Tax deductions for executive pay at medical insurance companies will be limited to prevent corporate officers from personally benefiting from expanded enrollments. The rule applies to insurers that earn 25 percent or more of their premium revenue from health plans, cutting the deduction to $500,000 from $1 million on income per employee.
Today, Medicare pays Medicare Advantage insurance companies over $1,000 more per person on average than is spent per person in Original Medicare. This results in increased premiums for all Medicare beneficiaries, including the 77% of beneficiaries who are not currently enrolled in a Medicare Advantage plan. The new law levels the playing field by gradually eliminating this discrepancy. People enrolled in a Medicare Advantage plan will still receive all guaranteed Medicare benefits, and the law provides bonus payments to Medicare Advantage plans that provide high quality care.
The law allows states that have, or plan to implement, measures that require insurance companies to justify their premium increases to be eligible for $250 million in new grants. Insurance companies with excessive or unjustified premium increases may not be able to participate in the new Affordable Insurance Marketplaces in 2014.
