April 1, 2010 / 8:13 PM / 9 years ago

Factbox: Details of final healthcare bill

(Reuters) - President Barack Obama signed into law on Tuesday a package of final changes to his 10-year, $940 billion overhaul of the U.S. healthcare industry.

The legislation, the most sweeping shift in U.S. social policy in decades, extends insurance coverage to 32 million uninsured people. Here are some provisions of the law.

INSURANCE MARKET REFORM

The legislation requires substantial insurance market reforms that would bar insurers from excluding coverage to people with pre-existing medical conditions and prevent them from arbitrarily dropping policy holders.

Insurance exchanges would be created in which small businesses and individuals without employer-sponsored coverage would be able to shop for coverage. Plans offered on the exchange would have to meet minimum benefit requirements.

Dependent children are allowed to remain on their parents’ health policies until age 26.

The Senate bill also requires insurers to spend at least 85 cents of every premium dollar on medical care in small group markets and 80 cents in large group markets. The proposed changes also would require Medicare Advantage insurers to spend at least 85 percent of revenues on medical care.

COVERAGE MANDATES, SUBSIDIES AND MEDICAID

Individuals would be required to obtain health insurance. Those who fail to obtain coverage would face fines of up to 2.5 percent of income by 2016.

Firms with more than 50 workers who do not offer medical coverage could face fines of $2,000 per full-time employee.

Federal subsidies would be provided to help people with incomes of up to 400 percent of the poverty level purchase coverage on the exchange. Proposed changes would sweeten those subsidies for lower income people.

Medicaid, the government health insurance program for the poor, would be available to everyone with incomes up to 133 percent of the poverty level, which stood at $10,830 for an individual and $22,050, for a family of four. Many states have eligibility requirements below those levels.

FINANCING

The Senate bill included a 40 percent excise tax on high-cost health insurance plans. The package of fixes delayed implementation of the tax until 2018 instead of 2013. The tax would kick in on plans costing $10,200 for individuals and $27,500 for family coverage. A higher threshold is allowed for plans covering mostly women, older workers and retirees as well as those in high-risk professions.

The law calls for raising the payroll taxes for Medicare, the government health insurance plan for the elderly and disabled, to 2.35 percent from the current 1.45 percent for individuals earning $200,000 or more and for couples earning $250,000 or more. The proposed changes would apply the tax at a rate of 3.8 percent to some investment income for those high-income groups.

The law imposes fees on medical device manufacturers, insurance providers and brand-name pharmaceuticals. The changes delayed implementation of those fees.

The law also puts a 10 percent tax on indoor tanning services that use ultraviolet lamps, which goes into effect on July 1.

MEDICARE

The law freezes payments to insurers that provide coverage to Medicare patients in 2011 and begins reducing the subsidy in 2012.

It would also gradually close the gap in drug coverage for Medicare beneficiaries by 2020. Those who enter the coverage gap, the so-called doughnut hole, in 2010 will get a $250 rebate. In 2011 they would get a 50 percent discount on brand-name drugs.

Reporting by Donna Smith and Patricia Zengerle in Washington; Editing by Stacey Joyce

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