U.S. House Vote Enacts Senate Health Reform Bill into Law
Issue: Health Care Reform
Reprinted with permission from the National Association of Insurance and Financial Advisors (NAIFA). Copyright 2010. All rights reserved.
Date: March 22, 2010
Action Taken: Last Night, the House of Representatives passed H.R.3590, a health insurance reform bill passed by the U.S. Senate in December. The House vote was 219 to 212. Since the House passed the bill exactly as the Senate had previously, H.R.3590 will become law as soon as President Obama signs it. That should happen early this week.
The House also passed a “sidecar-fixer” health reconciliation bill, H.R.4872, by a vote of 220 to 211. The reconciliation bill now goes to the Senate, where it will face procedural challenges that will require 60 votes to overcome prior to a simple majority vote on the bill itself. The reconciliation bill’s fate in the Senate is far from certain.
Impact on NAIFA Members: H.R. 3590 has numerous provisions that will impact how agents will continue to serve their clients. Following is a rundown on key provisions impacting the role of the agent. After each bullet point is an explanation of how (if) the health reconciliation bill, which still faces the need for considerably more legislative process, would change H.R.3590.
Key provisions include:
Creates state-based exchanges: The exchanges will be operational by 2014, and will be open to individuals without access to affordable health insurance and to very small businesses. Agents are specifically authorized to help individuals and very small businesses buy their insurance through exchanges. All the insurance sold through the exchanges will be private insurance (that has to comply with extensive rules regarding benefits included in the policies)
State Based Insurance Exchanges: There will be no government-underwritten health insurance plan offered through the exchanges
The above two provisions would not change in the amendments contained in the health reconciliation bill
Insurance Reforms: H.R.3590 contains extensive insurance reforms, including a prohibition against using preexisting conditions or health history in pricing insurance, guarantee issue rules, elimination of lifetime and unreasonable annual benefit caps, discrimination rules applicable to employer-provided insurance, and more. It also requires insurance policies to allow for coverage of adult children up through age 26.
The health reconciliation bill does not change these insurance reforms, but does modify the dates by which they must take effect.
Individual Mandate: Impose a requirement on virtually all Americans to buy health insurance. There are many subsidies for low and lower-middle income Americans to help them buy the required health insurance — failure to comply would result in a fine equal to the “bronze level” health plan premium (the authorized plan with the highest allowable co-pays and deductibles, other than the “young invincible plan” open to young adults)
The health reconciliation bill would change the fine for failure to comply with the individual mandate—to the greater of 2.5% of income or $695, once the fine is fully phased in
Employer Fees: Assess employers with more than 50 employees $750 per employee if they do not offer health insurance and one (or more) of their employees uses a federal subsidy to buy their health insurance through an exchange
The reconciliation bill would increase the assessment on employers that do not offer health insurance and who have at least one employee who buys health insurance with federal subsidies to $2,000 per full-time employee, after the first 30
Employer Fees II: Assess employers with more than 50 employees who do offer health insurance, but that health insurance is not “affordable” (costs more than 8% of a worker’s salary) $2,000 for such a worker (but not all workers) who uses a federal subsidy to buy health insurance
The reconciliation bill would increase this fine to $3,000 per employee who uses a federal subsidy to buy health insurance because the employer-offered insurance is not “affordable”—also changes what constitutes “affordable” to a sliding scale percentage of income that tops out at 9.5%
Insurance Company Tax on High Value Plans: Imposes a 40% tax on health insurers (or plan administrators or employers if they administer their own self insurance plan) if the employer offers “high value health insurance.” High value health insurance, generally, is insurance (all coverage aggregated, including FSAs but not stand-alone dental and vision insurance) with premiums in excess of $23,000 for family coverage and $8,500 for individual coverage. Those threshold amounts would go up if the health reconciliation bill’s amendments were to be enacted.
The health reconciliation bill would increase the thresholds to $27,500 and $10,200 for family and individual coverage; it also delays imposition of the tax to 2018
FSA: Caps FSA annual contributions at $2,500 (indexed)
The health reconciliation bill delays the effective date of the cap by one year
State Regulation of Insurance-Neither H.R.3590, the bill that is now ready for President Obama to sign into law, nor the health reconciliation bill, would repeal (or restrict) health insurers’ antitrust immunity contained in the McCarran-Ferguson Act of 1945.
Reconciliation Bill Issues of Concern: Issues of concern in the health reconciliation bill include a proposed 3.8% tax (the proceeds of which would go to the Medicare trust fund) on high income ($200,000/individual and $250,000/married) taxpayers’ unearned income, including annuities. Also of concern is a new rate review entity at the federal level that would have to approve health insurance premium increases.
Tags: politics
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