Key Provisions

The law’s major provisions

Key provisions taking effect in 2010:

January

Small Business Tax Credit

March

Grandfathering
Donut Hole Rebates
Change in Medicare Enrollment Period

June

Early Retiree Reinsurance

July

High Risk Pool/PA Fair Care

September

Quality of Care Reporting

October

100 percent Coverage of Preventive Care
Coverage of Dependents to age 26
Non-discriminatory Plans
Rescissions Ban
Internal Appeals and External Reviews
Elimination of lifetime maximum/Restricted annual limits
Prohibition of pre-existing condition exclusions for children under 19
Coverage for Emergency Services
Choosing Doctors

Small business tax credit (effective tax year 2010)

What is it?
Under the Affordable Care Act, small businesses may qualify for a tax credit that can help them offer health care coverage for the first time or maintain the coverage they currently have for their employees. The sliding-scale credit for qualified small employers has been offered since 2010 and can cover as much as 35 percent of a small employer’s premiums for the year.

How does it impact you?
If your small business meets the requirements, you can file for the tax credit beginning with your 2010 tax return. Visit the Internal Revenue Service website for detailed guidance.

Please note that this communication is not intended to provide legal or tax advice. Please consult with your legal or tax advisor regarding how the small business tax credit may apply to you.

Important information about links to other sites

Grandfathering (effective March 23, 2010)

What is it?
“Grandfathering” refers to the health care reform provision that states that if health plans were issued on or before March 23, 2010, they may be exempt from some — but not all — of the provisions of the Affordable Care Act, such as coverage of certain designated preventive care services with no cost-sharing. A health care plan can be eligible for grandfathered status if the plan maintains benefits as they existed on March 23, 2010, and does not increase coinsurance, deductibles, or copays beyond the cost-adjustment limits established by the Affordable Care Act, and does not increase the amount of the employee contribution by more than five percent. Plans will lose their grandfathered status if they fail to adhere to these requirements.

How does it impact you?
Employers should have determined whether or not a specific health plan is eligible for grandfathered status and were responsible for communicating this information to the plan’s beneficiaries. Independence Blue Cross has no control over grandfathered status and advises employers to consult with a benefits advisor or an attorney who specializes in benefits to determine the status of their plan.

Where can I learn more?
Grandfathering frequently asked questions

Donut hole rebates (effective March 23, 2010)

What is the donut hole rebate?
Effective this year, beneficiaries with Medicare Part D who reach the “donut hole” will receive a one-time, non taxable $250 rebate. The donut hole is the gap reached when Part D prescription drug costs go over $2,830. At that point, you are responsible for the entire cost of your prescription drugs (versus making copayments) — at least until your out-of-pocket costs reach $4,550.

In January 2011, Part D enrollees who enter the donut hole will receive a 50 percent discount on brand-name and biologic drugs in the coverage gap.

What does it mean to me?
2010: If you’re receiving Medicare benefits and are not already receiving Medicare Extra Help and your prescription drug coverage reaches the donut hole in 2010, you will automatically be mailed a one-time $250 rebate check. There is nothing you need to do. Checks are being mailed monthly throughout the year as beneficiaries reach the “donut hole.”

2011: The 50 percent discount will be applied to all brand-name and biologic drugs in the donut hole. This can mean significant out-of-pocket savings for you.

In the future: By 2020, the coverage gap will be closed, meaning there will be no more “donut hole,” and you will only pay 25 percent of the costs of your drugs until you reach the yearly out-of-pocket spending limit.

Where can I learn more?
IBXmedicare.com

Early retiree reinsurance (effective June 1, 2010)

What is the early retiree reinsurance?
The U.S. Department of Health and Human Services (HHS) will reimburse participating employment-based programs for a portion of the cost of providing health coverage to early retirees (age 55 or older, non-active employees, ineligible for Medicare) and eligible spouses, surviving spouses, and dependents.

What does it mean to me?
Eighty percent of retiree claims between $15,000 and $90,000 within employer-based health plans will be reimbursed.

Where can I learn more?
If your company meets the eligibility requirements, you may apply now for the temporary early retiree reinsurance program through the Health and Human Services website, where you’ll find the application and fact sheets, FAQs, and instructions. However, keep in mind that there is a limited amount of money available, and that thousands of applications have already been submitted.

100 percent Coverage of Preventive Care (effective October 1, 2010)

The Affordable Care Act requires non-grandfathered plans to provide coverage for certain designated preventative care services without cost sharing (coinsurance, deductible, or copayment) for services provided in network.

