Key Provisions of the Health Care Law

President Barack Obama signed the Patient Protection and Affordable Care Act — also known as the Health Care Law — on March 23, 2010. With implementation occurring in phases, the first provisions (or parts) of the law went into effect in 2010, and the remaining provisions are scheduled to be implemented by 2020.

Here’s a summary of the key provisions and important dates of the Health Care Law to help you understand how the law has affected and how it will affect your health insurance coverage.

By year: 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2020

Effective

The law’s major provisions

2010

Key provisions taking effect in 2010:

Small business tax credit
Grandfathering
"Donut hole" provisions
Change in Medicare enrollment period
Early retiree reinsurance
High risk pool/PA Fair Care
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 health care law, small businesses may qualify for tax credits that can help them offer their employees health care coverage for the first time, or to maintain the coverage they already offer.

This sliding-scale credit for qualified small employers has been offered since 2010; it can cover as much as 35 percent of the amount employers pay in health insurance premiums each year to cover their workers. Tax exempt non-profits may be eligible for a 25 percent credit.

In 2014, the tax credit increases to 50 percent of the cost of premiums for-profit small business, and to 35 percent for small tax-exempt charities.

What does it mean to me?
You can file for this tax credit on your federal income tax return if your small business qualifies. Talk with your legal or tax advisor about whether or not your small business qualifies for this tax credit.

Where can I learn more?
Visit the Internal Revenue Service website for detailed guidance.

Important information about links to other sites

Grandfathering (effective March 23, 2010)

What is it?
Health plans may be eligible for "grandfathering" or grandfathered status if they existed on or before March 23, 2010. Grandfathered plans may be exempt from some — but not all — of the provisions of the health care law.

For example, they may not be required to cover certain preventive care services with no employee cost-sharing. To be eligible and/or to maintain eligibility for grandfathered status, an employer must continue to offer a health plan that:

  • Maintains the benefits as they existed on March 23, 2010
  • Does not increase coinsurance, deductibles, or copays beyond the cost-adjustment limits allowed under the health care law
  • Does not increase the amount of the employee contribution by more than five percent.

Plans will lose their grandfathered status if they fail to meet these requirements.

What does it mean to me?
Employers should already have determined whether or not a specific health plan is eligible for grandfathered status; they are responsible for communicating this information to the plan’s members, sometimes called beneficiaries.

Where can I learn more?
Visit this Independence Blue Cross link for frequently asked questions about grandfathered plans.

"Donut Hole" provisions (effective March 23, 2010)

What is it?
The health care law includes several provisions designed to close the donut hole for those enrolled in Medicare Part D prescription drugplans.

The donut hole is the term used to describe the time when a person is enrolled in Medicare Part D prescription plan, are responsible for 100 percent of the costs of their Part D medications. This gap begins when a person’s Part D medication costs during a specific year exceed $2,830; it continues until a person’s out–of–pocket costs for medications in that specific year reaches $4,550.

Put another way, until the health care law took effect, those enrolled in Medicare Part D had to pay out-of -pocket $1,720 of drug costs by themselves while they were in the donut hole. Now, help is available.

Medicare and Medicare Advantage members enrolled in the Part D prescription drug plan who do not receive Medicare Extra Help now get assistance with their Part D drug costs when they are in the donut hole coverage gap. The level of assistance has increased incrementally three times and it will increase further as follows:

  • 2010 — Part D enrollees who reached the donut hole received a $250 one-time rebate.
  • 2011 — Part D enrollees received a 50 percent discount in 2011 and 2012 on brand-name and biologic drugs when they were in the donut hole.
  • 2013 — Part D enrollees now receive a 52.5 percent discount on all brand-name and biologic drugs and a 21 percent discount on generic prescription drugs while they are in the donut hole.
  • Through 2020, additional discounts will be applied. In 2020, when the donut hole disappears, Part D enrollees will pay 25 percent of the cost of their medications until they reach their yearly out-of-pocket maximum.

What does it mean to me?
The health care law will mean significant out-of-pocket savings for you if you reach the donut hole. You will pay much less for your brand name, biologic and generic medications during this gap in Medicare Part D coverage. In the future, this gap will close and you will pay 25 percent of the costs of your drugs until you reach the yearly out-of-pocket spending limit.

Where can I learn more?
Visit the Independence Blue Cross site for Medicare beneficiaries at Independence Medicare.

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

What is it?
The health care law changed the enrollment period and process for Medicare beneficiaries who enroll in Medicare Advantage and/or Part D plans. Beneficiaries can enroll in these plans each year during the six-week annual election period from October 15 through December 7.

What does it mean to me?
There is no longer an annual open enrollment period (January 1 through March 31) in which you can switch plans. However, a new disenrollment period extends for 46 days at the start of each year, from January 1 through February 15. During this time, Medicare Advantage members may drop their Medicare Advantage plans for original Medicare, and they also may enroll in a stand-alone Part D prescription drug plan.

If a member leaves a Medicare Advantage plan in the disenrollment period, they may not re-enroll in a Medicare Advantage plan until the next annual election period.

Each fall, Medicare Advantage insurers and Part D Sponsors post information online about the plans and benefits they will offer the following year. You should talk with your insurance company and research your options so you can make the best choices about your coverage based on your personal circumstances.

