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Health Law: The Basics 

The Patient Protection and Affordable Care Act tinkers in small and large ways with almost every facet of federal law that affects public health, health-care institutions and the workforce. Here is a summary of its central provisions:

Expanded coverage

The mandates and exchanges: Starting in 2014, most individuals who are not already insured will be required to buy insurance if they can afford it, and it will generally be deemed affordable if premiums do not consume more than 8 percent of a family's income. Families with incomes up to 400 percent of the poverty line will receive a federal subsidy to help them buy insurance, the amount adjusted according to income. Those for whom a policy would be affordable but who elect not to purchase insurance will be assessed a tax penalty.

Employers with more than 50 full-time employees generally will be required to offer health plans to their employees and carry at least half the premium costs or else pay a tax penalty.

Exchanges will be set up in each state or a group of states where individuals and small businesses can shop for an affordable health plan. The exchanges will give individuals and small businesses the advantage of enrolling in a group plan, where the premiums and out-of-pocket costs should be comparable to current large-group plans, or cheaper.

Medicaid: The state-federal insurance program, which now covers mostly children, will be expanded to cover adults with family incomes up to 133 percent of the poverty line. The federal government will pay 100 percent of the costs from 2014 through 2016, and states will begin to pick up a small share in 2017. The state share eventually will be capped at 10 percent.

Medicare: The "doughnut hole" — the gap in which people must pay 100 percent of their prescription costs — will gradually be closed, starting this summer with $250 checks for people whose drug costs are so high they have already reached the gap. Medicare will pay for an annual wellness visit and end deductibles and copays for immunizations, screening tests and other preventive services.

Consumer Protections

Either immediately or by 2014, insurance companies will be prohibited from following many practices. Among them: Denying coverage to people with pre-existing conditions or imposing different eligibility rules for them, excluding pre-existing conditions from coverage for children, imposing annual or lifetime dollar limits on coverage for essential benefits, charging higher premiums for people based on their gender or health history, and barring new employees from coverage in employer health plans during their first 90 days on the job. Insurance companies will not be allowed to rescind a person's insurance for minor errors in his or her application; the person will have to commit fraud or intentionally misrepresent a material fact to lose their coverage.

Insurance companies will have to spend 80 of their income from premiums from small-group and individual plans and 85 percent from large-group plans on actual medical care starting next year. That means only 15 to 20 percent could be kept for profits, advertising and overhead. If they spend less than 80 to 85 percent on medical services they must refund the balance to consumers.

Financing

Starting in 2013, people earning more than $200,000 a year or $250,000 for a couple will pay an extra tax of nine-tenths of 1 percent for the hospital portion of Medicare and a new Medicare tax of 3.8 percent on dividends and other unearned income, which are now exempt from the payroll tax.

Starting in 2018, expensive employer-sponsored insurance plans (those costing more than $10,200 for an individual and $27,500 for a family) will pay a tax on the annual value of the policies that exceeds those amounts.

Drug makers will pay fees totaling $16 billion and insurance companies $47 billion over the net nine years, and manufacturers of medical devices will pay a 2.9 percent excise tax on their sales. Indoor tanning services will pay a 10 percent excise tax on sales.

The government subsidy for Medicare Advantage, plans run by insurance companies, will be reduced by $132 billion over 10 years. The government now pays 14 percent more for people enrolled in those plans than for those enrolled in traditional Medicare.

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