News Columns & Blogs

INVESTING: Upcoming changes from health care law

Change is happening in health care reform. The expectation is that the health care law passed last March will finally succeed in helping individuals and companies with their health care needs. Here are a few of those changes:

Health insurance companies will be required to provide rebates to enrollees if they spend less than 80 percent to 85 percent of their premium dollars on health care as opposed to administrative costs.

Community health centers will be seeing some funding. In October, funding will be increased by $11 billion for these community health centers that provide medical care to patients who cannot afford it.

The Medicare doughnut hole will be seeing some improvement also. Drug companies must provide a 50 percent discount on brand name prescription drugs for seniors who face a gap in drug

coverage. More subsidies will be phased in through 2020, when the coverage gap would be closed.

Primary care doctors and general surgeons practicing in areas that lack primary care doctors will receive a 10 percent bonus payment under Medicare. This only lasts through 2015.

There is going to be a new annual fee on drug makers in 2011. A total of $2.5 billion will be imposed on pharmaceutical manufacturers.

Finally in 2011, the federal tax on individuals who spend money from their health savings accounts on ineligible medical expenses will double to 20 percent.

In 2012 and 2013, we also will see some changes.

October of 2012, long-term care will have a voluntary long-term care program called CLASS created. After at least five years of contributions, enrollees will be entitled to a $50 a day cash benefit to pay for community care. The annual fee to drug makers will be raised to $2.8 billion from $2.5 billion in January of 2012, then to $3 billion for 2014 through 2016. In January 2013, we have some very interesting changes taking place. The limit on how much individuals can contribute to a flexible savings account where people set aside money tax free for health costs will be set at $2,500. Currently employers set the limit.

Itemized deductions for unreimbursed medical expenses will increased from 7.5 percent to 10 percent. Finally, the medicare tax rate will increase to 2.35 percent from 1.45 percent on earnings over $200,000 for individuals and $250,000 for families. Also, for the first time a 3.8 percent medicare tax will be imposed on unearned income.

Many Americans still say that all these changes are going to work. I guess all we can do is watch and see what happens.

Mike Miele, a financial adviser with MGA Insurance, can be reached at