Health Care Reform Bill – What is it all about?

After months of debate in Washington, the Health Care Reform Bill was finally passed in the House of Representatives and around the country and has been signed by President Obama into law. The Health Care Reform will cost the government around $940 billion over ten years. It will help the government to reduce the deficit by $143 billion over the first ten years. With the coming of this bill, the health care coverage will expand to 32 million Americans who are presently not insured.

Here are some of the provisions of Health Care Reform Bill:

• Exchanges for health insurance: The uninsured and self-employed would be able to purchase insurance through these state-based exchanges. The government will provide funds to states to establish the exchanges within a year of enactment and until January 1, 2015.   Apart from this, separate exchanges would be created for small businesses to purchase coverage for their employees. Illegal immigrants will not be allowed to buy health insurance through any of the exchanges.

• Medicaid: The new Health Care Reform Bill also expands Medicaid to include 133% of people living below the federal poverty level. Illegal immigrants are not eligible for Medicaid. The Federal Government will pay 100% of costs in order to cover newly eligible individuals till 2016. It also requires the states to expand Medicaid to include childless adults starting from 2014.

• Medicare: This new reform will close the "donut hole" (i.e.  the difference of the initial coverage limit and the catastrophic coverage threshold) by 2020. Seniors reaching the donut hole by 2010 will receive a $250 rebate. Also, from 2011 onwards, seniors in the Medicare Part D coverage gap will receive a 50 percent discount on branded drugs.

• Subsidies:  Individuals and families who make between 100% - 400% of the Federal Poverty Level (FPL) will be eligible for subsidies if they want to purchase their own health insurance. However, they cannot be eligible for Medicare, Medicaid or be covered by an employer.

• Rules for insurance companies: Based on a pre-existing condition, the insurance companies could no longer deny children coverage. Also, insurance companies will not be able to deny coverage to anyone with pre-existing conditions starting from 2014. Apart from this, the insurance companies will have to allow children to stay on their parent's insurance plans until they reach the age of 26 years.

• Rules regarding abortion: Under the Health Care plan, it is not mandatory for the insurance companies to offer abortion coverage. States can even pass legislation if they want to opt out of offering abortion coverage through the health care exchange.

• Mandate for Employers: No special mandate has been mentioned for the employers under the Health Care Reform Bill. However, employers with more than 50 employees must provide health insurance or they will have to pay a fine of $2000 per worker each year.

The Federal Government is providing funds for the Health Care Plan. But where do the government receive these funds from? Lets take a look:

• Medicare Payroll tax: Starting from 2012, the Medicare Payroll Tax will be expanded and will include unearned income (income that is not a wage).
• Tanning Tax: 10 percent excise tax on indoor tanning services.
• Excise Tax: From 2018 onwards, the insurance companies will pay a 40 percent excise tax on so-called "Cadillac" high-end insurance plans. However, the dental and vision plans are exempt from this. It'll not be counted in the total cost of a family's plan.