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Consumer Health Reform Timeline

by Tony Novak, CPA, MBA, MT   revised October 13, 2012


Federal health care reform laws invokes sweeping changes on consumers yet the timing of these events may not be clear to most Americans. This timeline was developed to help individuals with their own financial and health care planning. A listing of "Tax Changes Triggered by Health Reform Law" is published separately.

March 2010

In a move intended to reduce health plan fraud, multi-employer health plans called "MEWAs" are required to register with the U.S. Department of Labor. That agency now has the power to regulate these plans to protect consumers. Previously these plans were largely unregulated because of exemption from state insurance laws. This change will have no effect on health plans costs but will likely remove some of the most problematic health plans from the market. We have previously reported that the majority of consumer health insurance complaints reported to OnlineAdviser service stemmed from these multi-state MEWA plans.

May 2010

Every state will offer a high risk pool for residents who have been uninsured for six months. Rates will be higher than commercial insurance so this will only be an attractive option to those with a serious medical condition. We expect this change will have little impact because most states already offer a high risk health insurance plan that is not popular with residents.

A temporary reinsurance program is established for early retirees from group health insurance plans. No information is available at this time on the effects for consumers.

September 2010

The changes that will have the largest effect on consumers:
  • Maximum lifetime coverage limits are removed. While very few policyholders have claims that approach policy maximums, this change has a significant impact on the amount of premiums that an insurance company is required to hold as financial reserves. One single catastrophic claim can easily exceed the total annual premiums paid by one hundred health plan members. Additionally, as maximum benefit caps are removed the treatment on catastrophic patients will increase so that these become disproportionally important to the revenues of doctors and hospitals. To meet these reserve requirements, insurers must raise premiums. Estimates vary widely but a long term estimate of 30% seems reasonable.
  • Emergency coverage is expanded; restrictions are lifted. This will have minimal impact since emergency services are generally provided regardless of insurance provisions and uninsured costs are already allocated throughout the health care system.
  • Ob/Gyn care will not require a physician referral; also with minimal impact.
  • Deductibles and co-payments are removed for preventative care and immunizations. This will raise insurance rates slightly, perhaps 3-5% per year.
  • Rescissions are prohibited except for fraud or intentional misrepresentation on an application. This will have little or no impact on consumers because first, the rarity of rescissions (les than 1/2 of 1% of all policies) and second, because insurers almost always assert that the rescission was for intentional misrepresentation.
However since premium rates may still be based on health history we expect to see a widening of range of rates.  Insurance companies will compete for young healthy members. Insurance exchanges like Freedom Benefits that allow consumers to comparing rates and coverage will become more valuable.

Hospitals will be required to publish a price list of their services and each state will establish a data center to collect and publicize medical cost information for consumer use.


Cost of tax-free employer-provided health coverage, including insurance and non-insured benefits, will be reported to the IRS on Form W2. This has no immediate effect on taxes although it does provide a reporting method for taxes to be assessed in the future.

Over-the-counter medications are excluded from coverage under Health Savings Accounts and other no-insured health plans. This will benefit insurance companies and pharmaceutical companies but have little effect on costs.

Small businesses may receive a financial grant to partially cover the cost of adding a wellness benefits to their health insurance. This is a voluntary provision.


Health plans pay one dollar per member to fund Comparative Effectiveness Research. These results may become the basis of controlled or rationed federal health care payments in the future.


Contributions to a health care Flexible Spending Account are limited to $2,500 per year. No information is available on how this impacts the interaction with Health Savings Accounts or combinations of health plans like cafeteria benefit plans that generally have higher allowances.

Deductions are disallowed for employer-provided prescription plans that benefit retirees. This forces more retirees to rely primarily on Medicare prescription benefits.

Funding for expansion of individual and small group CO-OP plans is available to commercial providers. Details of this program are not yet available and Freedom Benefits has not determined whether we will participate in the grant program.>
Performance information of individual physicians will be published on the Internet.


All residents must obtain health insurance coverage and the following provisions are intended to facilitate this requirement:
  • Health insurance may not be denied due to medical history. Waiting periods for coverage may not be longer than 90 days. Rates may be based on age, location and tobacco use. Despite the change, some currently uninsured individuals may be unwilling to purchase coverage and then wait three months before addressing a primary medical issue. Rates for tobacco users are currently only about 40% higher than for non-tobacco users, yet the difference in claims is much larger. We expect this difference in premiums will increase to approach the actual cost of insuring tobacco users.
  • No annual coverage limits for certain essential medical services. Coverage protections are added for those participating in clinical trials. We have no information on the consumer impact of this provision.
  • Federal fees levied on health insurance companies begin and then increase over the next four years. This fee appears to be less than $5 per health plan member per month so it should not have a significant effect on insurance premiums. However, some economists point out that the fee is far to little to cover the cost of the federal program so increases on health insurance seems likely./li>
  • Federal subsidies to employers are available to help pay for health insurance for modest income employees (income below 4 x federal poverty level) when the employee is contributing more than 8% of their own income for health insurance. States may subsidize employers to encourage coverage to Medicaid-eligible individuals.
  • Employer Responsibility Mandates are established. A "free rider penalty" is accessed when employees enroll in government-subsidized plans instead of the employer's health plan. Companies with more than 200 employees must automatically enroll employees unless the employee takes action to opt out. In our experience, this method have proved very effective in increasing employee participation in group benefit plans.
  • State health insurance exchanges offer a premium subsidy for modest income individuals (income below 4 x federal poverty level) and employees of small business. State Medicaid eligibility is expanded for low income (income below 1.33 x federal poverty level) non-elderly individuals.
Predictions that 34 million people currently without insurance will voluntarily add coverage through these provisions but that more than $10 million non-elderly adults will remain uninsured were recently published by several government and non-governmental sources. We suspect these may be overly optimistic based simply on the recent signs of destabilization of the health insurance markets caused by federal and state regulations. The number of middle income Americans who decline to pay 10% or more of their gross income to health insurance will be larger than current predictions indicate.


Health insurance exchanges are opened to large employers.


A 40% excise tax is placed on executive health plans. If combined wage taxes for those who receive these rich benefits are more than 40% then this provision will have little effect. Executive health benefit plans will likely focus on coverage not provided or de-emphasized by other federal and state reforms. We predict that supplemental health plans will become an increasingly important percentage of total compensation for those in the $200,000+ salary range and, coincidently, an increasing part of the overall market for health insurance firms like ours.

Related resources:

15 things you did not know about health reform

Affordable Care Act restricts pay to executives

Embracing the state insurance exchange

Health care reform summary

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This web site is independently owned and managed by Tony Novak operating under the trademarks "Freedom Benefits", "OnlineAdviser" and "OnlineNavigator". Opinions expressed are the sole responsibility of the author and do not represent the opinion of any other person, company or entity mentioned. Tony Novak is not an agent, broker, producer or navigator for any federal or state health insurance exchange but may provide uncompensated advice, reviews and referrals to these official resources. Novak is compensated as an accountant, adviser, affiliate consultant, marketer, reviewer, endorser, producer, lead generator or referrer to some of the other commercial companies listed on this site. Information is from sources believed to be reliable but cannot be guaranteed.