The Affordable Care Act is now the law of the land after the Supreme Court’s ruling of the act’s constitutionality and November’s presidential election. Most of the act’s provisions will be up and running in 2014, when the country will see statewide affordable health insurance exchanges and a national Medicaid program that will expand coverage to millions of low-income Americans. This year will mostly be dedicated to the preparation of government offices and health facilities for the larger changes that are on their way, but businesses also face increased regulatory requirements.
States face a deadline of Oct. 1 to activate their statewide health insurance exchanges. So far, 19 states and the District of Columbia have received conditional approval for their exchange programs, and two states have been approved to run an exchange in partnership with the federal government. People in states without exchanges will have access to a federal program. The exchanges are intended to provide the uninsured with an opportunity to find insurance at lower costs because a strong exchange will have the bargaining power to standardize benefit packages and establish a competitive bidding process.
Several other major provisions of the health care act will go live in 2013 to prepare for the act’s full implementation. State Medicaid programs that provide preventative services at little or no cost will receive extra funding from the federal government. In addition, primary care doctors who take Medicaid patients will receive no less than 100 percent of Medicare reimbursement rates from states. Previously, doctors who treated Medicaid patients could receive less reimbursement than for Medicare patients. Again, the federal government will fund this increase in compensation.
Also in 2013, medical providers will be encouraged to coordinate patient care through a pilot program that expands the authority to bundle payments. Instead of multiple bills from different providers who had a hand in a medical procedure, a team of providers will be encouraged to be compensated at a flat rate. This program is designed to save money and increase the efficiency and quality of care.
Some tax increases and changes to the tax code will also be effective in 2013. First, the Medicare tax increase will be applied to individuals earning more than $200,000 and couples earning more than $250,000; they will face a 0.9 percent tax increase that will be used to boost the Medicare trust fund.
Second, a new 2.3 percent tax on the price of medical devices will take effect in 2013. Items such as defibrillators, pacemakers and artificial limbs will be subject to the tax, although it will not apply to hearing aids or corrective lenses.
Third, medical deductions taken on individuals’ 1040s will be curtailed in 2013. Taxpayers will receive a deduction for medical expenses in excess of 10 percent of adjusted gross income, instead of the previous 7.5 percent limit.
The Affordable Care Act will also cap contributions to flexible savings accounts for medical expenses at $2,500 in 2013. Previously, there was no cap on how much an employer could set aside for employees’ flexible savings accounts, although most employers capped the amount at $5,000.
Finally, employers will be required to make changes to their W-2 forms in 2013. Employers must now include the amount of health benefits employees received from employer-sponsored health insurance. This provision’s goal is to help consumers better understand their benefits and to improve transparency.
Consumers are encouraged to begin planning tax and investment strategies, while business owners need to address the costs and increased regulatory requirements of the Affordable Care Act. This is an important year as businesses, states, government offices and health services begin laying the groundwork for the coming transformation of the health care industry.