Our timeline will help you learn about reform rules.
With each year, new Patient Protection and Affordable Care Act (PPACA) rules, called provisions, go into effect. The law focuses on health insurance reform, and there’s still a lot of work to be done to make health care affordable and to improve the quality of services. At Cigna, our goal is to help you understand the law so you can address changes and impacts.
You can print out the entire timeline, or highlight a certain section to print it. Check back often because as rules change and the reform progresses, we’ll keep you informed.
- W-2 ReportingEmployers who distribute 250 or more Form W-2s are required to report the value of employer-sponsored health coverage.
- W-2 ReportingEmployers who distribute 250 or more Form W-2s are required to report the value of employer-sponsored health coverage.
2010 - U.S. health care reform begins with several consumer-focused provisions
Summary:
The PPACA was signed into law on March 23, 2010. Changes that went into effect in 2010 include:
- Allowing adult children under age 26 to be covered on their parents’ health plans
- Rebates for prescribed medication to those on Medicare
- Tax credits to small businesses for employee premiums
- Health plan requirements to cover preventive care at no cost to the consumer
- An early retiree insurance program
The law also prevents:
- plans from denying coverage for children under the age of 19 with pre-existing conditions
- lifetime limits on essential health benefits
- plans from canceling benefits due to illness
The PPACA includes a provision that considers health plans that existed on March 23, 2010, as “grandfathered.” Grandfathered plans are not required to comply with some of the PPACA provisions.
The year’s provisions are:
- Grandfathered plans
- Early retiree reinsurance program
- Online resources
- Appeals and external review
- Cancellation of coverage (rescissions)
- Dependent coverage up to age 26
- Doctor choice
- Dollar limits on essential health benefits: annual and lifetime
- Emergency care
- Prohibition in favor of highly compensated individuals
- No pre-existing conditions for enrollees under age 19
- Preventive services/immunizations without cost share
- Temporary high-risk pools
- No unreasonable premium increases
Grandfathered plans
Summary:
The PPACA includes a provision that considers health plans that existed on March 23, 2010, as “grandfathered.” Grandfathered plans are not required to comply with some of the PPACA provisions. Grandfathered plans can make routine changes to plan designs without losing grandfathered status. However, plans will lose their grandfathered status if they make changes that significantly cut benefits, increase out-of-pocket spending for individuals or reduce the employer contribution toward the cost of the plan.
A November 2010 amendment allows employers to keep grandfathered status if:
- An insured plan changes insurance policies (to a new carrier) and the new policy was effective on or after November 17, 2010
- A self insured plan changes to an insured plan and the policy was effective on or after November 17, 2010
Early Retiree Reinsurance Program
Summary:
The federal program will pay employers for part of the cost of health benefits they pay for retired employees age 55 and over, their spouses, surviving spouses and dependents. The program started June 1, 2010 and ends January 1, 2014 or when its $5 billion budget is used.
The Early Retiree Reinsurance Program refunds employers for up to 80 percent of claims that cost between $15,000 and $90,000. Employers must use the early retiree reinsurance program funds on health care programs that help to control employee costs.
Read our Early Retiree Reinsurance Program FAQ
Online resources
Summary:
Health insurance companies must post health plan options online for consumers. This provision applies only to fully insured individual policies and small group plans.
Appeals and external review
Summary:
Important: Grandfathering applies to this provision differently for individual and group plans. See details below.
All non-grandfathered individual and group health plans must have an effective appeals process for coverage determinations and claim decisions for plan years beginning on or after September 23, 2010. The PPACA requires plans and issuers to offer an external review process that meets minimum requirements.
Plans must:
Follow Employee Retirement Income Security Act (ERISA) rules pertaining to claims and appeals.
- Consider a rescission (retroactive cancellation) of coverage to be an adverse benefit determination
- Provide to the claimant any new or additional evidence or rationale considered, relied upon or generated in connection with the claim prior to giving a final adverse determination
- Address urgent pre-service initial determinations within 72 hours
- Meet additional adverse determination notice requirements, including:
- Providing information sufficient to identify the claim
- Providing a description of the available internal appeals and external review processes
- Disclosing information about any applicable office of health insurance consumer assistance or ombudsman
There is a foreign language requirement for notices under certain circumstances.
Grandfathered group plans are exempt from this requirement.
Read our news alert to learn about reform’s claims and appeals process
Cancellation of coverage (rescissions)
Summary:
Insurers and plans cannot retroactively cancel coverage except in cases of fraud or intentional misrepresentation. If coverage is cancelled, the PPACA requires 30 days advance notice to all enrollees.
Note: Cigna voluntarily complied with this provision on May 1, 2010.
Dependent coverage to age 26
Summary:
The PPACA requires dependents under age 26 be covered regardless of marital, student, residency or financial status. The Department of Health and Human Services requires plans to cover those:
- Currently enrolled on the plan
- Previously terminated from the plan
- Never enrolled on the plan
Spouses and children of dependents are not eligible unless the plan already covers these individuals.
Until 2014, grandfathered plans are not required to cover dependents that have access to another employer-sponsored plan.
Additional notes:
- Funds from Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs) may be used for dependents up to age 26.
- Plans may also offer retroactive FSA reimbursement for expenses incurred by a dependent up to age 26 – as far back as March 30, 2010. The IRS Ruling (2010-38) allows for this exception as long as you amended your cafeteria plan documents by December 31, 2010.*
- Health Savings Account (HSA) funds may not be used to pay the expenses of covered dependents who are not claimed as dependents for tax purposes.
Read our fact sheet to learn more about dependent coverage to age 26
*Under certain circumstances, extending FSA coverage to dependents up to age 26 may be optional. Please speak to your own legal counsel to determine if your FSA plan is required to provide this extension of coverage.
Doctor choice
Summary:
Enrollees must be allowed to select the primary care physician (PCP), including a pediatrician, of their choice. Enrollees must be able to visit an OB/GYN without a referral from the PCP. This rule does not apply to grandfathered plans.
Dollar limits on essential health benefits
Summary:
Important: Grandfathering applies to annual dollar limits differently for individual and group plans. See details below.
- Plans are restricted from having lifetime limits on coverage defined as Essential Health Benefits. Health care reform allows an annual limit on Essential Health Benefits until January 1, 2014. Final government definitions of essential benefits remain outstanding. However, plans and insurers are expected to make a good faith effort to comply with the lifetime and annual guidance provided so far.
The following minimum annual limits are allowed for plan years beginning on or after these dates:
- September 23, 2010: not less than $750,000
- September 23, 2011: not less than $1.25 million
- September 23, 2012: not less than $2 million
- 2014: No annual dollar limits allowed
Plans and insurers must offer a one-time, 30-day special enrollment period to any individual whose coverage previously ended due to reaching the lifetime dollar limit. This applies if that individual would otherwise still be eligible for coverage.
The PPACA provides an annual limits waiver program for limited benefit plans, which are typically for part-time or seasonal employees, that were in effect prior to September 23, 2010. The waivers are generally granted if compliance would significantly increase premiums or decrease access to coverage for current enrollees.