Preventive care services include yearly wellness visits and standard immunizations for all members regardless of age; screenings for cancer, cholesterol and lipids, HIV, alcohol and substance abuse, high blood pressure, diabetes and depression in adults; and screenings for hearing, vision, fluoride, autism and developmental disorders, depression, lead, obesity and tuberculosis in children. In addition, specific preventive health services for women and men are covered. A complete list of preventive health services for men, women, and children can be found on the Coverage for Preventive Services listing.

How does it impact you?
Independence Blue Cross members no longer have cost-sharing for certain designated preventative care services when received from in network providers. All non-grandfathered plans now include 100 percent coverage for these services.

Coverage of Dependents to age 26 (effective October 1, 2010)

What is it?
All group health plans that offer dependent coverage must now make that coverage available until a dependent reaches 26 years of age, even if the dependent lives separately from his or her parents, is no longer a student, files his or her own tax return, or is married. However, until 2014, grandfathered plans are not required to provide coverage if a dependent under 26 is eligible for coverage by the dependent’s employer.

How does it impact you?
If your plan includes dependent coverage, dependents will remain on your policy until they reach the age of 26, or you can add new dependents under the age of 26. The benefit became effective as groups renewed on or after September 23, 2010. As a result, individuals under the age of 26 who were denied, or ineligible for, coverage due to age or a change in student status became eligible to reenroll.

Extending coverage to dependents to age 26

Dependent Coverage: How IBC will implement this provision

Non-discriminatory plans (effective October 1, 2010)

What does the law say about nondiscriminatory plans?
Fully insured group plans are prohibited from establishing eligibility rules for coverage that favor highly compensated individuals. The benefits under such plans may not discriminate in favor of this group either. Grandfathered plans are exempt.

What does it mean to me?
Employers with non-grandfathered fully insured group health plans will need to make sure that their benefits plans comply with this provision beginning on the first renewal after September 23, 2010.

Rescissions ban (effective October 1, 2010)

What is the ban on rescissions?
A new ban on rescissions prohibits all health plans — even grandfathered plans — from rescinding coverage of subscribers, except in cases involving fraud, nonpayment of premium, or intentional misrepresentation of material facts under the terms of the health plan.

What does it mean to me?
You may not be retroactively cancelled from your plan unless you provide fraudulent information or do not pay your premiums. Prior notice must be provided at time of cancellation, and any cancellation must not violate the law.

What is IBC doing to help?
Independence Blue Cross remains in compliance with the new law and does not rescind coverage except in cases where a subscriber has committed fraud.

High risk pool/PA Fair Care (effective July 2010)

What is the high-risk pool?
The pool provides temporary, transitional health coverage to U.S. citizens and nationals, lawfully present in the United States, who have been uninsured for at least six months, have a preexisting medical condition , and are unable to afford or have access to individual coverage in the period before health insurance exchanges are operating in 2014.

What does it mean to me?
Funding is limited for this program; the pools are scheduled to remain available until January 1, 2014, or until funding exhausts. If you qualify, apply now.

Where can I learn more?

• PA Fair Care

Change in Medicare enrollment period (effective March 23, 2010)

What is the change in the Medicare enrollment period?
People with Medicare can enroll in a Medicare Advantage plan or Part D plan during the six-week annual election period (AEP), from November 15 through December 31 for 2010, and from October 15 through December 7 for every year after. Previously, you could also switch plans — from one carrier’s plan to another or within the same carrier — during the open enrollment period (OEP), from January 1 through March 31. Beginning in 2010, however, the only time most seniors may enroll in a Medicare Advantage Plan is during AEP.

What does it mean to me?
Seniors may no longer switch plans during the OEP (January 1 through March 31), but a new disenrollment period will extend for 45 days at the start of each year, from January 1 through February 15, when Medicare Advantage enrollees may drop their plans for Original Medicare and enroll in a stand-alone Part D plan. But once most seniors leave Medicare Advantage, they may not reenroll until the next AEP. Medicare Advantage and Part D carriers post the next year’s plans and benefits online, usually in October of the prior year; at that time, you should talk to your insurance company, conduct your research, and make the best decision given your circumstances.

What is IBC doing to help?
Independence Blue Cross helps you navigate the complexities of health care reform’s effect on seniors on our website where you can compare plan options, find a pharmacy, learn more about Medicare, and more.

Where can I learn more?

