An Association Guide to the House and Senate Health Care Reform Bills The similarities and differences between the two chamber’s reform efforts and their.

An Association Guide to the House and Senate Health Care

Reform Bills

The similarities and differences between the

two chamber’s reform efforts and their impact on

associations.

Status of the HR 3962The Affordable Health Care for

America ActThe House

Passed the House on November 11, 2009

220-215 vote

Awaiting the Senate to pass the bill

The SenateMotion to proceed on

debate passed 60-39 on November 21

Senate now debating the bill.

Outline for Health Care Guide

Insurance Reforms (pp. 4 – 8)Mandates (pp. 9 - 11)New Health Care Entities (pp. 12 -

15)Affordability Measures (pp. 13 - 19)Revenue Raisers (pp. 20 - 23)

Insurance Reforms: What’s Prohibited?

House Bill Reforms begin in 2013 Denial of coverage

based on preexisting conditions

Not covering an individual seeking coverage

Not renewing an individual’s insurance

Senate Bill Reforms begin in 2014 Denial of coverage

based on preexisting conditions

Not covering an individual seeking coverage

Not renewing an individual’s insurance

Insurance Reforms: Insurance Ratings

House Bill Limits the insurance

rating for age to no more than 2:1

All ratings prohibited except for geographic location and family size

Senate Bill• Limits the insurance

rating for age to no more than 3:1

• All ratings prohibited except for geographic location, family size, actuarial value, participation in a health promotion program, and tobacco use.

Insurance Reforms: Immediate Reforms

House Bill Senate Bill Preexisting conditions:

creates and funds an insurance program for those denied coverage due to preexisting condition

Creates a re-insurance program for early retirees to reduce insurance costs

Preexisting conditions: shortens the timeframe for an insurer to deny coverage to 3 months, until 2013.

Creates a national high risk pool for uninsured.

Creates a re-insurance program for early retirees to reduce insurance costs

Insurance Reforms: Dependents

Both bills allows dependents to remain on family coverage until age 26.

Insurance Reforms: Form Standardization

Both bills require insurers to develop a standard form for insurance transactions like claims payments and insurance enrollment under HIPAA.

Insurance Mandates: Individuals

House Bill All individuals are

required to carry insurance, except in extreme cases

The penalty for not reporting insurance coverage is 2.5% of an individual’s AGI.

Senate Bill All individuals are

required to carry insurance, except in extreme cases.

The penalties for not carrying insurance begin in 2014 at $95, and increase to $750 by 2016.

Insurance Mandates: Employer Mandate

House Bill• Employers with over

$500,000 in total payroll must make a credible offer of insurance to their employees

• Employers must cover at least 72.5% of individual and 65% of family plans to make offer valid.

Senate Bill The Senate bill does

not have language mandating that employers offer insurance to employees

Insurance Mandates: Employer Penalties

House Bill• Employers with payroll

between $500,000 and $750,000 who do not offer coverage are fined between 0-8% of the uninsured employee’s salary.

• Employers with payroll over $750,000 are fined 8% for each employee.

Senate Bill If an employer with

over 50 total employees has at least 1 employee receiving insurance through the Exchange, the employer pays a $750 penalty for every employee, regardless of coverage.

New Health Care Entities: Exchange

House Bill Bill allows for the

creation of a National Health Insurance Exchange, under a Health Insurance Commissioner.

For individuals and, after three years on sliding scale, employers with 100 or fewer employees.

Senate Bill Bill creates American

Health Benefit Exchanges in each state, run by state governments.

Must be operational by 2014, or federal plan is established in state.

Open to individuals and employers, as defined by the state.

New Health Care Entities: Navigators

House Bill The bill tasks the

Health Insurance Commissioner with advertising the Exchange, with help from “small employer benefit arrangements.”

Senate Bill The bill creates

“navigators”, which are membership organizations (including associations) that guide and inform eligible people and businesses into an Exchange.

New Health Care Entities: Public Plan

House Bill The House bill creates

a federal insurance company to compete with private companies

States cannot opt-out of participating

Reimbursement between insurer and providers will be negotiated

Senate Bill The Senate bill creates a

federal insurance company to compete with private companies

States can pass a law to opt-out of participating

Reimbursement between insurer and providers will be negotiated

New Health Care Entities: Co-ops

Both the House and Senate bills allow for the creation of state and regional cooperatives to provide insurance for members.

Affordability Measures: Small Employer Tax Credits I

Both bills provide sliding-scale subsidies for small businesses that:

Have 25 or fewer full-time employees Have an average salary under $40,000

Make a credible offer of insurance coverage

Pay at least 60% of insurance premiums

Affordability Measures: Small Employer Tax Credits II

However, the House and Senate bills differ as to who can receive the credits

The House gives an income tax credit, so no nonprofit can receive it

The Senate bills gives an income tax credit to businesses, and a payroll credit to nonprofits

Affordability Measures: Small Employer Tax Credits III

How the Senate Small Employer Credit Works

For-profit employers would receive an income tax credit for up to 35% of payroll the first year, and 50% for the subsequent two years.

Nonprofit employers would receive an income tax credit for up to 25% payroll the first year, and 35% for the subsequent two years.

Affordability Measures: Insurance Credits

Both bills allows individuals in the exchange to receive a credit (on a sliding scale) if they are up to 400% above the federal poverty level

Revenue Raisers: Medical Device Tax

House Bill The House bill

imposes a 2.5% tax on every medical device manufactured in the U.S. The tax is paid by the manufacturer.

Senate Bill The Senate bill

imposes a flat $2 billion fee annually on medical device manufacturers

Revenue Raisers: Senate Bill A tax is levied on

individual insurance plans above $8,500 and family plans above $23,000

The Medicare Hospital insurance tax is increased 0.5% on individuals earning over $200,000 and couples earning over $250,000

A new tax is levied on cosmetic surgery procedures that are not classified as medically necessary. The tax is 5%.

Revenue Raisers: House Bill

The bill imposes a 5.4% tax on individuals making over $500,000 and couples making over $1,000,000

Revenue Raisers: HSAs/FSAs

Flexible Spending Accounts

Both bills limit the amount of pre-tax donations to FSAs to $2,500 annually

Health Savings Accounts

Both bills limit the ability to use funds in HSAs except for qualified medical expenses, not including prescriptions.

Both bills also increase the financial penalties for inappropriate use of the funds.

Need More Information?

Contact the ASAE Public Policy Department at

202.626.2703 or [email protected]