News Article: The Wall Street Journal
The Health-Care Overhaul: A Timeline for Consumers
The U.S. Supreme Court has upheld most of the massive health-care changes Congress passed in 2010. Their ultimate fate depends on whether November's elections provide traction to a vocal group of lawmakers who want to repeal them.
While some changes have taken effect already, others haven't—and won't kick in for years. "For many people, the most important provisions are yet to come," says Mark Luscombe, a tax specialist at publisher CCH, a WoltersKluwer business, which closely tracks changes in federal laws.
Here's a guide to the status of some of the most notable changes affecting individuals—and their wallets. (Note: Some provisions affect older plans or policies on a different schedule, or not at all.)
In Effect Now
Group health plans are required to cover the children of enrolled parents until age 26. "Child" includes stepsons and stepdaughters, adopted children and eligible foster children.
A small-business health-insurance tax credit is available to employers with fewer than 25 employees, or the equivalent.
According to the Government Accountability Office, only about 170,000 employers claimed this credit in 2010 out of an estimated pool of up to 4 million eligible firms, perhaps because of the complexity of calculating the credit. Terms of the credit change in 2014.
New plans and policies are required to cover certain preventive services without copayments, including immunizations, routine mammograms for women age 40 and older, and colorectal cancer screening beginning at age 50. For a partial list, see HealthCare.gov.
Flexible-spending-account funds may no longer be used to pay for nonprescription drugs except insulin, but they may still be used for supplies such as bandages, contact lenses and blood-sugar test kits. According to Mr. Luscombe, some health-care providers are writing prescriptions for over-the-counter medicines for their patients to get around the new requirements.
Indoor tanning parlors must pay a 10% excise tax on amounts charged to clients.
Beginning this year, most employers filing 250 or more W-2 forms must list the cost of health coverage on each form. The reporting is for informational purposes only.
Effective in 2013
A 3.8% tax on net investment income takes effect for most joint filers with adjusted gross income above $250,000 ($200,000 for singles). It applies to gross income from interest, dividends, annuities, royalties and rents—unless the income is from a business the taxpayer actively engages in—and to net gains from investments. It might also apply to large net gains on the sale of a home. (For more details, see "Get Ready for the New Investment Tax," June 30.)
A 0.9% Medicare surtax will apply to most joint filers' wages and self-employment income above $250,000 ($200,000 for singles).
The threshold for taxpayers claiming an itemized deduction for medical expenses rises to 10% from 7.5% of adjusted gross income. For taxpayers (and spouses) 65 or older, however, the AGI threshold continues to be 7.5% until 2017. For those subject to the alternative minimum tax, the threshold remains 10% of AGI.
Contributions to flexible spending accounts are capped at $2,500 per employee, down from $5,000 or more per employee. The new cap is adjusted for inflation beginning in 2013.
A medical-device excise tax of 2.3% of the sale price applies to certain products. The tax doesn't apply to eyeglasses, contact lenses and hearing aids, but will apply to items such as pacemakers, stents and artificial hips. The House has repealed this provision, but it's unclear if the Senate will act.
Effective in 2014
The first penalties will be levied on individuals without insurance. The penalty is a flat amount or a percentage of income, whichever is greater, and it phases in over three years.
For 2014, the dollar penalty is $95, rising to $695 as of 2016. The 2014 income percentage is 1%, rising to 2.5% as of 2016. This amount is uncapped, says Mr. Luscombe—a fact relevant to the wealthy who self-insure.
In general, individuals with employer-provided coverage meeting minimum standards will be exempt from the penalty, as will people covered by Medicaid and Medicare and members of a religion opposed to accepting benefits.
Large employers (more than 50 full-time workers or the equivalent) must pay an assessment if they don't offer employees certain minimum coverage at an affordable rate.
Each state must establish an "exchange" offering health plans to individuals and small-business employers. Coverage will be classified as bronze, silver, gold or platinum. Small businesses are defined as those with fewer than 25 full-time employees and average annual wages of less than $50,000 for those employees. If a state doesn't comply, the Department of Health and Human Services will operate a substitute exchange.
Insurers must not impose exclusions for pre-existing conditions, or annual or lifetime limits on the dollar value of health benefits, except in cases of fraud. (A similar provision affecting enrollees under age 19 took effect in 2010.)
Effective in 2018
So-called Cadillac plans—employer-sponsored health coverage exceeding a certain value—is subject to a 40% excise tax. The threshold is $10,200 for singles and $27,500 for families, although those figures might be adjusted upward based on health-care inflation before then.
Wall Street Journal