2010 Federal Health Care Legislation

Well, here it is, over 2,200 pages of Federal Law distilled down to three pages. You can Google the law if you wish to visit with the devil. After all, the devil is always in the details.

March 30, 2010, the "Health Care and Education Affordability Reconciliation Act", was signed into law. That law made changes to the "Patient Protection and Affordable Care Act" of March 23, 2010. Congressional Budget Office's estimated cost to the tax payors...read, "you and me"...is $940,000,000,000.00, ($940 Billion), over ten years.

New Additional Taxes, Taxes, Taxes:

The new law includes over $570,000,000,000.00 ($570 billion) in new taxes.

1. A 40% excise tax on so-called "high value" employer-provided group health insurance benefits starting in 2018, with even higher levels and adjustments promised in the future.

2. Starting in 2013, a 0.9% increase in the Medicare tax on tax payors earning over $200,000,single/$250,000, joint filers, plus a new 3.8% tax on interest and dividends on those same folk.

3. New increased Federal Taxes on health insurance companies and pharmaceutical companies  running into the billions of dollars are included in this legislation.

4. Beginning in 2013, a new 2.9% Federal Sales Tax will be applied to most medical devices...with a few exclusions.

5. If you are savvy enough to own a Health Savings Account, the new penalty tax for spending any of those dollars on a non-qualified purchase increases from 10% to 20%, starting in 2011.

6. To deduct medical expenses on your income tax return, such expenses must exceed 10%, of your adjusted gross income, up 2.5% from the long time traditional 7.5% benchmark, starting in 2013. (Stays at 7.5% for filers age 65, and their spouses, through 2016)

7. Expect to pay a new 10% Federal Sales Tax on tanning bed services.

8. This new legislation Reduces payments to your doctors, hospitals and other health care providers under Medicare Advantage Plans and Medicare, by $523,000,000,000.00 ($523 billion).

9. This legislation also includes rebates for Medicaid and discounts for Medicare Part D from pharmaceudical companies. (Prior to this time private insurance companies negotiated drug costs under Part D.)

10. Dig deeper and more will surface.

Other Provisions to be Phased In 2010 to 2018

Starting on or about September 2010:

1. Lifetime benefit limits and "restricted" annual limits are prohibited.

2. Dependents must be covered to age 26.

3. Waiting periods cannot exceed 90 days.

4. Preventive Services must be covered without cost sharing.

5. Children under age 19 cannot be excluded due to "pre-existing" conditions.

6. In the absence of fraud, coverage cannot be canceled or rescended.

7. High Risk Pools will be created to insure those with significant health issues. (Provision expires in 2014) 

2011

1. Employers must disclose value of health plans on W-2 forms.

2. Insurers must pay out 80% to 85% of premium income dollars in health insurance claims, leaving only 15% to 20% to cover overhead costs.

2012

1. Medicare Advantage payments are frozen at 2011 levels, while a new system of payments are put into place.

2013

1. $2,500 Limit imposed on Flexible Spending Account contributions indexed to Consumer Price Index/urban.

2. Employers lose existing deduction for Part D subsidy.

2014

1. State based "Exchanges" are established for those without "affordable" group coverage...must not be eligible for Medicare or Medicaid.

2. Credits available up to 400% of the Federal Poverty Level.

3. Insurers prohibited from excluding anyone due to "pre-existing conditions".

4. Ownership of health insurance now mandated by the Federal Government. Fines/penalties apply for failure to obey this Federal Law.

5. Employers with 50 or more employees must offer health insurance coverage to their employees or pay a fine of $2,000 to $3000, per employee as stipulated in the new law.

2015 

1. Penalties for uninsured individuals increase to the greater of $325, individual/$975, family, or 2% of income. (Waivers allowed for Native Americans, religious objectors, and those providing proof of financial hardship)

2016

1. Penalties for uninsured increase to 2.5% of income.

2018

1. 40% excise tax on insurers based on aggregate premiums.

Beginnng in 2011, Medicare Advantage plans are frozen at 2010 levels and new health care provider payment level mandate takes effect. The Part D, "Donut Hole" is reduced in stages until the gap is closed by 2020, starting with $250 in 2010. Co-Payments/Co-Insurance, will be adjusted to meet the new law's requirements.

The income subsidy exclusion for employers offering qualified prescription drug plans to its Medicare eligible retirees will be eliminated in 2013.

Annual provider updates are reduced for Medicare Parts A and B, and an independent "Payment Advisory Board" is established to report on system-wide health care costs, access, and quality and recommend policy changes to slow the rate of national health care spending growth and limit the rate of growth in Medicare Spending. (See #8 above, under "New Additional Taxes, Taxes, Taxes".)

There are other provisions in the new federal legislation covering technical issues and mandates on employers, health insurance companies, "State Exchanges", etc., many in the out-years, which may or may not change between now and the time such are expected to go into effect.

There are Constitutional issues to be addressed in this attempted federal take-over of our health care, and Attorneys General of twentysix (26) states have challenged provisions of the law. The Supreme Court scheduled hearings on those issues for late March 2012, which will have a major impact on our health care system.