Health Care Reform

Health Care Reform

What Do We KnowSo Far?

Health Care Reform

Actually There Were Two Legislative Acts

Health Care Reform


Patient Protection and Affordable Care Act [HR 3590]

Health Care Reform


Health Care & Education Reconciliation Act of 2010 [HR

4872]

Health Care Reform

Formal Name: Patient Protection and Affordable Care Act

(PPACA)Passed: March 23, 2010

Health Care Reform

Formal Name: Patient Protection and Affordable Care Act

(PPACA)Passed: March 23, 2010

Vote: For – 219; Against - 212

Implementation

What will (or is expected to) happen and when

Implementation


Immediately after signing

Implementation



Dependent children up to age 26 are permitted to remain covered by their parent’s health insurance plan that includes dependent coverage. Became effective 03/30/2010.

Implementation



Health insurers are barred from denying coverage to dependent children with pre-existing conditions

Implementation



Children on Medicaid or CHIP Programs will remain covered until 2019

Adults on these programs will remain covered until 2014

Implementation


Ten percent (10%) tanning tax went into effect on July 1, 2010. Tax will be paid by the customer. If not paid by customer, it will be paid by the provider.

Implementation


Up to 35% tax credit for Eligible Small Employers (ESE) which offer health insurance coverage to employees

Implementation



ESE defined as one having no more than 25 FTE’s during tax year.

Implementation



ESE defined as one having no more than 25 FTE’s during tax year.

Average annual wages per FTE cannot exceed $50,000

Implementation


Full amount (35%) credit goes to employers of 10 or fewer FTE’s for whom each FTE’s average wages are no more than $25,000.

Implementation



Credit is reduced if average wages is between $25K and $50K.

Implementation




Credit is available from 2010 through 2013.

Implementation




Credit is available from 2010 through 2013.

Credit can be as much as 50% after 2013.

Implementation


By June 30, 2010

Implementation


By June 30, 2010

Individuals (other than dependent children) who cannot obtain healthcare coverage due to pre-existing conditions can purchase coverage through a special high-risk pool.

Implementation


By June 30, 2010

Individuals (other than dependent children) who cannot obtain healthcare coverage due to pre-existing conditions can purchase coverage through a special high-risk pool.

In 2014 they can participate in state run exchanges.

Implementation


By September 30, 2010

Medicare Part D (Prescription Drug Coverage) participants who have fallen into the “doughnut hole” will receive a $250 rebate

Implementation



Medicare Part D (Prescription Drug Coverage) participants who have fallen into the “doughnut hole” will receive a $250 rebate.

In 2010, “doughnut hole” starts at $2,830 and closes at $6,440 (Participant pays 100%)

Implementation




In 2010, the TROOP (true out-of-pocketexpense) will be $4,550 = $310 + $630 + $3,610

Implementation




The “doughnut hole” is expected to be completely closed by 2020.

Implementation



New insurance policies offered hereafter must exclude preventative care and screenings from annual deductibles and co-pays.

Implementation



Except for cases of fraud, there will be no lifetime coverage ceilings or limits.

Implementation


Beginning Calendar Year 2011

Implementation



“Doughnut hole” gap participants will get 50% discount on prescriptions while they are in the “hole”.

Implementation



New voluntary long-term care plans will be made available for nursing home or in-home care.

Implementation



Beginning of series of ten-year cuts to Medicare Advantage Programs (e.g., Humana).

Senior citizens covered by such plans can expect premium increases, reductions in coverage, or both.

Implementation



Employers will be required to report the value of employee health insurance benefits on their W-2 Forms.

Implementation



Employers will be required to report the value of employee health insurance benefits on their W-2 Forms.

First step to taxing employer provided health insurance??? Estimated at $297 billion per year.

Implementation



FSA’s, HSA’s, and MSA’s can no longer reimburse participants for non-prescription drugs and medical supplies.

Implementation



Small employers may qualify for “Simple” Cafeteria Plans whose non-discrimination provisions are not as strict as those of regular Section 125 Plans.

Implementation



Small employers may qualify for “Simple” Cafeteria Plans whose non-discrimination provisions are not as strict as those of regular Section 125 Plans.