What is IBC doing to help?
Visit the Independence Blue Cross Medicare website to find out how the health care law affects you. Our site will help you navigate the changing health care environment, compare plan options, find a pharmacy, learn more about Medicare, and more.

Where can I learn more?
Visit the Independence Blue Cross site for Medicare beneficiaries at Independence Medicare.

Visit the official government Medicare site at www.medicare.gov.

Early retiree reinsurance (effective June 1, 2010)

What is the early retiree reinsurance?
As part of the health care law, the federal government started reimbursing employer-based programs for a portion of the cost of providing health coverage to early retirees and eligible spouses, surviving spouses, and dependents. Eighty percent of retiree health care claims between $15,000 and $90,000 within employer-based health plans were reimbursed.

Early retirees are defined as persons age 55 or older who are not active employees and who are not eligible for Medicare. This provision was designed to encourage employers to continue to provide this type of coverage until 2014, when the health insurance marketplaces open.

What does it mean to me?
There was only a limited amount of money available for this program. Due to the volume of applications, the Department of Health and Human Services stopped accepting applications for the program on May 5, 2011. Only those employers that submitted applications prior to that time were eligible for reimbursement under this program.

Where can I learn more?
Visit the Health and Human Services website for more information about this program.


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

What is the high-risk pool?
This high-risk insurance pool provides temporary, transitional health coverage to people who have been uninsured for at least six months and who also have a pre-existing medical condition and are unable to afford or have no access to individual coverage plans. This pool provides coverage until plans offered through the health insurance marketplaces become effective in January 2014.

What does it mean to me?
The government suspended new enrollment in this program on March 2, 2013.

Where can I learn more?
Visit the Pennsylvania Insurance Department website at PA Fair Care.

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

What is it?
The health care law requires health plans that do not qualify for grandfathered status to provide full coverage for certain preventive care services without charging members cost-sharing fees (coinsurance, deductible, or copayment) when they obtain services from network providers. The preventive care services now covered at 100 percent include:

  • Yearly wellness visits and standard immunizations for all members regardless of age
  • Adult screenings for cancer, cholesterol and lipids, HIV, alcohol and substance abuse, high blood pressure, diabetes, and depression
  • Pediatric screenings for hearing, vision, fluoride, autism and developmental disorders, depression, lead, obesity, and tuberculosis
  • Specific preventive health services for women and men

Here’s a complete list of preventive health services that are covered at 100 percent.

What does it mean to me?
Independence Blue Cross members no longer pay cost-sharing fees for certain designated preventive care services when they use 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; this is so 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. In 2014, grandfathered plans must also offer employees the option of covering dependents up to age 26.

What does it mean to me?
If your plan includes dependent coverage, your dependents can remain on your policy until they reach the age of 26. You can also add new dependents under the age of 26.

Where can I learn more?
Visit Independence Blue Cross links about extending coverage to dependents to age 26 or Dependent Coverage: How IBC will implement this provision

Non-discriminatory plans (delayed implementation)

What does the law say about nondiscriminatory plans?
The health care law prohibits fully insured group plans from establishing eligibility rules for coverage or offering health plans with benefits that favor executives and highly compensated employees. Grandfathered plans are exempt. This provision of the law is currently on hold.

What does it mean to me?
Employers with non-grandfathered, fully insured group health plans will no longer be able to discriminate in this way if this provision is implemented.

Rescissions ban (effective October 1, 2010)

What is the ban on rescissions?
The health care law prohibits all health plans — including grandfathered plans — from rescinding or canceling coverage, except when members commit fraud, fail to pay their premiums, or intentionally provide false information.

What does it mean to me?
You may not be cancelled retroactively from your plan unless you provide fraudulent information or do not pay your premiums. Your insurance company must provide written notice 30 days before you are removed from the health plan.

What is IBC doing to help?
Independence Blue Cross does not rescind coverage except in cases where a subscriber has committed fraud.

Internal appeals and external reviews (effective October 1, 2010)

What is it?
Under the health care law, non-grandfathered health insurance plans are required to have an internal appeals process that complies with existing Department of Labor requirements. The appeals process must allow enrollees to review their files, present evidence and testimony, and receive continued coverage for an ongoing course of treatment pending the outcome of the internal appeals process.

Health plans must provide clear, easy-to-understand information about this process and how members can start an internal appeal. Insurers also must offer an independent external review process. Decisions from external reviews are binding. Members and the health plan are expected to accept the decisions made following an independent external review.

What does it mean to me?
You can appeal your insurer’s decisions about your coverage through internal and external appeals processes.

What is IBC doing to help?
Independence Blue Cross complies with this regulation and keeps enrollees updated on changes to its internal appeals and external review processes.

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

What is it?
The health care law eliminates lifetime limits on the amount your health insurer pays for your essential health benefits. This applies to all plans including those with grandfathered status. The law also sets amounts for annual dollar limits from 2010 through 2013, and eliminates them completely in 2014. The annual limit allowed for each individual covered under a plan from September 23, 2012 until January 1, 2014 is $2 million.