In June 2011, the Department of Health and Human Services extended the waiver program through 2014. To obtain a waiver, an extension request must have been received by September 22, 2011. Annual limit updates must then be sent by December 31, 2012 and December 31, 2013 to extend the waiver through 2014.
The PPACA has disclosure requirements for plans that receive waivers. They must clearly communicate limits of the coverage so plan participants understand them.
When state insurance exchanges open and other coverage options become available, waivers and annual limits will no longer be allowed.
For individual plans, annual dollar limits do not apply to grandfathered plans.
Read our extending annual limits waiver alert
Emergency care
Summary:
The PPACA requires insurers to cover all emergency services* as in-network benefits even if the emergency services are received out-of-network. Also, the PPACA does not allow insurers to require prior authorization for out-of-network emergency care.
Doctors and hospitals may balance bill participants once their benefit plan or insurer pays an amount equal to the greatest of the:
- Amount negotiated with in-network providers (median cost, if more than one amount is negotiated)
- Amount of the in-network, cost-sharing (without reduction for out-of-network cost-sharing, i.e. the Usual and Customary Rate or “UCR”)
- Sum generally paid by Medicare
These requirements do not apply to grandfathered plans.
*Plans must adopt a standard the “prudent layperson” definition for emergency services.
Prohibition in favor of highly compensated individuals
Summary:
Health care reform does not allow plans to discriminate by giving highly compensated employees better benefits. Employers may be fined $100 per day multiplied by the number of employees denied participation in the plan. The Department of Treasury has delayed enforcement of this rule until the Department of Health and Human Services issues additional rules.
Distinction based on a job factor, such as hours, salary or location may be acceptable.
Grandfathered plans do not have to follow this rule. A similar rule already exists for self-funded plans.
No pre-existing condition limitations for enrollees under 19
Summary:
Important: Grandfathering applies to this provision differently for individual and group plans. See details below.
Plans cannot deny benefits and coverage for people age 19 or under, whether they are an employee, spouse or dependent, because they have a pre-existing condition.
Beginning January 1, 2014 no one can be denied coverage based on pre-existing conditions.
Grandfathered individual plans are exempt from this requirement.
Preventive services/immunizations without cost share
Summary:
Plans must cover preventive care services and immunizations with no cost-sharing, such as deductibles, coinsurance, copayments or any other payment. However, cost sharing does not include premiums, balance billing amounts for out-of-network services or costs for non-covered services.
Grandfathered plans do not have to follow this rule.
The PPACA does not require preventive care to be covered for services received out-of-network. If a grandfathered or non-grandfathered plan includes out-of-network coverage, then cost-sharing, such as deductibles and coinsurance, are allowed. The preventive care services are covered in full under the in-network coverage.
Dollar limits on out-of-network preventive services and immunizations are not allowed.
Preventive care services and immunizations include:
- Recommended evidence-based preventive services from the United States Preventive Services Task Force with a rating of A or B.
- Immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention.
- Preventive care guidelines developed by the Health Resources and Services Administration and the American Academy of Pediatrics.
- On August 1, 2011, HHS adopted additional Guidelines for Women’s Preventive Services – including well-woman visits, support for breastfeeding equipment, contraception and domestic violence screening – that will be covered without cost sharing in new health plans starting in August 2012. The guidelines were recommended by the independent Institute of Medicine (IOM) and based on scientific evidence.
- These additional guidelines apply to new non-grandfathered plans (new or renewing) beginning with the first plan year on and after August 1, 2011.
- Please visit hrsa.gov/womensguidelines to read the Guidelines for Women’s Preventive Services.
Visit hhs.gov to read a list of covered preventive services.
Read our preventive health services without cost-sharing alert
Access our coverage of preventive health services without cost-sharing fact sheet
Temporary high risk pools
Summary:
Temporary high-risk pools give health insurance to people with pre-existing conditions who have not had insurance for at least six months. These pools will be available until state exchanges begin operating and selling insurance in 2014.
If insurers and employers encourage individuals to leave their current plan to join a high-risk pool they will be held responsible for the health care expenses paid by the high-risk pool.
No unreasonable premium increases
Summary:
Every year the federal government will review plan premium increases. Health and Human Services is establishing a process to review unreasonable increases. This provision applies only to fully insured individual policies and small group plans.
2011 - After a year of new reform regulations, focus shifted to preparation for the future.
Summary:
While 2010 was a year when we implemented many early health reform provisions, 2011 was equally busy as we prepared for future provisions and regulators released more specific information.
The year’s provisions are:
* Health savings account distribution tax penalty
* Medical loss ratio
* Eliminating the Medicare Part D coverage “Donut Hole”
* Over-the-counter drugs
Read our year-one anniversary memo
(individuals)
Read our year one-anniversary memo
(business)
Visit InformedOnReform.com often to learn more about how reform may affect you
Health savings account distribution tax penalty
Summary:
If a person uses Health Savings Account funds for items not listed as medical expenses under the federal tax code, the Internal Revenue Service may impose a 20 percent tax penalty on the amount.
All plans were required to follow this rule regardless of status as of January 1, 2011.
Read our health savings accounts FAQRead our over-the-counter drugs fact sheet to learn moreRead our over-the-counter medicines update to review changes in using health spending accounts
Eliminate the Medicare Part D coverage "Donut Hole"
Summary:
- The law gradually closes the gap between now and 2020. In 2010, enrollees received a $250 rebate from the government if they entered the Part D coverage gap.
- Starting in 2011, there was progressively lower beneficiary coinsurance for generic drugs and coverage for brand name drugs (with discounts from drug companies) in the gap.
- By 2020, the donut hole will be reduced to 25 percent coinsurance, instead of 100 percent.
The PPACA keeps the federal Medicare Part D 28 percent drug subsidy as is.
Read our Medicare Part D subsidy FAQ
Medical loss ratio
Summary:
Insurers must provide an annual rebate to policyholders after claims and other medical services are paid for—if the percent of premium left over meets a certain level. Called the medical loss ratio, this amount is based on a “block” of business to which the individual or group belongs. A rebate would be issued if the block’s medical loss ratio is less than 85 percent for large groups or 80 percent for small groups or individuals. A block may also be called a “cell.”
This provision applies to fully insured plans, including shared returns. Issuers of limited medical and expatriate international plans are subject to separate calculation rules.
Broker commissions are included in the non-claims portion of the medical loss ratio calculation.
Read our medical loss ratio FAQ
Learn about medical loss ratio
View our alert on the MLR final regulations
View our alert on notices for those not receiving rebates
Over-the-counter drugs
Summary:
As of January 1, 2011, purchases of most OTC drugs and medicines were no longer reimbursable from health spending accounts (HRA, HSA and FSA) unless the individual had a doctor’s prescription for the drug.
Certain products, such as contact lens solutions, insulin and diabetic supplies and first aid items can still be purchased with health spending and savings account funds without a prescription.
Health care reform affects flexible spending account debit cards, too. They may no longer be used to purchase over-the-counter drugs or medicines. However, the cost will be reimbursed with a prescription and store receipt. If a pharmacy processes the over-the-counter drug as a prescription (as defined by Internal Revenue Service notice 2011-05), then the flexible spending account debit card may allow the charge to go through.
