When will the health insurance reform bill be effective?


You would expect that the health insurance reform bill will become fully effective once it's signed into law. That is not how it will work. The changes and measures outlines in this bill will become effective in phases.

Here's a brief outline of what will happen:

The first year after the bill is signed:

  • Senior citizens on Medicare will receive $250 to help pay for prescription drugs that are not addressed due to the "doughnut hole".
  • Insurance companies will not be allowed to cancel policies when a person becomes sick.
  • Children with pre-existing conditions should be accepted by insurance companies and there should be no exclusions imposed. This will be done by establishing high-risk pools that will cover them while health care coverage exchanges are established.
  • Children will remain covered under their parents' health plans until they reach the age of 26.
  • Lifetime limits and unreasonable annual limits will be lifted on health plans.
  • Preventive services will be included in all new plans. These will not have deductibles or co-payment amounts. By 2018, all policies sold must comply with this.
  • A reinsurance program to provide for catastrophic events and to help cover early retirees will be set up.
  • Tax credits will be provided and may be refunded until 2011. Also, tax credits will be given to small business (those with fewer than 50 employees) who provide health care insurance to their employees.
  • Indoor tanning services will be charged with a 10% tax.


  • Discounts will be provided for brand-name medications.
  • Prevention plans and wellness services will be integrated into the new plans of Medicare. These will be offered without deductibles or co-pays.
  • Increased tax savings of 10% more for seniors for non-qualified medical expenses.
  • Increased Medical payroll tax for people who fall in the high-income bracket ($200,000 for individuals and $250,000 for married couples).


  • Healthcare providers and institutions will establish a system for exchanging health information.
  • Limits will be set for contributions to flexible savings accounts. It will start at $2,500 and will be adjusted to reflect inflation over the years.
  • A 0.9 percentage point increase for hospital insurance tax for high-income earners.


  • Citizens will be required to have insurance. Otherwise, penalties will be meted out.
  • Companies that have 50 or more employees are required to provide health insurance coverage for their employees. Otherwise, penalties will be charged as well.
  • Insurance companies will be prohibited from setting annual limits on the coverage. They are also required to accept individuals regardless of health status.
  • Increased eligibility for Medicaid to eligible non-elderly individuals.


  • High cost plans (also known as "Cadillac plans") will be charged an excise tax.
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