Figuring out the puzzle

HEALTH CARE REFORM: Impact On Individuals And Families… 2014 And 2018

The Patient Protection and Affordable Care Act (H.R. 3590), originally approved by the Senate on December 24, 2009, was passed by the House on March 21, 2010 and signed into law by President Obama on March 23, 2010.

The information that follows summarizes insurance reform that takes place in 2014, the first year that most individuals will be required to have health insurance, and the 2018 tax changes that impact high-dollar health insurance plans. As you review the summary, pay particular attention to any provisions you feel may impact on your situation in the future.



Insurance Reform

  • Unless they qualify for an exemption, U.S. citizens and legal residents are required to have minimum essential health insurance coverage or pay a penalty.
  • Individuals who fail to maintain minimum essential coverage in 2014 are liable for a penalty equal to the greater of $95 or 1% of income.
  • Health insurance premium subsidies are available to eligible individuals and families with incomes between 133% and 400% of the federal poverty level (currently $29,327 to $88,200).
  • Medicaid coverage is provided to all individuals under age 65 with incomes up to 133% of the federal poverty level, based on modified adjusted gross income.
  • Taxpayers below the threshold for filing an income tax return are exempt from the minimum essential coverage penalty.
  • State-based American Health Benefit Exchanges and Small Business Health Options Programs are created, through which individuals and small businesses with up to 100 employees can comparison shop for standardized health insurance coverage. At least two multi-state options must be offered in each Exchange.
  • To be offered through an Exchange, a qualified health plan must provide essential health benefits which include cost sharing limits. No out-of-pocket requirements can exceed those in Health Savings Accounts, and deductibles in the small group market cannot exceed $2,000 for an individual and $4,000 for a family. Coverage will be offered at four levels based on how much the insurer pays: Platinum – 90%; Gold – 80%; Silver – 70%; and Bronze – 60%. A lower-benefit catastrophic plan will be offered to individuals under age 30 and to others who are exempt from the individual responsibility requirement.
  • Guaranteed issue and renewability is required, meaning that insurers cannot deny or cancel coverage to anyone with a pre-existing condition.
  • Any waiting periods for coverage cannot exceed 90 days.
  • Health insurance plans cannot impose annual limits on the amount of coverage an individual may receive.
  • For individual and small group policies, as well as policies sold through Exchanges, premium rating variations can be based only on age, premium rating area, family composition and tobacco use.
  • The out-of-pocket limits paid by those with incomes up to 400% of the federal poverty level are reduced.
  • Employers with 50 or more full-time employees must offer health care coverage or pay penalties.


Tax Changes

  • Impose a 40% nonrefundable excise tax on group insurers of employer-sponsored plans on the portion of annual premiums that exceed an inflation-adjusted $10,200 for individual coverage and $27,500 for family coverage.
  • Higher premium thresholds ($11,850 individual/$30,950 family) will be available to certain high-risk professions, as well as to retired individuals age 55 and older.
  • While insurers will be responsible for calculating and paying the tax, they can pass along the excise tax to their customers in the form of higher premiums.

If you would like additional information on the Patient Protection and Affordable Care Act of 2010 or to discuss the impact of specific provisions on you and your family, please contact my office.