Health Care Reform

With comprehensive health care reform a reality, plan sponsors across the United States are gradually learning what they must do—and what they can do—in the new plan year and over the next few years. The reform will profoundly influence benefit design, cost and eligibility rules.

The comprehensive health reform bill, the Patient Protection and Affordable Care Act (PPACA), was signed into law on March 23, 2010. Shortly afterword, a reconciliation bill was passed that amended the PPACA. The President signed the reconciliation bill on March 30, 2010. What the final bill means to private and public employers, multiemployer health and welfare plans, small businesses and others will continue to be revealed via regulations and analyzed in the months ahead.

Provisions Effective Immediately

Here are the key provisions that appear set to take effect immediately:

• Small-business tax credits to make employee coverage more affordable. Firms that choose to offer coverage will be able to take advantage of tax credits of up to 35% of premiums in 2010. (In 2014, tax credits will cover 50% of premiums.)
• Medicare Part D “donut hole” begins to close. Medicare beneficiaries will receive a $250 rebate in 2010 when they reach the donut hole, which will be completely closed by 2020.
• The bill offers employers that provide health benefits for retirees ages 55 to 64 help in offsetting the costs of expensive health claims.

Provisions Effective For Plan Years Beginning After September 23, 2010

Among provisions that will affect plan sponsors later this year and next year, the bill

• Extends coverage for children up to their 26th birthday under their parents’ health insurance policy. For grandfathered plans, this provision would apply only if the children are not eligible for other employer-sponsored coverage.
• Bans health plans from dropping people from coverage when they get sick, and prohibits health plans from denying coverage to children under the age of 19 with preexisting conditions. (In 2014, that prohibition would extend to everyone.)
• Prohibits lifetime limits on coverage
• Tightly restricts new plans’ use of annual limits.

Numerous other changes are to take effect in 2011, 2014 and 2018.

Keep an eye on this site for daily news updates (see column on right) and regularly updated resources. The International Foundation has followed the health care debate since day one. And now we'll help you make sense of it all.

As always, the International Foundation will provide educational opportunities to help you navigate new legislation impacting your employee benefit plans.