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Five Things in the Law That May Surprise You
Five Things in the Law That May Surprise You
by: Patricia Barry | from: AARP | May 1, 2010
* Members of Congress will be required to buy health plans through the state-run insurance exchanges that begin in 2014.
* Illegal immigrants are prohibited from buying health insurance through the exchanges or from getting subsidies.
* Chain restaurants and vending machines must display calorie counts for their foods.
* Tanning parlor services will have a 10 percent sales tax.
* New long-term care insurance lets you make contributions while you’re working in return for future cash benefits for help to remain in your home if you are sick or disabled.
Will My Taxes Go Up?
The new taxes mostly affect people with high incomes.
* Beginning in 2013, if you are a married couple with income of more than $250,000 a year or an individual making more than $200,000 a year, you will pay an extra 0.9 percent in Medicare payroll taxes and a new 3.8 percent tax on unearned income from, for example, investment interest, annuities, rents. This tax does not include Social Security benefits, pensions or IRAs.
* Whatever your income, beginning next year if you have a health savings account, the tax on your withdrawals for anything other than approved medical expenses will rise from 10 to 20 percent.
* Starting in 2013, you can take a tax deduction only on medical expenses that exceed 10 percent of your income—up from 7.5 percent now. This change is postponed until 2016 for taxpayers age 65 and older.
Coverage as Good as Congress’?
by: Patricia Barry | from: AARP Bulletin | May 1, 2010
Many Americans will get the same deal as members of Congress. The new law requires these legislators to buy coverage through state insurance exchanges that start in 2014. The exchanges—mainly for those who don’t have employer insurance—will offer options closely resembling those that all federal workers have today
by: Patricia Barry | from: AARP | May 1, 2010
* Members of Congress will be required to buy health plans through the state-run insurance exchanges that begin in 2014.
* Illegal immigrants are prohibited from buying health insurance through the exchanges or from getting subsidies.
* Chain restaurants and vending machines must display calorie counts for their foods.
* Tanning parlor services will have a 10 percent sales tax.
* New long-term care insurance lets you make contributions while you’re working in return for future cash benefits for help to remain in your home if you are sick or disabled.
Will My Taxes Go Up?
The new taxes mostly affect people with high incomes.
* Beginning in 2013, if you are a married couple with income of more than $250,000 a year or an individual making more than $200,000 a year, you will pay an extra 0.9 percent in Medicare payroll taxes and a new 3.8 percent tax on unearned income from, for example, investment interest, annuities, rents. This tax does not include Social Security benefits, pensions or IRAs.
* Whatever your income, beginning next year if you have a health savings account, the tax on your withdrawals for anything other than approved medical expenses will rise from 10 to 20 percent.
* Starting in 2013, you can take a tax deduction only on medical expenses that exceed 10 percent of your income—up from 7.5 percent now. This change is postponed until 2016 for taxpayers age 65 and older.
Coverage as Good as Congress’?
by: Patricia Barry | from: AARP Bulletin | May 1, 2010
Many Americans will get the same deal as members of Congress. The new law requires these legislators to buy coverage through state insurance exchanges that start in 2014. The exchanges—mainly for those who don’t have employer insurance—will offer options closely resembling those that all federal workers have today
I totally agree with you there. I have felt that way as well and I can only guess that it will take that long to implement the exchanges. But yes, I totally agree. AARP has a very thorough covering of all this and may in fact address that, but I didnt read everything there. Yet. lol
Sorry, teko, I only had time to skim the whole thing, but the following caught my eye...........
"Preexisting conditions: Starting in September, children cannot be denied coverage because of a preexisting condition. Adults receive the same protection in 2014."
I have employer sponsored health coverage, so this doesn't really affect me at this time; however, I do not believe, under any circumstances that they should wait until 2014 to require insurance companies to cover those adults with pre-existing conditions.......This is a major issue and *should* have been one of the first parts of the plan to take effect........yes, I understand that children must be covered; that's not enough.
Come on folks, what about mom and dad? If mom and dad can't get the care they need to stay/get well, who's gonna care for the kids? Or what about other, older, working people who need health care? I know we have some hard working members in this group who can't get health insurance, yet they work and pay taxes........seems to me that somebody's not thinking clearly.............If they are going to shove this plan down our throats, they need to get the priorities in order............