For Health Savings Accounts, copies of prescriptions and receipts must be kept in the event of a federal income tax audit.
Read about over-the-counter changes in our FAQsView our fact sheet to learn about rules for over-the-counter drugsRead our over-the-counter medicines update to review changes in using health spending accounts
2012 - The PPACA will create administrative standards in United States health care.
Summary:
The PPACA requires insurers to continue to standardize documents in 2012. New reporting requirements are also in effect.
The year’s provisions are:
- Encouraging integrated health systems
- Summary of Benefits and Coverage
- Quality of care reporting
- Reducing paperwork and administrative costs
- Patient-Centered Outcomes Research Fee
Encouraging integrated health systems
Summary:
The PPACA improves quality of care by creating incentives for doctors to form accountable care organizations (ACOs). These organizations allow doctors and other health care professionals to better coordinate patient care. They could help prevent disease and illness and reduce unnecessary hospital admissions or re-admissions.
Incentives will be paid by the Centers for Medicare & Medicaid Services (CMS) for Medicare patients, but many ACOs will also contract for other patients.
Summary of Benefits and Coverage
Summary:
On February 9, 2012, the Department of Health and Human Services’ Center for Consumer Information and Insurance Oversight (CCIIO) issued its final rule regarding the Summary of Benefits and Coverage provision.
The rule applies to employees and dependents of domestic and international group and individual health plans. It applies to all fully insured and self-insured plans, regardless of grandfathered status. It does not apply to Medicare plans.
Beginning September 23, 2012, health insurers and self-insured group health plans will be required to provide a standard Summary of Benefits and Coverage (SBC) document to all individuals enrolling in medical coverage. This includes mid-year enrollment for new employees and those experiencing a special enrollment event, and 'upon request' by other enrollees.
The SBC includes:
- A four-page benefits and coverage summary describing plan benefits, cost sharing and limitations
- Consumer costs examples based on the specific plan’s benefits for two common medical scenarios: maternity and diabetes management
- Customer service phone number and a website to review or obtain a copy of their full policy or certificate
Health care reform requires the Summary of Benefits and Coverage:
- Be no more than four double-sided pages
- Be printed in 12-point font
- Be written in appropriate language that is respectful of culture
- Use terms most people understand
The benefit documents must also include dollar values for:
- Daily hospital room and board
- Miscellaneous hospital services
- Surgical services
- Physician services
- Prevention and wellness services
- Prescription drugs
- Mental health benefits
- Other benefits
The PPACA says documents must also include:
- The exceptions, reductions and limitations of the plan’s coverage
- Details on the plan’s cost-sharing rules
- How coverage renews or continues
- A statement indicating the Summary of Benefits and Coverage is not a policy, and the full policy can be reviewed for details on how to use the plan.
- A glossary of standard medical and insurance terms
All plans regardless of grandfathered status will be required to pay $1,000 per enrollee for what is considered willful non-compliance.
Learn about the Summary of Benefits and Coverage
Watch our webinar on the Summary of Benefits and Coverage
Quality of care reporting
Summary:
The Department of Health and Human Services is developing rules for how plans report on benefits and how they pay health care providers. The goal is to improve health outcomes through:
- Reporting
- Case management
- Care coordination
- Chronic disease management
- Medication and care initiatives, including the medical homes model for treatment or services
New rules are aimed at reducing hospital readmissions. A comprehensive program for hospital discharge could include:
- Patient education and counseling
- Thorough discharge planning
- Post-discharge follow-up by a health care professional
To improve patient safety and reduce medical errors, health care reform requires use of:
- Best clinical practices
- Evidence-based medicine
- Health information technology
The PPACA also supports widespread wellness and health promotion programs.
Grandfathered plans are not required to participate.
Reducing paperwork and administrative costs
Summary:
Many changes will make billing practices uniform to improve the quality of care. The PPACA requires health plans to adopt rules for the secure, confidential and electronic sending of health information. Standard documents could reduce paperwork and administrative duties, lower costs and decrease medical errors.
Grandfathered plans are not required to participate.
Comparative Effectiveness Research Fee
Summary:
Reform creates a new Comparative Effectiveness Research Fee. Revenue from this tax will fund research to determine the effectiveness of various forms of medical treatment. Effective for plan years that began on and after October 2, 2011, insurers and self-insured group health plans must pay a $1 tax per participant. The fee increases to $2 per participant in 2013, then to an amount indexed to national health expenditures for future years. The comparative effectiveness fee phases out by 2019.
Women's Health Amendment
Summary:
On August 1, 2011, HHS adopted additional Guidelines for Women's Preventive Services – including well-woman visits, support for breastfeeding equipment, contraception and domestic violence screening – that will be covered without cost sharing in new health plans starting in August 2012. The guidelines were recommended by the independent Institute of Medicine (IOM) and based on scientific evidence.
- These additional guidelines apply to new non-grandfathered plans (new or renewing) beginning with the first plan year on and after August 1, 2011.
- Please visit hrsa.gov/womensguidelines* to read the Guidelines for Women’s Preventive Services.
See 2010 for the Preventive Services/Immunizations without Cost Share provision synopsis.
W-2 Reporting
Summary:
Starting with the 2012 tax year, employers who distribute 250 or more* Form W-2s for the tax year are required to include the value of applicable employer-sponsored coverage on each employee's W-2 Form. This is not considered taxable income and is for information purposes only. Employee premiums may still be made on a pre-tax basis.
IRS Notice released October 12, 2010, made this reporting requirement for the 2011 tax-year voluntary. Employers that choose not to report the aggregate cost of employer-sponsored coverage for the 2012 tax year and beyond will be subject to tax penalties. While the Form W-2 has not changed, the IRS added a code "DD" that employers should put in box 12 to report the value. See the IRS sample W-2 form.
* It is important to note that this requirement applies to employers who distribute 250 or more W-2s, not simply to employers with 250 or more employees. A high-turnover employer with 200 employees may send out more than 250 W-2s.
2013 - Final preparations heading into reform's pinnacle in 2014.
Summary:
The year will focus on final preparations for the new state health insurance exchanges. They must open in time for open enrollment in fall 2013.
The year's provisions are:
- Flexible spending account limits
- Expanded authority to bundle payments
- Increased Medicare Part A tax on wages and investment income
Flexible spending account limits
Summary:
Individuals can save up to $2,500 per year (the Department of Health and Human Services will adjust the amount to inflation) in their flexible spending accounts.
Read our flexible spending account contribution cap FAQs
Read our flexible spending account FAQRead our fact sheet to view changes in using health spending accounts
Expanded authority to bundle payments
Summary:
Establishes a national pilot program to encourage hospitals, doctors and other health care professionals to work together to improve the coordination and quality of patient care.
Increased Medicare Part A tax on wages and investment income
Summary:
Starting January 1, 2013, there will be additional Medicare taxes for high-income earners. Employees earning up to $200,000 will continue to pay the same 1.45% Medicare tax. Employees earning more will be taxed an additional .9% on all earnings over the $200,000. Employers are liable for this added tax if they do not begin withholding the additional .9% once earnings reach $200,000.
