Health Care Package Major Provisions Timeline

Timeline of Major Provisions in the Democrats’ Health Care Package

2009
• 2-year tax credit (total cap of $1B) for new chronic disease therapy investments
• Medicare cuts to hospitals begin (long-term care (7/1/09) and inpatient and
rehabilitation facilities (FY10))

2010
• States and Federal officials review premium increases
• FDA authorized to approve “follow-on” biologics
• Increase brand name pharmaceutical Medicaid rebate (from 15.1% to 23.1%)
• Medicare payments to physicians in primarily rural areas increase (2 years)
• Deny “black liquor” eligibility for cellulosic biofuel producers credit
• Tax credits provided to certain small employers for health care-related expenses
• Increase adoption tax incentives for 2 years
• Codify economic substance doctrine and impose penalties for underpayments
(transactions on/after 3/23/10)
• Provide income exclusion for specified Indian tribe health benefits provided after
3/23/10
• Temporary high-risk pool and high-cost union retiree reinsurance ($5 B each for 3.5
years) (6/23/10)
• Impose 10% tax on indoor UV tanning (7/1/10)
• Medicare cuts to inpatient psych hospitals (7/1/10)
• Prohibits lifetime and annual benefit spending limits (plan years beginning 9/23/10)
• Prohibits non-group plans from canceling coverage (rescissions) (plan years
beginning 9/23/10)
• Requires plans to cover, at no charge, most preventive care (plan years beginning
9/23/10)
• Allows dependents to stay on parents’ policies through age 26 (plan years
beginning 9/23/10)
• Provides limited protections to children with pre-existing conditions (plan years
beginning 9/23/10)
• Hospitals in “Frontier States” (ND, MT, WY, SD, UT ) receive higher Medicare
payments (FY11)
• Hospitals in “low-cost” areas receive higher Medicare payments for 2 yrs ($400
million, FY11)

2011
• Medicare Advantage cuts begin
• No longer allowed to use FSA, HSA, HRA, Archer MSA distributions for over-the-
counter medicines
• Medicare cuts to home health begin
• Wealthier seniors ($85k/$170k) begin paying higher Part D premiums (not indexed
for inflation in Parts B/D)
• Medicare reimbursement cuts when seniors use diagnostic imaging like MRIs, CT
scans, etc.
• Medicare cuts begin to ambulance services, ASCs, diagnostic labs, and durable
medical equipment
• Impose new annual tax on brand name pharmaceutical companies
• Americans begin paying premiums for federal long-term care insurance (CLASS Act)
• Health plans required to spend a minimum of 80% of premiums on medical claims
• Physicians in “Frontier States” (ND, MT, WY, SD, UT ) receive higher Medicare
payments
• Prohibition on Medicare payments to new physician-owned hospitals
• Penalties for non-qualified HSA and Archer MSA distributions double (to 20%)
• Seniors prohibited from purchasing power wheelchairs unless they first rent for 13
months
• Brand name drug companies begin providing 50% discount in the Part D “donut
hole”
• 10% Medicare bonus payment for primary care and general surgery (5 years)
• Employers required to report value of health benefits on W-2
• Steps towards health insurance administrative simplification (reduced paperwork,
etc) begins (5 yr process)
• Additional funding for community health centers (5 years)
• Seniors who hit Part D “donut hole “in 2010 receive $250 check (3/15/11)
• New Medicare cuts to long-term care hospitals begin (7/1/11)
• Additional Medicare cuts to hospitals and cuts to nursing homes and inpatient
rehab facilities begin (FY12)
• New tax on all private health insurance policies to pay for comp. eff. research (plan
years beginning FY12)

2012
• Medicare cuts to dialysis treatment begins
• Require information reporting on payments to corporations
• Medicare to reduce spending by using an HMO-like coordinated care model
(Accountable Care Organizations)
• Medicare Advantage plans with a 4 or 5 star rating receive a quality bonus payment
• New Medicare cuts to inpatient psych hospitals (7/1/12)
• Hospital pay-for-quality program begins (FY13)
• Medicare cuts to hospitals with high readmission rates begin (FY13)
• Medicare cuts to hospice begin (FY13)

2013
• Impose $2,500 annual cap on FSA contributions (indexed to CPI)
• Increase Medicare wage tax by 0.9% and impose a new 3.8% tax on unearned , non-
active business income for those earning over $200k/$250k (not indexed to inflation)
• Generally increases (7.5% to 10%) threshold at which medical expenses, as a % of
income, can be deductible
• Eliminate deduction for Part D retiree drug subsidy employers receive
• Impose 2.3% excise tax on medical devices
• Medicare cuts to hospitals who treat low-income seniors begin
• Post-acute pay for quality reporting begins
• CO-OP Program: Secretary awards loans and grants for establishing nonprofit health
insurers
• $500,000 deduction cap on compensation paid to insurance company employees and
officers
• Part D “donut hole” reduction begins, reaching a 25% reduction by 2020

2014
• Individuals without gov’t-approved coverage are subject to a tax of the greater of
$695 or 2.5% of income
• Employers who fail to offer “affordable” coverage would pay a $3,000 penalty for
every employee that receives a subsidy through the Exchange
• Employers who do not offer insurance must pay a tax penalty of $2,000 for every full-
time employee
• More Medicare cuts to home health begin
• States must have established Exchanges
• Employers with more than 200 employees can auto-enroll employees in health
coverage, with opt-out
• All non-grandfathered and Exchange health plans required to meet federally-
mandated levels of coverage
• States must cover parents /childless adults up to 138% of poverty on Medicaid,
receive increased FMAP
• Tax credits available for Exchange-based coverage, amount varies by income up to
400% of poverty
• Insurers cannot impose any coverage restrictions on pre-existing conditions
(guaranteed issue/renewability)
• Modified community rating: individual or family coverage; geography; 3:1 ratio for
age; 1.5 :1 for smoking
• Insurers must offer coverage to anyone wanting a policy and every policy has to be
renewed
• Limits out-of-pocket cost-sharing (tied to limits in HSAs, currently $5,950/$11,900
indexed to COLA)
• Insurance plans must include government-defined “essential benefits ” and coverage
levels
• OPM must offer at least two multi-state plans in every state
• Employers can offer some employees free choice vouchers for health insurance in the
Exchange
• Government board (IPAB) begins submitting proposals to cut Medicare
• Impose tax on nearly all private health insurance plans
• Medicare payment cuts for hospital-acquired infections begin (FY15)

2015
• More Medicare cuts to home health begin

2016
• States can form interstate insurance compacts if the coverage with HHS approval (2016)

2017
• Physician pay-for-quality program begins for all physicians
• States may allow large employers and multi-employer health plans to purchase coverage in the Exchange.
• States may apply to the Secretary for a limited waiver from certain federal requirements

2018
• Impose “Cadillac tax on “high cost” plans, 40% tax on the benefit value above a certain
threshold: ($10,200 individual coverage, $27,500 family or self-only union multi-
employer coverage)

Update: Health Care Reform Expands IRS (Hat Tip: Shawn)


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