Just my humble opinion............
"Preexisting conditions: Starting in September, children cannot be denied coverage because of a preexisting condition. Adults receive the same protection in 2014."
I have employer sponsored health coverage, so this doesn't really affect me at this time; however, I do not believe, under any circumstances that they should wait until 2014 to require insurance companies to cover those adults with pre-existing conditions.......This is a major issue and *should* have been one of the first parts of the plan to take effect........yes, I understand that children must be covered; that's not enough.
Come on folks, what about mom and dad? If mom and dad can't get the care they need to stay/get well, who's gonna care for the kids? Or what about other, older, working people who need health care? I know we have some hard working members in this group who can't get health insurance, yet they work and pay taxes........seems to me that somebody's not thinking clearly.............If they are going to shove this plan down our throats, they need to get the priorities in order............
Just my humble opinion............
mericans are already struggling with a shortage of primary care doctors. While some fear that insuring more people will make it even harder to find a doctor, groups like the American Medical Association say the new law will help improve the situation.
* Medicare will give extra payments to physicians and nurses providing primary care in areas with doctor shortages. Adjusting Medicare payments to reflect regional differences will benefit doctors in 42 states, the AMA says. Medicaid doctors will see pay increases. Paperwork will be simplified, to give doctors more time with patients.
* New measures to attract more doctors, nurses and physician assistants to primary care include forgiving student loans for those who practice in areas that need medical workers. Community health centers will receive $11 billion starting in 2011, allowing them to serve some 20 million new patients.
* More health professionals in Medicare will be paid for the quality of care they provide rather than the number of services they perform—a change that is expected to lower costs while improving care and is likely to be adopted by private insurers, too.
* Medicare will give extra payments to physicians and nurses providing primary care in areas with doctor shortages. Adjusting Medicare payments to reflect regional differences will benefit doctors in 42 states, the AMA says. Medicaid doctors will see pay increases. Paperwork will be simplified, to give doctors more time with patients.
* New measures to attract more doctors, nurses and physician assistants to primary care include forgiving student loans for those who practice in areas that need medical workers. Community health centers will receive $11 billion starting in 2011, allowing them to serve some 20 million new patients.
* More health professionals in Medicare will be paid for the quality of care they provide rather than the number of services they perform—a change that is expected to lower costs while improving care and is likely to be adopted by private insurers, too.
The new health reform law wrings $390 billion in savings from Medicare over the next decade to help pay for health care reforms—but spending on the program will continue to rise.
How can the new legislation reduce Medicare costs and still spend millions more dollars on improvements like closing the gap in drug coverage and offering free preventive care? Here’s a quick lesson in Medicare math.
These are cuts in future increases, not cuts in services, experts explain.
Medicare spending has grown about 8 percent annually over 20 years, according to the Congressional Budget Office, an independent arm of Congress. The law could slow down the annual increase in spending to about 6 percent over the next 20 years, the CBO has reported.
For example, of the projected $390 billion in savings—the latest estimate from Congressional Research Service—$196 billion comes from smaller increases in payments to hospitals, nursing homes, home health workers and other medical providers. But physicians who work in primary care will be rewarded with a 10 percent bonus. Hospitals that prevent readmissions or hospital-acquired infections will be paid more than those that do not. The American Hospital Association and the American Medical Association were among the many health care organizations that backed the legislation, along with advocacy groups.
Medicare Advantage Another piece of the $390 billion savings, about $136 billion, comes from reductions in subsidies paid to private health insurance plans, called Medicare Advantage, that provide medical and drug coverage to about one of four people in Medicare. Currently, Medicare pays the private plans an average of 14 percent more to care for a member than it would cost if that person remained in traditional Medicare.
In 2012, the government will start lowering these overpayments to Medicare Advantage plans. Insurers contend they will be forced to cut benefits. But the law prohibits plans from reducing or eliminating essential guaranteed Medicare benefits. It also protects plan members by requiring that at least 85 cents of every dollar insurers receive is spent on benefits.