For married couples filing jointly, the tax is assessed on a total household income of $250,000. In this case, a single employee's income may be below $200,000, so the employee is liable for the additional Medicare tax.
There is also an additional 3.8% Medicare tax on investment income (interest, dividends, and capital gains). The amount of investment income to be taxed is determined by the lesser of:
* The Modified Adjusted Gross Income above the threshold of
* $200,000 for an individual
* $250,000 for married or joint income
* Total investment earnings
Individuals who believe they may be assessed this new tax should consult their tax advisor or Certified Public Accountant (CPA) for guidance.
2014 - The year several key health reform provisions take effect
Summary:
The PPACA comes to a crescendo in 2014. Many key changes that are expected to get health insurance to millions of uninsured Americans, improve care and reduce costs begin.
The year’s provisions are:
- American health benefit exchanges
- Individual mandate
- Employer mandate
- Essential health benefits
- No pre-existing conditions for all ages
- Clinical trials
- Dollar limits on essential health benefits: annual
- Eligibility-related provisions
- Guaranteed availability/renewability
- Waiting periods
- Auto enrollment
- Health care excise taxes
American health benefit exchanges
Summary:
On January 1, 2014, states are required to establish health care exchanges where individuals and small employers can evaluate and purchase health insurance. In 2017, states may allow large employers (more than 100 employees) to purchase insurance through exchanges.
Health care reform establishes exchanges to offer affordable health insurance and makes it easy for people to purchase.
A state may defer to the federal government to establish an exchange for its citizens. Or, a state may develop an exchange in partnership with the federal government and take advantage of processes and systems being developed for the federal exchange.
There are many details for the states and the Department of Health and Human Services to work on before 2014.
Read our exchanges FAQ
Review our comprehensive page on exchanges
Track exchanges with our map
Individual mandate
Summary:
The PPACA requires all U.S. citizens and legal residents to have minimum essential coverage in 2014. People who do not have coverage will be taxed monthly on their annual incomes taxes. There are a few exceptions to the penalty.
Read our individual mandate FAQ
Read rule for U.S. territories in our FAQs
Read our fact sheet to learn more about the individual mandate
Employer mandate
Summary:
Health care reform requires employers with more than 50 full-time employees (or the mathematical equivalent)* to offer affordable health insurance benefits.
If employers do not offer health insurance benefits to full-time employees, the PPACA directs the Internal Revenue Service to tax them.
The tax is $2,000 each year for each full-time employee over the first 30 employees.
If an employer offers health insurance to full-time employees, but an employee still qualifies for premium assistance from the federal government and can buy more affordable insurance on a state exchange, the employer will still be taxed.
The tax will be lesser of $3,000 for each employee receiving premium assistance or $2,000 per employee for each full-time employee over the first 30 employees.
*Having a number of part-time or seasonal employees can add up to more than 50 full-time employees.
Read our employer mandate fact sheet to learn more
Read our part-time employee FAQ
Visit our exchanges page to learn more
Essential health benefits
Summary:
Health care reform requires fully insured small group and individual health plans to cover essential health benefits with no annual dollar limits or lifetime maximums starting in 2014.
The U.S. Department of Health and Human Services is working on the definition of essential health benefits, but the law will require plans cover:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance abuse disorder services (including behavioral health treatment)
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
Plans that stay grandfathered are not required to follow this rule. Large group plans will be affected if they offer any essential health benefits.
Read our annual limits FAQ
Learn if your plan qualifies for a waiver with our FAQ
Read our fact sheet to learn more about essential health benefits
Understand grandfathered status
Read our news alert about the HHS bulletin describing essential health benefits benchmarking
No pre-existing conditions for all ages
Summary:
Important: Grandfathering applies to this provision differently for individual and group plans. See details below.
Beginning January 1, 2014 all individual and group health insurance plans are not allowed to deny coverage to enrollees based on a pre-existing condition. The ban includes benefit limitations and coverage denials.
Grandfathered plans for individuals are exempt from this rule.
Read our grandfathering fact sheet to understand grandfathered status
Clinical trials
Summary:
With health care reform, plans can’t deny people from participating in clinical trials. They can’t limit coverage of routine patient costs for items and services in connection with the trial. The PPACA says that they must not discriminate against a policyholder because of a clinical trial.
Approved clinical trials are phase I, II, III or IV clinical trials that are for prevention, detection or treatment of cancer or another life-threatening disease.
Coverage includes benefits for routine patient care services provided outside of the plan’s health care provider network unless out-of-network benefits are otherwise provided by the plan.
Grandfathered plans do not have to follow this rule.
Read our grandfathering fact sheet to understand grandfathered status
Dollar limits on essential health benefits: annual
Summary:
Annual limits on the dollar value of essential health benefits ends in 2014.
Grandfathered plans for individuals are exempt from this rule.
Learn about annual limits in our FAQ
Read our waiver process FAQ
Read our fact sheet for more information on Taft-Hartley and Federal plans
Guaranteed availability/renewability
Summary:
Each carrier offering fully insured health insurance coverage in the individual or group market must accept every individual and group in the state that applies for coverage.
The carrier must renew or continue coverage at the plan sponsor or individual’s choice. Does not apply to grandfathered plans
Waiting periods
Summary:
With reform, group health plans and group health insurance carriers can’t require an insurance coverage waiting period of more than 90 days.
Auto enrollment
Summary:
Employers with more than 200 full-time employees that offer one or more health benefit plans must:
- Automatically enroll new full-time employees in one of the plans
- Continue the enrollment of current enrollees
- Give employees adequate notice and an opportunity to opt-out or change plans
Health care excise taxes
Summary:
The PPACA taxes health insurance companies based on their market share. The rate of this new excise tax rises each year between 2014 and 2018, and then increases at the rate of inflation.
In 2014, the fee is $8 billion, in 2015 $11.3 billion and in 2017 it is $11.9 billion. The tax is expected to create $14.3 billion in annual revenue.
Pharmaceutical companies will also be taxed based on market share. This new tax could create $2.5 billion in annual revenue.
Health care reform also taxes purchases of most medical devices at 2.3 percent. However, the law increases the deduction for medical expenses in Schedule A tax filings from 7.5 to 10 percent of earned income.
2018 - The PPACA requires a new tax on plans with rich benefits.
Summary:
Beginning this year, the PPACA imposes the Cadillac excise tax on plans with rich benefits.
Cadillac excise tax
Summary:
Health care reform law directs the Internal Revenue Service (IRS) to impose a 40 percent tax on employers that provide excessive benefits to certain employees under an employer sponsored group health plan.
Beginning in 2018, coverage valued in excess of $10,200 for a single person and $27,500 for family plans will be deemed excessive.
Read more about the Cadillac tax in our FAQ
2020 - This year brings a close to the Medicare Part D Coverage "Donut Hole"
Summary:
By 2020 the Medicare Part D coverage gap will be 25 percent.
Medicare Part D
Summary:
Health care reform phases out the coverage gap known as the “Donut Hole” in the Medicare Part D prescription drug benefit. Seniors pay a standard 25 percent of drug costs until they reach the threshold for Medicare catastrophic coverage.
Read our Medicare Part D coverage gap FAQ
Our timeline will help you learn about reform rules.
With each year, new Patient Protection and Affordable Care Act (PPACA) rules, called provisions, go into effect. The law focuses on health insurance reform, and there’s still a lot of work to be done to make health care affordable and to improve the quality of services. At Cigna, our goal is to help you understand the law so you can address changes and impacts.
You can print out the entire timeline, or highlight a certain section to print it. Check back often because as rules change and the reform progresses, we’ll keep you informed.
2010 - U.S. health care reform begins with several consumer-focused provisions
Summary :
The PPACA was signed into law on March 23, 2010. Changes that went into effect in 2010 include:
- Allowing adult children under age 26 to be covered on their parents’ health plans
- Rebates for prescribed medication to those on Medicare
- Tax credits to small businesses for employee premiums
- Health plan requirements to cover preventive care at no cost to the consumer
- An early retiree insurance program
The law also prevents:
- plans from denying coverage for children under the age of 19 with pre-existing conditions
- lifetime limits on essential health benefits
- plans from canceling benefits due to illness
The PPACA includes a provision that considers health plans that existed on March 23, 2010, as “grandfathered.” Grandfathered plans are not required to comply with some of the PPACA provisions.
The year’s provisions are:
- Grandfathered plans
- Early retiree reinsurance program
- Online resources
- Appeals and external review
- Cancellation of coverage (rescissions)
- Dependent coverage up to age 26
- Doctor choice
- Dollar limits on essential health benefits: annual and lifetime
- Emergency care
- Prohibition in favor of highly compensated individuals
- No pre-existing conditions for enrollees under age 19
- Preventive services/immunizations without cost share
- Temporary high-risk pools
- No unreasonable premium increases
Grandfathered plans
Summary:
The PPACA includes a provision that considers health plans that existed on March 23, 2010, as “grandfathered.” Grandfathered plans are not required to comply with some of the PPACA provisions. Grandfathered plans can make routine changes to plan designs without losing grandfathered status. However, plans will lose their grandfathered status if they make changes that significantly cut benefits, increase out-of-pocket spending for individuals or reduce the employer contribution toward the cost of the plan.
A November 2010 amendment allows employers to keep grandfathered status if:
- An insured plan changes insurance policies (to a new carrier) and the new policy was effective on or after November 17, 2010
- A self insured plan changes to an insured plan and the policy was effective on or after November 17, 2010
Early Retiree Reinsurance Program
Summary:
The federal program will pay employers for part of the cost of health benefits they pay for retired employees age 55 and over, their spouses, surviving spouses and dependents. The program started June 1, 2010 and ends January 1, 2014 or when its $5 billion budget is used.
The Early Retiree Reinsurance Program refunds employers for up to 80 percent of claims that cost between $15,000 and $90,000. Employers must use the early retiree reinsurance program funds on health care programs that help to control employee costs.
Read our Early Retiree Reinsurance Program FAQ
Online resources
Summary:
Health insurance companies must post health plan options online for consumers. This provision applies only to fully insured individual policies and small group plans.
Appeals and external review
Summary:
Important: Grandfathering applies to this provision differently for individual and group plans. See details below.
All non-grandfathered individual and group health plans must have an effective appeals process for coverage determinations and claim decisions for plan years beginning on or after September 23, 2010. The PPACA requires plans and issuers to offer an external review process that meets minimum requirements.
Plans must:
Follow Employee Retirement Income Security Act (ERISA) rules pertaining to claims and appeals.
- Consider a rescission (retroactive cancellation) of coverage to be an adverse benefit determination
- Provide to the claimant any new or additional evidence or rationale considered, relied upon or generated in connection with the claim prior to giving a final adverse determination
- Address urgent pre-service initial determinations within 72 hours
- Meet additional adverse determination notice requirements, including:
- Providing information sufficient to identify the claim
- Providing a description of the available internal appeals and external review processes
- Disclosing information about any applicable office of health insurance consumer assistance or ombudsman
There is a foreign language requirement for notices under certain circumstances.
Grandfathered group plans are exempt from this requirement.
Read our news alert to learn about reform’s claims and appeals process
Cancellation of coverage (rescissions)
Summary:
Insurers and plans cannot retroactively cancel coverage except in cases of fraud or intentional misrepresentation. If coverage is cancelled, the PPACA requires 30 days advance notice to all enrollees.
Note: Cigna voluntarily complied with this provision on May 1, 2010.
Dependent coverage to age 26
Summary:
The PPACA requires dependents under age 26 be covered regardless of marital, student, residency or financial status. The Department of Health and Human Services requires plans to cover those:
- Currently enrolled on the plan
- Previously terminated from the plan
- Never enrolled on the plan
Spouses and children of dependents are not eligible unless the plan already covers these individuals.
Until 2014, grandfathered plans are not required to cover dependents that have access to another employer-sponsored plan.
Additional notes:
- Funds from Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs) may be used for dependents up to age 26.
- Plans may also offer retroactive FSA reimbursement for expenses incurred by a dependent up to age 26 – as far back as March 30, 2010. The IRS Ruling (2010-38) allows for this exception as long as you amended your cafeteria plan documents by December 31, 2010.*
- Health Savings Account (HSA) funds may not be used to pay the expenses of covered dependents who are not claimed as dependents for tax purposes.
Read our fact sheet to learn more about dependent coverage to age 26
*Under certain circumstances, extending FSA coverage to dependents up to age 26 may be optional. Please speak to your own legal counsel to determine if your FSA plan is required to provide this extension of coverage.
Doctor choice
Summary:
Enrollees must be allowed to select the primary care physician (PCP), including a pediatrician, of their choice. Enrollees must be able to visit an OB/GYN without a referral from the PCP. This rule does not apply to grandfathered plans.
Dollar limits on essential health benefits
Summary:
Important: Grandfathering applies to annual dollar limits differently for individual and group plans. See details below.
- Plans are restricted from having lifetime limits on coverage defined as Essential Health Benefits. Health care reform allows an annual limit on Essential Health Benefits until January 1, 2014. Final government definitions of essential benefits remain outstanding. However, plans and insurers are expected to make a good faith effort to comply with the lifetime and annual guidance provided so far.
The following minimum annual limits are allowed for plan years beginning on or after these dates:
- September 23, 2010: not less than $750,000
- September 23, 2011: not less than $1.25 million
- September 23, 2012: not less than $2 million
- 2014: No annual dollar limits allowed
Plans and insurers must offer a one-time, 30-day special enrollment period to any individual whose coverage previously ended due to reaching the lifetime dollar limit. This applies if that individual would otherwise still be eligible for coverage.
The PPACA provides an annual limits waiver program for limited benefit plans, which are typically for part-time or seasonal employees, that were in effect prior to September 23, 2010. The waivers are generally granted if compliance would significantly increase premiums or decrease access to coverage for current enrollees.
In June 2011, the Department of Health and Human Services extended the waiver program through 2014. To obtain a waiver, an extension request must have been received by September 22, 2011. Annual limit updates must then be sent by December 31, 2012 and December 31, 2013 to extend the waiver through 2014.