• IBXmedicare.com
• Medicare.gov

Internal Appeals and External Reviews (effective October 1, 2010)

What is it?
Under the Affordable Care Act, non-grandfathered health insurance plans are required to have an internal appeals process, compliant with existing Department of Labor requirements, that allows enrollees to review their files, to present evidence and testimony as part of the appeals process, and to receive continued coverage for an ongoing course of treatment pending the outcome of the internal appeals process. Notice of the internal appeals process and assistance starting an internal appeal must be provided to enrollees in a manner that is clear and consistent, taking into account any cultural and linguistic barriers that may exist. Insurers must offer an independent external review process whose decision is binding upon the member and the health plan.

What is IBC doing to help?
Independence Blue Cross will keep its enrollees updated on changes to its internal appeals and external review processes. IBC intends to comply with the new provisions of health care reform as they pertain to the internal appeals and external review processes and will provide you with ongoing updates and information as we implement the new regulations.

Elimination of lifetime maximum/Restricted annual limits (effective October 1, 2010)

What is it?
Under the Affordable Care Act, all health plans, including grandfathered plans, cannot impose lifetime limits on the dollar value of essential health benefits. Health plans can, however, impose a restricted annual limit on the dollar value of benefits until 2014. After January 1, 2014, health plans will be prohibited from imposing any annual dollar limits on essential health benefits. The Act defines restricted annual limits as $1.25 million for plan years beginning before or on September 23, 2012, and $2 million for plan years beginning on or after September 23, 2012, but before January 1, 2014. The limits are applied to individuals, so each covered person has his or her own limit.

How does it impact you?
Independence Blue Cross eliminated annual and lifetime limits on all plans effective October 1, 2010. As a result, you don’t have to worry about exhausting your medical coverage if you require costly medical care. If your lifetime benefits were exhausted prior to the new law taking effect, you may be able to reinstate your coverage. Contact your employer or Independence Blue Cross for details.

Prohibition of preexisting condition exclusions for children under 19 (effective October 1, 2010)

What is it?
Most health plans, even grandfathered ones, may not deny coverage of or benefits to children under 19 who have a preexisting condition . New rules issued by HHS allow for insurers to set specific enrollment times for the coverage. Prohibition of preexisting condition exclusions will extend to adults in 2014. Currently, this prohibition does not apply to grandfathered individual health insurance coverage.

What does it mean to me?
If you are the parent or guardian of a child under 19, your health plan may not deny your child coverage or benefits based on a preexisting condition. If such coverage was previously denied, contact your health plan to reapply for coverage once the provision goes into effect.

Coverage for emergency services (effective October 1, 2010)

What is it?
The law provides that individual plans, group health insurance plans, and self-funded plans that cover hospital emergency services must do so without prior authorization, whether the provider participates in the health plan’s network or not. A subscriber’s costsharing requirements for out-of-network emergency services must be the same as those applied to in-network services. Grandfathered plans are exempt.

What does it mean to me?
You will be paying the same level of costsharing for emergency services regardless of whether you stay in-network or go out of the network for the emergency services. Out-of-network providers may, however, also balance-bill payments for the difference between the providers’ charges and the amount collected from the plan and from your copayment or coinsurance amount.

What is IBC doing to help?
Independence Blue Cross currently complies with this provision.

Quality of care reporting (effective September 23, 2010)

What is the quality of care reporting requirement?
The quality of care reporting requirement provides that all individual, group, and self-funded plans — with the exception of grandfathered plans — must submit an annual report to the U.S. Department of Health and Human Services (HHS), and to enrollees during the open enrollment period, to describe how the health plan’s benefits and provider reimbursement policies improve quality of care, including wellness and health promotion activities.

What does it mean to me?
You will receive information on your plan’s quality and wellness programs during the open enrollment period.

What is IBC doing to help?
Independence Blue Cross is an industry leader in offering you high-quality preventive and wellness programs, and you can count on us to continue to lead by providing full disclosure on the quality and effectiveness of these services.

Choosing doctors

What changes are there to a member’s ability to choose his or her primary care physicians?
All health plans — except those that are grandfathered — must allow members to designate any participating primary care physician or pediatrician (for a child) who is available to accept the member when that designation is required by the plan.

What does it mean to me?
You may choose any participating primary care physician, and you do not need a referral to see that doctor. The participating primary care physician list includes pediatricians. Additionally, you have direct access to an OB/GYN, and you do not need a referral to see that doctor.

What is IBC doing to help?
IBC currently complies with this provision.

