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2010 Health Care Reform Act Summary
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2010 Health Care Reform Act Summary

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Summary of the 2010 health care legislation, tax implications, timelines, general information and helpful links. ...

Summary of the 2010 health care legislation, tax implications, timelines, general information and helpful links.

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2010 Health Care Reform Act Summary Presentation Transcript

  • 1. 2010 Federal Healthcare Reform Patient Protection and Affordable Care Act Updated July 5, 2012
  • 2. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act • Tax Implications • Timeline • Business Owners• Business Owners • Hospital and Doctor Ownership • General Information and Helpful Websites
  • 3. Federal Healthcare Reform Patient Protection and Affordable Care Act Tax Implications • For not carrying insurance, there will be a penalty tax: The greater of $95 or 1% of household income in 2014 phasing up to a maximum of 2.5% or $695 in 2016. M i lt f $2 085 f il– Maximum penalty of $2,085 per family – Adjusted for inflation thereafter • The medical expense income tax deduction threshold will increase to 10% of adjusted grosse ed ca e pe se co e ta deduct o t es o d c ease to 0% o adjusted g oss income (currently 7.5%) • Increasing the Medicare Part A tax rate to 2.35% on wages (current 1.45%): I di id l ith i $200 000– Individuals with earnings over $200,000 – Married couples with earnings exceeding $250,000 • New 3.8% tax on unearned income for these higher-income individuals (effective afterg ( December 31, 2012) – more detail on the following slide • Imposing taxes or fees on health insurance providers and drug companies, while doctors and hospitals will receive less compensation from government sourcesand hospitals will receive less compensation from government sources
  • 4. Federal Healthcare Reform Patient Protection and Affordable Care Act Medicaid Surtax • For individuals, the 3.8% Medicaid surtax will be imposed on the lesser of: – Net investment income for the tax year, or Th t b hi h th difi d dj t d i (MAGI) d th h ld t i– The amount by which the modified adjusted gross income (MAGI) exceeds a threshold amount in that year: $200,000 for singles, $250,000 for married filing jointly, $125,000 for married filing separately – In this case, investment income refers to interest, dividends, capital gains, annuities, rents, royalties, and passive activity income. It does not include active trade and/or business income, any of the above to the extent that it is derived from active trade and/or business, distributions from IRA’s or other qualified retirement plans, or any income taken into account for self-employment tax purposes – Example: A married couple with combined salaries of $200,000 and net investment income ofp p $150,000 would pay the surtax on $100,000 of income since it is the lesser of $150,000 of net investment income or the excess over the MAGI threshold of $250,000 ($200,000 + $150,000 - $250,000) • For estates and trusts the new surtax will be imposed on the lesser of:For estates and trusts, the new surtax will be imposed on the lesser of: – The undistributed net investment income for the tax year, or – The excess (if any) of the taxpayer’s adjusted gross income over the dollar amount at which the highest tax bracket begins ($11,650 in 2012).
  • 5. Federal Healthcare Reform Patient Protection and Affordable Care ActPatient Protection and Affordable Care Act 2011 D M k ill h $2 3 2013 • 3.8% tax on unearned income for higher-income individuals 2020 • Medicare Part D ‘doughnut hole’ closed • Drug Makers will have a $2.3 billion annual fee that will increase over time • A 10% Medicare reimbursement bonus will be provided to primary h i i & l g • Medicare payroll taxes increase to 2.35% – Single earning more than $200,000 M i d i th 2018 • Taxes on high cost health plans (plans costing more (gap between amount paid for drugs by your insurance company and the yearly out-of- pocket spending limit care physicians & general surgeons practicing in underserved areas – Married earning more than $250,000 • Medicare device makers will have a 2.3% sales tax on medical devices than $27,500 for families and $10,200 for individuals) – donut hole is the period during which you pay full price for drugs out-of-pocket) 2010 • Pre-existing conditions & limits on coverage – Insurers will be barred from denying coverage to 2014 • Individual mandate – Most everyone will be required to get ins or face a fine • Employer mandate children with pre-existing conditions; adults will get same protection in 2014 – High-risk pools operate until 2014 – Insurers cannot place lifetime caps on benefits • Tax credits p y – Businesses with 50+ employees must offer insurance or pay $2,000-per-worker penalty • Healthcare exchanges – New state-based marketplaces will be open for business, gi ing indi id als & small b siness a place to shop for• Tax credits – Businesses with fewer than 25 employees, covering up to 35% of premiums • Medicare Part D – Begin filling the ‘doughnut hole’ in Medicare drug giving individuals & small business a place to shop for affordable ins • Subsidies – The Federal government will offer subsidies to families earning up to $88,000 a year coverage • National health plans offered to individuals – Office of Personnel Management will contract with two insurers to offer national plan.
  • 6. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act 2010 Timeline • Pre-existing conditions and limits on coverage Insurers will be barred from denying coverage to children with pre existing– Insurers will be barred from denying coverage to children with pre-existing conditions; adults will get same protection in 2014 – High-risk pools operate until 2014 – Insurers cannot place lifetime caps on benefitsInsurers cannot place lifetime caps on benefits – Rescission restrictions apply immediately (Insurance benefits cannot be rescinded except in cases of clear fraud. • Tax creditsTax credits – Businesses with fewer than 25 employees, covering up to 35% of premiums • Medicare Part D – Begin to fill the ‘doughnut hole’ in Medicare drug coverageBegin to fill the doughnut hole in Medicare drug coverage – Doughnut hole: • After a Medicare beneficiary surpasses the prescription drug coverage limit, the Medicare beneficiary is financially responsible for the entire cost of prescription drugs until the expense reaches the catastrophic coverage threshold.