What does it mean to me?
Independence Blue Cross eliminated annual and lifetime limits on all plans effective October 1, 2010. That means you don’t have to worry about exhausting your medical coverage if you require costly medical care.

Prohibition of pre-existing condition exclusions for children under 19 (effective October 1, 2010)

What is it?
In 2014, health plans cannot deny coverage of or benefits to children under 19 who have a pre-existing medical condition. Beginning Jan. 1, 2014, grandfathered plans are also are excluded from the pre-existing condition exclusion for children. Adults will receive this same protection in 2014.

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 pre-existing condition. Contact your health plan if you have any questions about your child’s eligibility for coverage.

Coverage for emergency services (effective October 1, 2010)

What is it?
Individual plans, group health insurance plans, and self-funded plans that cover hospital emergency services must provide these services without requiring prior authorization whether members seek services from network or out-of-network providers. In addition, members’ cost-sharing fees must be the same for in network and out-of-network providers. Grandfathered plans are exempt from this provision.

What does it mean to me?
You do not need prior authorization for emergency services, and your insurance company will charge you the same cost-sharing fees for emergency services regardless of where you seek care. Keep in mind, however, that out-of-network providers typically bill you for the difference between their charges and the amount they collect from the health plan.

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

Choosing doctors

What is it?
Members in all health plans — except those that are grandfathered — can designate any participating primary care physician or pediatrician (for a child) as their primary care physician. In addition, women can see OB/GYN physicians without a referral.

What does it mean to me?
You may choose any participating primary care physician to oversee your medical care. You do not need a referral to see that doctor, or if you’re a woman, to see an OB/GYN. The participating primary care physician list also includes pediatricians who can oversee children’s medical care.

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

2011

Key provisions taking effect in 2011:

New Medicare Advantage maximum out-of-pocket (MOOP) limit
Tax changes to health care savings and spending accounts
Medical loss ratio rebates

New Medicare Advantage maximum out-of-pocket (MOOP) limit

What is it?
The Medicare Advantage maximum out-of-pocket (MOOP) limit is the annual maximum amount of out-of-pocket costs that a member will have to pay for health care before Medicare pays 100 percent of costs. The limits 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.

Deductible, copay, and coinsurance amounts for the following are 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 drug costs do not count toward the MOOP limit.

What does it mean to me?
If you are a Medicare Advantage HMO or PPO member and have reached the MOOP limit, you will not be responsible for any additional claim costs for the rest of the calendar year.

Tax changes to health care savings and spending accounts (effective January 1, 2011)

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

In addition, the tax penalty on distributions from HSAs that are not used for qualified medical expenses increases from 10 percent to 20 percent; for MSAs, the tax penalty increases from 15 percent to 20 percent of the amount that can be included in your gross income.

What does it mean to me?
You will not be able to use any funds in these accounts for most over-the-counter drugs. You also may pay higher tax penalties if you use these funds for non-qualified medical purchases.

Medical loss ratio rebates

The health care law requires health insurers to spend a certain percentage of the premiums they receive to pay claims for services and to fund activities that improve the quality of health care. This includes activities that help improve health outcomes, prevent hospital readmissions, improve patient safety, and increase wellness.

The amount insurers must spend is called the medical loss ratio (MLR). For large groups with 51 or more employees, the MLR is 85 percent. For small groups with 2 to 50 employees and individual plans, the MLR is 80 percent. Health insurance companies that don’t meet minimum medical loss ratio amounts must send rebates to groups and/or subscribers.

In 2013, this provision extends to self-insured groups and student plans. Medicare plans are included in 2014.

What does it mean to me?
In June of each year beginning in 2012, Independence Blue Cross will report its medical loss ratios for the previous calendar year and will mail any applicable rebates by August 1. In most cases, IBC will mail rebates for group plans to the groups, where they will be distributed to subscribers or used to reduce future premiums. Rebates will be mailed directly to subscribers enrolled in individual plans.

Where can I learn more?
Visit Independence Blue Cross Medical Loss Ratio Rebates FAQs.

2012

Key provisions taking effect in 2012:

W-2 disclosure of health plan value
Women’s preventive health coverage
Medicare Part D Drug Savings
The Patient-Centered Outcomes Research Fee

W-2 disclosure of health plan value (January 1, 2012)

What is it?
Employers must disclose the aggregate value of an employee’s employer-sponsored coverage for the year on the employee’s W-2 Form. The aggregate value includes both the employer and employee contributions. This amount is now included in Box 12 on standard W-2 forms, meaning you are not subject to income taxes for the employer contribution.

What does it mean to me?
The health care value reported on this form is not considered part of your taxable income. According to the Internal Revenue Service, the amount listed provides employees with useful information about the costs of their health plan.

Women’s preventive health coverage (August 1, 2012)

What is it?
This provision requires all non-grandfathered health plans to cover 100 percent of the costs of an expanded list of women’s preventive services when they receive care from network providers. The list of services includes:

  • Well-woman visits
  • Screening for gestational diabetes
  • Counseling for sexually transmitted diseases
  • Screening and counseling for HIV
  • Screening for human papillomavirus
  • Breastfeeding support, supplies, and counseling
  • FDA-approved methods of contraception and counseling
  • Screening and counseling for interpersonal and domestic violence

What does it mean for me?
You will not have to pay cost-sharing fees (deductibles, copays, or coinsurance) for services on this list when you seek care from providers in your health plan’s network. This does not apply to grandfathered, Medicare Supplement, or Medicare Advantage plans.

