There  has been a lot said about Health Care Reform, with all the talk it’s been difficult to figure out exactly what the facts are. So here are some quick facts as I understand them to be at the current time. While this law is being tested on the legality of certain elements, and the politicians continue to politic,  the back bone of this great country (yes that’s you and I!) need to know how, when and if we are to be effected. I hope this helps sort out the fact from the fiction. 

Coverage Mandates Scheduled to take effect in 2014

• Individuals will be required to obtain coverage under a qualified health insurance plan or pay a tax penalty. 
• Employers will be required to offer qualified health insurance to their employees or pay a penalty in some circumstances.
  • Small businesses with fewer than 50 employees will be exempt.
  • If an employer is subject to the penalty and fails to offer any full-time employee health coverage, and if any full-time employee enrolls in the exchange and receives a tax subsidy to purchase coverage, the employer is subject to a penalty equal to the number of full-time employees it has times $2,000 per year. For purposes of calculating the penalty, however, the first 30 employees are disregarded.
  • Employers with more than 200 employees that offer a health plan must automatically enroll all new employees in the plan. The employee will have the opportunity to opt out of the coverage. Employers will also be required to notify each employee at hiring about the existence of the insurance exchange and that the employee might be eligible for a subsidy to purchase a plan through the exchange under certain circumstances.
  • Employers who offer coverage but have employees whose required contribution for that coverage would be between 8 and 9.8 percent of household income must provide employees with a “free choice voucher.” The voucher must be equal to the amount of the contribution that the employer would have made to its own plan and can be used toward the purchase of plans through the exchanges.

Insurance exchange

• Individuals who do not obtain health insurance through their employer will have a mechanism set up by the states to help them find qualified health insurance coverage on an individual basis. The individual must be a citizen of the United States or an alien who is lawfully present in the U.S. to purchase coverage through the exchange.

Small employers (fewer than 100 employees) will also be able to access coverage for their employees through the exchange. For years prior to 2016, states may limit this to employers with fewer than 50 employees

*Note: Voluntary Supplemental products such as Short Term Disability, Cancer, Critical Illness and Accident are not offered through the exchange.

Market reforms

• Health insurance companies will be required to make their policies available to individuals on a guaranteed-issue basis, and no pre-existing condition exclusions can be applied.  This takes effect in 2014.
• Health insurance plans may not impose lifetime limits on the value of any essential benefits, as established under the law. Annual limits may also be restricted by the Secretary of Health and Human Services (HHS). Plans that cover dependent children must cover all children (married and unmarried) of the insured until the child reaches age 26, provided that the child is not eligible for employer-provided coverage himself. Plans must provide first-dollar coverage for certain preventive care and immunizations. Plans may not rescind coverage except in cases of fraud or intentional misrepresentation. Children under age 19 may not be denied coverage due to a pre-existing condition. This takes effect for plan years beginning October 1, 2010, or later.

• Health insurance companies or plan administrators of self-funded health plans must prepare and distribute a paper or electronic summary of coverage to all applicants and enrollees for the coverage. The Secretary of HHS will establish standards for the summary. HHS must establish the standards within 12 months after the law is enacted, and the summary must be provided within 24 months after the date of enactment.

Excise Tax 

• “High-cost” health plans will be subject to an excise tax, paid by the insurance company selling the plan. A plan is considered a “high-cost” plan if the annual value of the coverage is greater than $10,200 for single coverage and $27,500 for family coverage. Special rules apply for plans for retirees and employees in high-risk professions and multi-employer plans. This provision is intended to encourage employers to hold down the value of the plans they offer to employees and could possibly result in reduced medical spending. This takes effect in 2018.
• Employers will be required to include on employees’ W-2 forms the value of plans subject to the excise tax. This takes effect for W-2s filed in 2012 for the 2011 tax year. 

Cafeteria Plan Changes

• Health flexible spending arrangement (FSAs) salary reductions are capped at $2,500 per year. That amount is indexed for inflation beginning in 2014. The cap takes effect in 2013.
• Health FSAs, HRAs and HSAs may not reimburse over-the-counter medicines without a doctor’s prescription. This takes effect in 2011.
• Cafeteria plans of small employers have a new safe harbor from the nondiscrimination rules. For purposes of this rule, a small employer is one who employs 100 or fewer employees during either of the two years preceding the year for which the discrimination test is being run. This takes effect in 2011.

Timeline

Here is a summary of the years in which the health care reform changes listed above will take place. 

2010

• No lifetime limits allowed, possible restrictions on annual limits in plans.
• Coverage on children up to age 26.
• No rescission except for fraud or intentional misrepresentation.
•  No pre-existing condition exclusions for children under 19.

2011

• Employers must disclose value of certain health plans on W-2 forms.
• Over-the-counter medications no longer reimbursable.
• Special non-discrimination safe harbor for small-employer cafeteria plans.

2012

•  Plans must provide summaries of coverage.

2013

• FSA salary reductions capped at $2,500.

2014 

• Individual and employer mandates take effect.
• Health insurance plans have new guaranteed issue and pre-existing condition requirements.
• Exchanges are available for purchase of insurance coverage by individuals and small employers.

2018

Excise tax on “high-cost” plans takes effect.