The PPACA has disclosure requirements for plans that receive waivers. They must clearly communicate limits of the coverage so plan participants understand them.
When state insurance exchanges open and other coverage options become available, waivers and annual limits will no longer be allowed.
For individual plans, annual dollar limits do not apply to grandfathered plans.
Read our extending annual limits waiver alert
Emergency care
Summary:
The PPACA requires insurers to cover all emergency services* as in-network benefits even if the emergency services are received out-of-network. Also, the PPACA does not allow insurers to require prior authorization for out-of-network emergency care.
Doctors and hospitals may balance bill participants once their benefit plan or insurer pays an amount equal to the greatest of the:
- Amount negotiated with in-network providers (median cost, if more than one amount is negotiated)
- Amount of the in-network, cost-sharing (without reduction for out-of-network cost-sharing, i.e. the Usual and Customary Rate or “UCR”)
- Sum generally paid by Medicare
These requirements do not apply to grandfathered plans.
*Plans must adopt a standard the “prudent layperson” definition for emergency services.
Prohibition in favor of highly compensated individuals
Summary:
Health care reform does not allow plans to discriminate by giving highly compensated employees better benefits. Employers may be fined $100 per day multiplied by the number of employees denied participation in the plan. The Department of Treasury has delayed enforcement of this rule until the Department of Health and Human Services issues additional rules.
Distinction based on a job factor, such as hours, salary or location may be acceptable.
Grandfathered plans do not have to follow this rule. A similar rule already exists for self-funded plans.
No pre-existing condition limitations for enrollees under 19
Summary:
Important: Grandfathering applies to this provision differently for individual and group plans. See details below.
Plans cannot deny benefits and coverage for people age 19 or under, whether they are an employee, spouse or dependent, because they have a pre-existing condition.
Beginning January 1, 2014 no one can be denied coverage based on pre-existing conditions.
Grandfathered individual plans are exempt from this requirement.
Preventive services/immunizations without cost share
Summary:
Plans must cover preventive care services and immunizations with no cost-sharing, such as deductibles, coinsurance, copayments or any other payment. However, cost sharing does not include premiums, balance billing amounts for out-of-network services or costs for non-covered services.
Grandfathered plans do not have to follow this rule.
The PPACA does not require preventive care to be covered for services received out-of-network. If a grandfathered or non-grandfathered plan includes out-of-network coverage, then cost-sharing, such as deductibles and coinsurance, are allowed. The preventive care services are covered in full under the in-network coverage.
Dollar limits on out-of-network preventive services and immunizations are not allowed.
Preventive care services and immunizations include:
- Recommended evidence-based preventive services from the United States Preventive Services Task Force with a rating of A or B.
- Immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention.
- Preventive care guidelines developed by the Health Resources and Services Administration and the American Academy of Pediatrics.
- On August 1, 2011, HHS adopted additional Guidelines for Women’s Preventive Services – including well-woman visits, support for breastfeeding equipment, contraception and domestic violence screening – that will be covered without cost sharing in new health plans starting in August 2012. The guidelines were recommended by the independent Institute of Medicine (IOM) and based on scientific evidence.
- These additional guidelines apply to new non-grandfathered plans (new or renewing) beginning with the first plan year on and after August 1, 2011.
- Please visit hrsa.gov/womensguidelines to read the Guidelines for Women’s Preventive Services.
Visit hhs.gov to read a list of covered preventive services.
Read our preventive health services without cost-sharing alertAccess our coverage of preventive health services without cost-sharing fact sheet
Temporary high risk pools
Summary:
Temporary high-risk pools give health insurance to people with pre-existing conditions who have not had insurance for at least six months. These pools will be available until state exchanges begin operating and selling insurance in 2014.
If insurers and employers encourage individuals to leave their current plan to join a high-risk pool they will be held responsible for the health care expenses paid by the high-risk pool.
No unreasonable premium increases
Summary:
Every year the federal government will review plan premium increases. Health and Human Services is establishing a process to review unreasonable increases. This provision applies only to fully insured individual policies and small group plans.
2011 - After a year of new reform regulations, focus shifted to preparation for the future.
Summary :
While 2010 was a year when we implemented many early health reform provisions, 2011 was equally busy as we prepared for future provisions and regulators released more specific information.
The year’s provisions are:
* Health savings account distribution tax penalty
* Medical loss ratio
* Eliminating the Medicare Part D coverage “Donut Hole”
* Over-the-counter drugs
Read our year-one anniversary memo
(individuals)
Read our year one-anniversary memo
(business)
Visit InformedOnReform.com often to learn more about how reform may affect you
Health savings account distribution tax penalty
Summary:
If a person uses Health Savings Account funds for items not listed as medical expenses under the federal tax code, the Internal Revenue Service may impose a 20 percent tax penalty on the amount.
All plans were required to follow this rule regardless of status as of January 1, 2011.
Read our health savings accounts FAQRead our over-the-counter drugs fact sheet to learn moreRead our over-the-counter medicines update to review changes in using health spending accounts
Eliminate the Medicare Part D coverage "Donut Hole"
Summary:
- The law gradually closes the gap between now and 2020. In 2010, enrollees received a $250 rebate from the government if they entered the Part D coverage gap.
- Starting in 2011, there was progressively lower beneficiary coinsurance for generic drugs and coverage for brand name drugs (with discounts from drug companies) in the gap.
- By 2020, the donut hole will be reduced to 25 percent coinsurance, instead of 100 percent.
The PPACA keeps the federal Medicare Part D 28 percent drug subsidy as is.
Read our Medicare Part D subsidy FAQ
Medical loss ratio
Summary:
Insurers must provide an annual rebate to policyholders after claims and other medical services are paid for—if the percent of premium left over meets a certain level. Called the medical loss ratio, this amount is based on a “block” of business to which the individual or group belongs. A rebate would be issued if the block’s medical loss ratio is less than 85 percent for large groups or 80 percent for small groups or individuals. A block may also be called a “cell.”
This provision applies to fully insured plans, including shared returns. Issuers of limited medical and expatriate international plans are subject to separate calculation rules.
Broker commissions are included in the non-claims portion of the medical loss ratio calculation.
Read our medical loss ratio FAQ
Learn about medical loss ratio
View our alert on the MLR final regulations
View our alert on notices for those not receiving rebates
Over-the-counter drugs
Summary:
As of January 1, 2011, purchases of most OTC drugs and medicines were no longer reimbursable from health spending accounts (HRA, HSA and FSA) unless the individual had a doctor’s prescription for the drug.
Certain products, such as contact lens solutions, insulin and diabetic supplies and first aid items can still be purchased with health spending and savings account funds without a prescription.
Health care reform affects flexible spending account debit cards, too. They may no longer be used to purchase over-the-counter drugs or medicines. However, the cost will be reimbursed with a prescription and store receipt. If a pharmacy processes the over-the-counter drug as a prescription (as defined by Internal Revenue Service notice 2011-05), then the flexible spending account debit card may allow the charge to go through.
