at www.healthcare.gov, also includes information for small businesses, including coverage options, reinsurance for early retirees, and tax credits.
Improvements and Changes in Medicare and Medicare Advantage
Starting in 2011, seniors will no longer have to pay for preventive care such as an annual physical, screenings for treatable conditions, or routine laboratory work, if Medicare is their primary source of health insurance.
Certain Medicare Part D beneficiaries will get a $250 check from the federal government to help pay for prescription drugs currently not covered as a result of the Medicare Part D “doughnut hole.” The doughnut hole refers to the gap in coverage that some Medicare Part D beneficiaries fall into when their drug costs fall between $2,600 and $6,154 (these amounts are indexed for annual inflation). All Medicare Part D beneficiaries have catastrophic coverage once their drug costs exceed $6,154.
As part of the health care reform, prescription drug assistance will be reduced starting in 2011 for high-income individuals and couples ( Those making more than $85,000 as an individual or $170,000 combined income). More than 10 million people currently enrolled in a Medicare Advantage or Medicare Part D plan may be facing higher premiums because such premium assistance subsidies from the federal government will be reduced.
Access to a High-Risk Pool Option
The new federal health care laws establish a temporary national high-risk pool to provide health coverage to individuals with preexisting medical conditions who have not had coverage for six months or more. In Montana, the new pool, called the Montana Affordable Care Plan (MAC Plan), is offered by the Montana Comprehensive Health Association (MCHA). The MCHA began accepting enrollees on behalf of the MAC Plan in July 2010. Learn more at www.mthealth.org or 1-800-447-7828, Extension 2128. The new MAC Plan will operate in addition to the existing high-risk plan offered by the MCHA.
Reporting The cost of Health Coverage
Beginning in 2012 many Employers will have to report to their employees the annual cost of paid for each employee’s health coverage. The terms cost of coverage will appear on employee W-2 forms.
Medical Loss Ratios
Starting in 2010, plans issuing individual or group health insurance are required to annually report the percentage of total premium revenue spent on reimbursement for clinical services; activities that improve health care quality; and all other “non-claims costs,” excluding state taxes and licensing or regulatory fees. Health plans must provide rebates to consumers if their medical loss ratio (MLR) is less than 85% for large group coverage and less than 80% for individual and small group coverage. This MLR amount is on an aggregate, not a per policy basis.
Medical Flexible Spending Accounts (FSAs) Will Become Less Flexible
Medical flexible spending accounts are used to remburse the holder for medical expenses not covered by health insurance. Starting in 2013 the new maximum annual contribution to flexible spending accounts will be $2,500. Currently, up to $5,000 may be contributed to a medical flexible spending account annually. In addition, people will no longer be able to use their FSA to help defray the cost of over-the-counter drugs unless the drug is prescribed by a physician or is insulin.
Montana Health Benefit Exchange
The health care reform laws provide funding for the State of Montana (and all other states as well) to establish a health insurance exchange through which individuals may purchase health insurance beginning in 2014. The Exchange will be an Internet-based e-commerce website, allowing easy access to individuals who will be able to shop for a variety of health insurance products. Coverage and benefits of products featured on the Exchange will need to meet certain benefit standards as prescribed by the health care reform laws. Individuals may continue to rely on insurance agents and consultants to help ensure that they are purchasing the most appropriate health care benefits for themselves and their family.
The Individual Mandate
Starting in 2014, individuals will have to purchase health insurance or risk being fined. The fines for not purchasing insurance will be levied based upon the greater of a flat dollar amount or a percentage of income. Starting in 2014, the lowest fine would be $95 per individual per year, or 1% of a person’s income, and then increase to a high of $695, or 2.5% of an individual’s taxable income by 2016.
Premium Subsidies/Tax Credits
Individuals with incomes under 400% of the federal poverty level may get assistance from the federal government in the form of tax credits to help pay for insurance purchased through the exchange.
Additionally, the health care reform laws mandate a reduction in the maximum out-of-pocket amounts that those under 400% of the poverty level have to pay. A cost-sharing subsidy for out-of-pocket health care costs will be available from the federal government as well.
Increased Access to Medicaid
Beginning in 2014, Medicaid will be expanded to 133 percent of the poverty level ($14,404 for individuals and $29,326 for a family of four). It is expected that up to 100,000 people may be added to Medicaid in Montana as a result of this expansion.
High-Cost Health Plan Tax, Often Referred to as the “Cadillac Tax”
Beginning in 2018, a 40% excise tax will apply to the value of employer-sponsored health coverage that exceeds $10,200 for a single policy and $27,500 for a family policy.