Still, however, must meet certain contribution and eligibility requirements.

Implementation



Drug manufacturers will be assessed an annual fee of $2.5 billion.

How big is a trillion?

Sen. Everett Dirksen (R-IL) – “A billion here, a billion there, and pretty soon you’re talking about real money”. June 1965


A million seconds is about 11 days



A billion seconds is about 31.7 years



A billion seconds is about 31.7 years

A trillion seconds is about 31,688 years

Equates to about $3,250 for every person in US

Implementation



No major changes in health care provisions.

Implementation



All businesses must issue Form 1099 to any individual who is paid $600 or more for not only services (current law) but also for the purchase of goods, property and other expenditures. New law expands to all entities (e.g., Corps, S-Corps, Partnerships, LLC, LLP, estates, trusts.

Implementation



New Medicare tax on individuals making more than $200,000 per year, $125,000 or more for MFS, and MFJ making more than $250,000.

Tax rate will rise from 1.45% to 2.35%

Implementation



New Medicare tax on individuals making more than $200,000 per year, $125,000 or more for MFS, and MFJ making more than $250,000.

Tax rate will rise from 1.45% to 2.35%.

Employer will NOT have to match the increase.

Implementation



New Medicare Tax on unearned income (e.g., interest, dividends, rents, royalties, etc.) at rate of 3.8% on individuals with income $200K or more, MFS with income of $125K or more and MFJ of $250K or more.

Implementation



Excise tax of 2.3% on sale of medical devices at first sale for use, except those related to hearing, vision, and purchase at retail for individual use.

It is not known yet whether such devices as heart pacemakers would be exempted!

Implementation



Flex Spending Account (FSA) contributions are decreased from a maximum of $5,000 annually to max. of $2,500.

Implementation



Threshold for itemizing medical expenses increases from 7.5% of Adjusted Gross Income (AGI) to 10% of AGI.

Implementation



Implementation



States create “insurance exchanges” where individuals without coverage or businesses seeking to cover employees can shop for healthcare coverage.

Implementation



Insurance companies are barred from denying coverage to anyone who has a pre-existing condition (including pregnancy). Insurers will not be able to impose higher premiums on those with chronic illnesses.

Implementation



Penalties imposed on those persons who do not have healthcare coverage. There are exceptions for low-income, those exempted for religious reasons, those living outside USA, incarcerated individuals and members of Indian Tribes.

Implementation



Start at penalty of $95 (2014), $325 (2015), and $695 for (2016) for individuals, unless you can prove hardship. Thereafter the $695 will be adjusted annually for inflation. No penalty for those without insurance for three months or less during year.

Implementation



A penalty may also be imposed on a percentage of income basis by comparing household income to annual income tax filing requirements.

Implementation



A penalty may also be imposed on a percentage of income basis by comparing household income to annual income tax filing requirements.

1.0% for 20142.0% for 20152.5% for 2016 and later

Implementation



Employers with more than 50 employees will be penalized for not providing health insurance.

Implementation




First 30 employees are exempted.

Implementation




First 30 employees are exempted.

Fine after exemption can be $2,000 per employee.

Implementation



Refundable tax credit for those who buy individual health insurance for those who have income between 100% and 400% of FPL (currently about $22K)

Implementation



Maximum premium that can be charged to low-income households:

3% of income to those at 133% of FPL.

9.5% of income to those at 400% of FPL.

Implementation



Penalties for failure to have coverage increases from $95 to $695, or 2.5% of income, whichever is greater.

If you make more than $27,800, the 2.5% figure will be the larger.

Implementation



40% surtax added for so called “Cadillac” plans

Implementation



40% surtax added for so called “Cadillac” plansthat cost for singles for >$10,200, and families > $27,500

Got a Question???

Contact us or e-mail your questions to:

Greener Accounting and Tax Service LLC758 Lee StreetJefferson GA 30549Phone: (706) 387-0087Email: [email protected]

Please contact us to prior to making any decision regarding this subject matter, so you can be apprised of any changes that may have taken. Greener Accounting & Tax Service LLC will not be held liable for any decision you make without prior discussion with a member of the firm.

mailto:[email protected]

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Health Care Reform

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