For Health Savings Accounts, copies of prescriptions and receipts must be kept in the event of a federal income tax audit.
Read about over-the-counter changes in our FAQsView our fact sheet to learn about rules for over-the-counter drugsRead our over-the-counter medicines update to review changes in using health spending accounts
2012 - The PPACA will create administrative standards in United States health care.
Summary :
The PPACA requires insurers to continue to standardize documents in 2012. New reporting requirements are also in effect.
The year’s provisions are:
- Encouraging integrated health systems
- Summary of Benefits and Coverage
- Quality of care reporting
- Reducing paperwork and administrative costs
- Patient-Centered Outcomes Research Fee
Encouraging integrated health systems
Summary:
The PPACA improves quality of care by creating incentives for doctors to form accountable care organizations (ACOs). These organizations allow doctors and other health care professionals to better coordinate patient care. They could help prevent disease and illness and reduce unnecessary hospital admissions or re-admissions.
Incentives will be paid by the Centers for Medicare & Medicaid Services (CMS) for Medicare patients, but many ACOs will also contract for other patients.
Summary of Benefits and Coverage
Summary:
On February 9, 2012, the Department of Health and Human Services’ Center for Consumer Information and Insurance Oversight (CCIIO) issued its final rule regarding the Summary of Benefits and Coverage provision.
The rule applies to employees and dependents of domestic and international group and individual health plans. It applies to all fully insured and self-insured plans, regardless of grandfathered status. It does not apply to Medicare plans.
Beginning September 23, 2012, health insurers and self-insured group health plans will be required to provide a standard Summary of Benefits and Coverage (SBC) document to all individuals enrolling in medical coverage. This includes mid-year enrollment for new employees and those experiencing a special enrollment event, and 'upon request' by other enrollees.
The SBC includes:
- A four-page benefits and coverage summary describing plan benefits, cost sharing and limitations
- Consumer costs examples based on the specific plan’s benefits for two common medical scenarios: maternity and diabetes management
- Customer service phone number and a website to review or obtain a copy of their full policy or certificate
Health care reform requires the Summary of Benefits and Coverage:
- Be no more than four double-sided pages
- Be printed in 12-point font
- Be written in appropriate language that is respectful of culture
- Use terms most people understand
The benefit documents must also include dollar values for:
- Daily hospital room and board
- Miscellaneous hospital services
- Surgical services
- Physician services
- Prevention and wellness services
- Prescription drugs
- Mental health benefits
- Other benefits
The PPACA says documents must also include:
- The exceptions, reductions and limitations of the plan’s coverage
- Details on the plan’s cost-sharing rules
- How coverage renews or continues
- A statement indicating the Summary of Benefits and Coverage is not a policy, and the full policy can be reviewed for details on how to use the plan.
- A glossary of standard medical and insurance terms
All plans regardless of grandfathered status will be required to pay $1,000 per enrollee for what is considered willful non-compliance.
Learn about the Summary of Benefits and Coverage
Watch our webinar on the Summary of Benefits and Coverage
Quality of care reporting
Summary:
The Department of Health and Human Services is developing rules for how plans report on benefits and how they pay health care providers. The goal is to improve health outcomes through:
- Reporting
- Case management
- Care coordination
- Chronic disease management
- Medication and care initiatives, including the medical homes model for treatment or services
New rules are aimed at reducing hospital readmissions. A comprehensive program for hospital discharge could include:
- Patient education and counseling
- Thorough discharge planning
- Post-discharge follow-up by a health care professional
To improve patient safety and reduce medical errors, health care reform requires use of:
- Best clinical practices
- Evidence-based medicine
- Health information technology
The PPACA also supports widespread wellness and health promotion programs.
Grandfathered plans are not required to participate.
Reducing paperwork and administrative costs
Summary:
Many changes will make billing practices uniform to improve the quality of care. The PPACA requires health plans to adopt rules for the secure, confidential and electronic sending of health information. Standard documents could reduce paperwork and administrative duties, lower costs and decrease medical errors.
Grandfathered plans are not required to participate.
Comparative Effectiveness Research Fee
Summary:
Reform creates a new Comparative Effectiveness Research Fee. Revenue from this tax will fund research to determine the effectiveness of various forms of medical treatment. Effective for plan years that began on and after October 2, 2011, insurers and self-insured group health plans must pay a $1 tax per participant. The fee increases to $2 per participant in 2013, then to an amount indexed to national health expenditures for future years. The comparative effectiveness fee phases out by 2019.
Women's Health Amendment
Summary:
On August 1, 2011, HHS adopted additional Guidelines for Women's Preventive Services – including well-woman visits, support for breastfeeding equipment, contraception and domestic violence screening – that will be covered without cost sharing in new health plans starting in August 2012. The guidelines were recommended by the independent Institute of Medicine (IOM) and based on scientific evidence.
- These additional guidelines apply to new non-grandfathered plans (new or renewing) beginning with the first plan year on and after August 1, 2011.
- Please visit hrsa.gov/womensguidelines* to read the Guidelines for Women’s Preventive Services.
See 2010 for the Preventive Services/Immunizations without Cost Share provision synopsis.
W-2 Reporting
Summary:
Starting with the 2012 tax year, employers who distribute 250 or more* Form W-2s for the tax year are required to include the value of applicable employer-sponsored coverage on each employee's W-2 Form. This is not considered taxable income and is for information purposes only. Employee premiums may still be made on a pre-tax basis.
IRS Notice released October 12, 2010, made this reporting requirement for the 2011 tax-year voluntary. Employers that choose not to report the aggregate cost of employer-sponsored coverage for the 2012 tax year and beyond will be subject to tax penalties. While the Form W-2 has not changed, the IRS added a code "DD" that employers should put in box 12 to report the value. See the IRS sample W-2 form.
* It is important to note that this requirement applies to employers who distribute 250 or more W-2s, not simply to employers with 250 or more employees. A high-turnover employer with 200 employees may send out more than 250 W-2s.
2013 - Final preparations heading into reform's pinnacle in 2014.
Summary :
The year will focus on final preparations for the new state health insurance exchanges. They must open in time for open enrollment in fall 2013.
The year's provisions are:
- Flexible spending account limits
- Expanded authority to bundle payments
- Increased Medicare Part A tax on wages and investment income
Flexible spending account limits
Summary:
Individuals can save up to $2,500 per year (the Department of Health and Human Services will adjust the amount to inflation) in their flexible spending accounts.
Read our flexible spending account contribution cap FAQs
Read our flexible spending account FAQRead our fact sheet to view changes in using health spending accounts
Expanded authority to bundle payments
Summary:
Establishes a national pilot program to encourage hospitals, doctors and other health care professionals to work together to improve the coordination and quality of patient care.
Increased Medicare Part A tax on wages and investment income
Summary:
Starting January 1, 2013, there will be additional Medicare taxes for high-income earners. Employees earning up to $200,000 will continue to pay the same 1.45% Medicare tax. Employees earning more will be taxed an additional .9% on all earnings over the $200,000. Employers are liable for this added tax if they do not begin withholding the additional .9% once earnings reach $200,000.
