On March 23, 2010, President Obama signed into law the health care reform bill, the Patient Protection and Affordable Care Act. This legislation, along with the Health Care and Education Reconciliation Act of 2010, makes sweeping changes to the U.S. health care system. These changes will be implemented over the next several years.

This article provides a timeline of the implementation of key reforms that take effect in 2013.


  • Closing the Medicare Drug Coverage Gap. Begins phasing-in federal subsidies for brand-name prescriptions filled in the Medicare Part D coverage gap (reducing coinsurance from 100 percent in 2010 to 25 percent in 2020, in addition to the 50% manufacturer brand-name discount). For example, if you reach the “gap” in 2013, you'll pay only 47.5 percent for covered brand-name drugs and 79 percent for generic drugs. These discounts will gradually increase until the gap is closed in 2020. Implementation: January 1, 2013 (P.L. No. 111-418, Sec. 3301)
  • Medicare Bundled Payment Pilot Program. The law establishes a national pilot program to encourage hospitals, doctors, and other providers to work together to improve the coordination and quality of patient care. Under payment “bundling,” hospitals, doctors, and providers are paid a flat rate for an episode of care rather than the current fragmented system where each service or test or bundles of items or services are billed separately to Medicare. Instead of generating multiple claims from various providers for a surgical procedure, the entire team is compensated with a “bundled” payment that provides incentives to deliver health care services more efficiently while maintaining or improving quality of care. It aligns the incentives of those delivering care, and savings are shared between providers and the Medicare program.i Implementation: January 1, 2013 (P.L. No. 111-418, Sec. 3023)
  • Medicaid Coverage of Preventive Services. This provision offers a one percentage point increase in federal matching payments if the state covers certain recommended immunizations and preventive services without charging Medicaid beneficiaries a share of the cost. States can choose whether to use this option. Implementation: January 1, 2013 (P.L. No. 111-418, Sec. 4106)
  • Medicaid Payments for Primary Care. As Medicaid programs and providers prepare to cover more patients in 2014, the Act requires states to pay primary care physicians no less than 100 percent of Medicare payment rates in 2013 and 2014 for primary care services. The increase is fully funded by the federal government. Implementation: January 1, 2013 – December 31, 2014 (P.L. No. 111-418, Sec. 1202)
  • Itemized Deductions for Medical Expenses. Increases the threshold for the itemized deduction for unreimbursed medical expenses from 7.5 percent of adjusted gross income to 10 percent of adjusted gross income; waives the increase for individuals age 65 and older for tax years 2013 through 2016. Implementation: January 1, 2013 (P.L. No. 111-148, Sec. 9013)
  • Flexible Spending Account Limits. The Affordable Care Act will lower the limit for the amount of contributions to a flexible spending account for medical expenses to $2,500 per year, increased annually by the cost of living adjustment. The previous limit was $5,000. The limit for dependent care accounts remains $5,000. Implementation: January 1, 2013 (P.L. No. 111-148, Sec. 9005)
  • Medicare Tax Increase. Increases the Medicare Part A (hospital insurance) tax rate on wages by 0.9 percent (from 1.45 percent to 2.35 percent) on earnings of more than $200,000 for individual taxpayers, and $250,000 for married couples filing jointly, and imposes a 3.8 percent assessment on unearned income, such as taxable capital gains, dividends, rents, royalties, and interest for taxpayers with modified adjusted gross income of more than $200,000 for single filers and $250,000 for married joint filers. Implementation: January 1, 2013 (P.L. No. 111-148, Sec. 9015)
  • Employer Retiree Coverage Subsidy. The Medicare Part D program includes a Retiree Drug Subsidy (RDS) to encourage employers to continue providing prescription drug coverage to Medicare-eligible retirees. The RDS is available to certain employers that sponsor group health plans covering retirees who are entitled to enroll in Medicare Part D but elect not to do so. Employers receive RDS payments tax-free. In addition, before 2013, employers receiving the RDS could take a tax deduction for their retiree prescription drug costs, unreduced for the subsidy amount. Beginning in 2013, employers receiving the RDS will no longer be permitted to take a tax deduction for the subsidy amount. Implementation: January 1, 2013 (P.L. No. 111-148, Sec. 9012)
  • Tax on Medical Devices. Imposes an excise tax of 2.3 percent on the sale of any taxable medical device.ii Implementation: January 1, 2013 (P.L. No. 111-148, Sec. 9009)
  • State Notification Regarding Exchanges. By December 14, 2012, states will indicate to the Department of Health and Human Services whether they will create a state-based American Health Benefit Exchange. A state must declare its intention to create a Partnership Exchange with the Federal Government by February 15, 2013. Implementation: December 14, 2012; February 14, 2013 (P.L. No. 111-148, Sec. 1321)
  • Financial Disclosure. Requires disclosure of financial relationships between health entities, including physicians, hospitals, pharmacists, other providers, and manufacturers and distributors of covered drugs, devices, biologicals, and medical supplies. Implementation: Report to Congress due April 1, 2013 (P.L. No. 111-148, Sec. 6002)
  • CO-OP Health Insurance Plans. Creates the Consumer Operated and Oriented Plan (CO-OP) to foster the creation of non-profit, member-run health insurance companies. However, the American Taxpayer Relief Act (the legislative response to the “fiscal cliff”), which the House and Senate passed on New Year’s Day and President Barack Obama signed late on Wednesday, January 2nd eliminates additional funding for CO-OPs. The U.S. Department of Health and Human Services (HHS) had already distributed approximately $1.9 billion (of the $3.8 billion in authorized funding for the program) to the 24 plans that have already been created. The bill eliminates all unobligated CO-OP funds, but sets aside 10 percent of the unobligated funds to help with administrative costs for these 24 plans. Implementation: CO-OPS established by July 1, 2013 (P.L. No. 111-148, Sec. 1322)
  • Extension of CHIP. Extends authorization and funding for the Children’s Health Insurance Program (CHIP) through 2015 (current authorization is through 2013). Implementation: Fiscal Year 2013
  • Medicare Disproportionate Share Hospital Payments. Medicare Disproportionate Share Hospital (DSH) payments, paid to qualifying hospitals that serve low-income patients, will be reduced by 75 percent starting October 1, 2013. A hospital will receive an additional payment based on three factors: 1) the remaining pool of DSH payments that would have been paid absent these changes; 2) current estimates of the uninsured compared to the estimate for 2013, the last year before the expansion of coverage; and 3) the hospital-specific share of uncompensated care. Implementation: October 1, 2013 (P.L. No. 111-148, Sec. 3133)
  • Medicaid Disproportionate Share Hospital Payments. Reduces states’ Medicaid Disproportionate Share Hospital (DSH) allotments and requires the Secretary to develop a methodology for distributing the DSH reductions. Implementation: October 1, 2013 (P.L. No. 111-148, Sec. 2551 as modified by Sec. 10201(e); P.L. 111-152, Sec. 1203)