Health Care In A Capsule

Depending on your circumstances, the newly enacted health reform legislation, formally known as the Patient Protection and Affordable Care Act, can either be a bitter pill to swallow or the new miracle drug. Many of the provisions are phased in over the next five years and may face legal challenges by both individuals and State governments, so don’t increase your blood pressure meds just yet.

Provisions that are effective in 2010 and 2011:

Adults who can’t get coverage because of a pre-existing medical condition can join a high-risk insurance pool (this is an interim step pending the launch in 2014 of competitive health insurance marketplaces and premium subsidies).

Insurance companies will have to issue policies for children with preexisting conditions. They will not be allowed to revoke existing policies if people get sick. Lifetime limits on coverage will be banned in new coverage and annual limits will be restricted. Coverage will be available for dependent children until they turn 27.

People in the Medicare prescription drug program will receive a $250 rebate as the first step in closing the “doughnut hole” coverage gap. In the year 2011, Medicare coverage will be expanded to include free annual wellness visits and discounts on prescriptions for people in the “doughnut hole.”

Certain small businesses, with 25 or fewer full-time employees and average wages less than $50,000, will start getting tax credits to offset the cost of insuring their employees for tax years beginning after 2009. This credit will range from 10% to 35% depending on number of employees and average wages of the employee pool.

In 2011, employer Health Reimbursement Accounts (HRAs), Medical Savings Accounts (MSAs and Archers), and Flexible Savings Accounts (FSAs) will see changes in what qualifies on a tax-free basis.

“Simple Cafeteria Plans” are established so that small businesses can provide tax-free benefits to their employees, including self-employed individuals. Starts in tax years beginning after 2010, but now is the time to check out the possibilities if you fall under this umbrella. This is just a sneak-peak at the over 2,000 pages of the health care reform legislation. As the provisions become effective, we will keep you informed on what changes to expect and explain how they will affect you. If you have immediate concerns, your ELLS adviser is here to listen. We can be reached at 714-569-1000.