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The ACA and What Goes into Effect in 2013

In 2012, national health care policy commanded a bright spotlight, from the Supreme Court’s final ruling on the Affordable Care Act (ACA) in June, to the Presidential debates leading up to the election in November. As we look to next year, health care will continue to hold its place as a cover story. Starting in 2013, numerous provisions of the ACA are set to take effect. Highlights include changes to:

Medicare  & Medicaid

  • The current Medicare Prescription Drug Coverage Gap will continue to narrow, as federal subsidies will be phased in for brand-name medications. Coinsurance will be reduced from 100 percent of costs to 25 percent by 2020.
  • Federal matching payments will rise by one percentage point for preventive services covered through Medicaid with no patient cost sharing for services recommended (rated A or B) by the U.S. Preventive Services Task Force.
  • Reductions will be made to the Medicare and Medicaid Disproportionate Share Hospital payments. These are payments that states receive to help those hospitals that serve a disproportionate number of low-income patients. Under the Medicare DSH, payments will be initially reduced by 75 percent, and then increased accordingly based on the percent of uninsured seen by these hospitals. Under Medicaid DSH, the Secretary of the Department of Health and Human Services will determine the method of distributing the reductions.


  • In 2013, taxpayers will see an increase in the threshold for itemized deductions for unreimbursed medical expenses. The increase goes up from 7.5 percent to 10 percent of adjusted gross income and waives the increase for those 65 years or older until 2016.
  • Those individuals with Medicare Part A (hospital insurance) will see an increase in the tax rate on wages by 0.9% on earnings over $200,000 for individuals and $250,000 for married couples filing jointly. There is a 3.8% assessment on unearned income for higher-income taxpayers.
  • Ending in 2013 are tax deductions employers receive for Medicare Part D retiree drug subsidy payments.

Flexible Spending Accounts

  • New limits are set on the amounts individuals may contribute to a flexible spending account (FSA) for medical expenses to $2,500 per year.


  • Starting in April 2013, financial disclosure is required stating financial relationships between health entities, doctors, hospitals, pharmacists, manufacturers, distributors of devices, biological and medical supplies.

Children’s Health Insurance Program

  • In 2013, the Children’s Health Insurance Program (CHIP) is extended through 2015.

Along with these provisions, a handful set for 2013 are already in effect. These include state decisions on the operation of health insurance exchanges, Medicare bundled payment pilot programs, Medicaid payments for primary care, a tax on medical devices, and co-op health insurance plans.


For more details on the ACA’s implementation, see Kaiser’s Timeline.

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