Understanding HR3962: The Affordable Health Care for America Act
On Saturday, the House of Representatives passed the healthcare reform bill, formally known as HR3962, The Affordable Health Care for America Act. Most of the bill will take effect on January 1, 2010 or when signed into law by the President. Some portions of the bill will be introduced in stages through 2013.
In a section-by-section analysis of the bill, the House explains what each section means to Americans who are currently uninsured or underinsured. Section 101 explains the target audience for the healthcare act: Those who have been uninsured for several months or denied a policy because of pre-existing conditions. No one can be denied health insurance, except in the instance of fraud.
Under the Act, the Exchange will offer essential benefits within the base package, with additional benefits offered in four tiers, basic (essential), enhanced, premium, and premium-plus. The essential benefits package will limit out-of-pocket spending to $5,000 for an individual and $10,000 for a family. The premium plus plan will offer extra benefits such as dental and vision.
The Health Insurance Exchange will facilitate the offering of health insurance choices. It will be under the direction of the Health Choices Commissioner who will establish a process with qualified plans and will ensure that the different levels of benefits are offered properly. The program will not replace Medicaid or Medicare. Those eligible for those programs will be enrolled appropriately.
The act provides for coverage for those who are caught in several loopholes for insurance. For example, low-wage workers who are working for small companies who cannot provide insurance coverage for employees, cannot afford a private plan, and do not qualify for federal plans such as Medicaid or Medicare, the public health options will provide options for coverage.
In addition to providing expanded coverage, the Act will set up affordability credits to ensure that people with incomes up to 400% of the federal poverty level will have affordable health coverage. These credits reduce the costs of both premium and annual out-of-pocket spending. During the first two years of the plan, these credits will only be offered with the basic plan. After that, a process will be developed for the remainder of the plans.
For 2009, the Federal Poverty Guidelines state that an individual making $10,830 or less is below the level of poverty. Insurance will be offered to those individuals up to an annual salary of $43,320. For a family of four, the federal level of poverty is $22,050 in annual income. The plan will be an option for those families with gross annual income of up to $88,200.
In order to receive the credits, one cannot be enrolled in other coverage, including private plans, Medicaid or Medicare, and must be an American citizen or legal resident. The credits are offered on a sliding scale, meaning those with lower incomes will receive higher credits (less cost paid out) on their premiums. Income is determined from the most recent tax return.
As a part of the shared responsibility provision, those who cannot establish acceptable health coverage for themselves and all dependents will pay a 2.5% additional tax on their gross income. There will be a hardship exception, as well as exemptions for certain groups. In addition, employers who cannot provide health insurance to employees will contribute a payroll tax of 8% to help cover the expenses of employees who choose coverage under the exchange.
The next stage for HR3962 is for the Senate to approve with at least 60 votes out of 100. The bill is not expected to reach the senate until 2010.