Guarantees The law also requires Medicare to spend more wisely. For example, a new independent Medicare advisory board is expected to save the program $16 billion over 10 years. Cracking down on fraud and waste will save an estimated $7 billion. Even bonus payments and innovations aimed at improving patient care are intended to produce a long-term payoff: People who get more effective treatment can recover more quickly from medical setbacks, and that saves Medicare money, too.
Finally, the law comes with a Medicare warranty in Section 3601: Nothing in the law can cut current Medicare benefits, and the Medicare savings it achieves “shall extend the solvency of the Medicare trust funds, reduce Medicare premiums and other cost-sharing for beneficiaries, and improve or expand guaranteed Medicare benefits and protect access to Medicare providers.”
Who must have insurance?
Starting in 2014 almost all U.S. residents must have at least basic health insurance. “Insurance” means coverage from employers or public programs such as Medicare, Medicaid, Veterans Affairs or insurance you buy on your own.
* If you remain uninsured, you’ll be required to pay a penalty of $95 or 1 percent of your income, whichever is greater, in 2014, rising to $695 or 2.5 percent of your income in 2016 and later. The penalties apply to each uninsured adult in the household, with a $2,085 annual limit for families.
* You will not be fined for going without insurance if your income is so low you don’t have to file taxes; if premiums for the cheapest insurance plan available would cost more than 8 percent of your income; if you can demonstrate financial hardship; or if you’re an American Indian, qualify for a religious exemption or are in prison.
* The government cannot seize your property or use liens to enforce the law, or send you to jail.
How can the new legislation reduce Medicare costs and still spend millions more dollars on improvements like closing the gap in drug coverage and offering free preventive care? Here’s a quick lesson in Medicare math.
These are cuts in future increases, not cuts in services, experts explain.
Medicare spending has grown about 8 percent annually over 20 years, according to the Congressional Budget Office, an independent arm of Congress. The law could slow down the annual increase in spending to about 6 percent over the next 20 years, the CBO has reported.
For example, of the projected $390 billion in savings—the latest estimate from Congressional Research Service—$196 billion comes from smaller increases in payments to hospitals, nursing homes, home health workers and other medical providers. But physicians who work in primary care will be rewarded with a 10 percent bonus. Hospitals that prevent readmissions or hospital-acquired infections will be paid more than those that do not. The American Hospital Association and the American Medical Association were among the many health care organizations that backed the legislation, along with advocacy groups.
Medicare Advantage Another piece of the $390 billion savings, about $136 billion, comes from reductions in subsidies paid to private health insurance plans, called Medicare Advantage, that provide medical and drug coverage to about one of four people in Medicare. Currently, Medicare pays the private plans an average of 14 percent more to care for a member than it would cost if that person remained in traditional Medicare.
In 2012, the government will start lowering these overpayments to Medicare Advantage plans. Insurers contend they will be forced to cut benefits. But the law prohibits plans from reducing or eliminating essential guaranteed Medicare benefits. It also protects plan members by requiring that at least 85 cents of every dollar insurers receive is spent on benefits.
Guarantees The law also requires Medicare to spend more wisely. For example, a new independent Medicare advisory board is expected to save the program $16 billion over 10 years. Cracking down on fraud and waste will save an estimated $7 billion. Even bonus payments and innovations aimed at improving patient care are intended to produce a long-term payoff: People who get more effective treatment can recover more quickly from medical setbacks, and that saves Medicare money, too.
Finally, the law comes with a Medicare warranty in Section 3601: Nothing in the law can cut current Medicare benefits, and the Medicare savings it achieves “shall extend the solvency of the Medicare trust funds, reduce Medicare premiums and other cost-sharing for beneficiaries, and improve or expand guaranteed Medicare benefits and protect access to Medicare providers.”
Who must have insurance?
Starting in 2014 almost all U.S. residents must have at least basic health insurance. “Insurance” means coverage from employers or public programs such as Medicare, Medicaid, Veterans Affairs or insurance you buy on your own.
* If you remain uninsured, you’ll be required to pay a penalty of $95 or 1 percent of your income, whichever is greater, in 2014, rising to $695 or 2.5 percent of your income in 2016 and later. The penalties apply to each uninsured adult in the household, with a $2,085 annual limit for families.
