By Michelle Mulvena, Esq.
On March 23, 2010, President Obama signed into law the nation’s most sweeping social legislation in decades, the Patient Protection and Affordable Care Act (“the Act”). Although the fight is over, so to speak, the dust has far from settled. The challenge now is figuring out how the new health care reform will impact you and your loved ones as the changes begin to take effect.
The uninsured are clearly the biggest beneficiaries of the legislation, which will extend the healthcare safety net for the lowest income Americans. For those who are already covered by a large employer, representing most Americans, the effect won’t be as significant. According to the Congressional Budget Office, the estimated cost of the overhaul is $938 billion over 10 years. The legislation is meant to provide coverage for as many as 32 million uninsured Americans. Major coverage expansion will begin in 2014.
The following is from a timeline of implementation dates produced by the Henry J. Kaiser Family Foundation for when some of the key provisions of the Act will take effect:
2010
Insurance Reforms:
- Provide dependent coverage for adult children up to age 26 years for all individual and group insurance policies.
- Prohibit individual and group health plans from placing lifetime limits on the dollar value of coverage.
- Provide tax credits to small employers with no more than 25 employees and average annual wages of less than $50,000 that provide health insurance for employees.
Medicare:
- Provide a $250 rebate to Medicare beneficiaries who reach the Part D coverage gap in 2010 and gradually eliminate the Medicare Part D coverage gap by 2020.
2011
Long-term Care:
- Establish a national, voluntary insurance program for purchasing community living assistance services and supports (CLASS).
Prevention/Wellness:
- Require chain restaurants and food sold from vending machines to disclose the nutritional content of each item.
- Require pharmaceutical manufacturers to provide a 50% discount on brand-name prescriptions filled in the Medicare Part D coverage gap beginning in 2011 and begin phasing-in federal subsidies for generic prescriptions filled in the Medicare Part D coverage gap.
Tax Changes:
- Increase the tax on distributions from a health savings account or an Archer MSA that are not used for qualified medical expenses to 20% of the disbursed amount.
2013
Medicare:
- Begin phasing-in federal subsidies for brand-name prescriptions filled in the Medicare Part D coverage gap (to 25% in 2020, in addition to the 50% manufacturer brand-name discount).
Medicaid:
- Increase Medicaid payments for primary care services provided by primary care doctors for 2013 and 2014 with 100% federal funding.
Tax Changes:
- Increase the threshold for the itemized deduction for unreimbursed medical expenses from 7.5% of adjusted gross income to 10% of adjusted gross income for regular tax purposes; waive the increase for individuals age 65 years and older for tax years 2013 through 2016.
- Increase the Medicare Part A (hospital insurance) tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly and impose a 3.8% assessment on unearned income for higher-income taxpayers.
- Limit the amount of contributions to a flexible spending account for medical expenses to $2,500 per year increased annually by the cost of living adjustment.
This list is not comprehensive, but represents a sample of the changes inherent in the new health care reform over the next few years. The full transition won’t be complete for years to come, but it is well worth taking the time to investigate what these changes mean for you. At Moschella & Winston, we are studying the Act in order to better incorporate its provisions into estate and long-term care planning for our clients to ensure they are properly protected and don’t run out of money during retirement.
For more information on the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, visit the following websites:
Henry J. Kaiser Family Foundation: www.kff.org/healthreform/8060.cfm
U.S. Department of Health and Human Services: www.healthreform.gov
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Moschella & Winston has specialized in legal planning and protection for individuals and families for over 30 years, and our attorneys are experts in elder, disability and special needs law. Please contact us at info@moschellawinston.com or (617) 776-3300.
