Alert: Congress passes major health reform legislation

Congress has voted to pass the Patient Protection and Affordable Care Act (HR 3590), a landmark health reform bill, which will now move to the President’s desk for signature. At the same time, the Health Care and Education Affordability Reconciliation Act of 2010 (HR 4872), containing important changes to the Patient Protection and Affordable Care Act, moves to the Senate for consideration and is expected to be passed and signed into law. Together the two bills contain more than 2,500 pages of new provisions. Here’s a summary of some of the most significant items on the horizon:

• Heath benefit exchange: Health benefit exchanges will be established through which individuals and small businesses with up to 100 employees can purchase coverage. Tax credits will be available to certain employers to contribute to employees’ premium costs through the exchange (effective 2014).
• Low-income employee vouchers: Employers will be required to provide vouchers to certain low-income employees who choose to enroll in a plan offered through the health benefit exchange (effective 2014).
• Employer penalties: Employers with 50 or more full-time employees will be assessed penalties if any employees use federal subsidies to buy insurance. Penalties will vary depending on whether the employer offers coverage to its employees (effective 2014).
• Automatic enrollment: Employers with more than 200 employees must automatically enroll employees in coverage offered by the employer (effective 2014).
• Premium tax credit: A tax credit of up to 35 percent of the employer’s contribution toward employees’ health insurance premiums is available if the employer contributes at least 50 percent of the premium cost or 50 percent of a benchmark premium (effective 2010 through 2013).
• Limit on FSA contributions: Contributions to flexible spending accounts (FSAs) will be limited to $2500 annually (effective 2013).
• Small employer tax credit: Employers with no more than 25 employees and average annual wages of less than $40,000 are entitled to a tax credit if they purchase health insurance for their employees (effective 2010).
• Temporary reinsurance for retiree coverage: A new program will reimburse employers or insurers for 80 percent of claims between $15,000 and $90,000 for retirees who are at least 55, but not eligible for Medicare (effective no later than 90 days after enactment and ending on January 1, 2014).
• Reporting: Insurance plans are required to report the proportion of premium dollars spent on clinical services, quality and other costs (effective 2010).
• Dependent coverage until age 26: All individual and group policies must provide dependent coverage for children until they turn age 26 (effective for plan years beginning on or after six months after enactment).
• Waiting period restrictions: Waiting periods for coverage are limited to 90 days (effective 2014).
• Excise tax on high-value health plans: Insurers will be subject to an excise tax on health plans whose aggregate values exceed certain limits (effective 2018).

There are too many new provisions to report here, but Vigilant will update its members and offer a webinar in the future as new details emerge. Have questions? Contact your Vigilant staff representative.