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Health Care Reform Law What’s In It?

Health Care Reform Law What’s In It?. April 2010. What Questions Do You Have About the Health Reform Law?. ?. What happens to my current employer-based health insurance coverage?. When do the reforms in the law take effect?.

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Health Care Reform Law What’s In It?

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  1. Health Care Reform Law What’s In It? April 2010

  2. What Questions Do You Have About the Health Reform Law? ? What happens to my current employer-based health insurance coverage? When do the reforms in the law take effect? How will reform impact state and local governments and their workers? What’s in the health reform law for retirees? What happens if I don’t have employer coverage? ? ?

  3. Health Reform Signed Into Law Two reform bills signed: March 23rd & March 30th, 2010 “There are so many people who we have to thank. And as I look around the room, we've got leaders of labor who helped to make this happen.” President Obama Photo Credit: Win McNamee

  4. AFSCME Health Reform Objectives • Maintain Existing Plans • Expand Coverage • Control Costs • Improve Quality • Progressive Funding

  5. Reform Impacts Everyone • Workers and families with employer • sponsored insurance (ESI) • Workers and families without ESI • Retirees • State and local governments • Employers

  6. 3 Key Elements of Reform • Not radical change… It maintains current structure and coverage • Big change… It aims to control costs system-wide, cover 95% of population (adding 32 million), make many system changes to improve care • Phased Implementation Phased-in over four years (2014) for most changes. A few provisions don’t start until 2017-18.

  7. For Those Who Get Coverage at Work • You will keep your employer health plan and doctors. • Existing health policies are unchanged, but plans will be required to provide a set of new mandated benefits that will protect consumers. All health plans in existence as of the date of passage of health reform (3-23-10) are “grandfathered”, meaning they will be exempt from some of the reform law’s new benefit mandates. New plans (created after 3-23-10) are not exempt from new mandates.

  8. Mandates for Existing Plans Effective After Sept. 23, 2010 • Lifetime limits on coverage will be prohibited for essential benefits. • Annual limits on coverage will be restricted • Dependent coverage is extended to children up to their 26th birthday (as long as the child does not have employer coverage) • Pre-existing condition exclusions for children under age 19 will be prohibited • Rescission will be prohibited Definition Rescission: The cancellation of coverage after a person gets sick

  9. Mandates for Existing Plans Effective After Jan. 1, 2014 • Annual limits on coverage will be prohibited. • Dependent coverage will be extended to adult children up to age 26 without regard to whether that child has his/her own employer coverage. • Pre-existing condition exclusions will be prohibited for everyone, including adults. • No eligibility waiting periods longer than 90 days.

  10. Dates When Mandates Take Effect for Existing Plans • Existing (“Grandfathered”) plans must comply with the new mandates seen on the previous slides beginning: • the first plan year after September 23, 2010 for reforms that begin in 2010, and • the first plan year after January 1, 2014 for reforms that begin in 2014. • However, health plans that are collectively bargained are likely to be exempt from these benefit mandates until your contract expires or is modified. (Talk with your union representatives about your contract specifics.)

  11. Additional Mandates on New (Non-Grandfathered) Plans • Maximum deductibles and out-of-pocket limits • Emergency care must have same payment for in and out of network – no prior authorization • Required coverage of certain preventative services without co-payments or deductibles • New appeals rules (internal and external) • No prior authorization for OB/GYN (PCP) • Coverage of clinical trial treatment … AND MORE

  12. Retiree Health Care • New Retiree “Reinsurance” Pool is established to help employers pay for the costs of their early retirees from June 21, 2010 – December 31, 2013. • Health plans covering early retirees will be reimbursed by the pool for 80% of the cost of retiree claims between $15,000 and $90,000 (per year). • Plans must have chronic care management program. • Provides reimbursement to employers for retirees age 55 to 64.

