Health Care Reform: Compliance Dates in Current Legislation

With the differences of the Senate and House versions of health care legislation still being considered, it is important for patients to realize that each bill has a rolling series of effective dates starting immediately upon passage of the legislation and running all the way into 2018. Below is a summary to provide an overview on what becomes effective when.

House of Representatives – Effective in 2010

Beginning in 2010 (upon passage of the health care legislation):

·  Health plans can look back for pre-existing conditions up to 30 days, reduced from 6 months

·  Insurers must disclose new health premium rate increases

·  Individuals may maintain COBRA coverage until Health Exchange is in effect

·  Plans must pay for reconstructive surgery for children with deformities

·  Employers prohibited from reducing retiree health benefits for retirees, unless the same reduction is made to active employees’ benefits

·  So called CLASS ACT is implemented in order to provide public long-term disability insurance, which would supplement Medicaid or private LTD benefits

·  Funding to community health centers significantly increased

·  Funding for preventative health services at local or community level

·  Primary care physicians and training for nurses expanded

·  Grants for employer wellness programs established

·  States to receive grants for immediate health care reform initiatives

·  Consumer Operated and Oriented Program (CO-OP) created to facilitate the establishment of a non-profit, member run health insurance cooperative through the Exchange

·  States can extend Medicaid coverage to HIV infected individuals

·  Reimbursement rate for Medicaid begins to be raised up to Medicare levels for primary care physicians

·  States required to provide 12-month continuous eligibility for children in CHIP

·  HHS Secretary required to set standards for expanding Medicare accountable organizations and medical home pilot programs and to test such programs in a variety of settings and regions

Senate Provisions – Effective in 2010

• The use of some annual coverage limits prohibited
• Plans must provide first dollar coverage for preventative care
• Plans must annually report the share of premium dollars spent on health care and provide rebates to participants for excessive loss ratio (2010-2013)
• Process to be established for reviewing health coverage premium increases
• New quality requirements established for nonprofit hospitals
• Medicare payment protections established to increase reimbursements for health care providers in rural areas
• $2.3 billion non-deductible annual fee imposed on the pharmaceutical manufacturing industry and is to be allocated by market share
• $2 billion non-deductible annual fee imposed on the medical device manufacturing sector and is to be allocated by market share
• $6.7 billion non-deductible annual fee imposed on the health insurance sector and is to be allocated by market share
• 10 percent tax imposed on indoor tanning

House and Senate Provisions – Effective in 2010

• Insurance policies prohibited from being rescinded when an individual gets sick
• Uses new discounts from drug manufacturers to provide a 50 percent discount on brand name drugs in the “donut hole” under Medicare Part D
• Lifetime dollar limits for coverage prohibited
• Individuals up to age 26 (Senate) and 27 (House) not otherwise covered may remain on parents coverage Temporary reinsurance assistance established for employers providing early retiree health benefits (ages 55-64)

House Provisions – Effective in 2011

• 5.4 percent tax imposed on high income individuals
• 2.5 percent excise tax imposed on the first taxable sale of medical devices
• First report on payments to physicians and a laundry list of providers due from industry.

Senate Provisions – Effective in 2011

• Employers must report the value of health care benefit provided on each employee W-2
• Tax penalty increased to 20 percent for non-qualified expenses under health savings tax vehicles such as Health Savings Accounts
• Employer deductions eliminated for subsidies currently received for providing prescription drug plans for Medicare Part D retirees
• 10 percent Medicare reimbursements paid to primary care and surgeons
• Access to primary care and nursing increased through Medicare Graduate education Program
• Small business tax credit to begin for qualified employers purchasing health care or their employees

Senate Provisions – Effective in 2012

• Businesses paying providers of property or services of $600 or more per year required to file reports with IRS and providers specifying the amounts paid
• Deductibility of executive compensation under Section 162(m) limited to $500,000 for insurance providers if 25 percent or more of gross income comes from health plans that meet the minimum creditable coverage requirements
• Physician payment reforms implemented to increase payment for primary care physicians

House Provisions – Effective in 2013

• All individuals required to obtain acceptable health care coverage or pay penalty of 2.5 percent of their income
• Small businesses that provide health coverage to employees are eligible for a tax credit up to 50 percent of the amount paid for coverage (credit lasts 2 years)
• Insurance companies prohibited from refusing to sell or renew policies on the basis of an individual’s health
• Exclusion of coverage because of pre-existing conditions is prohibited
• Insurance companies cannot charge higher premiums based on health status, gender, etc., and premiums can vary only on age (no more than 2:1), geography, and family size
• Coverage through the Health Insurance Exchange provided to the uninsured and to employees of employers with 25 or fewer employees

Senate Provisions – Effective in 2013

• 40 percent excise tax imposed on so called “Cadillac health plans”
• Income threshold increased from 7.5 to 10 percent in order for individuals to deduct medical expenses
• Medicare hospital insurance tax rate increased by .05 percent on individuals earning $200,000 ($250,000 for married filed jointly)
• Pharmaceutical and Device Companies 1^st Payment to Physician Report

House Provisions – Effective in 2014

• Individuals offered employer-sponsored coverage may opt-in to the Health Insurance Exchange if the employer’s premium is equal to or greater than 12 percent of family income
• Health Insurance Exchange expanded to include employers with 50 or fewer employees
• Medicare Advantage program must spend at least 85 percent of premium on health care

Senate Provisions – Effective in 2014

• Individuals required to obtain acceptable health care coverage or pay an annual tax penalty of $95 graduated up to $750 by 2016
• Employers with 50 or more employees must offer health coverage to employees (and families) or pay an annual $750 penalty for each full-time employee
• Employers with more than 200 employees must automatically enroll employees into employer-sponsored plans although employees may opt out
• Employers with eligibility waiting periods over 60 days must pay $600 annually for each full-time employee subject to the waiting period

All these dates will change in the very near future as the final version of the legislation.

Our guess is the result of the special senate election in Massachusetts will throw a wrench in the system and anyone’s guess is as good as ours.  The most likely scenario is the house passes the senate bill (which was passed as an amendment to a house bill) but those blue dogs have to be howling.