In addition, some religious and non-profit employers may not have to provide contraception services to their employees if they meet Department of Health and Human Services exemption criteria.

Where can I learn more?
Visit the Department of Health and Human Services website.

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?
Visit the Independence Blue Cross site for Medicare beneficiaries at Independence Medicare.

The patient-centered outcomes research fee

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

The institute was created to help patients, providers, and policy-makers make informed decisions about the most effective ways to prevent, diagnose, treat, and manage various health conditions. The institute’s board evaluates existing research, identifies research priorities, and conducts relevant research. It cannot mandate or endorse coverage rules or reimbursement practices for any particular treatment.

As part of this provision, health plans and plan sponsors or administrators of self-insured plans will be assessed $1 per covered individual 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 per covered individual. After 2013, the fee will be adjusted annually based on national health care expenditures. This fee will be phased out in 2019.

What does it mean to me?
Fully-insured groups: Independence Blue Cross has incorporated this fee into our premium rate structure.
Self-funded groups: Your plan sponsor is responsible for the payment of this fee.

2013

Key provisions taking effect in 2013:

Flexible spending account (FSA) limits
Medicare payroll tax
Medical device sales tax
Employer notice to employees of marketplace coverage option
Repeal of the Retiree Drug Subsidy Program
"Donut hole" discounts increase
Increase in threshold for deduction of medical expenses

Flexible spending account (FSA) limits

Employees cannot defer more than $2,500 of their salary annually into a health care FSA. Employers have the option to further limit their employees' annual elections.

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

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

Medical device sales tax

What is it?
Medical device manufacturers will pay a 2.9 percent sales tax on products sold, excluding eyeglasses, contact lenses, and hearing aids.

What does it mean to me?
Manufacturers may pass increased costs on to you if you require a medical device, such as a heart pacemaker.

Employer Notice to Employees of Marketplace Coverage Option

What is it?
The health care law requires employers to let employees know how some parts of this law may affect them. Specifically, employers must formally notify existing employees in writing and new employees upon hire about the following:

  • The existence of the state Marketplace, the services it provides and instructions for contacting the Marketplace.
  • Possible eligibility for premium or cost-sharing tax credits/subsidies on the individual Marketplace to reduce health care costs. Employees may be eligible for these subsidies if the large group employer plan pays less than 60 percent of the costs of covered benefits or costs more than 9.5 percent of the employee’s household income and if the employee’s income falls below certain income levels. Beginning no later than October 1, 2013, employers must provide this notice to current workers and to new employees at the time of hiring. Beginning in 2014, the notice must be provided within 14 days of an employee’s start date.

What it means to me?
Your employer will let you know about the new Marketplace and how some parts of the health care law will affect you.

Repeal of the Retiree Drug Subsidy Program

What is it?
The health care law eliminated the Retiree Drug Subsidy Deduction effective January 1, 2013. The subsidy program established by the Centers for Medicare & Medicaid Services reimburses some employers for part of the cost of providing more generous prescription drug coverage to their retirees. Previously, some employers received a subsidy equal to 28 percent of their retiree drug costs, and they were allowed to deduct the subsidy on their federal tax returns. The subsidy is still available, but the deduction is no longer allowed.

"Donut Hole" Discounts Increase

What is it?
More savings were introduced for Medicare and Medicare Advantage enrollees with Part D prescription drug coverage who reach the coverage gap informally known as the donut hole. When these enrollees are in the coverage gap, their medications will be discounted by these amounts:

  • Brand-name and biologic drugs - 52.5 percent
  • Generic drugs - 21 percent

Through the year 2020, additional discounts will “phase down” the amount owed in the coverage gap until it reaches 25 percent for all drugs.

Department of Health and Human Services: Medicare Drug Discounts

What does it mean to me?
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?
Visit the Independence Blue Cross Medicare site at Independence Medicare.

Increase in Threshold for Deduction of Medical Expenses (January 1, 2013)

What is it?
The threshold for the itemized tax deduction for unreimbursed medical expenses increased. Previously, people could claim unreimbursed medical expenses that exceed 7.5 percent of their adjusted gross income (AGI). That threshold is now 10 percent for those under age 65. The rate remains 7.5 percent for those over age 65 until 2017 when it increases to 10 percent of adjusted gross income.

What does it mean to me?
Here’s an example of how this change may affect you.

