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Health Care Legislation and LACERS Health Benefits

The Patient Protection and Affordable Health Care Act and the Health Care and Education Reconciliation Act of 2010 were signed into law in March. Some provisions will take effect as early as this year and the most significant changes will occur in 2014.

However, the impact on LACERS members and health plans is still being assessed and LACERS will not know the impact on its members or its health plans until the final regulations are prepared by the federal Department of Health and Human Services. Retirees will receive the most up-to-date interpretation of the provisions that pertain to the upcoming plan year in their 2011 Open Enrollment packets. Visit www.LACERS.org for regular updates.

A summary of the various provisions is listed by the year they go into effect:

2010 Rebate to Medicare Part D Participants Who Reach Coverage Gap (click here for more info)
  A rebate of $250 will be provided to Medicare beneficiaries who reach the Part D coverage gap. The Medicare Part D coverage gap will gradually be eliminated by 2020.
   
2011 LACERS is exempt from the following provisions, pending legislative review.  We will notify you if there are any changes.
   
  Dependent Coverage for Adult Children up to Age 26 (click here for more info)
   
 

Closing the Medicare Part D Drug Coverage Gap (“Donut Hole”)
Beginning January 1, 2011, the Patient Protection and Affordable Care Act requires pharmaceutical manufacturers to provide a discount on brand-name drugs once retirees enter  the Medicare Part D coverage gap (a.k.a. as the “Donut Hole”).  As a result, once retired members with Medicare Part D (and their medical plan) pay $2,840 or more for prescription drugs during a plan year, they will see a 50% reduction in their co-pays for brand-name prescription drugs for the rest of that year.

   
 

No Cost-Sharing for Approved Preventive Services

   
  Lifetime Limits Abolished
   
2013 Consumer-Operated and Oriented Plan (CO-OP)
  This program will foster the creation of non-profit, member-run health insurance companies.
   
  Federal Subsidies Applied to Medicare Part D Coverage Gap
  Federal subsidies will be phased in for the Medicare Part D coverage gap until they reach a level of 25% of the gap in 2020. These subsidies will be in addition to the 50% discount on brand-name drugs from manufacturers.
   
  Increases in Medicare Part A Tax and Unearned Income Tax
  The Medicare Part A tax will be increased from 1.45% of income to 2.35% of income for earnings over $200,000 for individuals and $250,000 for married couples filing jointly. A 3.8% assessment on unearned income will also take effect for high-income taxpayers.
   
2014 Individual Mandate for Health Coverage
  U.S. citizens and legal residents will be required to have qualifying health coverage or pay a tax penalty (certain exceptions granted). The tax penalty would be phased in between 2014 and 2016. As of 2016, the penalty would be the greater of:
  a) $695 per year per individual, up to a maximum of three times that amount ($2,085) per family, OR
b) 2.5% of household income
  (The amounts are $95 or 1% of income for 2014, and $325 or 2% of income for 2015)
   
  American Health Benefit Exchanges and Small Business Health Options Program (SHOP)
  Governmental agencies or non-profit organizations will be able to administer American Health Benefit Exchanges and SHOP Exchanges to provide health coverage for employers with up to 100 employees.
   
2018 Excise Tax on Employer-Sponsored Health Plans
  An excise tax of 40% will be levied on the value of health plans exceeding:
  a) $10,200 for individual coverage
  b) $27,500 for family coverage
  The excise tax will be levied on the issuer of the insurance policy.
   
You can review summaries of the bills by clicking on the links below: