Health Reform Provisions Affecting the Elderly

The new health reform law includes provisions of interest to the elderly and their family members including health insurance requirements and annual limits, Medicare benefits and the small business tax credit.

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Insurance for Adults with Pre-existing Conditions.  Beginning in 2014, no one will be turned down or charged an increased premium due to a pre-existing health condition (including a disability).  Until that time, the new health care reform law establishes a Pre-Existing Condition Insurance Program in order to make health coverage available to those who have been denied insurance by private insurers due to a pre-existing condition. However, new health insurance applicants must have been uninsured for a minimum of the past six months, and premiums and deductibles may be relatively high.  The program varies by state, as some states created their own plans while others are adopting the federal plan.

Lifetime and Annual Insurance Coverage Limits.  Health insurance providers often place a cap on the benefits that will be authorized and paid annually, during a patient’s lifetime, or both.  Included under this law, individual and employer policies that are either issued or renewed can no longer cap lifetime payout limits.  Further, annual caps on insurance payments will no longer be allowed in January of 2014 (unless the individual health plan was in effect on March 23, 2010, the time of the enactment of the healthcare bill).  However, some plans could be eligible for a waiver of the annual cap limitations if compliance with the new law would result in a significant increase in premiums or decrease in benefits.

Medicare.  The changes to Medicare benefits extend the Medicare trust fund for 12 years, to 2029.  Also, the new law will gradually do away with the Part D prescription drug “doughnut hole” issue (in which many beneficiaries’ coverage ceased until a specific out-of-pocket amount was reached).  In order to fund these added benefits, premiums for Part D will also be scaled to income, so that higher income earners will pay additional premiums (beginning at a $12 increase to the regular premium amounts).  Also, approximately 2% of the population will pay increased Medicare taxes.

Small Business Tax Credit.  The new health reform law includes a new small business tax credit for small employers. Companies with less than 25 employees, with an average annual salary of $50,000 or less (not including the owner’s income), that are paying 50% of their employees’ premiums on a group health plan are now eligible for a 35% tax credit for health insurance premiums paid on behalf of their employees.  This credit rises substantially to 50% in 2014.  For more information, see the IRS Small Business Health Care Tax Credit for Small Employers information page located here.