Important Information Regarding the Patient Protection and Affordable Care Act

With most of the shouting over, the Patient Protection and Affordable Care Act (PPA) is law.  While many of the provisions of this Act take effect in 2014 (and some beyond), others take effect immediately. Provisions of the Act impact individuals, households, and businesses.  Your clients will have important decisions to make regarding medical expense and long-term-care insurance.  Only with meaningful understanding of both the tax and non-tax ramifications of this sweeping health care reform will you be able to advise clients on how to make the best choices relative to their needs.

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Here are a few important provisions of the PPA that will impact your clients in the order in which they become effective:

 

2010

 

Medicare recipients affected by the Medicare Part D "donut-hole" will be given a $250 rebate. By 2011, 50% of the gap will be eliminated.

 

Lifetime medical insurance coverage limits will be restricted and ultimately eliminated by 2014. Insurance companies will be barred from dropping the coverage of people who get sick for reasons other than fraud. A new appeals process for denied claims will operate.

Relief will be available to help companies provide early retiree benefits for individuals aged 55-64. The program will reduce premiums.

Non-profit insurance companies (Blue Cross in some states) will need to spend more than 85 percent of their revenue on patient care to qualify and keep their non-profit status.

January 1, 2011

Insurance companies offering large group plans must spend at least 85 percent of their premium income on health benefits. Small group plans need to spend at least 80 percent. Some states may already have more stringent standards which will supersede.

January 1, 2014

Applicants with pre existing conditions may not be charged higher rates than other applicants having similar ages and smoking habits.  Medical expense insurance policies will be barred from imposing annual benefit limits.

Americans having incomes up to 133 percent of the poverty level become eligible for Medicaid coverage. Those with incomes up to 400 percent of the poverty line are eligible for subsidies to help them pay medical expense insurance premiums.

The government will set up insurance exchanges where high risk applicants and others can join quasi-group plans.

Small businesses with less than 25 employees will receive tax credits for providing health insurance. Companies with more than 50 employees will be fined if they do not provide insurance to their full time workers. This may not affect many employers because 95 percent of all employers with 50 or more workers already provide group health insurance.

Health Insurance will be mandatory for individuals. Americans not carrying minimum coverage health insurance will be fined. Certain exceptions will apply for financial hardship and religious preference.

Certain Americans will receive tax credit for purchasing health insurance.

Medicare and Medicaid spending will be cut. Drug reimbursement will also be reduced.

Fast food chains with 20 or more restaurants will be required to post caloric and nutritional information on their menus. Such information includes saturated fat, carbohydrate, and sodium content of their foods.

January 2018

All insurance plans will provide coverage for preventive care and checkups without co-payment.

Expensive health care plans (the “Cadillac” plans) will be charged an excise tax.

These highlights are the tip of the iceberg when it comes to understanding what the Patient Protection Act entails.  Attend AICPA's brand new course, and learn the real ins and outs of health care reform. 

Source:  Carla Gordon, AICPA