Before 2013

After 2014

Unreimbursed medical expenses (UME)

$4,000 $4,000

Annual HDHP minimum deductibles amounts

$40,000 $40,000

Deduction

$4,000 UME -$3,000
(7.5% $40,000)
_________________

$1,000 Deductible amount

$4,000 UME - 4,000
(10% of $40,000)
______________________

=$ 0 Deductible amount


2014

Key provisions taking effect in 2014:

Mandatory insurance for individuals
Federal tax credits/subsidies to buy insurance
State-based health insurance marketplaces
Essential heath benefits
Prohibition of pre-existing conditions exclusion
Expansion of Medicaid
Health insurance providers pay annual fees
Automatic enrollment of employees
Basic health programs
Consumer operated and oriented plan program (CO-OP)
Small business tax credit increases
Free choice vouchers
Guaranteed issue
Guaranteed renewability of coverage
Incentives for employee wellness programs
Insurance rating reforms
Limitation on employer-imposed waiting periods
No annual limits on essential benefits
Non-discrimination involving participants in clinical trials
Requirement to report health insurance coverage

Mandatory insurance for individuals (effective January 1, 2014)

What is it?
The new health care law requires that everyone have health insurance beginning January 1, 2014.

People who do not get insurance at work have other options. They may qualify for the state Medicaid program, also known as Medical Assistance. Many states are expected to expand access to their Medical Assistance programs to provide health insurance to more individuals. At this time, Pennsylvania has not determined whether it will expand the state Medicaid program.

People also may buy health insurance on their own at a reduced cost. Under the health care law, many people who currently receive no government assistance will qualify for tax credits/subsidies to help pay monthly insurance premiums and/or other cost-sharing fees. Some people will need to buy health insurance on their own at full cost if their income is above a certain level.

What does it mean to me?
You will have to pay a penalty if you have no health insurance as of January 1, 2014, and you do not qualify for an exemption from the individual mandate. The penalties increase each year from 2014 through 2016. You will pay the greater of the two amounts listed below:

  • 2014 — $95 per individual and $47.50 per child up to a maximum of $275 per family OR 1 percent of your income.
  • 2015 — $325 and $162.50 per child up to a maximum of $975 per family OR 2 percent of your income.
  • 2016 — $695 and $347.50 per child up to maximum of $2,085 per family OR 2.5 percent of your income.

You will be assessed this penalty when you pay your federal income taxes.

There are some exceptions to this mandate. You may be exempt from this mandate if you are a member of a Native American tribe, are incarcerated, are part of a religion that objects to health insurance, are an undocumented immigrant, or meet certain income guidelines.

Where can I learn more?
Visit the government’s health care law website at Healthcare.gov.

Federal tax credits/subsidies to buy insurance

What is it?
Many single people and working families will get money from the government to help pay their health care costs. This includes many people who the government does not help now.

Beginning in 2014, federal tax credits/subsidies will be available to U.S. citizens and legal immigrants who purchase coverage by using the new health insurance Marketplace and who have income up to 400 percent of the federal poverty level (FPL).

To be eligible for the premium tax credits/subsidies, individuals must not be eligible for public coverage —including Medicaid, CHIP, Medicare, or military coverage — and must not have access to health insurance through an employer. (There is an exception in cases where the employer plan does not cover at least 60 percent of covered benefits on average, or when the employee share of the premium exceeds 9.5 percent of the employee's income.)

The premium tax credits/subsides will be advanceable and refundable, meaning they will be available when an individual purchases coverage. People with incomes up to 250 percent of the FPL are also eligible for reduced cost-sharing (for example, coverage with lower deductibles and copayments) paid for by the federal government. Both the premium and cost-sharing reductions will vary by income and are structured so the amount that eligible people have to pay will not exceed a specified percentage of their income.

The Congressional Budget Office estimates that about 20 million American households will be eligible for tax credits/subsidies.

The health care law also seeks to make Medicaid benefits available to anyone earning up to 133 percent FPL. Medicaid is currently available to those earning less than 100 percent FPL in certain circumstances (for example, children, pregnant women, etc.). For the states that decide to expand eligibility, the government is funding a large percentage of the coverage costs. Pennsylvania has not yet determined whether it will expand Medicaid. New Jersey recently announced that it will.

What does it mean to me?
If you qualify, you may be able to get one of the following:

  • Free health insurance through Medical Assistance, also known as Medicaid
  • Tax credits/subsides to lower your monthly premium costs and the cost-sharing fees

State-based health insurance marketplaces

What is it?
New state-based, online health insurance marketplaces open October 1, 2013. The Marketplace website is a new way for individuals and small businesses to shop, compare and buy health insurance. The website offers free, easy, and confidential online tools to help people make the right choices about their health insurance needs.

Some states have their own Marketplace. Others let the federal government operate their Marketplace. At this time, Pennsylvania uses the federal Marketplace.

What does it mean to me?
The Marketplace has online shopping tools that show you apples-to-apples comparisons about the qualified health plans in your area that may be right for you. The Marketplace will also link to a federal database to verify your eligibility and find out if you qualify for tax credits/subsidies.

The Marketplace has a toll-free number that you can call if you have questions. In addition, Marketplace navigators and assistors can give you unbiased information about health plans, help you consider your options, and help you enroll in the plan of your choice.

What is IBC doing to help?
Independence Blue Cross will also have an easy-to-use website where you can buy your health plan. Our shopping tool asks simple questions about you and your family, how you expect to use medical services in the year ahead, and how much certainty or predictability you want when paying for your health care expenses.

Our site then makes three recommendations based on your answers. We’ll let you know what plans best match your preferences, the plans that are your most affordable alternatives, and what plans others who are like you typically buy. You have the option of seeing the complete list, but using this tool can help make the decision easier.

