On June 28, 2012, the U.S. Supreme Court ruled, in a land­mark deci­sion, that the Patient Pro­tec­tion and Afford­able Care Act (ACA), includ­ing the pro­vi­sion that most Amer­i­cans car­ry health insur­ance or pay a penal­ty, is con­sti­tu­tion­al.

The ACA, signed into law in 2010, made sweep­ing reforms to health-care cov­er­age in the Unit­ed States. Many pro­vi­sions of the law have already tak­en effect. A num­ber of oth­er pro­vi­sions are sched­uled to take effect in sub­se­quent years, includ­ing the require­ment that most Amer­i­cans and legal res­i­dents have qual­i­fy­ing health insur­ance (excep­tions apply) or pay a penal­ty in the form of a tax. Here’s a sum­ma­ry of some of the impor­tant pro­vi­sions that are already in place, and those that are on their way by 2014.

In effect now

  • Chil­dren can no longer be denied insur­ance cov­er­age because of pre-exist­ing con­di­tions
  • Pay­ment of $250 rebate to Medicare Part D ben­e­fi­cia­ries sub­ject to the cov­er­age gap (begin­ning Jan­u­ary 1, 2010) and grad­u­al­ly reduc­ing the ben­e­fi­cia­ry coin­sur­ance rate in the cov­er­age gap from 100% to 25% by 2020
  • Insur­ers will not be able to impose life­time caps on insur­ance cov­er­age
  • All plans offer­ing depen­dent cov­er­age will be required to allow chil­dren to remain under their par­ents’ plan until age 26
  • Insur­ers can­not can­cel or deny cov­er­age if you are sick except in cas­es of fraud
  • Adults with pre-exist­ing con­di­tions will be able to buy cov­er­age from tem­po­rary high-risk pools until 2014, when cov­er­age can­not oth­er­wise be denied for pre-exist­ing con­di­tions
  • A Small Busi­ness Tax Cred­it exists for qual­i­fied small employ­ers who con­tribute at least 50% of the pre­mi­um cost of a qual­i­fy­ing health plan for employ­ees
  • Employ­ers must dis­close on Form W‑2 the val­ue of an employee’s health insur­ance cov­er­age spon­sored by the employ­er

 

Key pro­vi­sions effec­tive on or before Jan­u­ary 1, 2014

  • Increas­ing the med­ical expense income tax deduc­tion thresh­old to 10% of adjust­ed gross income, up from the cur­rent 7.5% (Jan­u­ary 1, 2013)
  • Increas­ing the Medicare Part A tax rate by 0.9% on wages over $200,000 for indi­vid­u­als ($250,000 for mar­ried cou­ples), and assess­ing a new 3.8% tax on some or all of the net invest­ment income for these high­er-income indi­vid­u­als (Jan­u­ary 1, 2013)
  • Health FSAs in cafe­te­ria plans will be lim­it­ed to $2,500 (Jan­u­ary 1, 2013)
  • All Amer­i­cans must car­ry health insur­ance or face a penal­ty (in the form of a tax) of up to 2.5% of house­hold income on indi­vid­u­als.  The max­i­mum house­hold penal­ty will be $285 but will increase to $2,085 by 2016.  Excep­tions exist for eco­nom­ic hard­ship, reli­gious beliefs, and oth­er sit­u­a­tions.  (Jan­u­ary 1, 2014)
  • Adults with pre-exist­ing con­di­tions can­not be denied cov­er­age or have their insur­ance can­celled due to pre-exist­ing con­di­tions (Jan­u­ary 1, 2014)
  • A require­ment that states estab­lish an Amer­i­can Health Ben­e­fit Exchange that facil­i­tates the pur­chase of qual­i­fied health plans and includes an Exchange for small busi­ness­es (Jan­u­ary 1, 2014)
  • Tax cred­its will be avail­able to qual­i­fy­ing fam­i­lies to off­set the cost of health insur­ance pre­mi­ums (Jan­u­ary 1, 2014)
  • Employ­ers with more than 50 full-time equiv­a­lent employ­ees must offer health insur­ance for their employ­ees or be fined per employ­ee (Jan­u­ary 1, 2014)
  • Impos­ing tax­es or fees on health insur­ance providers and drug com­pa­nies, while doc­tors and hos­pi­tals will receive less com­pen­sa­tion from gov­ern­ment sources (Jan­u­ary 1, 2014)
  • A 40% excise tax on insur­ers who pro­vide employ­er spon­sored “Cadil­lac” or high-val­ue plans.  The thresh­old is increased for employ­ees engaged in high-risk pro­fes­sions (Jan­u­ary 1, 2018)

 

So is this it?

While the Supreme Court has ruled the ACA con­sti­tu­tion­al, it may still face chal­lenges as Con­gress may seek to repeal the law. The ulti­mate fate of the health-care reform law may be deter­mined by the out­come of the Novem­ber elec­tions.

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