We have all heard by now that the Supreme Court has upheld the Affordable Care Act. Many of the provisions have already been enacted while it will be several years before others take effect. We have highlighted some of the important provisions that will come into effect in 2013 below. A number of other provisions are scheduled to take effect in years to come including the requirement that most Americans and legal residents have qualifying health insurance with some exceptions, or pay a penalty in the form of a tax.
The following is a summary of the more important provisions that are already in place, and those that are on their way by 2014.
In effect now
- Children can no longer be denied insurance coverage because of pre-existing conditions.
- Payment of $250 rebate to Medicare Part D beneficiaries subject to the coverage gap (beginning January 1, 2010) and gradually reducing the beneficiary coinsurance rate in the coverage gap from 100% to 25% by 2020.
- Insurers will not be able to impose lifetime caps on insurance coverage.
- All plans offering dependent coverage will be required to allow children to remain under their parents’ plan until age 26.
- Insurers cannot cancel or deny coverage if you are sick except in cases of fraud.
- Adults with pre-existing conditions will be able to buy coverage from temporary high-risk pools until 2014, when coverage cannot otherwise be denied for pre-existing conditions.
- Over-the-counter drugs are no longer eligible for reimbursement through Flexible Spending Accounts (FSAs), unless prescribed by a doctor.
Key provisions effective in 2013
- Increasing the medical expense income tax deduction threshold to 10% of adjusted gross income, up from the current 7.5%.
- Increasing the Medicare Part A tax rate by 0.9% on wages over $200,000 for individuals ($250,000 for married couples), and assessing a new 3.8% tax on some or all of the net investment income for these higher-income individuals.
- Employers will be required to begin reporting the value of an employee’s health benefits on fiscal year 2012 W-2 wage statements issued in January 2013, however small employers (who filed less than 250 W-2 forms for tax year 2011) were granted a one year temporary exemption from this W-2 reporting requirement.
Key provisions effective in 2014
- All Americans must carry health insurance or face a penalty (in the form of a tax) of up to 2.5% of household income on individuals, with exceptions for economic hardship, religious beliefs, and other situations.
- Adults with pre-existing conditions cannot be denied coverage or have their insurance cancelled due to pre-existing conditions.
- A requirement that states establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans and includes an Exchange for small businesses; also requires employers that contribute toward the cost of employee health insurance to provide free choice vouchers to qualified employees for the purchase of qualified health care plans through Exchanges.
- Tax credits will be available to qualifying families to offset the cost of health insurance premiums.
- Employers with more than 50 employees must offer health insurance for their employees or be fined per employee.
- Imposing taxes or fees on health insurance providers and drug companies, while doctors and hospitals will receive less compensation from government sources.