Health Care Reform Update
Last night, the House of Representatives passed the Senate's health care reform bill and a package meant to reconcile differences between the House and Senate bills. It is expected that President Obama will sign the bill this Tuesday, March 23. Following the President's signature, the next step is for the Senate to approve both pieces, known as the reconciliation package.
The Kaiser Foundation has published a comparison of the various iterations of health care reform proposals, including the version that was passed yesterday. It can be viewed here: http://www.kff.org/healthreform/upload/housesenatebill_final.pdf
As of yet, it is difficult to know how the final bill will affect employer-sponsored plans and their participants. This is because according to Senate rules, members are allowed to offer unlimited amendments and challenges to the reconciled bill. Online news sources suggest that this could be a lengthy process, because Senate members may offer new provisions or object to any current provision. If any provisions are rejected, then the bill must return to the House. Time estimates for the Senate to complete its work vary considerably.
When the provisions are established as law, BSG will produce a custom piece for each of our clients regarding our assessment of how each provision will affect them, including a timeline and action steps. In the meantime, here are some details from the bill as it stands today.
IMMEDIATE ACTIONS
There are a few provisions which could become effective within 6 months of enactment. According to the Kaiser report, within 6 months the bill would "prohibit individual and group health plans from placing lifetime limits on the dollar value of coverage, having eligibility waiting periods greater than 90 days, and for insurers, prohibit rescinding coverage except in cases of fraud. In addition, plans could not enforce pre-existing condition exclusions for children" and all individual and group health plans would be required to provide dependent coverage for children up to age 26. (However, some industry analysts place these effective dates for "grandfathered plans" as starting for plan years beginning 6 months after enactment.)
Some people could be eligible for temporary high-risk pools as early as 90 days from enactment. Medicare beneficiaries can receive a refund up to $250 for prescription drugs purchased in the "donut hole" of Part D plans.
CHANGES TO HRA, HSA AND FLEX PLANS
Beginning in January, 2011, over-the-counter drugs (unless prescribed by a physician) may no longer be reimbursed through an HSA with tax-free dollars, or through HRA or a health care flexible spending account. Contributions to health care flexible spending accounts will be capped at $2,500 beginning in 2013.
MANDATES AND TAXES
Individual and employer mandates begin in 2014, a year after new taxes are imposed. The Medicare Part A tax rate on wages will increase by 0.9% (from 1.45% to 2.35%) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly. There will be a new 3.8% tax on unearned income for higher-income taxpayers. Unearned income includes rents, dividends, interest, etc. other than earned wages.
