On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act and on March 30, 2010, he signed into law the Health Care and Education Reconciliation Act. These two Acts comprise the crux of sweeping health care legislation designed to expand medical insurance coverage, control health care costs, and improve delivery of health care.
The new health care legislation will bring extensive changes affecting individuals, employers, government, and companies operating in the insurance and health care industries. The timeline below highlights the major provisions of the new legislation, which will be phased in over several years:
2010
- Tax credits begin for small businesses that provide health insurance coverage to employees.
- Health insurance companies will be prohibited from denying coverage to children with a pre-existing illness.
- Children will be permitted to stay on their parents' health insurance policies until their 26th birthday.
- Group and individual health plans are prohibited from placing lifetime dollar limits on coverage.
- Health insurers are prohibited from rescinding coverage except in cases of fraud.
2011
- The establishment of a national, voluntary long-term care program under which people can pay premiums into the system for at least five years and become eligible for community living assistance services and supports.
- Pharmaceutical companies must pay an annual fee of $2.5 billion (rises in subsequent years).
- For small businesses a Simple Cafeteria Plan will be available.
- Grants will be given to small employers who establish wellness programs.
2012
- Corporate information reporting becomes required. Businesses that pay more than $600 per year to corporate providers of property and services will be required to file a Form 1099.
2013
- Increase in Medicare tax on wages from 1.45% to 2.35% (on individuals with earned income of more than $200,000 a year and couples filing jointly with earned income of more than $250,000 a year).
- New 3.8% medicare tax on unearned income such as dividends and interest (on individuals with MAGI of more than $200,000 a year and couples filing jointly with MAGI of more than $250,000 a year).
- An excise tax of 2.3% is imposed on the sale of medical devices.
- The threshold for claiming medical deductions on Form 1040, Schedule A, is increased from 7.5% of AGI to 10% of AGI for those under age 65.
2014
- Exchanges will be created where individuals without employer health coverage, as well as small businesses, can purchase coverage. Health insurance companies will be barred from denying coverage to anyone with a pre-existing illness.
- Most people will now be required to maintain health insurance. Subsidies and credits will be provided to lower and middle-income people in order to purchase health insurance. People at 133% of the federal poverty level will pay a maximum of 3% of income for coverage. People at 400% of the poverty level pay up to 9.5% of income.
- Medicaid coverage will expand to most Americans under age 65 with income up to 133% of federal poverty level.
- Subsidies for small businesses to provide health insurance coverage increase. Businesses with 10 or fewer employees and average annual wages of less than $25,000 will receive a tax credit of up to 50% of the employer's contribution. Tax credits are phased out for larger businesses.
- Employers with more than 50 employees that do not provide affordable health coverage could pay a fine if at least one employee receives tax credits to buy health insurance. The fine is up to $3,000 per employee, excluding the first 30 employees.
- The health insurance industry must pay an annual fee of $8 billion (rises in subsequent years).
- An independent Medicare board is established to make recommendations to curb Medicare spending, if costs are rising faster than inflation.
2016
- Penalty for those who do not carry health coverage rises to 2.5% of taxable income or $695, whichever is greater.
2017
- Businesses with more than 100 employees will be permitted to buy coverage on insurance exchanges, if states permit it.
2018
- An excise tax of 40% will be imposed on insurers of employer sponsored health plans valued at more than $10,200 for individual coverage and $27,500 for family coverage.
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