Our website also links to federal databases to verify your eligibility for health insurance and to find out if you can get tax credits/subsidies to lower your costs. To see a demonstration of how the IBC shopping tool will work, please visit The Health Care Law & You and click on the Buying a Health Plan from IBX video.

Essential health benefits

What is it?
In 2014, all health plans offered to people who purchase their own health insurance and small businesses (2-50 employees) must cover 10 core services, which are called essential health benefits. The list of core benefits includes:

  • Preventive, wellness and disease management services
  • Emergency care
  • Ambulatory services
  • Hospitalization
  • Maternity and newborn services
  • Pediatric services, including dental and vision
  • Prescription drugs
  • Laboratory services
  • Mental health and substance abuse services, including behavioral health treatment
  • Rehabilitation and habilitative services

There are no lifetime limits on the amount health plans spend on these services. Annual limits on these benefits will be eliminated in 2014.

What does it mean to me?
If you have do not have health insurance today or if you have a health plan with limited benefits, you will have greater access to preventive care under the health care law. In the individual and small group market, your qualified health plan will be required to provide a new range of benefits determined “essential.”

In addition, insurers will cover 100 percent of the cost of many preventive services, such as wellness visits, immunizations, screenings for cancer, and other diseases. That means you will not pay any deductible, copayments, or coinsurance for many services that can help you stay healthy.

Prohibition of pre-existing conditions exclusion

What is it?
As part of the health care law, insurers can no longer deny coverage or charge a different rate for anyone with pre-existing health conditions.

What does it mean to me? You will be able to buy health insurance even if you have a pre-existing medical condition. In addition, insurers cannot charge you more because of your health status.

Expansion of Medicaid

What is it?
Many state Medical Assistance programs, also known as Medicaid, are expanding by offering health plans to more people who are uninsured. As part of health care reform, the income allowance for Medicaid will increase to 133 percent of the federal poverty level. The federal government will pay all costs for covering newly-eligible Medicaid beneficiaries from 2014 through 2016. At this time, the Commonwealth of Pennsylvania has not decided whether it is going to expand Medicaid coverage.

What does it mean to me?
You can check your eligibility for Medical Assistance when you shop at the health insurance Marketplace or when you use the Independence Blue Cross online shopping tool. If Pennsylvania decides to expand the state Medical Assistance program, it will affect eligibility thresholds for Medicaid and tax credits/subsidies.

Where can I learn more?
Visit the government site: HHS Centers for Medicare and Medicaid Services.

Health Insurance Providers Pay Annual Fees

What is it?
Starting in 2014, health insurance companies will be assessed an annual non-deductible excise tax using a formula based on market share and premiums collected the previous year. The amount collected from all insurers will total the following amounts over the next several years:

  • 2014: $8 billion
  • 2015 – 2016: $11.3 billion
  • 2017: $13.9 billion
  • 2018: $14.3 billion
After 2018, the amounts due will be calculated using the fee from the previous year and including increases based on the rate of premium growth. These fees are assessed as follows:
  • No fees/exempt:
    • Non-profit insurers that meet certain criteria may be granted exemptions.
    • No fees are assessed for insurance companies with net premiums of $25 million or less, or employers that self-insure their employees’ health risks.
  • 50 percent of premiums are used in the calculations:
    • Non-profit insurers that are not exempt from the fees.
    • Insurers with net premiums of $25 – 50 million.
  • 100 percent of premiums are used in calculations:
    • Insurers with net premiums of $50 million or more.

Automatic enrollment of employees

What is it?
The health care law requires large employers with 200 or more full-time employees that offer health insurance to automatically enroll all newly hired full-time employees into one of the employer’s group health plans. The provision also calls for employers to automatically re-enroll employees who have employer-sponsored health insurance.

Although this part of the health care law was scheduled to be implemented in 2014, it has been delayed until final regulations or guidelines are issued.

What does this mean to me?
When this provision is implemented, you will automatically be enrolled in a health plan if you start a new full-time job with a large employer. The employer must provide you with notice about: your right to opt out of automatic enrollment, the deadline for opting out, and information about the health plan (benefits and employee premium levels) that you will be enrolled in automatically if you do not opt out.

Basic health programs

What is it?
States have the option of using federal tax credit/subsidy dollars to create basic health plans for individuals whose income is between 133-200 percent of the federal poverty level (FPL). People at this level would be eligible for premium tax credit/subsidies to help pay for their health care costs.

However, states can choose to contract with standard plans to provide people at this income level with health plans that include at least the minimum essential health benefits. People covered under these plans cannot be charged more for monthly premiums than they would have paid after premium and cost-sharing tax credits/subsides.

Also, cost-sharing fees cannot exceed the Platinum benefit tier for people whose income is below 150 percent of the FPL or the Gold benefit tier for individuals whose income is above 150 percent of the FPL. Individuals in this income level are not eligible for tax credits/subsidies if they live in states that establish basic health plans.

Consumer operated and oriented plan program (CO-OP)

What is it?
Consumer operated and oriented plans (CO-OPs) in some states can begin enrolling members through state Marketplaces and outside the Marketplace. These plans, which are directed by customers, must meet the same standards as other health insurers in the states in which they offer coverage.

