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Items Taking Immediate Effect
Uninsurable Individuals (as a result of a
pre-existing condition) may be able to enroll in a new federally subsidized
insurance program.
Medicare D “Doughnut Hole” Medicare recipients
pay the first $300 in drug expenses out-of-pocket (the deductible). Medicare D
then covers the next $2,830 per year in prescription drug costs; however, the
coverage ends there until the recipient pays $6,440 for prescription medication.
This design leaves the recipient responsible for all drug costs between $2,830
and $6,440 annually, leaving a "doughnut hole" in the reimbursement scheme.
Medicare beneficiaries who hit the “doughnut hole” in the program’s drug plan
will get a $250 rebate this year. Next year, their cost of drugs in the coverage
gap will go down by 50%.
Medicare Preventive Care, such as some types of
cancer screening, will be free of co-payments or deductibles.
Coverage of Children Parents may maintain
health insurance plans for children under age 26, unless the child is eligible
for coverage through a job. Insurance plans are prohibited from excluding
pre-existing medical conditions from coverage for children under age 19.
Insurers could still reject those children outright for coverage in the
individual market until 2014.
Tax Credit for Businesses with fewer than 25
employees and average wages of less than $50,000 may qualify for a tax credit of
up to 35% of the cost of their health insurance premiums. Beginning in 2014, the
small business tax credit will cover 50% of premiums.
Insurance Lifetime Caps on insurance coverage
and Retroactive Cancellation of insurance (except in the case
of outright fraud) are banned. Restrictions will also be placed on annual
coverage limits.
How the Government Will Pay for All of This
3.8% Medicare Payroll Tax will be assessed
starting in 2012 on unearned income (interest, dividends, and capital gains for
families making more than $250,000 per year ($200,000 for individuals).
40% Excise Tax will be assessed beginning in
2018 on insurance companies’ premiums related to "Cadillac" insurance plans
worth over $27,500 for families ($10,200 for individuals). The tax is equal to
40% of the value of the plan that exceeds the threshold amount(s) and is imposed
on the issuer of the health insurance policy, which in the case of some
self-insured plans is the employer. The aggregate value of the health insurance
plan includes reimbursements under a flexible spending account for medical
expenses or health reimbursement arrangement, employer contributions to a health
savings account, and coverage for supplementary health insurance coverage.
Dental and vision plans are exempt and will not be counted in the total cost of
a family's plan.
Employer Penalties will be assessed on
employers with more than 50 employees that do not offer coverage and have at
least one full-time employee who receives a premium tax credit. The penalty will
be equal to $2,000 per full-time employee, excluding the first 30 employees.
Employers with more than 50 employees that offer coverage but have at least one
full-time employee receiving a premium tax credit, will pay the lesser of $3,000
for each employee receiving a premium credit or $750 for each full-time
employee, starting January 1, 2014.
HSA Withdrawal Tax will increase on non-medical
early withdrawals from a health savings account from 10 to 20%. |
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Other Changes
Medicine Cabinet Tax which will no longer
permit using health savings account, flexible spending account, or health
reimbursement pre-tax dollars to purchase non-prescription, over-the-counter
medicines (except insulin).
Automatic Enrollment of employees in employer
(with more than 200 employees) provided health insurance plans. Employees may
opt out of coverage.
Flexible Spending Account Cap imposed of $2,500
(now unlimited).
Medical Itemized Deductions threshold is
increased from 7.5% of adjusted gross income to 10% of adjusted gross income.
This is waived for taxpayers 65 or older from 2013-2016 only.
What's Next
The reconciliation Bill which was passed by the House of
Representatives on March 21, 2010 was passed by the Senate and the Senate
changes were approved by the House of Representatives early on March 26, 2010.
Aside from some minor modifications to the Patient Protection
Act, the main focus of this Bill is taking administration of the
government-backed student loan program from banks and placing the program under
direct government administration.
The Patient Protection Act is still facing challenges from an
increasing number of states, including Michigan.The challenge initially appears
limited to the individual insurance coverage mandate.
The result of the challenge is difficult to assess. In any event
a substantial portion of the law will remain in place.
For More Information
Please contact
Abbott, Nicholson, Quilter,
Esshaki & Youngblood,
P.C.
300 River Place, Suite 3000
Detroit, MI 48207-4225
Office:
313.566.2500
www.abbottnicholson.com
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