* You will not be fined for going without insurance if your income is so low you don’t have to file taxes; if premiums for the cheapest insurance plan available would cost more than 8 percent of your income; if you can demonstrate financial hardship; or if you’re an American Indian, qualify for a religious exemption or are in prison.
* The government cannot seize your property or use liens to enforce the law, or send you to jail.
Getting access to health insurance is one thing. Paying for it is another. No one knows yet how much private health plans will charge to cover people who purchase policies through the state insurance exchanges that begin in 2014, when most people will be required to have coverage. But buying it through an exchange instead of on your own will give you the advantage of group rates, which tend to be lower. Also, starting in 2014, the law helps people with moderate or low income in these ways:
* Provides subsidies or tax credits to reduce the cost of buying insurance through a state exchange. This help will be given to people on a sliding scale, if your income is below a certain level. Currently, for example, that would include those individuals with incomes of $14,403 to $43,320 and families of four with incomes of $29,326 to $88,200.
* Limits annual out-of-pocket costs—deductibles and copayments—of insurance bought through an exchange for single people and families with moderate incomes. For example, a family of four now earning $60,000 could spend no more than $11,900 out-of-pocket for health care in a year.
* Expands Medicaid, the health care program run by the states for low-income people, to cover any low-income legal residents under age 65 with annual income under a certain level—$14,403 for a single person, $19,378 for a married couple.
For the first time, these measures offer financial help with health insurance to millions of Americans without access to government-run programs like Medicare or employer health plans—and drastically reduce the risk of going bankrupt because of medical expenses. Whether the changes are sufficient, or still leave some people falling through the cracks, remains to be seen.
* Provides subsidies or tax credits to reduce the cost of buying insurance through a state exchange. This help will be given to people on a sliding scale, if your income is below a certain level. Currently, for example, that would include those individuals with incomes of $14,403 to $43,320 and families of four with incomes of $29,326 to $88,200.
* Limits annual out-of-pocket costs—deductibles and copayments—of insurance bought through an exchange for single people and families with moderate incomes. For example, a family of four now earning $60,000 could spend no more than $11,900 out-of-pocket for health care in a year.
* Expands Medicaid, the health care program run by the states for low-income people, to cover any low-income legal residents under age 65 with annual income under a certain level—$14,403 for a single person, $19,378 for a married couple.
For the first time, these measures offer financial help with health insurance to millions of Americans without access to government-run programs like Medicare or employer health plans—and drastically reduce the risk of going bankrupt because of medical expenses. Whether the changes are sufficient, or still leave some people falling through the cracks, remains to be seen.
f you are self-employed or working in a small business, buying insurance for yourself and your family—or have no insurance at all—you are among those that the new law helps the most. Millions of Americans currently pay the highest rates for health coverage because they buy it on their own. Others—especially those ages 50 to 64—can’t buy coverage at any price because they have preexisting medical conditions. Making private insurance more accessible and fairer for consumers is a central goal of the new law.
Immediate help: If you have a preexisting condition and have been uninsured at least six months, you’ll be eligible to buy coverage through a temporary high-risk program—which limits what you’ll be charged for out-of-pocket costs—that starts in July and ends when insurance exchanges become available in 2014.
Immediate coverage protections: Insurers can no longer drop your coverage if you’ve paid your premiums. Health plans can’t limit what they will spend on your care during your lifetime. Starting in 2014, they can’t place limits on your annual health costs either. Plans must justify steep price hikes.
Preexisting conditions: Starting in September, children cannot be denied coverage because of a preexisting condition. Adults receive the same protection in 2014.
Coverage for adult children: If your company offers a family coverage plan, unmarried children can be covered under your policy until they reach age 26. This change begins in the fall, but you should consult your insurer to find out which month it takes effect for your plan.
Health plan choices: Starting in 2014, you can select a private health plan from a menu of choices offered through an insurance exchange run by your state. And your yearly out-of-pocket expenses will be limited.
Enrollment and premium protections: Health plans cannot deny you coverage or make you pay more for your insurance because of your health, past medical problems or gender, starting in 2014. But they can raise premiums by up to 50 percent for people who smoke.
Free preventive care: Health plans you buy on your own must cover certain preventive services, screenings and vaccinations free of charge. This requirement starts as soon as your current plan’s next coverage year begins or when you join a new plan.
