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Healthcare Reform
On Sunday night, March 21, 2010, the U.S. House of Representatives passed the Patient Protection and Affordable Care Act (H.R. 3590), which had been previously approved by the Senate on December 24, 2009 (the Reform Act).
Some provisions that are effective immediately:
- A temporary national high-risk pool will go into effect within 90 days of enactment.
- Restrictions on insurers regarding lifetime limits, excessive waiting periods (over 90 days), rescissions, and pre-existing condition exclusions for children.
- Limitations on insurers ability to impose annual limits on the dollar value of coverage as determined by the Secretary of Health and Human Services.
- New insurance must pay the full cost of specified preventive care.
- Children can stay on their parents insurance policies until they are 26.
- Rebates on Medicaid prescription drugs are increased effective January 1, 2010.
- Starting in 2011, health insurers must make rebates to enrollees if medical loss ratios are lower than specified levels.
- Effective January 1, 2011, the elimination of the ability of employers to exclude from taxation (Medicare Part D) the subsidies they receive for maintaining retiree drug coverage for their Medicare-eligible retirees.
- Effective January 1, 2011, contributions to employee flexible spending accounts will be limited to $2,500 per year, indexed to CPI, and reimbursements for non-prescription drugs will no longer be allowed.
Many of the Reform Act provisions take effect in 2013, 2014, or later years, others will be phased in gradually. Reliance Insurance Advisors will keep this updated with new information as it is released.
Employer Impact
Employer Mandate. Effective January 1, 2014, the Reform Act assesses a fee of $750 per full-time employee (30+ hours per week) on employers with 50 or more employees that do not offer health coverage and that have at least one full-time employee who receives a premium tax credit. For employers that impose a waiting period before employees can enroll in coverage, there will be a penalty payment of $400 for any full-time employee in a 30-60 day waiting period and $600 for any fulltime employee in a 60-90 day waiting period. The length of permitted waiting periods is particularly important for employers with a high turnover workforce. The Reconciliation Act would increase the penalty to $2,000 per full-time employee, excluding the first 30 employees from the assessment. Employers would not be assessed any payments if they require a waiting period before any employee can enroll in the health coverage, but the amount of any waiting period will be limited to 90 days.