Healthcare Bill: Timeline to the Future

REMINDER:  TIME LINE FOR HEATHCARE BILL

Now that the Affordable Care Act has been ruled constitutional by the U.S. Supreme Court, it might be useful to again review the timeline of its provisions.  Absent any further congressional action, the law’s original timelines remain intact as follows:

Already in Effect:

2010

• Sets up high risk insurance pool to provide affordable coverage for uninsured people with medical problems.
• Bars lifetime dollar limits on insurance coverage.
• Provides tax credits to help small businesses (up to 25 employees) provide workers with insurance.
• Requires insurance plans to maintain dependent coverage for children until they turn age 26.  Prohibits insurers from denying coverage to children because of pre-existing health problems.

2011

• Provides Medicare recipients in the prescription drug coverage gap (doughnut hole) with discounts. By 2020 seniors pay just 25% of the cost of brand name and generic drugs.

2013

• Limits medical expense contributions to tax-sheltered flexible spending accounts (FSA’s) to $2,500 a year, with annual increases based on cost-of-living adjustments.
• Increases Medicare payroll tax on couples making more than $250,000 and individuals making more than $200,000.  Adds a new tax of 3.8% on income from investments.
• Sets up a program to create nonprofit co-ops.

2014

• Prohibits insurers from denying or limiting coverage based on pre-existing conditions.
• States create health insurance exchanges – supermarkets for individuals and small businesses to buy coverage (already approved and being set up in CA).
• Provides income-based tax credits for most consumers in the exchanges.
• Expands Medicaid to cover low-income people up to 133 percent of the poverty line (states may opt out of this provision, per the Supreme Court’s decision).
• Requires citizens and legal residents to have health insurance, with exceptions, or pay a fine (the individual mandate, ruled constitutional as a tax by the Supreme Court’s decision)
• Penalizes employers with more than 50 workers if insurance is not offered or if their workers get coverage through the exchange and receive a tax credit.

2018

• Imposes a tax on so-called Cadillac health plans, defined as employer-sponsored health insurance worth more than $10,200 for individual coverage, $27,500 for a family plan (probably affects public sector employers more than others)

2020

• Doughnut hole coverage gap in Medicare prescription benefit is phased out.

As is readily apparent, this law changes the landscape of purchasing and paying for health insurance for a many of Americans.  The major “shockwave” really occurs in 2014, less than two years from now.  During that year, exchanges must be up, running, and ready for subscribers to enroll, the IRS must be ready to deal with most of the tax provisions in the law, states must opt in or out of the new Medicaid eligibility rules, and last but not least, most individuals and small businesses must purchase health insurance.  Clearly, 2014 will be a stellar year.

Assuming everything in the previous paragraph occurs without a hitch, everyone has a break until the last of the law’s provisions are implemented in 2018 and 2020.  What the ultimate cost (or savings, as some advocate) will be of this law, is undetermined at this point.  Stay tuned.

Mike DeMore has practiced as a healthcare consultant for over 30 years and is currently the President of Catalina Insurance Solutions, Inc., a full service agency in Southern California.