The government awarded loans and grants to help CO-OPs with start up and other fees. The goal of this provision was to establish at least one CO-OP in each state. However, funding for this provision was cut as part of the fiscal cliff deal. The compromise deal will not affect the formation of the 24 nonprofit cooperatives that have already been approved for approximately $2 billion in start-up loans. But there will be no additional funding for nonprofit cooperatives in the remaining 26 states.

What does it mean to me?
At this time, no CO-OP option will be offered in Pennsylvania during the initial launch of CO-OPs January 1, 2014.

Small business tax credit increases (effective tax year 2014)

What is it?
The sliding-scale credit for qualified small employers that provide health coverage to their employees increases from 35 to 50 percent of the cost of premiums for for-profit small business, and from 25 to 35 percent for small tax-exempt charities.

Free choice vouchers

What is it?
The free choice voucher provision of the health care law scheduled for implementation in 2014 was repealed by Congress in 2011. This part of the law allowed some employees to obtain free choice vouchers from their employers to purchase health plans through the Marketplace. These vouchers would have been available to employees whose cost of health care coverage was between 8 and 9.8 percent of household income.

Guaranteed issue

What is it?
In 2014, the health care law requires insurers to offer all insurance products in the individual and group market to everyone in the state. This means you are guaranteed coverage regardless of your health status or other factors. Insurance plans cannot deny you coverage or charge you more if you have cancer, diabetes, or other serious and expensive health problems. This provision applies to individual and group plans, but does not apply to grandfathered or self-funded plans.

What does it mean to me?
You will have more options for buying a health plan if you are sick or have a chronic health condition. Insurers cannot deny you coverage or charge you more for your health plan because of your health.

Guaranteed renewability of coverage

What is it?
All health insurance plans in the individual and group markets have guaranteed renewability. Insurers cannot refuse to renew coverage when people are sick.

What does it mean to me?
You do not have to worry about losing your insurance coverage if you are sick or require costly medical care.

Incentives for employee wellness programs

What is it?
Starting in 2014, the Department of Health and Human Services has issued rules to increase the incentives employers can offer their employees who participate in wellness programs. The final rules would allow employers to increase rewards from 20 percent to 30 percent of the cost of health coverage (total premium). The maximum reward could increase to as much as 50 percent for programs that prevent or reduce tobacco use. These rewards are not available in the individual market. However, the health care law authorizes the creation of a 10-state pilot program on July 1, 2014 that allows participating states to offer similar reward incentives for those in the individual market.

What does this mean to me?
You may be eligible for more incentives to stay healthy. Your employer may offer you greater rewards if you participate in wellness programs.

Insurance rating reforms

What is it?
The health care law changes the way insurance companies decide the cost of your health plan.

Traditionally, insurance companies have used formulas to estimate the level of services the people they cover will need. The premiums and cost-sharing amounts they charge people are based on a number of rating factors, such as the age and health status of everyone on the plan. Those who are older or have certain health conditions usually pay more, because they are likely to need more services.

Starting in 2014, insurers cannot charge more for a health plan because of health or gender. There is also a limit on the amount they can increase rates based of age. The only rating variations that may affect costs when this part of the law goes into effect are:

  • The age of everyone covered by the plan (but people cannot be charged more than three times the amount a younger person pays)
  • Family composition
  • Geographic location
  • Tobacco use (people cannot be charged more than a 1.5-1 ratio or 1.5 times the amount of a non-smoker with the same characteristics)
This provision applies to the individual and group market.

What does this mean to me?
This provision could increase or decrease the cost of your health plan. Those who are young and healthy may pay more for the same level of coverage than they have in the past. Those who have a health problem, such as heart disease or cancer, or are older will likely pay less for their coverage than they do now.

Limitation on employer-imposed waiting periods

What is it?
Employers offering group health insurance coverage cannot impose a waiting period of more than 90 days on individuals who choose to enroll in a health plan. A waiting period is the time that people must wait before health insurance coverage goes into effect for employees or their family members who are eligible for coverage.

This provision does not apply to the individual market. It does apply to all fully insured and self-insured group plans regardless of whether they have grandfathered status.

What does it mean to me?
You will have more peace of mind about your health coverage if you start a new job. Your employer cannot require you to wait more than 90 days to enroll in an employer health plan.

No annual limits on essential benefits

What is it?
The health care law eliminates annual maximum limits on the amount health plans will pay for covered services, such as essential health benefits. Previously, health plans could limit the amount they would pay each year as long as they complied with federal regulations.

What does it mean to me?
You don’t have to worry about exhausting your essential health benefits coverage if you require costly care.

Non-discrimination involving participants in clinical trials

What is it?
Health insurers can no longer drop or limit coverage to people who choose to participate in approved clinical trials that evaluate treatments for cancer and other life-threatening diseases. Plans also must cover routine costs associated with the trial.

What does it mean to me?
You will not have to worry about losing your coverage or wondering how routine services will be paid if you participate in approved clinical trials.