Age rating: Starting in 2014, insurers can charge older people no more than three times the amount they charge younger adults. Currently, insurers can charge older people up to 10 times what they charge younger people.
Immediate help: If you have a preexisting condition and have been uninsured at least six months, you’ll be eligible to buy coverage through a temporary high-risk program—which limits what you’ll be charged for out-of-pocket costs—that starts in July and ends when insurance exchanges become available in 2014.
Immediate coverage protections: Insurers can no longer drop your coverage if you’ve paid your premiums. Health plans can’t limit what they will spend on your care during your lifetime. Starting in 2014, they can’t place limits on your annual health costs either. Plans must justify steep price hikes.
Preexisting conditions: Starting in September, children cannot be denied coverage because of a preexisting condition. Adults receive the same protection in 2014.
Coverage for adult children: If your company offers a family coverage plan, unmarried children can be covered under your policy until they reach age 26. This change begins in the fall, but you should consult your insurer to find out which month it takes effect for your plan.
Health plan choices: Starting in 2014, you can select a private health plan from a menu of choices offered through an insurance exchange run by your state. And your yearly out-of-pocket expenses will be limited.
Enrollment and premium protections: Health plans cannot deny you coverage or make you pay more for your insurance because of your health, past medical problems or gender, starting in 2014. But they can raise premiums by up to 50 percent for people who smoke.
Free preventive care: Health plans you buy on your own must cover certain preventive services, screenings and vaccinations free of charge. This requirement starts as soon as your current plan’s next coverage year begins or when you join a new plan.
Age rating: Starting in 2014, insurers can charge older people no more than three times the amount they charge younger adults. Currently, insurers can charge older people up to 10 times what they charge younger people.
You can keep the health plan you have now. You will not be forced into a “government” plan—no such plan is offered under the new law. But you will have new protections and options, and other changes might affect you.
* New benefits and protections: Starting this September, insurance companies can no longer place lifetime limits (or even annual limits from 2014) on what they will pay for your care. From next January, insurance companies will have to spend a large chunk of the money you pay for your coverage on medical care, not profits or overhead. All new plans must provide many preventive services and screenings for free—but it isn’t yet clear whether this change applies to existing employer plans before 2014.
* If you have children: If your insurance offers a family plan, adult children can be covered until they turn 26. No child under age 19 can be denied coverage because of preexisting medical conditions. These changes begin in the fall, but you should consult your insurer to find out which month they take effect for your plan.
* New long-term care insurance: Starting next year, if your employer takes part in this program, you can choose to pay monthly premiums through payroll deductions, which after five years entitle you to cash benefits toward the costs of services—from home aides to wheelchair ramps—that help you remain in your home if you are disabled or sick.
* If you take early retirement: Starting this June and running through 2013, the government will provide money to help employer health plans cover early retirees ages 55 to 64 and to reduce retirees’ costs.
* If you have a flexible spending account: From 2013, the maximum you can contribute to these tax-free accounts (including health savings accounts) will be reduced to $2,500 a year, and you will no longer be able to use them to buy over-the-counter medicines not prescribed by your doctor.
* Wellness incentives: Starting in 2013, employers will be allowed to offer employees discounts of up to 30 percent on their insurance costs, if they participate in a wellness program or meet health goals such as quitting smoking.
* New coverage options: If your employer coverage is too expensive or too skimpy by new official standards, starting in 2014 you can switch to one of many plans offered through the state-run exchanges and may be able to get subsidies to help you buy that insurance.
* If you have a “Cadillac” health policy: Eight years from now, insurance companies must pay an excise tax on the most expensive high-value employer plans. The 40 percent tax applies only to the value of the plan above certain amounts.
If you Run a Small Business or work for one
About 80 percent of American businesses employ fewer than 10 workers, and less than half of these firms offer health insurance. Among companies with between 25 and 100 workers, 85 percent offer no coverage, according to official reports. The new law helps these small businesses provide insurance for their employees—and enables workers to change their jobs, or even set up their own businesses, without fear of losing health coverage.
* Benefits and protections: Small-business employees who have health insurance will receive the same new benefits and protections as those who work for large employers with group health plans.
