Sunday, March 21, 2010

Health Care Reform Passes (and other updates)

Health Care Reform

The House of Representatives voted on Sunday to accept the Senate version of the health care reform bill and changes to the Senate bill as a separate budget reconciliation bill.

The next step is for the reconciliation bill to be considered by the Senate starting on Tuesday. For the reconciliation bill to pass the Senate, it would require a simple majority vote (51 votes), with Vice President Biden available to break a tie.

Total cost of health care reform: $940 billion over 10 years, according to the Congressional Budget Office.

Implementation timeline of key employer activities:

Within 6 months after enactment
  • Adult dependents up to age 26, if they are not eligible for other employer coverage, must be covered;
  • Prohibits lifetime limits and restrictive annual limits (as determined by the Health and Human Services Secretary).
  • Requires qualified health plans to provide at a minimum coverage without cost-sharing for preventive services rated A or B by the U.S. Preventive Services Task Force, recommended immunizations, preventive care for infants, children, and adolescents, and additional preventive care and screenings for women.
In 2011:
  • Over the counter drugs no longer eligible for reimbursement under flexible spending plans
  • Increase the tax on distributions from a health savings account that are not used for qualified medical expenses to 20% (used to be 10%)
In 2013:
  • Medical flexible spending plans are limited to $2,500/year
  • Increase the Medicare tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly
  • Eliminate the tax deduction for employers who receive Medicare Part D retiree drug subsidy payments
  • Impose an excise tax of 2.9% on the sale of any taxable medical device.
  • Increases the threshold for the itemized deduction for unreimbursed medical expenses from 7.5% of adjusted gross income to 10% of adjusted gross income for regular tax purposes
In 2014
  • No annual limits
  • No preexisting condition exclusions
  • No waiting periods of longer than 90 days
  • Adult dependents up to age 26 eligible for employer coverage regardless of whether the adult dependent has access to other employer coverage.
  • Companies not offering coverage must pay $2,000 for all full-time employees
  • Employers offering unaffordable coverage would be assessed $3,000 per full-time employee who enrolls in the exchange and receives a subsidy.
  • Imposes an individual tax on those without qualifying coverage of the greater of $695 per year up to a maximum of three times that amount or 2.5% of household income
  • Imposes an annual fee on the health insurance sector starting with $8 billion in 2014
  • Creates American Health Benefit Exchanges
  • Permits employers to offer employees rewards of up to 30% of the cost of coverage for participating in a wellness program and meeting certain health-related standards. Employers must offer an alternative standard for individuals for whom it is unreasonably difficult or inadvisable to meet the standard.
In 2017:
  • States to allow businesses with more than 100 employees to purchase coverage in the state exchanges (referred to as SHOP Exchange)
In 2018:
  • Excise tax begins and to medical plans in excess of $10,200 for an individual or $27,500 for a family. Stand-alone dental and vision benefits are excluded from the excise tax calculation.
In 2020:
  • Excise tax thresholds will begin to be indexed to general inflation
  • Phases out the Medicare Part D coverage gap (aka "donut hole") completely by 2020.

COBRA Subsidy Extension - Third time's the charm

On March 10, 2010, the Senate passed the American Worker, State, and Business Relief Act of 2010. Among the provisions was an extension of the COBRA subsidy through December 31, 2010. The bill now moves to the House for approval.


HHS has begun posting the list of employers with breaches impacting over 500 individuals:

Of particular note: Lucille Packard Children's Hospital, Kaiser, UCSF

Dental Insurance

Some dental plans are trying to more closely align coverage not only with the individual’s cavity and gum history but even with other non-dental conditions, such as diabetes or heart disease. By providing broader coverage upfront, the goal is to forestall or prevent more costly dental work later. Employees with a cavity track record, for example, might get more than two covered cleanings annually. Other plans might pay for deep cleanings of diseased gums (also known as scaling and root planing), rather than asking the employee to pick up part of the tab. Depending on the employee’s risk, other products might be offered, including fluoride varnish or a special prescription mouth rinse.

Other items of note:
  • National Employee Benefits Day - April 6, 2010
  • Culturally Competent Health Care - a white paper written by Aon about limiting disparities in health care delivery and treatment

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