Friday, March 26, 2010

Congress passes final legislation on health reform

Following the Senate’s passage of the reconciliation bill Thursday afternoon, it was kicked back to the House due to minor language changes to a student loan provision. The House passed the measure just hours later by a margin of 220 to 207.

The reconciliation bill includes many changes intended to bridge differences between the original House and Senate bills and to incorporate additional provisions sought by President Obama, including a broad restructuring of federal student loan programs.

Most notably the reconciliation package will delay the 40% excise tax on Cadillac plans until 2018; increase the fees on employers failing to provide qualified health coverage; restructure the penalty for non-compliance with the individual mandate; increase subsidies for lower income individuals to purchase coverage; and increase Medicare payroll taxes to help pay for the legislation.

While the more significant components do not take effect until 2014, there are several provisions effective within the next year. For a detailed summary of the current legislation and how it is impacted by the reconciliation changes, please view the National Association of Health Underwriters' Health Reform Timeline.

Provisions effective immediately:
• Allows review of health plan premiums by state departments of insurance and HHS
• Allows individuals and employer group plans to keep their current policy on a grandfathered basis if the only plan changes made are to add or delete new employees/dependents; however, the reconciliation bill eliminates grandfathering of several provisions
• Provides small employers with no more than 25 employees and average annual wages of less than $50,000 with a tax credit of up to 50% (35% in the case of tax-exempt eligible small businesses) of the employer’s contribution for employee health coverage if the employer contributes at least 50% of the total premium cost

Provisions effective within 90 days:
• Creates a temporary reinsurance program for employers that provide retiree health coverage for employees over age 55
• Establishes a high-risk pool program for individuals who cannot obtain coverage due to a medical condition

Provisions effective within 6 months:
• Prohibits pre-existing condition exclusions for children under 19; though this provision is ambiguous in the bill, HHS is preparing regulations to clarify the term 'pre-existing exclusion' so that insurers cannot refuse new coverage because of a pre-existing medical problem
• Prohibits lifetime benefit limits and restricted annual limits
• Allows children to be covered as dependents up to age 26; allows dependents to be married and eligible for the group health insurance income tax exclusion
• Prohibits coverage cancellation or rescission except in cases of fraud or intentional misrepresentation
• Requires individual and group plans to cover preventive services without cost sharing
• Requires that plans cover emergency services at the in-network level, allow enrollees to designate any in-network doctor as their primary care physician and have a coverage appeal process
• Requires group health plans to comply with Internal Revenue Section 105(h) rules that prohibit discrimination in favor of highly compensated individuals (currently applies only to self-funded plans)

Provisions effective in 2010:
• Appropriates $200 million in grant funding for small employer-based wellness programs
• Imposes $2.3 billion in annual fees on brand-name prescription drug manufacturers and importers

Provisions effective in 2011:
• Requires 80% medical loss ratio (MLR) for individual and small group plans and 85% MLR for large group plans
• Requires carriers to issue a premium rebate for plans that fail to meet the minimum MLR threshold
• Requires employers to include the aggregate cost of employer-sponsored health benefits on W-2s
• Increases the penalty for using HSA funds on non-qualified medical expenses from 10% to 20%
• Prohibits the use of FSA/HSA funds for over-the-counter drugs not prescribed by a doctor
• Allows employers with 100 employees or less to adopt new “simple cafeteria plans”
• Requires employers to enroll employees in a new national public long-term care program, unless the employee opts out
• Requires the Department of Labor to begin annual studies on self-insured plans using data collected from Form 5500
• Imposes $2 billion in annual fees on medical device manufacturers and importers

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