Friday, November 16, 2012

Health Law changes to look for in 2013



The re-election of President Obama means the health reform law (“The Affordable Care Act” aka “Obamacare”) is here to stay. The constitutionality of most of the law was upheld by the US Supreme Court in a decision issued in June. The health law phases in over a number of years. Some of its provisions are already in effect. Here are some new changes you can look for starting in 2013.

Reducing the donut hole.  The health reform law gradually reduces the amount that Medicare Part D enrollees are required to pay for their prescriptions when they reach the coverage gap.  As part of this reduction, in 2013 Medicare Part D beneficiaries will get higher 52.5 % discounts on their band name prescriptions while in the gap. (The discount on generic drugs is 21%).

Expanding preventive health coverage.  To expand the number of Americans receiving preventive care, effective January 1, 2013 the law provides new funding to state Medicaid programs that choose to cover preventive services for patients. 

Improving access to primary care.
    • The law requires state Medicaid programs to pay primary care physicians no less than 100% of Medicare payment rates in 2013 and 2014 for primary care services. The goal is to help ensure that there are a sufficient number of doctors available to treat Medicaid patients. The increase is fully funded by the federal government. See CMS news release
    • Medicare will be increasing its payments for primary care doctors including family physicians, internists, and geriatricians. It will be reducing Medicare payments made to some specialists.
    • Medicare is instituting a new policy to pay a patient’s physician or practitioner to coordinate the patient’s care in the 30 days following a hospital or skilled nursing facility stay. This is known as Transitional Care Management services.

Financial disclosure. The law requires disclosure of financial relationships between health entities, including physicians, hospitals, pharmacists, other providers, and manufacturers and distributors of covered drugs, devices, biologicals, and medical supplies. Basically, health care providers must tell you in writing if they will make money from a drug or treatment they recommend to you.

Higher spending caps. Before the health reform law, health insurance plans could set low annual limits on how much they would spend in total on your covered benefits. In 2013 the reform law will require plans to provide no less than $2 million in coverage. (The ability of plans to cap their payments will be eliminated entirely in 2014).   

Now for the bad news – new taxes and deduction reductions will impact some taxpayers. 

Medicare high earner taxes begin. The law increases the Medicare Part A (hospital insurance) tax rate on wages by 0.9% (from 1.45% to 2.35%) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly and imposes a 3.8% assessment on unearned income for higher income taxpayers. See my June 2012 blog post New Medicare Contribution Tax on Investment Income starts on January 1, 2013 for more information on this tax change.

Increase in the threshold for the itemized deduction of unreimbursed medical expenses. The threshold for deducting medical expenses on your federal income tax return is increased from 7.5% of adjusted gross income to 10% of adjusted gross income. However, the lower 7.5% threshold will continue to apply for individuals age 65 and older for tax years 2013 through 2016. See my June 2012 blog post Medical Expense Deduction Threshold Set to Increase on January 1, 2013 for more information on this issue.

Tax on medical devices. The law imposes an excise tax of 2.3% on the sale of any taxable medical device. The IRS has issued a proposed rule that provides guidance on the tax being imposed on medical devices.  

Limit on flexible spending accounts. Starting in 2013 there will be a $2,500 limit on the amount of pre-tax money that an employee can place in a flexible spending account to use for unreimbursed health-related expenses.

Health care is immensely complicated and so is the health reform law. 2013 is actually a modest year in terms of the changes that are being implemented. Much more dramatic changes including health-insurance exchanges, tax credits to help people buy coverage, and Medicaid expansion for states that choose to participate will become reality in 2014. 

Meanwhile, if you are looking for a new health insurance plan for 2013 you can check the plan rankings provided by the National Committee for Quality Assurance. Help in finding a Medicare insurance plan is available at https://medicare.gov/find-a-plan/questions/home.aspx.  The Medicare site has a helpful tool that allows you to answer a few questions to find the options available to you given your location and situation. Note that the Medicare open enrollment period ends on December 7, 2012.

More Information:
For an easy to use guide on the health reform changes taking effect in 2013 and 2014 see the “Implementation Timeline” prepared by the Kaiser Family Foundation which is available here

More information on the physician payment changes scheduled for 2013 is available online here.

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