What You & Your Clients Need to Know about the New Health Law

After nearly a year of heated debate, Congress has approved and the President has signed into law two pieces of legislation. On March 23, 2010 President Barack Obama signed the Patient Protection & Affordable Care Act (PPACA) into law and on March 30, 2010, he signed the Health Care and Education Reconciliation Act which amends the PPACA. Together these Acts create a new systemic health reform law. The new law is complex and broad in scope, covering health care insurance, financing, delivery, information technology, wellness, and medical training. Many implementation questions remain to be defined by regulation. New questions are emerging every day. Some new rules will be implemented this year; many take effect in 2014 and some do not kick until 2018.

The process is far from over. The implementation process presents numerous opportunities for agent guidance including:

1. Federal Regulatory Process
2. National Association of Insurance Commissioners (NAIC)
3. State Regulatory Process
4. Technical Corrections Legislation
5. New Federal Legislation

NAIFA will remain actively engaged to ensure the implementation of the new law allows consumer access to licensed agents who are fairly compensated and to minimize administrative burdens.

As our legislative and regulatory work continues, there are five provisions effective this year that will be of great interest to your clients.

1.  Dependent Coverage Extended to Age 26 (beginning with plan years on or after September 23, 2010)

1. Dependent children must be covered until the child reaches age 26. This includes married dependent children, but does not include the spouse or grandchildren
2. Grandfathered plan may exclude such dependent children if they are eligible for coverage under another employer-sponsored plan
3. Dependent age extension applies only to medical plans 

2.  No Lifetime Limits (beginning with plan years on or after September 23, 2010)

1. No lifetime dollar limits on the value of “essential benefits”
2. Lifetime limit prohibition does NOT apply to non-essential benefits
3. Grandfathered plans may not receive this benefit change until their next scheduled renewal date
4. Prohibition on lifetime limits applies only to medical plans

3.  No Pre-existing Condition Exclusions for Dependent Children (beginning with plan years on or after September 23, 2010)

1. Prohibits pre-existing condition exclusions on children under the age of 19
2. Prohibition of pre-existing condition exclusions for adults takes effect in 2014
3. Prohibition on pre-ex applies only to medical plans

4.  Retiree Reinsurance Program (Beginning June 23, 2010)

1. New program to encourage employers to maintain benefits to retirees over 55 and not eligible for Medicare
2. The program will reimburse employer-provided health plans for 80 percent of certain costs of providing health insurance to early retirees
3. Reimbursement applies only to claims that exceed $15,000 but are no greater than $90,000

5.  Small Business Tax Credit (Effective Now)

1. Must cover at least 50 percent of the cost for workers, pay average annual wages below $50,000, and have less than the equivalent of 25 full-time workers (i.e. a firm with fewer than 50 half-time workers would be eligible)
2. Tax credit worth up to 35 percent of the premiums (25 percent for nonprofits)
3. Full credit is available to firms with average wages below $25,000 and less than 10 full-time equivalent workers.
4. Phases out gradually for firms with average wages between $25,000 and $50,000 and equivalent of between 10 and 25 full-time workers 

NAIFA has developed several educational tools to assist members in better understanding the new law. These include webinar presentations, general FAQs (coming soon) as well as specific FAQs (coming soon) regarding the Small Business tax credit.

NAIFA Staff Contact: Diane Boyle, Vice President – Federal Government Relations, at (703) 770-8252.