Health Care Reform Update

20 May 2010

To our clients:
The newly enacted federal Patient Protection and Affordable Care Act was signed into law on March 23, 2010. It makes significant changes to the health benefits and other benefits employers offer to their employees. Below are a few key changes that we have summarized for your convenience. For more details, we invite you to view the Health Care Reform Matrix. (We believe this matrix is well crafted and comprehensive, but it is for informational purposes only and subject to change.)

Employer-sponsored plans

1. Small business tax credits – Offers sliding-scale tax credits to small businesses to make employee coverage more affordable. Tax credits for up to 35 percent of premiums will be immediately available to firms that choose to offer coverage. Effective beginning of calendar year 2010. Beginning in 2014, the small business tax credits will cover 50 percent of premiums.
2. Extends coverage for adult children up to 26th birthday through parents’ insurance – Requires health plans to allow young people up to their 26th birthday to remain on their parents’ insurance policy, at the parents’ choice. Effective for plan years beginning on or after Sept. 23, 2010.
3. Prohibiting discrimination based on salary – Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees. Effective for plan years beginning on or after Sept. 23, 2010.
4. No discrimination against children with pre-existing conditions – Prohibits health plans from denying coverage to children under age 19 with pre-existing conditions. Effective for plan years beginning on or after Sept. 23, 2010. Beginning in 2014, this prohibition would apply to all persons.
5. Bans lifetime limits on coverage – Prohibits health plans from placing lifetime caps on coverage. Effective for plan years beginning on or after Sept. 23, 2010.
6. Bans restrictive annual limits on coverage – Tightly restricts new plans’ use of annual limits to ensure access to needed care. These tight restrictions will be defined by the U.S. Department of Health and Human Services. Effective for plan years beginning on or after Sept. 23, 2010. Beginning in 2014, the use of any annual limits would be prohibited for all plans.
7. Free preventive care under new private plans – Requires new private plans to cover preventive services with no copayments and with preventive services being exempt from deductibles. Effective for plan years beginning on or after Sept. 23, 2010.
8. Help for early retirees – Creates a temporary re-insurance program (until the exchanges are available) to help offset the costs of health insurance for employers that provide health benefits for retirees age 55 - 64. Effective 90 days after enactment.
9. New, independent appeals process – Ensures consumers in new plans have access to an effective internal and external appeals process to appeal decisions by their health insurance plan. Effective for plan years beginning on or after Sept. 23, 2010.
10. Ensuring value for premium payments – Requires plans in the individual and small group market to spend 80 percent of premium dollars on medical services and plans in the large group market to spend 85 percent. Insurers that do not meet these thresholds must provide rebates to policyholders. Effective on Jan. 1, 2011.
11. Ends rescissions – Bans health plans from dropping people from coverage when they get sick. Effective six months after enactment.

Medicare

1. Begins to close the Medicare Part D donut hole – Provides a $250 rebate to Medicare beneficiaries who hit the donut hole in 2010. Effective for calendar year 2010. Beginning in 2011, institutes a 50 percent discount on brand-name drugs in the donut hole; also completely closes the donut hole by 2020.
2. Free preventive care under Medicare – Eliminates copayments for preventive services and exempts preventive services from deductibles under the Medicare program. Effective beginning Jan. 1, 2011.

Miscellaneous

1. Community Health Centers – Increases funding for Community Health Centers to allow for nearly a doubling of the number of patients seen by the centers over the next five years. Effective beginning in fiscal year 2010.
2. Increasing number of primary care doctors – Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals.Effective beginning in fiscal year 2010.
3. Health insurance consumer information – Provides aid to states in establishing offices of health insurance consumer assistance in order to help individuals with the filing of complaints and appeals. Effective beginning in fiscal year 2010.