Key provisions taking effect in 2011:

Tax changes to health care savings and spending accounts
Medical Loss Ratio

Maximum Out-of-Pocket (MOOP) Limit

What is it?
The Medicare Advantage MOOP limit is the annual maximum amount of out-of-pocket cost that a policy holder will have to pay for health care. The limits now are as follows: HMO members: $6,700. PPO members: $6,700 for in-network services; $10,000 for in-network and out-of-network services combined.

The following deductible, copay, and coinsurance amounts will be included in the MOOP limit:

• medical (Medicare Part A and B services);
• mental health (Medicare Part A and B services);
• pharmacy (Medicare Part B drugs only).

Part D drugs do not count toward the MOOP limit.

How does it impact you?
If you are a Medicare Advantage HMO or PPO member and have reached the MOOP limit (listed above) you will not be liable for any additional claim costs for the remainder of the calendar year.

Tax changes to health care savings and spending accounts

This provision changes how you may use distributions from Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), Archer Medical Spending Accounts (MSAs), and Health Reimbursement Accounts (HRAs). You may no longer use this money taxfree to pay for over-the-counter medications and drugs, excluding insulin and doctor-prescribed medications.

What does it mean to me?
You will not be able to use any of these accounts for almost all over-the-counter drugs. A tax penalty on distributions from HSAs that are not used for qualified medical expenses increases from 10 percent to 20 percent; for MSAs it increases from 15 percent to 20 percent of the amount includable in gross income.

Where can I learn more?
IRS.gov

Medical Loss Ratio

The Affordable Care Act requires that health insurers meet minimum medical spending requirements based on a formula known as the Medical Loss Ratio (MLR). For large groups with 51 or more employees, insurers must spend at least 85 percent of premiums received on claim reimbursement and activities to improve the quality of health care, such as those that improve health outcomes, prevent hospital readmissions, improve patient safety, and increase wellness. For small groups, from 2 to 50 employees and individuals, the minimum MLR is 80percent. The MLR provision does not apply to self-insured groups and student plans until 2013, and Medicare plans in 2014.

The MLR reporting provision requires insurers to report spending for all plans so that each plan’s MLR can be calculated. Health plans whose MLR does not meet the minimum spending standards must provide rebates to groups and/or subscribers.

How will it impact you?
In June of each year beginning in 2012, Independence Blue Cross will report its MLR ratios for the previous calendar year. If you are an IBC group or non-group/individual subscriber and IBC does not meet or exceed the minimum MLR, you will be eligible for a rebate, which will be mailed by August 1 of each year.

For groups: In most situations, rebates will be mailed to groups for either distribution to subscribers or use in reducing future premiums.

Rebates will be mailed to subscribers in these situations:

• When a group is terminated and we are unable to validate the group’s address.
• The group is an ERISA exempt church group and does not sign a written verification that the rebate will be used for the benefit of the members.

For individuals: Rebates will be mailed directly to subscribers.

Frequently Asked Questions
Medical Loss Ratio Rebates FAQs

Key provisions taking effect in 2012:

Women’s preventive health coverage
Medicare Part D Drug Savings
The Patient-Centered Outcomes Research Fee

W-2 disclosure of health plan value

The provision requires employers to disclose the aggregate value of an employee’s employer-sponsored coverage for the year on the employee’s 2012 W-2 Form, which will first be distributed in early 2013.

Women’s preventive health coverage

This provision of the health care reform law requires all health insurers to eliminate member cost-sharing for an expanded list of women’s preventive services when they are recieved in-network.

What does it mean for me?
Presently, IBC commercial health plans include coverage at 100 percent for six of the eight preventive services on the expanded list. They are:

• well-woman visits;
• screening for gestational diabetes;
• counseling for sexually transmitted diseases;
• screening and counseling for HIV;
• screening for human papillomavirus (HPV);
• breastfeeding support, supplies, and counseling;
• contraceptive methods and counseling;
• screening and counseling for interpersonal and domestic violence.

The federal rule also eliminates member cost-sharing for certain breastfeeding services and for all FDA-approved methods of contraception. Independence Blue Cross (IBC) is updating all fully-insured, non-grandfathered commercial medical and prescription drug plans to eliminate member cost-sharing as required by the law on August 1, 2012. For self-funded customers, this update will be on the group’s first renewal on or after August 1, 2012. Medicare Supplement, Medicare Advantage, and grandfathered plans are not impacted by this rule.