Requirement to report health insurance coverage

What is it?
The health care law requires certain types of reporting starting in 2014. Those who may need to comply with new reporting requirements include:

  • Insurers who provide minimum essential coverage to an individual
  • Employers that offer health plans
  • Insurance companies

The specific reporting requirements vary for each of these groups and may include: the names and coverage dates of persons covered, whether the coverage is from a qualified health plan, premium and cost-sharing tax credits/subsides applied, the employer portion of the premium, certification confirming that employers offered full-time employees and dependents an employer-sponsored plan that included minimum essential benefits, the length of any waiting period, etc.

What is IBC doing to help?
Independence Blue Cross will comply with this provision.

2015

Key provisions taking effect in 2016:

Mandatory insurance for individuals — penalty increase
Mandatory insurance for employers

Mandatory insurance for individuals — penalty increase

What is it?
The health care law requires nearly everyone to purchase health care coverage by 2014 or pay a penalty. The penalty increases in 2015 from $95 or 1 percent of income to $325 or 2 percent of income, whichever amount is greater. The amount is assessed for each uninsured person.

Mandatory insurance for employers

What is it?
Employers with 50 or more full time equivalent employees will be required to offer benefits to all full-time employees or face a fine. Employers with 50 or more employees who do not offer health benefits or do not offer a certain level of benefits may have to pay one of the following types of annual penalties:

  • The Mandate Penalty ($2,000). This penalty applies if an employer does not offer group health coverage and at least one employee purchases subsidized coverage on the Marketplace. Employers will pay $2,000 for each full-time employee. The first 30 employees are exempt from the penalty.
  • The Qualification Penalty ($3,000). This penalty applies if an employer fails to offer a qualifying plan (minimum and affordable) to any employee and if any of those employees purchase subsidized coverage through the Marketplace. The penalty assessed is based on the number of employees who are not offered qualifying coverage and subsequently purchase subsidized coverage through the Marketplace.

What does it mean to me?
If you are an employer, you must decide if your company will continue to offer a group health plan, or instead will pay the penalty for failing to offer coverage. This provision is sometimes called the “play or pay” mandate.

2016

Key provisions taking effect in 2016:

Quality of care reporting
Mandatory insurance for individuals — penalty increase
Coverage across state lines
Small group size definition changes to 100

Quality of care reporting

What is the quality of care reporting requirement?
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. In general, this report describes how the health plan’s benefits, coverage and provider reimbursement policies meet requirements to improve quality of care and outcomes, improve patient safety, prevent hospital readmissions, and implement activities to enhance members’ health and wellness. It will also indicate the percentage of total premiums spent on quality improvement 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.

Mandatory insurance for individuals — penalty increase

What is it?
The health care law requires nearly everyone to purchase health care coverage by 2014 or pay a penalty. In 2016, the penalty increases in from $325 or 2 percent of income to $695 or 2.5 percent of income, whichever is greater. This amount is assessed for each uninsured person.

Coverage across state lines

What is it?
In 2016, people will be able to buy health plans from health insurance companies in other states. This provision may lead to more competition among health insurance companies that could result in lower costs for health coverage.

What does it means to me?
For 2016, if you are buying health coverage for yourself, your family, or your business, you can consider health plans located outside of the state in which you live or operate your business.

Small group size definition changes to 100

What is it?
The health care law defines small groups as those with 100 or fewer employees. Some states, however, are allowed to define small groups as those with 50 or fewer employees for the years 2014 and 2015. In 2016, the definition for small groups will be the standardized nationally and will refer to groups with 1-100 employees.

2017

Marketplaces may expand to include large groups

States will have the option of allowing large companies with more than 100 employees to buy health insurance through state-based health insurance marketplaces. These online marketplaces — which open in the fall of 2013 — make it easier for those purchasing health insurance to compare products and prices. Initially, only individuals who buy their own insurance and small businesses will be able to use these online portals. Marketplaces will work with state insurance departments to set and enforce insurance reforms and protections.

2018

Excise tax on “Cadillac plans”

What is it?
This part of the health care laws adds a 40 percent nondeductible excise or cadillac tax on generous health plans. Those are plans that cost at least $27,500 per year for a family plan and at least $10,200 per year for an individual plan.

What it means to me?
If you are covered by a comprehensive health plan with no deductible or that otherwise qualifies as a cadillac plan, the amount you spend on that plan will be taxed at the rate of 40 percent beginning in 2018.

2020

Elimination of “donut hole” coverage gap

The health care law includes several provisions designed to reduce and then eliminate the coverage gap known as the donut hole. This coverage gap occurs during a period of in a specific year when a person’s Medicare’s Part D medication costs go over $2,830; it continues in that same specific year until that person’s out-of-pocket costs reach $4,550. This is the period when a Medicare member is in the donut hole.

Originally, a Medicare member in this situation was responsible for 100 percent of the costs of her or his medications. Once they reached the out-of-pocket maximum, Medicare paid 100 percent of the medication costs. The donut hole has been closing since the health care law was passed in 2010.

What it means to me?
The donut hole closes in 2020. Medicare and Medicare Advantage members enrolled in the Part D prescription drug program who do not receive Medicare Extra Help will pay 25 percent of the costs of their drugs until they reach the yearly out-of-pocket spending limit.

Where can I learn more?
Visit the government health care law website at Healthcare.gov.