* Tax credits for employers: Businesses with fewer than 25 full-time workers that pay an average salary of $50,000 or less per year get an immediate tax credit of up to 35 percent on the premiums they pay for employees’ health coverage. The credit rises to 50 percent in 2014. How much of the credit you receive depends on how many workers you employ and their average wage. Starting in 2011, small businesses can also get government grants for up to five years to establish wellness programs.
* New insurance options for employers: Starting in 2011, small businesses can offer “cafeteria” plans, which allow employees to transfer before-tax earnings into accounts that can be used for medical expenses. Starting in 2014, businesses with fewer than 100 workers can buy insurance for their employees through a state-run exchange. Businesses with 50 or more workers will pay an annual penalty if they don’t provide coverage.
* New insurance options for workers: Starting in 2014, employees can buy health insurance for themselves and their families through an exchange if they work for a business that doesn’t provide insurance. Subsidies or tax credits will be available to those with low and moderate incomes.
* New benefits and protections: Starting this September, insurance companies can no longer place lifetime limits (or even annual limits from 2014) on what they will pay for your care. From next January, insurance companies will have to spend a large chunk of the money you pay for your coverage on medical care, not profits or overhead. All new plans must provide many preventive services and screenings for free—but it isn’t yet clear whether this change applies to existing employer plans before 2014.
* If you have children: If your insurance offers a family plan, adult children can be covered until they turn 26. No child under age 19 can be denied coverage because of preexisting medical conditions. These changes begin in the fall, but you should consult your insurer to find out which month they take effect for your plan.
* New long-term care insurance: Starting next year, if your employer takes part in this program, you can choose to pay monthly premiums through payroll deductions, which after five years entitle you to cash benefits toward the costs of services—from home aides to wheelchair ramps—that help you remain in your home if you are disabled or sick.
* If you take early retirement: Starting this June and running through 2013, the government will provide money to help employer health plans cover early retirees ages 55 to 64 and to reduce retirees’ costs.
* If you have a flexible spending account: From 2013, the maximum you can contribute to these tax-free accounts (including health savings accounts) will be reduced to $2,500 a year, and you will no longer be able to use them to buy over-the-counter medicines not prescribed by your doctor.
* Wellness incentives: Starting in 2013, employers will be allowed to offer employees discounts of up to 30 percent on their insurance costs, if they participate in a wellness program or meet health goals such as quitting smoking.
* New coverage options: If your employer coverage is too expensive or too skimpy by new official standards, starting in 2014 you can switch to one of many plans offered through the state-run exchanges and may be able to get subsidies to help you buy that insurance.
* If you have a “Cadillac” health policy: Eight years from now, insurance companies must pay an excise tax on the most expensive high-value employer plans. The 40 percent tax applies only to the value of the plan above certain amounts.
If you Run a Small Business or work for one
About 80 percent of American businesses employ fewer than 10 workers, and less than half of these firms offer health insurance. Among companies with between 25 and 100 workers, 85 percent offer no coverage, according to official reports. The new law helps these small businesses provide insurance for their employees—and enables workers to change their jobs, or even set up their own businesses, without fear of losing health coverage.
* Benefits and protections: Small-business employees who have health insurance will receive the same new benefits and protections as those who work for large employers with group health plans.
* Tax credits for employers: Businesses with fewer than 25 full-time workers that pay an average salary of $50,000 or less per year get an immediate tax credit of up to 35 percent on the premiums they pay for employees’ health coverage. The credit rises to 50 percent in 2014. How much of the credit you receive depends on how many workers you employ and their average wage. Starting in 2011, small businesses can also get government grants for up to five years to establish wellness programs.
* New insurance options for employers: Starting in 2011, small businesses can offer “cafeteria” plans, which allow employees to transfer before-tax earnings into accounts that can be used for medical expenses. Starting in 2014, businesses with fewer than 100 workers can buy insurance for their employees through a state-run exchange. Businesses with 50 or more workers will pay an annual penalty if they don’t provide coverage.
* New insurance options for workers: Starting in 2014, employees can buy health insurance for themselves and their families through an exchange if they work for a business that doesn’t provide insurance. Subsidies or tax credits will be available to those with low and moderate incomes.
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