Photo (cc) by steve hards
Editor’s Note: This post comes from partner site Insure.com.
There are a lot of promises within the health care reform law, but changes may not actually affect you for years, especially if you buy group coverage through your workplace. The actual health care bill, signed into law on March 23, 2010, is more than 2,000 pages. Here is a time table of highlights that will affect health insurance for individuals and group health plans.
Health reform highlights: A time-line
Starting immediately in 2010, those on Medicare’s prescription drug plan whose initial benefits run out will receive a $250 rebate. It is designed to help cover the so-called “doughnut hole” gap in coverage. More discounts and subsidies will be phased in until the doughnut hole is eliminated by 2020.
In the 90 days after the bill is enacted, high-risk health insurance pools will be created in each state that will last until 2014. This provides immediate access to coverage for people who have no insurance now due to pre-existing conditions. The out-of-pocket premium will be capped at $5,950 for individuals and $11,900 for families.
In sixth months after the bill is enacted, new rules for health insurance companies go into effect:
- Coverage cannot be denied or canceled when people get sick.
- Coverage cannot be denied to children with pre-existing conditions.
- Insurers cannot place lifetime caps on coverage. Annual limits must be approved by the government.
- Adult children will be eligible for coverage as dependents on their parents’ polices until they are 26.
In 2011, other short-term reforms include the following:
- Individual health insurance plans and small-group insurance plans must spend 80 percent of premiums on medical services, while large group plans have to spend at least 85 percent. Currently, the average spent is 74 percent.
- A voluntary insurance program for assisted living services will be established.
- Seniors who fall into that “doughnut hole” gap will receive a 50 percent discount on brand-name drugs.
- Medicare will offer free preventive care, with no co-payments.
In 2013, families who make $250,000 or more ($200,000 or more for singles) will pay more in Medicare payroll taxes. Unearned income on this group will also be taxed. Also, those who utilize a flexible spending account will be limited to $2,500 in contributions. This number will be adjusted yearly for the cost of living, and these plans will no longer allow reimbursement for over-the-counter medications. The threshold for deducting out-of-pocket medical expenses on your taxes will rise from 7.5 percent of income to 10 percent. (People over age 65 will remain at the 7.5 percent deduction threshold through 2016.)
In 2014, many of the bill’s reforms are scheduled to take place:
- Most individuals will be required to buy health insurance, and most employers will have to provide coverage. Both groups will face penalties for non-compliance. American Indians, those with religious objections and those who would face a financial hardship are exempt. If you would end up paying more than 8 percent of your income for health insurance, you won’t have to pay penalties for not buying coverage.
- You will have the option to buy affordable health insurance through state-run insurance marketplaces called exchanges. If you have coverage through your employer but your policy covers less than 60 percent of costs, or you pay more than 9.5 percent of your income to get that coverage, you can buy subsidized coverage.
- Families with income up to 400 percent of the federal poverty level will earn subsidies to buy health insurance.
- Insurance companies will be banned from charging higher premiums because of a person’s sex or health status.
- Small-group deductibles will be limited to $2,000 for individuals and $4,000 for families. Contributions can be offered to offset any amounts above these amounts.
- Waiting periods for coverage will be capped at 90 days.
- The out-of-pocket maximum that Medicare Part D enrollees pay for catastrophic coverage will be lowered.
In 2018, a 40 percent excise tax on high-end policies (that is, policies with annual premiums of $10,200 for individuals and $27,500 or more for families) will be imposed. It is uncertain, according to The Los Angeles Times, whether consumers will have the cost of this “Cadillac plan” tax passed on to them, or if insurers and plan administrators will absorb all the costs.
And the overall goal of the reform — to expand coverage to 32 million people — will be in place by 2019.
Something to keep in mind: By the time many of these major reforms are due to be enacted in 2014, there will be a new Congress, and possibly a new President. This means these reforms will likely undergo some changes, possibly major changes, before they take effect. So before you make any decisions on your health insurance, make sure you’re aware of the current laws.