  • 7. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act 2011 Timeline • Drug Makers will have a $2.3 billion annual fee that will increase over time • A 10% Medicare bonus will be provided to primary care physicians & general• A 10% Medicare bonus will be provided to primary care physicians & general surgeons practicing in underserved areas
  • 8. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act 2013 Timeline • New 3.8% tax on unearned income for higher-income individuals (effective after December 31, 2012)December 31, 2012) • Medicare payroll taxes increase to 2.35% – Single earning more than $200 000Single earning more than $200,000 – Married earning more than $250,000 • Medicare device makers will have a 2 3% sales tax on medical devicesMedicare device makers will have a 2.3% sales tax on medical devices
  • 9. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act 2014 Timeline • Individual mandate – Most everyone will be required to get insurance or face a fine • Employer mandate – Businesses with 50 or more employees must offer insurance or pay $2,000-per- worker penalty • Healthcare exchanges – New state-based marketplaces will be open for business, giving individuals & small business a place to shop for affordable insurance S b idi• Subsidies – The Federal government will offer subsidies to families earning up to $88,000 a year N ti l h lth l ff d t i di id l• National health plans offered to individuals – Office of Personnel Management will contract with two insurers to offer national plan. At least one of the plans will have to operate on a nonprofit basis
  • 10. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act 2018 Timeline • Taxes on high cost health plans (plans costing more than $27,500 for families and $10,200 for individuals)and $10,200 for individuals) 2020 • Medicare Part D ‘doughnut hole’ closed (gap between amount paid for drugs by your insurance company and the yearly out-of-pocket spending limit – donut hole is the period during which you pay full price for drugs out-of-pocket)
  • 11. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act Business Owners • Business tax credits & subsidies – Business with fewer than 25 employees and average wages of less than $50 000 lif f t dit f t 35% f th t f th i$50,000 can qualify for a tax credit of up to 35% of the cost of their premiums – Provide tax credits to small businesses that want to offer coverage. Subsidize employer plans that cover early retirees ages 55 to 64Subsidize employer plans that cover early retirees ages 55 to 64. – Employers with 10 or less workers with average wages of less than $25,000 can get the full credit – up to 35% of premium costs between 2010-2013 and 50% thereafter. – Credit phases out as firm size and average wage increases – The Federal government will cover 80% of the cost of a retiree’s medical claims of more than $15,000 through 2013, with a cap at $90,000 – at whichg point the employer’s plan will pay the rest
  • 12. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act Healthcare Industry Impact • Fees on healthcare industry – $2.3 billion a year on pharmacyy p y – $2 billion a year on medical devices ($3 billion by 2017) – $2 billion a year on health insurance ($10 billion by 2017) • Hospitals in development must be accepted as a “Medicare Provider” by December 31, 2010 • All hospitals with physician ownership in existence and participating in government sponsored funding (e.g. Medicare, Medicaid, etc) as of March 23, 2010 are “grandfathered”, subject to the following: – The aggregate percentage of physician ownership cannot be increased after March 23 201023, 2010; – Except under very stringent circumstances, the number of operating rooms, procedure rooms or beds for which a currently existing facility is licensed may not be expandedbe expanded
  • 13. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act General Information • Pre-existing conditions – Insurers cannot deny coverage to children because of pre-existing– Insurers cannot deny coverage to children because of pre-existing conditions • Doughnut hole – Increases Medicare’s initial drug coverage limit reducing the doughnut holeIncreases Medicare s initial drug coverage limit, reducing the doughnut hole by $500 a year. Reconciliation will send 2010 rebates of up to $250 to individuals who fell in the doughnut hole in 2010 instead of the $500 increase. In 2011, PDP enrollee cost of drugs in the coverage gap will d li b 50% f d d b d kdecline by 50%, funded by drug makers. • Dependents – Parents will be allowed to keep their children on their health insurance plan til 27 l th hild i li ibl f th h j buntil age 27, unless the child is eligible for coverage through a job
  • 14. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act Helpful websites: • Interactive tool to show how the healthcare bill affects you: http://www.washingtonpost.com/wp-srv/special/politics/what-health-bill-means-http://www.washingtonpost.com/wp srv/special/politics/what health bill means for-you • Timeline of Healthcare changes: http://www.bankrate.com/finance/insurance/timeline-for-health-care-reform- 1.aspx?ic_id=nwsltr_wkrdup_20100423 • Understanding the Healthcare Surtax: http://image.emarketerpro.skylinetechnologies.com/lib/fe5f1570746107797c1d/ m/1/Understanding+the+3 8+Percent+Health+Care+Surtax pdfm/1/Understanding+the+3.8+Percent+Health+Care+Surtax.pdf
  • 15. Federal Healthcare ReformFederal Healthcare Reform Patient Protection and Affordable Care Act Sources: 1. “Federal Healthcare Reform Digest, News as of 3/25/2010.” Bain & Company. 2010.2010. 2. “What does the health care bill mean to me?” The Washington Post. 21 Mar. 2010. 3. “Understanding the Healthcare Surtax.” Keebler Tax & Wealth Education. 28g June 2012. 4. “Planning for the 3.8% Medicaid Surtax.” Clifton Gunderson. 7 Oct. 2011.
  • 16. Di lDisclosure Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Lee Financial Corporation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing Leeis encouraged to consult with the professional advisor of his/her choosing. Lee Financial Corporation is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice.