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.