Tuesday, March 23, 2010

Obama to sign health reform bill, provisions effective within six months

Once the President signs the health reform bill into law today, the clock begins ticking on several provisions that are effective shortly after enactment, though most major changes do not go into effect until 2014. Below is a summary of the key provisions for employers and the insurance industry that take place within the next year.

This summary is based on the Senate’s original legislation. If the Senate passes the reconciliation package, it may alter some of the provisions outlined below. For a detailed comparison of the reconciliation and Senate bills, please view The Kaiser Family Foundation Side-by-Side Comparison.

Provisions effective within six months:
• Allows review of health plan premiums by state departments of insurance and HHS
• Prohibits lifetime benefit limits and restricted annual limits
• Allows children to be covered as dependents up to age 26
• Requires individual and group plans to cover preventive services without cost sharing
• Prohibits pre-existing condition exclusions for children under 19
• Prohibits coverage cancellation or rescission except in cases of fraud
• Establishes high risk pool provisions for individuals who cannot obtain coverage due to health status
• Creates a reinsurance program for employer coverage of early retirees
• 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 in 2011:
• 80% medical loss ratio (MLR) for individual and small group plans
• 85% MLR for large group plans
• Eliminates tax deductions for employers receiving Medicare Part D retiree drug subsidy payments
• Limits FSA contributions to $2,500 per year
• Prohibits the use of FSA/HSA funds for over-the-counter drugs not prescribed by a doctor
• Increases the penalty for using HSA funds on non-qualified medical expenses from 10% to 20%

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