  13. Changes to Reimbursement Accounts • People who have tax-free FSA*, HRA* and HSA* accounts will not be reimbursed for over-the-counter drugs unless you have a doctor’s prescription (2011) • FSAs are limited to $2,500/year (2013) • The penalty for a non-health care withdrawal from an HSA will be increased to 20% (2011) *Flexible Spending Arrangement (FSA); Health Reimbursement Arrangement (HRA); Health Savings Account (HSA)

  14. Medicare taxes from high income earners Tax on health-insurance providers Penalties on employers who don’t provide health insurance Excise tax on high cost health plans Tax on pharmaceutical manufacturers/importers Tax on medical-device manufacturers/importers Penalties on persons who don’t buy health insurance Sources of Health Reform Financing (2010 - 2019) $210 billion $60 billion $52 billion $32 billion $27 billion $20 billion $17 billion Source: Joint Committee on Taxation; House Ways and Means Committee

  15. Specifics on Financing • New Excise Tax (begins 2018): • 40% tax on premiums that exceed more than $10,200 single or $27,500 family • The base amount will rise with the inflation level (CPI) +1% until 2020, then just CPI • Dental and vision coverage excluded • There may also be demographic and retiree adjustments made. • New Medicare health insurance taxes for high income earners (begins 2014) • For families>$250K; Individuals>$200K; and • 3.8% Medicare tax on unearned income

  16. New Coverage Expansions • Medicaid expandedto all adults earning up to 133% of the federal poverty level (FPL) - S14,404/individual or $29, 327/ family of four • Insurance buying poolscalled “exchanges” created for individuals and small employers (2014) and then for large employers (2017) • Tax creditswill be provided to purchase coverage in the exchange for persons earning 400% FPL or less - $43,320/individual or $88,200/family of four • Community health centerswill receive new funding.

  17. Employer Responsibility (2014) • Employers with over 50 workers that do not offer coverage pay $2,000 per FTE (full-time equivalent) if one or more workers gets a tax credits in the new “exchange.” • Large employers that do not offer affordable coverage, or offer coverage that pays less than 60%, of workers health care expenses must pay a penalty of $3,000 per employee who receives a tax credit in the exchange. • First 30 workers are exempt from assessment.

  18. Individuals are Required to Have Health Insurance (2014) • All legal residents required to have health insurance with exemptions if you: • spend more than 8% of your income on coverage • have financial hardship • earn too little to file taxes [$9,350 in 2009]

  19. Impact on State Budgets • Beginning in 2010, states receive substantial federal funding to pay for reform. • The federal government will pay for all of the costs to cover new Medicaid enrollees until 2017. In 2017, state governments will begin paying a portion of these costs. After 2019, they will pay 10% of the costs.

  20. Impact on State Budgets (Cont.) • The federal government will substantially increase its contribution to states to help them pay for children's health coverage (called the "SCHIP" program and offered in every state) • As the number of uninsured drop, states will receive less funding for care provided to the uninsured in hospitals called "DSH” payments (disproportionate share hospital payments)

  21. Medicare • No changes are made to guaranteed Medicare benefits or cuts made to current funding levels. • The coverage gap ("donut hole") for Medicare prescription drug coverage is eliminated by 2020. • In 2010, a $250 rebate check will be given to participants who reach the donut hole. • The premiums paid for Part D will be based on a sliding scale according to income (like Part B) - 2011

  22. Medicare (continued) • The excessive subsidies provided to corporations that offer private Medicare plans (also called Medicare Advantage or Part C) will be reduced. • Changes in Medicare payment procedures will be made to reduce costs and promote quality. A payment commission will be created as well programs to look at innovative practices and care for high-cost enrollees.

  23. Long Term Care • CLASS Program – new, voluntary long term care insurance program created for all workers to help purchase home and community-based services and institutional care ( begins 2011): • All workers will be auto-enrolled by employer unless they choose to opt out or bargain otherwise. • Fully paid for by worker premiums on a sliding scale. Premiums to be determined by federal government. • New Medicaid Funds for Home and Community-Based Services for long-term care provided to expand pilot programs to help people live independently at home (begins 2011).

  24. Workforce Development Training grants, scholarships and other incentives to expand the health care workforce, including nurses and primary care physicians.

  25. Online Resources AFL-CIO - www.workingfamiliestoolkit.org HCAN - www.healthcareforamericanow.org Administration -www.healthreform.gov • Dept. of Labor - http://www.dol.gov/ebsa/healthreform U.S. House of Representatives Fact Sheets • http://www.speaker.gov/newsroom/legislation?id=0361 U.S. Senate Fact Sheets • http://dpc.senate.gov/dpcissue-sen_health_care_bill.cfm

  26. Still have Questions? • Contact: Your local Union Representative. Your Local Union Representative can send your questions to the • Research and Collective Bargaining Department

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