Health Care Reform Act of 2010
Listed in Legislation.
Legislation determining the overhaul of the nation’s health insurance system was established in March 2010 when
the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010
were passed by Congress and signed into law by President Obama. The main goal of the reform is to expand
coverage to allow access to health care insurance coverage to millions of uninsured Americans. This will be
achieved by utilizing a range of mechanisms including public programs, private insurance markets and employers.
It will also assist in removal of perceived barriers to coverage and affordability issues. The health care reform
will be implemented over a nine year period and will affect the uninsured, insurers, Medicare prescription drug
beneficiaries, and employers.
Some of the changes that will take place in 2010 include:
Tax credits for small businesses allowing them to affordably purchase insurance for employees.
- The health care legislation does not require businesses with fewer than the equivalent of 50 full-time employees to offer health care coverage to their employees. However, should small businesses choose to purchase health care for employees, these tax credits are available to make it easier for them to do so.
- Small business tax credits are effective immediately to qualifying small businesses that offer health insurance to employees.
- A business will qualify for the credit if it covers at least 50% of the cost of qualified health care coverage through a qualified contribution arrangement for employees, pays an average annual wage below $50,000 and has fewer than the equivalent of 25 full-time employees.
- In tax years 2010-2013, the tax credit is worth a maximum of 35% of the premium the small business pays to cover its workers. In 2014 and subsequent tax years, the maximum credit increases to 50% for small businesses and 35% for nonprofits.
- The size of the credit is dependent on the average wage and the number of employees.
Elimination of preexisting condition clauses for children and an increase in dependent coverage to age 26.
- Dependents will be tax excludable until the end of the calendar year prior attaining age 27.
- Dependents will not be subject to student status or income dependency test.
- Dependents can be married, but must not be eligible for an employer sponsored plan. As of January 1, 2014, dependents can be insured through parents even if they are eligible for an employer sponsored plan.
Creation of a temporary reinsurance program to provide coverage for retirees over 55 who are not
eligible for Medicare.
- Covers early retirees from age 55 through 64.
- Will provide 80% coverage of expenses between $15,000 and $90,000.
Further creation of a temporary national high risk insurance pool.
- Available from June 23, 2010 to December 31, 2013.
- Created for those unable to obtain coverage through an employer or individual markets for more than six months.
Prohibition of lifetime dollar maximum benefits limits and most maximum annual benefit payments.
Provision of $250 rebate for Medicare patients who face a gap in prescription drug coverage (currently,
when enrollees pass $2,700 in costs, they lose coverage until they reach $6,154).
Beginning July 1, 2010, indoor tanning facilities will be subject to a 10% excise tax.
Changes in 2011 and 2012
Coverage of non-prescription over the counter drugs through HSAs, FSAs and HEAs will cease as of
January 1, 2011.
The aggregate cost of health care plans provided to employees will be included in 2011 W-2s.
New summary of benefits will be required from plan sponsors and insurers.
- Regulations for these documents will be rolled-out by March 23, 2011, and distribution of documentation will begin March 23, 2012.
- Documentation is limited to four pages and the content will be determined by the Secretary of HHS.
Changes in 2013 and beyond
New excise tax on medical devices.
Medicare Part D subsidies paid by employers will become taxable.
Medicare tax will increase.
In 2013, the maximum FSA contribution will be set at $2,500; an indexing will be created to determine the
maximum for future years.
In 2014, the waiting period for benefit eligibility will be set to a maximum of 90 days.
All preexisting condition clauses eliminated in 2014.
A penalty tax will be implemented and levied against individuals without approved health care coverage.
- Individuals without coverage are subject to a tax penalty of the greater of either $695 or 2.5% of income.
All employers with an equivalent of 50 or more full time employees will be required to provide health
care insurance to all employees; penalties will apply to employers who either do not provide coverage
or provide coverage deemed “not affordable” as outlined in the Act.
High cost health care plans, often referred to as “Cadillac” plans, will be subject to a 40% excise tax in 2018.
- “Cadillac” plans are those that cost more than $10,200 for a single employee and $27,500 for a family.
Employers should review their plan(s) with their benefits provider taking into account employee contributions,
co pays and deductibles, prescription drug plans, and enhanced health management and wellness programs.
For additional information about the Health Care Reform Act, visit the White House Web site at
www.whitehouse.gov.
“Putting Americans in Control of Their Health Care.“ http://www.whitehouse.gov. US Government. n.d. Web. 20 April 2010.
“Health Care Reform Act.“ CCH Tax Briefing. 30 Mar 2010: 1-5.
Doble, L. A. Health Care Reform and Your Benefits Program, Webinar, Frank Crystal and Company, 13 April 2010.
“Small Employer Health Care Tax Credit – How Does it Work?” www.zanebenefits.com. Zane Benefits, Clarifying Health. 15 April 2010. Web. 28 April 2010.
“How Health Care Reform Affects Annual W-2 Reporting.” www.zanebenefits.com. Zane Benefits, Clarifying Health. 2 April 2010. Web. 28 April 2010.
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For information purposes only. Contact your benefits provider for additional information..