Client Alert: Patient Protection and Affordable Care Act of 2010

Congress Passes "Patient Protection & Affordable Care Act"
After much debate and public discussion, Congress passed the "Patient Protection and Affordable Care Act of 2010" on March 23, 2010, with some changes made through the reconciliation process on March 26, 2010.  Businesses and individuals need to be aware of how the Act will affect healthcare coverage.  This Client Alert will focus on some of the more significant changes in the Act.   You are encouraged to consult with your attorney to determine how the Act affects you or your business.  
Changes Effective in 2010:  

-Small employers will receive a tax credit for contributions to health insurance for their employees where the employer offers health insurance to its employees and contributes at least half the total premium cost.  The business must have no more than 25 full-time equivalent employees and the average annual full-time wages must be no more than $50,000.  The credit phases out as average wages increase from $25,000 to $50,000 and as the number of full time employees increases from 10 to 25.  The credit can be worth as much as 35% of premiums paid by the employer.  (Note that, in 2014, the credit can be worth as much as 50% of premiums paid by the employer.)  The IRS has stated that the credit is available for premiums paid in 2010, prior to enactment of the Act.  Owners are ignored in both the number of employees and the calculation of the average wage for purposes of this provision.

-Insurance companies can no longer deny coverage based on pre-existing conditions in children.

-Families can include their adult children, up to the time a child attains the age of 27, in their coverage.

-Insurance companies can no longer impose lifetime caps on coverage.

-There are limits on the ability of insurance companies to impose annual caps on coverage.

-Early retiree health benefits:  Effective June 23, 2010 and expiring on January 1, 2014 (or when the $5 billion set aside to cover the cost is depleted), payments will be made to employer-sponsored health plans on behalf of an early retiree.  An early retiree is an individual aged 55 and older who is neither an active employee nor eligible for Medicare.

-Medicare beneficiaries will receive a rebate check to account for the Medicare Part D coverage gap, otherwise known as the "donut hole."

-Tax credits are available for investments in new therapies to prevent, diagnose and treat acute and chronic diseases.

Changes Effective in 2014:

-Insurance Exchanges:  States are required to establish Insurance Exchanges to facilitate the purchase of qualified health plans by individuals and small group markets.  Individuals will be able to enroll in plans through the Insurance Exchange.

-Employers with more than 50 employees will pay penalties if they do not provide coverage.  Employers with less than 50 employees will be exempt from this penalty.

-Insurance companies may no longer deny coverage for pre-existing conditions in adults.

-Insurance companies may no longer impose annual caps on coverage.

-Individuals will be eligible for tax credits for health insurance premiums paid through Insurance Exchanges where the individual's income is above Medicaid eligibility and below four times the federal poverty level, and where they are not eligible for other coverage.  Individuals who do not qualify for this credit may, under certain circumstances, be able to use their employer premium contribution ("vouchers") to obtain insurance through an Insurance Exchange.

-Individuals are required to obtain acceptable health insurance or pay a penalty.  Individuals will not have to pay the penalty if affordable coverage is not available.

-Insurance companies may not impose a waiting period in excess of 90 days.

-Insurance companies may not drop coverage because an individual chose to participate in a clinical trial.

Coming Attractions (changes after 2014):

-States may allow large employers to offer coverage to employees through the Insurance Exchanges.

-Tax on "Cadillac plans":  Where the annual premium exceeds $10,200 for single coverage and $27,500 for family coverage, the Act imposes a 40% tax on insurance companies and plan administrators.

-The Medicare Part D "donut hole" will be eliminated. 

 Antheil Maslow & MacMinn, LLP can provide guidance to our business clients and individual clients with respect to reviewing their  healthcare coverage needs in light of recent legislative changes.  Please contact Patricia Collins, Esquire at (215) 230-7500 to discuss any questions you have regarding the above issue or to schedule an appointment.