An Association Guide to the House and Senate Health Care Reform Bills

1. 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.

2. Status of the HR 3962The Affordable Health Care for America Act The House Passed the House on November 11, 2009 220-215 vote Awaiting the Senate to pass the bill The Senate Motion to proceed on debate passed 60-39 on November 21 Senate now debating the bill.

3. 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)

4. Insurance Reforms: What’s Prohibited? House Bill 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 • Reforms begin in 2013 • Denial of coverage based on preexisting conditions • Not covering an individual seeking coverage • Not renewing an individual’s insurance

5. Insurance Reforms: Insurance Ratings House Bill 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. • Limits the insurance rating for age to no more than 2:1 • All ratings prohibited except for geographic location and family size

6. 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

7. Insurance Reforms: Dependents • Both bills allows dependents to remain on family coverage until age 26.

8. Insurance Reforms: Form Standardization • Both bills require insurers to develop a standard form for insurance transactions like claims payments and insurance enrollment under HIPAA.

9. Insurance Mandates: Individuals House Bill 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. • 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.

10. Insurance Mandates: Employer Mandate House Bill Senate Bill The Senate bill does not have language mandating that employers offer insurance to employees • 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.

11. Insurance Mandates: Employer Penalties House Bill 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. • 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.

12. New Health Care Entities: Exchange House Bill 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. • 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.

13. New Health Care Entities: Navigators House Bill Senate Bill The bill creates “navigators”, which are membership organizations (including associations) that guide and inform eligible people and businesses into an Exchange. • The bill tasks the Health Insurance Commissioner with advertising the Exchange, with help from “small employer benefit arrangements.”

14. New Health Care Entities: Public Plan House Bill 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 • 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

15. 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.

16. 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

17. 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

18. Affordability Measures: Small Employer Tax Credits III How the Senate Small Employer Credit Works Nonprofit employers would receive an income tax credit for up to 25% payroll the first year, and 35% for the subsequent two years. • 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.

19. 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

20. Revenue Raisers: Medical Device Tax House Bill Senate Bill The Senate bill imposes a flat $2 billion fee annually on medical device manufacturers • The House bill imposes a 2.5% tax on every medical device manufactured in the U.S. The tax is paid by the manufacturer.

21. 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%.

22. Revenue Raisers: House Bill • The bill imposes a 5.4% tax on individuals making over $500,000 and couples making over $1,000,000

23. Revenue Raisers: HSAs/FSAs Flexible Spending Accounts 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. • Both bills limit the amount of pre-tax donations to FSAs to $2,500 annually

24. Need More Information? Contact the ASAE Public Policy Department at 202.626.2703 or publicpolicy@asaenet.org