Can I exclude contraceptive coverage from my plan(s)?
Customers who satisfy certain Department of Health and Human Services (HHS) regulations may either be exempt from including contraceptive coverage in their medical and/or prescription drug plans, or may be eligible for a one-year safe harbor exclusion to extend the date of implementation of contraceptive coverage until August 1, 2013. Customers who are eligible fall under one of the two following categories:

• A Religious Employer is one that meets all of the following provisions:
  • Has the inculcation of religious values as its purpose;and
  • primarily employs and serves persons who share its religious tenets;and
  • is a non-profit organization under Internal Revenue Code section 6033 (a)(1) and section 6033 (a)(3)(i) or (iii) 45 C.F.R. 147.130(a)(1)(iv)(B).
• The Safe Harbor Provision is available only to non-exempted, non-grandfathered group health plans that meet all four of the following criteria:
  • Organized and operates as a non-profit entity; and
  • From February 10, 2012 and onward, the plan established or maintained by the organization has not provided contraceptive coverage at any point, consistent with any applicable state law, because of the organization’s religious beliefs; and
  • The plan must give participants a specified notice – on any application materials distributed in connection with enrollment (or re-enrollment) in coverage that is effective beginning on the first day of the first plan year that is on or after August 1, 2012 – stating that contraceptive coverage will not be eligible for that plan year; and
  • The organization self-certifies - via the Certification Form signed by an authorized organizational representative – that it satisfies these all of the above criteria.

If you believe your organization falls under one of these two categories, complete the Certification Form and email it to: WomensPreventiveHealthCare@ibx.com or fax 215-238-2326 by June 8, 2012.

Medicare Part D Drug Savings

What is it?
New savings have been introduced for Medicare and Medicare Advantage enrollees with Part D prescription drug coverage who reach the coverage gap informally known as the “donut hole.” Currently, when Medicare Part D prescription drug beneficiaries surpass the drug coverage limit of $2,930 they reach the coverage gap, or donut hole, and are responsible for the entire cost of their prescription drugs until their out-of-pocket costs reach $4,700. These enrollees will now receive a fifty percent discount on all brand-name and biologic drugs and a 14 percent discount on generic prescription drugs purchased within the coverage gap. In addition, through the year 2020, additional discounts will “phase down” the coinsurance in the coverage gap for all drugs until it reaches 25 percent.

How will it impact you?
If you are a Medicare Part D beneficiary and are not already receiving Medicare Extra Help, you are eligible to receive these discounts, which could result in significant out-of-pocket savings for you. These discounts will be applied when you buy prescription drugs at a pharmacy or through mail order after you have reached the initial coverage limit.

Where can I learn more?
www.ibxmedicare.com

The Patient-Centered Outcomes Research Fee

What is it?
Beginning in 2012, health insurers and self-funded group health plans will pay an annual fee to fund the research of the Patient-Centered Outcomes Research Institute (PCORI), an independent, non-profit research board made up of patients, doctors, hospitals, drug makers, insurers, government officials, and health experts.

PCORI was created to help patients, providers, and policy-makers reach informed decisions about the effective prevention, diagnosis, treatment, and management of diseases, disorders, and other health conditions. The 21-member Board of Governors of the Institute will evaluate existing research, identify research priorities, and carry out research projects designed to meet this goal. (PCORI will not have the power to mandate or endorse coverage rules or reimbursement practices for any particular treatment.)

The Patient-Centered Outcomes Research Fee will be equal to $1 per average number of covered lives for policy or plan years ending between October 1, 2012 and September 30, 2013. For plans ending after September 30, 2013, the fee increases to $2. In subsequent years, the fee will be adjusted by the percentage increase in projected per capita amount of National Health expenditures.

How will it impact you?
Fully-insured groups: Independence Blue Cross has incorporated this fee into our premium rate structure for plans renewed on or after October 2011.

Self-funded groups: Your plan sponsor is responsible for the payment of this fee.

Flexible spending account (FSA) limits

The law says FSAs may not allow employees to annually defer salary in excess of $2,500 into a health care FSA. Employers have the option to limit their employees' annual elections further.

What does it mean to me?
Effective for tax years beginning after December 31, 2012, your maximum pretax contribution is $2,500. Further salary deferrals are not allowed.

Where can I learn more?
Check with your employer’s health benefits administrator if you have questions regarding FSA limits.

Medicare payroll tax

The Medicare payroll tax will increase by 0.9 percent on individuals making more than $200,000 and couples making more than $250,000. Unearned income, which has been exempt from the payroll tax, will be subject to a 3.8 percent tax.

Medical device sales tax

Medical device manufacturers will pay a 2.9 percent sales tax on products sold, excluding eyeglasses, contact lenses, and hearing aids. If you require a medical device, such as a heart pacemaker or other device included in the sales tax, the manufacturer’s increased cost may be passed on to you.

