Even though we've been talking about it for a long time, at the end it all happened very suddenly. You blinked, and when you opened your eyes, the country had healthcare reform.
The discussions were remarkably inconsistent. First there was a public option. Then it was gone, only to reappear again, and then disappear (for the record, it didn't make it in). Even the path the bill finally took was wild and twisted, with the House passing the Senate's originally approved bill and then a separate package of amendments (called reconciliation), which still needs to be approved by the Senate with a simple majority. And the whole thing may be repealed, if the GOP has its way.
Though there will certainly be legal wrangling in the coming months, it looks like most of this legislation is here to stay. Here are some of the major changes as they stand today:
Individual Mandate: Everyone (almost) will need to have insurance or pay a penalty. The new law gives you just under four years, until 2014, to find some source of health insurance. If you don't, you'll face an additional tax of $95, or 1% of your household's income, whichever is greater. The tax increases during the next two years, but is ultimately capped at a maximum of $2,085 per family.
There are some exemptions, including American Indians and people with religious objections. In addition, the government allows individuals without coverage a three-month grace period before they're subject to penalties. The law also provides an exemption for households below the tax-filing threshold -- $9,350 for individuals and $18,700 for couples in 2009.
Insurance Exchange: People will be able to shop around for health insurance by 2014. Don't like the plan your employer offers as much as the one your neighbor has? Well, you may be in luck, because by 2014, you most likely will be able to compare prices and benefits from competing insurance companies. Now, this law doesn't go into effect for four more years, and it will originally only be open to individuals who don't have "adequate" coverage and to businesses with 100 or fewer workers. By 2017, however, employers with more than 100 workers will also be allowed to participate in the exchange.
Subsidies for Individuals: Tax credits to lower and some middle income households. Under this law, the government will provide tax credits, on a sliding scale, to people with incomes up to four times the poverty level ($88,200 for a family of four). It also provides a cap on how much families in the lowest income groups will pay for their health plan premiums. These subsidies will grow at the same rate as premium contributions until 2019, at which time subsidy growth will slow.
Insurance Regulations: Starting 90 days from bill signing, Insurance companies can't deny coverage based on medical history. If you've been turned down for insurance because of a pre-existing condition, don't despair. In only 90 days, you'll be able to sign up for a high-risk insurance pool that will be available until 2014. Within six months, private insurers will be banned from refusing coverage for a child's pre-existing medical conditions. The ban on excluding people with pre-existing conditions will cover all ages in 2014.
Other Big Changes Coming Your Way
So how will all of this impact you, now and in the future? Many pieces of the reform don't go into effect until 2014, but if you're already insured by your employer, you may start seeing higher prices on premiums, deductibles and co-payments. Most healthcare provisions phase in during the next few years, but you can bet that insurance companies will start making pricing changes right away. Premiums for small businesses are expected to go up an average of 15% in the next year.
If you get health insurance through your employer, note that some companies may begin to pressure employees to kick their unhealthy habits. In a recent survey by Hewitt Associates, nearly half of employers say they plan to use financial penalties for employees who don't participate in certain health improvement programs.
Now some good news. If you're a small business owner, you may be able to receive tax credits as an incentive to provide health coverage to your employees. The credits decrease as companies get larger and completely phase out if a company has more than 25 employees making $50,000 or more per year. If a company fails to provide inexpensive health insurance, it may eventually face a large, non-deductible fee.
Individuals should plan on seeing some changes to their future tax bill, for better or for worse. In 2013, individuals making over $200,000 and couples making more than $250,000 a year will notice an extra 0.9% Medicare surtax, and an additional 3.8% Medicare tax on any unearned income (like interest, dividends and capital gains). And if you're an indoor tanner, you may want to start cutting back on your visits after July, or face a new 10% tax added on to your bill.
If you're a small business owner, you will want to pay special attention to the legislation. Small business owners may be able to receive tax credits as an incentive to provide health coverage to their employees. The credits decrease as companies get larger and completely phase out if a company has more than 25 employees making $50,000 or more per year. If a company fails to provide inexpensive health insurance, it may eventually face a large, non-deductible fee.
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Cached on February 9, 2012, 2:31 am