Health Care Reform

On March 23, 2010, Congress passed the Patient Protection and Affordable Care Act (known as the Patient Act) and President Obama signed it into law. In addition, on March 30, 2010, the reconciliation bill, the Health Care and Education Affordability Reconciliation Act of 2010, was signed into law. This bill made changes to the Patient Act. These wide-sweeping legislations make broad changes to health care in the U.S. and will most likely influence your future financial decisions, whether you are an individual or a business.

According to current estimates, over 32 million uninsured Americans will receive coverage through Medicaid and government subsidies. It is predicted that the final legislation will cut the national deficit; however, the bill is anticipated to cost approximately $940 billion. Some of that cost will be compensated by the following:

• For individuals who lack qualifying health care: a tax of up to 2.5% of household income, beginning in 2014.
• Increasing the threshold for medical income tax deduction to 10% of adjusted gross income (currently at 7.5%).
• Increasing the Medicare Part A tax rate by .9% for individuals with earnings over $200,000 and for married couples with earnings over $250,000; as well as, assessing a new 3.8% tax on unearned income for these higher-income individuals.
• An excise tax on “Cadillac Plans.”
• Imposing taxes or fees on drug companies and health insurance providers.

Once enacted, within six months, the following provisions will become effective:

• Children covered by insurance cannot be denied coverage because of pre-existing conditions.
• A $250 rebate to Medicare Part D beneficiaries subject to the coverage gap (beginning January 1, 2010) and reducing the beneficiary coinsurance rate in the gap from 100% to 25% by 2020.
• Insurers will no longer be able to impose lifetime caps on insurance coverage.
• All plans that offer dependent coverage will be required to allow children to remain under their parents’ plan until age 26.
• If you are sick, insurers cannot cancel or deny coverage (except in cases of fraud).
• Adults who have pre-existing conditions can purchase coverage from temporary high-risk pools until 2014, when coverage can no longer be denied for pre-existing conditions.
• Creating a long-term insurance program that will be financed by voluntary payroll deductions (effective January 1, 2011).

On or before January 1, 2014, the following provisions will become effective:

• All Americans must have health insurance or pay a fine. Exceptions include economic hardship, religious beliefs, and other situations.
• Medicaid coverage will be extended to non-disabled adults with incomes at or below 133% of the Federal Poverty Level.
• Available tax credits to qualifying families to offset the cost of health insurance premiums.
• Employers with more than 50 employees must offer health insurance to the their employees or be fined per employee.