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Small Business Employee Benefits and HR Blog

Major Health Care Reform Provisions by Impacted Group

Businesses, large and small, have many questions regarding the Affordable Care Act (ACA). Here's a quick overview of the major provisions impacting the following groups:

  1. Employers

  2. Individuals

  3. Medicare

  4. Medicaid

  5. Taxesmajor health care reform provisions

1. Major Health Care Reform Provisions Impacting Employers

  • Required to provide "affordable" and "qualified" coverage or else pay tax penalties (firms with less than 50 full-time equivalent employees are not subject this requirement)

  • New small business tax credit to purchase coverage

  • New insurance exchanges for small-group and individual markets

  • Limits on underwriting

  • Elimination of tax deduction for retiree drug subsidies to employers

  • Restrictions on Flexible Spending Account (FSA) salary deferral contributions

2. Major Health Care Reform Provisions Impacting Individuals

  • Required to purchase minimum essential coverage or else pay tax penalties

  • New mandated benefits in individual market

  • Tax subsidies to purchase individual health insurance coverage in an exchange

  • Limits on cost sharing

  • Limits on underwriting

  • Increase in floor for itemized medical deduction from 7.5% to 10%

  • Restrictions on use of HSAs, FSAs, HRAs for over the counter drugs

3. Major Health Care Reform Provisions Impacting Medicare

  • Part D coverage gap closed over time

  • Payment reductions to hospitals, physicians, etc.

  • Payment reductions to Medicare Advantage plans

  • Does not address physician payment issue

  • New rebates on drugs

4. Major Health Care Reform Provisions Impacting Medicaid

  • Expansion of coverage to 133% of poverty for all Americans (subject to State approval)

  • Temporary enhanced federal payments to states

  • Enhanced rebates on drugs

5. Major Health Care Reform Provisions Impacting Taxes

  • Medicare payroll tax increased by 0.9% for upper income

  • New 3.8% tax on investment for upper income $1 then $2-per-life tax on all insurance policies to fund research

  • High-cost plan tax of 40% for plans above $10,200 individuals/$27,500 families

  • New fees on drug, device manufacturers

  • New fees on health insurers

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