FACTBOX: Details of Senate Finance health bill

Mon Oct 12, 2009 4:04pm EDT

(Reuters) - The Senate Finance Committee, headed by Senator Max Baucus, will vote on Tuesday on a sweeping overhaul of the U.S. healthcare system.

The bill, with a price tag of $829 billion, calls for major insurance market reforms and payment system changes, as well as requirements for most citizens and legal residents to buy insurance.

Here are the details of the bill.

INSURANCE MARKET REFORMS

* Creates separate state-based exchanges for individuals and small businesses, with up to 50 employees, to shop for insurance.

* Four categories of minimum benefits would be offered.

* A policy offering catastrophic coverage for young adults, a "young invincible" plan, would be offered.

* Starting July 1, 2013, insurance companies would no longer be able to exclude people from coverage based on pre-existing conditions. Limited-benefit plans and lifetime limits on coverage would be barred. Insurers would be prohibited from rescinding health coverage.

* States could form regional exchanges.

* Beginning in 2015, states must open the business exchange to firms with up to 100 employees and may allow even larger businesses into the exchange beginning in 2017.

* Stand-alone dental plans can be offered through the exchanges.

HEALTH COOPERATIVES, STATE FLEXIBILITY

* The proposal does not contain a government health plan, which is backed by Obama and liberal Democrats but opposed by Republicans and health insurers.

* The proposal provides for the creation of nonprofit "consumer operated and oriented" plans or cooperatives.

* The cooperatives would compete with private insurers in the individual and small-group insurance markets.

* States may establish a federally funded health plan for people earning from 133 percent to 200 percent of poverty-line income.

* States could "opt out" of some requirements if they meet coverage requirements by other means.

MANDATES AND AFFORDABILITY MEASURES

* Beginning in 2013, most U.S. citizens and legal residents would be required to obtain health coverage.

* Provides a sliding scale of tax subsidies for people with incomes up to 400 percent of poverty to help buy insurance.

* Limits deductibles and out-of-pocket expenses. Limits put on a sliding scale based on incomes.

* Exemption allowed for those who cannot afford coverage if costs exceed 8 percent of income.

* Penalties for failure to purchase insurance would be phased in starting with $200 per adult in 2014. By 2017, the penalty would be $750 per adult.

* Medicaid, the healthcare program for the poor, expanded to qualify everyone up to 133 percent of poverty-line income.

* Employers not required to offer health insurance but firms with 50 or more full-time workers would pay a fee for employees who get subsidized exchange policies.

* No fee for workers enrolled in Medicaid.

* Tax credits provided for small businesses that help purchase health policies for employees.

REVENUE-RAISING FEES AND TAXES

* An excise tax of 40 percent would be levied on insurance companies for health plans above $8,000 for singles and $21,000 for families. The tax applies to self-insured and group-market plans but not to plans sold in the individual market. Threshold indexed for inflation plus 1 percent.

* Insurance policies for retired people aged 55 and higher who are not eligible for Medicare and for workers in high-risk professions have a higher threshold of $9,850 for singles and $26,000 for family coverage.

* Health insurance providers collectively would pay an annual fee of $6.7 billion starting in 2010. The fee would be allocated by companies' market share.

* Pharmaceutical companies collectively would pay an annual fee of $2.3 billion, allocated by market share.

* Medical device makers collectively would pay an annual fee of $4 billion, allocated by market share. Some items sold at retail for less than $100 would be exempted from the fee calculation.

(Reporting by Donna Smith in Washington; Editing by Eric Walsh)