Obamacare Update: Changes to Expect in 2013
Thursday, February 14, 2013
I’m sure that many of you reading this blog are, by now, very familiar with the Patient Protection and Affordable Care Act, commonly referred to as the “Affordable Care Act”, but known to the majority of Americans simply as Obamacare. In case you aren’t familiar with Obamacare, it is an act which was passed by congress and signed into law by President Obama in March of 2010. Obamacare was created with the intention of providing the millions of Americans living without medical insurance with greater access to affordable medical care. The controversial bill was denounced as unconstitutional by critics, and brought before the United States Supreme Court. In July 2012, the Supreme Court ruled in favor of Obamacare, and upheld most of the reforms that it proposed.
In July, M&L Special Needs Planning published a blog titled What Obamacare Really Does for Individuals with Disabilities. In this blog we outlined the ways in which the Affordable Care Act would positively impact individuals living with a disability. Our discussion included the abolition of the pre-existing condition clause – which allowed insurance companies to deny coverage – and the elimination of the insurance coverage limit, which removed the right for insurance companies to cease coverage once a certain cap was reached, among other benefits. While the majority of Obamacare’s reforms, including those discussed in the aforementioned blog, will be enacted in 2014, we can expect a number of changes under the Act this year. As such, we felt that that called for an Obamacare update – a discussion of some of the changes you will be facing in 2013.
Changes to expect from Obamacare in 2013
The majority of the Obamacare changes in 2013 are tax related. To begin with, high wage earners (those who earn more than $200,000 a year or $250,000 for couples) will now face a 0.9% tax hike.[i] There is a new medical device tax; artificial joints, bed pans, and defibrillators, as well as many other medical devices, are now subject to a 2.3% tax[ii]. Changes have also been made to the ways in which Americans calculate medical deductions. Previous to this year, Americans could claim a deduction if total medical expenses added up to more than 7.5% of their earnings; as of 2013, that amount has risen to 10%[iii]. (Note: We are not tax professionals. Please verify all information with your accountant.)
Of all the tax related changes that came into effect on January 1st, the one that is perhaps of the most interest to the special needs community is the Flexible Spending Account (FSA) cap. The FSA is an account that is established by an employer for the benefit of an employee. In this account, an employee can deposit pretax dollars that are intended to pay for qualified medical expenses not covered by health insurance. Previous to this cap, the amount of money that could be deposited by an employee to his or her FSA was technically unlimited – it was up to the discretion of the employer, however, and most employers did enforce a limit[iv]. As of January 1st, FSA contributions are limited to $2500 per year. While critics say that this is detrimental to the special needs community, supporters say that the decision was based on the national average amount of the FSA and claim that increased insurance coverage will eliminate the need for a higher FSA cap amount.
In addition to these tax regulation changes, a number of new programs are being implemented under Obamacare in 2013. One program, Payment Bundling, proposes that an “episode of care is billed as a whole, rather than paying for each service separately.[v]” It is intended to streamline the process of receiving medical care by facilitating a higher level of cooperation between medical professionals, while increasing the quality of care and lowering costs[vi]. Another program, one intended to promote preventative services, is also in effect. State Medicaid programs offering preventative services, such as cancer screenings, counseling for weight loss, addiction, and smoking cessation, routine vaccinations, and testing for diabetes, high blood pressure, and other preventative services for free, or at little cost to the patient, will now receive money from the federal government.[vii]
As well, as of 2013 CHIP, the Children’s Health Insurance Program, has been extended for another two years. The program is a collaboration between state and federal government that ensures that “children in families with incomes too high to qualify for Medicaid, but cannot afford private healthcare insurance, have healthcare coverage.”[viii] Funding has been extended until 2015.
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