Key provisions taking effect in 2014:

Mandatory insurance for individuals
Mandatory insurance for employers
Federal subsidies to buy insurance
State-based Health Exchanges
Essential benefits requirement
Prohibition of pre-existing conditions
Expansion of Medicaid

Mandatory insurance for individuals

The health care law requires most people to purchase health care coverage by January 1, 2014 or pay a penalty.

If you don't get insurance at work, you have other options. You may qualify for the state Medicaid program. which also is known as Medical Assistance. Pennsylvania and many other states are expected to expand access to their Medical Assistance programs to provide health insurance to more individuals.

You also may be eligible to buy your health insurance at a reduced cost. Based on your income, you may qualify for advance premium tax credits that will help pay your monthly insurance premiums and other cost-sharing fees. Under the health care law, many people who currently receive no government assistance will qualify for help with their health care costs. A third option is for you to buy health insurance yourself if your income is above a certain level.

Mandatory insurance for employers

Employers with more than 50 employees who do not offer health benefits and whose workers get subsidized coverage through an exchange, will be charged a $2,000 fee for each uninsured employee. The first 30 employees are exempt from the penalty.

Federal subsidies to buy insurance

Consumers who purchase coverage on their own may qualify for federal subsidies to help offset premiums. The Congressional Budget Office estimates that about 20 million American households will be eligible for subsidies. Federal agencies will determine how subsidies will be paid.

State-based Health Exchanges

New state-based exchanged will be set up in 2014 where consumers and small businesses can simply and quickly shop for health insurance and compare products and prices. Exchanges will work with state insurance departments to set and enforce insurance reforms and protections.

Essential benefits requirement

essential health benefits

What does it mean to me?
Your qualified health plan, will be required to provide a range of benefits determined as “essential.” Some preventive care services will be included as well, as recommended by the Centers for Disease Control and Prevention. In addition, the plans must cover pediatric services, including vision and oral care.

Prohibition of pre-existing conditions

What is it?
Under the Affordable Care Act, individuals 19 years and younger cannot have coverage denied based on pre-existing medical conditions. Starting 2014, this provision will extend individuals over age 19.

How does it impact you? If you are the parent or guardian of a child under 19 Independence Blue Cross may not deny your child coverage or benefits based on a preexisting condition. This provision applies to group grandfathered plans but not individual grandfathered plans. If such coverage was previously denied, contact IBC to reapply for coverage once the provision goes into effect.

Expansion of Medicaid

From 2014 to 2016, the federal government will pay all costs for covering newly eligible Medicaid beneficiaries. The income allowance for Medicaid will increase to 133 percent of the federal poverty level. If you are among the 15 million uninsured and Medicaid-eligible during this two-year period, you may want to consider applying for this federal-state program.

Where can I learn more?
HHS Centers for Medicare and Medicaid Services

Mandatory insurance for individuals — penalty increase

The law requires everyone to purchase health care coverage by 2014 or pay a penalty. In 2015, the $95 or 1 percent penalty increases to the greater of $325 or 2 percent of income.

Mandatory insurance for individuals — penalty increase

The law requires everyone to purchase health care coverage by 2014 or pay a penalty. In 2016, the $325 or 2 percent penalty increases to the greater of $695 or 2.5 percent of income.

Coverage across state lines

This allows consumers to purchase health insurance from insurers outside of their state. The theory holds that competition will foster lower prices for health coverage. If you are considering purchasing health coverage for you, your family, or your business, you would be able to consider coverage options outside of the state in which you reside or operate your business.

Large company exchange participation

Companies with more than 100 employees may be allowed to participate in state-based health exchanges. An exchange is a national or state-by-state marketplace where consumers and small businesses can simply and quickly shop for health insurance and compare products and prices. Exchanges would work with state insurance departments to set and enforce insurance reforms and protections.

Excise tax on “Cadillac plans”

This provision adds a 40 percent nondeductible excise or “Cadillac” tax on generous health plans ($27,500 for a family plan and $10,200 for an individual plan). If you are covered by a comprehensive health plan with no deductible or otherwise have a plan that would be considered a “Cadillac” plan, the amount you spend on that plan will be taxed at the rate of 40 percent beginning in 2018.

Elimination of “donut hole” coverage

By 2020, the coverage gap will be closed, meaning there will be no more “donut hole,” and you will only pay 25 percent of the costs of your drugs until you reach the yearly out-of-pocket spending limit.