For married couples filing jointly, the tax is assessed on a total household income of $250,000. In this case, a single employee's income may be below $200,000, so the employee is liable for the additional Medicare tax.
There is also an additional 3.8% Medicare tax on investment income (interest, dividends, and capital gains). The amount of investment income to be taxed is determined by the lesser of:
* The Modified Adjusted Gross Income above the threshold of
* $200,000 for an individual
* $250,000 for married or joint income
* Total investment earnings
Individuals who believe they may be assessed this new tax should consult their tax advisor or Certified Public Accountant (CPA) for guidance.
2014 - The year several key health reform provisions take effect
Summary :
The PPACA comes to a crescendo in 2014. Many key changes that are expected to get health insurance to millions of uninsured Americans, improve care and reduce costs begin.
The year’s provisions are:
- American health benefit exchanges
- Individual mandate
- Employer mandate
- Essential health benefits
- No pre-existing conditions for all ages
- Clinical trials
- Dollar limits on essential health benefits: annual
- Eligibility-related provisions
- Guaranteed availability/renewability
- Waiting periods
- Auto enrollment
- Health care excise taxes
American health benefit exchanges
Summary:
On January 1, 2014, states are required to establish health care exchanges where individuals and small employers can evaluate and purchase health insurance. In 2017, states may allow large employers (more than 100 employees) to purchase insurance through exchanges.
Health care reform establishes exchanges to offer affordable health insurance and makes it easy for people to purchase.
A state may defer to the federal government to establish an exchange for its citizens. Or, a state may develop an exchange in partnership with the federal government and take advantage of processes and systems being developed for the federal exchange.
There are many details for the states and the Department of Health and Human Services to work on before 2014.
Read our exchanges FAQ
Review our comprehensive page on exchanges
Track exchanges with our map
Individual mandate
Summary:
The PPACA requires all U.S. citizens and legal residents to have minimum essential coverage in 2014. People who do not have coverage will be taxed monthly on their annual incomes taxes. There are a few exceptions to the penalty.
Read our individual mandate FAQ
Read rule for U.S. territories in our FAQs
Read our fact sheet to learn more about the individual mandate
Employer mandate
Summary:
Health care reform requires employers with more than 50 full-time employees (or the mathematical equivalent)* to offer affordable health insurance benefits.
If employers do not offer health insurance benefits to full-time employees, the PPACA directs the Internal Revenue Service to tax them.
The tax is $2,000 each year for each full-time employee over the first 30 employees.
If an employer offers health insurance to full-time employees, but an employee still qualifies for premium assistance from the federal government and can buy more affordable insurance on a state exchange, the employer will still be taxed.
The tax will be lesser of $3,000 for each employee receiving premium assistance or $2,000 per employee for each full-time employee over the first 30 employees.
*Having a number of part-time or seasonal employees can add up to more than 50 full-time employees.
Read our employer mandate fact sheet to learn more
Read our part-time employee FAQ
Visit our exchanges page to learn more
Essential health benefits
Summary:
Health care reform requires fully insured small group and individual health plans to cover essential health benefits with no annual dollar limits or lifetime maximums starting in 2014.
The U.S. Department of Health and Human Services is working on the definition of essential health benefits, but the law will require plans cover:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance abuse disorder services (including behavioral health treatment)
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
Plans that stay grandfathered are not required to follow this rule. Large group plans will be affected if they offer any essential health benefits.
Read our annual limits FAQ
Learn if your plan qualifies for a waiver with our FAQ
Read our fact sheet to learn more about essential health benefits
Understand grandfathered status
Read our news alert about the HHS bulletin describing essential health benefits benchmarking
No pre-existing conditions for all ages
Summary:
Important: Grandfathering applies to this provision differently for individual and group plans. See details below.
Beginning January 1, 2014 all individual and group health insurance plans are not allowed to deny coverage to enrollees based on a pre-existing condition. The ban includes benefit limitations and coverage denials.
Grandfathered plans for individuals are exempt from this rule.
Read our grandfathering fact sheet to understand grandfathered status
Clinical trials
Summary:
With health care reform, plans can’t deny people from participating in clinical trials. They can’t limit coverage of routine patient costs for items and services in connection with the trial. The PPACA says that they must not discriminate against a policyholder because of a clinical trial.
Approved clinical trials are phase I, II, III or IV clinical trials that are for prevention, detection or treatment of cancer or another life-threatening disease.
Coverage includes benefits for routine patient care services provided outside of the plan’s health care provider network unless out-of-network benefits are otherwise provided by the plan.
Grandfathered plans do not have to follow this rule.
Read our grandfathering fact sheet to understand grandfathered status
Dollar limits on essential health benefits: annual
Summary:
Annual limits on the dollar value of essential health benefits ends in 2014.
Grandfathered plans for individuals are exempt from this rule.
Learn about annual limits in our FAQ
Read our waiver process FAQ
Read our fact sheet for more information on Taft-Hartley and Federal plans
Guaranteed availability/renewability
Summary:
Each carrier offering fully insured health insurance coverage in the individual or group market must accept every individual and group in the state that applies for coverage.
The carrier must renew or continue coverage at the plan sponsor or individual’s choice. Does not apply to grandfathered plans
Waiting periods
Summary:
With reform, group health plans and group health insurance carriers can’t require an insurance coverage waiting period of more than 90 days.
Auto enrollment
Summary:
Employers with more than 200 full-time employees that offer one or more health benefit plans must:
- Automatically enroll new full-time employees in one of the plans
- Continue the enrollment of current enrollees
- Give employees adequate notice and an opportunity to opt-out or change plans
Health care excise taxes
Summary:
The PPACA taxes health insurance companies based on their market share. The rate of this new excise tax rises each year between 2014 and 2018, and then increases at the rate of inflation.
In 2014, the fee is $8 billion, in 2015 $11.3 billion and in 2017 it is $11.9 billion. The tax is expected to create $14.3 billion in annual revenue.
Pharmaceutical companies will also be taxed based on market share. This new tax could create $2.5 billion in annual revenue.
Health care reform also taxes purchases of most medical devices at 2.3 percent. However, the law increases the deduction for medical expenses in Schedule A tax filings from 7.5 to 10 percent of earned income.
2018 - The PPACA requires a new tax on plans with rich benefits.
Summary :
Beginning this year, the PPACA imposes the Cadillac excise tax on plans with rich benefits.
Cadillac excise tax
Summary:
Health care reform law directs the Internal Revenue Service (IRS) to impose a 40 percent tax on employers that provide excessive benefits to certain employees under an employer sponsored group health plan.
Beginning in 2018, coverage valued in excess of $10,200 for a single person and $27,500 for family plans will be deemed excessive.
Read more about the Cadillac tax in our FAQ
2020 - This year brings a close to the Medicare Part D Coverage "Donut Hole"
Summary :
By 2020 the Medicare Part D coverage gap will be 25 percent.
Medicare Part D
Summary:
Health care reform phases out the coverage gap known as the “Donut Hole” in the Medicare Part D prescription drug benefit. Seniors pay a standard 25 percent of drug costs until they reach the threshold for Medicare catastrophic coverage.
Read our Medicare Part D coverage gap FAQ
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