Health Reform – What’s Next?

Posted on Mar 22, 2010 in Health Care Reform

Last night the House of Representatives voted and approved the health care reform legislation presented by the Senate. They also voted and passed a series of proposed changes to the Senate bill.

Now the bill goes back to the Senate for approval of those changes. Once this is done it will go to the President to be signed into law.

So what are some of the things that will happen after that? Here is a list of some of the key provisions and the proposed changes made by the House of Representatives:

The legislation would require substantial insurance market reforms that would bar insurers from excluding people for pre-existing medical conditions and prevent them from arbitrarily dropping policy-holders.

Insurance exchanges would be created in which small businesses and individuals without employer-sponsored coverage would be able to shop for coverage. Plans offered on the exchange would have to meet minimum benefit requirements.

The proposed changes would allow dependent children to remain on their parents’ health policies until age 26.

The Senate bill requires insurers to spend at least 85 cents of every premium dollar on medical care in small group markets and 80 cents in large group markets. The proposed changes also would require Medicare Advantage insurers to spend at least 85 percent of revenues on medical care.

Changes to Coverage Mandates, Subsidies, and Medicaid

Individuals would be required to obtain health insurance. Those who fail to obtain coverage would face fines of up to 2.5 percent of income by 2016.

Firms with more than 50 workers who do not offer medical coverage could face fines of $2,000 per full-time employee.

Federal subsidies would be provided to help people with incomes up to 400 percent of the poverty level purchase coverage on the exchange. Proposed changes would sweeten those subsidies for lower income people.

Medicaid, the government health insurance program for the poor, would be available to everyone with incomes up to 133 percent of the poverty level, which stood at $10,830 for an individual and $22,050, for a family of four. Many states have eligibility requirements below those levels.

The proposed changes would get rid of a special deal in the Senate bill that would have provided more money to Nebraska to cover costs of increased Medicaid coverage.

Financing

The final proposal makes some adjustments to the revenue measures in the Senate-passed bill.

The Senate bill included a 40 percent excise tax on high-cost health insurance plans. The proposed changes would delay implementation of the tax until 2018 instead of 2013. The tax would kick in on plans costing $10,200 for individuals and $27,500 for family coverage. A higher threshold is allowed for plans covering mostly women, older workers and retirees as well as those in high-risk professions.

The bill calls for raising the payroll taxes for Medicare, the government health insurance plan for the elderly and disabled, to 2.35 percent from the current 1.45 percent for individuals earning $200,000 or more and for couples earning $250,000 or more. The proposed changes would apply the tax to some investment income as well for those high-income groups.

The bill imposes fees on medical device manufacturers, insurance providers and brand-name pharmaceuticals. The proposed changes would delay implementation of those fees.

It also puts a 10 percent tax on indoor tanning services that use ultraviolet lamps goes into effect on July 1.

Medicare

The legislation would freeze payments to insurers that provide coverage to Medicare patients in 2011 and begin reducing the subsidy in 2012.

It would also gradually close the gap in drug coverage for Medicare beneficiaries by 2020. Those who enter the coverage gap, the so-called doughnut hole, in 2010 will get a $250 rebate. In 2011 they would get a 50 percent discount on brand-name drugs.

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COBRA Subsidy Extension to March 31, 2010

Posted on Mar 12, 2010 in Health Care Reform

The Temporary Extension Act of 2010 (the Act) was signed into law by President Obama on Tuesday, March 2, 2010. The Act extends the COBRA subsidy eligibility period originally introduced under the American Recovery and Reinvestment Act of 2009 (ARRA), as amended by the Department of Defense Appropriations Act, 2010, until March 31, 2010.

New Rules
Individuals who experienced a qualifying event that was a reduction in hours of employment, on or after September 1, 2008, and who later experienced an involuntary termination of employment as defined by ARRA between March 2 and March 31, 2010, are eligible for the subsidy if they are otherwise an Assistance Eligible Individual (AEI). This new rule only applies to periods of coverage beginning after March 2, 2010.

New Election Period
Individuals who experienced a qualifying event due to a reduction in hours of employment and did not elect COBRA coverage, or elected and then lost COBRA coverage, are entitled to a new COBRA election period if they later experience an involuntary termination of employment between March 2, 2010 and March 31, 2010.

Civil Action and Penalties
To enforce the provisions of ARRA and the Act, the Treasury and/or Department of Labor (DOL) or an affected individual may bring a civil action to enforce any determinations and/or appropriate relief. Plan sponsor or health carrier failure to comply with Treasury or DOL determinations within 10 days after receiving notice of the determination could result in $110 a day penalty.

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