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Health Care Reform

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Check this out! My friends at Greener Accounting and Tax Services put this presentation together to show some of the changes that will be made with two health care legislations passed this term. Very informative and somewhat disturbing.

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Health Care Reform

  1. 1. Health Care Reform What Do We Know So Far?
  2. 2. Health Care Reform Actually There Were Two Legislative Acts
  3. 3. Health Care Reform Actually There Were Two Legislative Acts Patient Protection and Affordable Care Act [HR 3590]
  4. 4. Health Care Reform Actually There Were Two Legislative Acts Health Care & Education Reconciliation Act of 2010 [HR 4872]
  5. 5. Health Care Reform Formal Name: Patient Protection and Affordable Care Act (PPACA) Passed: March 23, 2010
  6. 6. Health Care Reform Formal Name: Patient Protection and Affordable Care Act (PPACA) Passed: March 23, 2010 Vote: For – 219; Against - 212
  7. 7. Implementation What will (or is expected to) happen and when
  8. 8. Implementation What will (or is expected to) happen and when Immediately after signing
  9. 9. Implementation What will (or is expected to) happen and when Immediately after signing 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.
  10. 10. Implementation What will (or is expected to) happen and when Immediately after signing Health insurers are barred from denying coverage to dependent children with pre- existing conditions
  11. 11. Implementation What will (or is expected to) happen and when Immediately after signing Children on Medicaid or CHIP Programs will remain covered until 2019 Adults on these programs will remain covered until 2014
  12. 12. Implementation What will (or is expected to) happen and when 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.
  13. 13. Implementation What will (or is expected to) happen and when Up to 35% tax credit for Eligible Small Employers (ESE) which offer health insurance coverage to employees
  14. 14. Implementation What will (or is expected to) happen and when Up to 35% tax credit for Eligible Small Employers (ESE) which offer health insurance coverage to employees ESE defined as one having no more than 25 FTE’s during tax year.
  15. 15. Implementation What will (or is expected to) happen and when Up to 35% tax credit for Eligible Small Employers (ESE) which offer health insurance coverage to employees ESE defined as one having no more than 25 FTE’s during tax year. Average annual wages per FTE cannot exceed $50,000
  16. 16. Implementation What will (or is expected to) happen and when 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.
  17. 17. Implementation What will (or is expected to) happen and when 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. Credit is reduced if average wages is between $25K and $50K.
  18. 18. Implementation What will (or is expected to) happen and when 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. Credit is reduced if average wages is between $25K and $50K. Credit is available from 2010 through 2013.
  19. 19. Implementation What will (or is expected to) happen and when 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. Credit is reduced if average wages is between $25K and $50K. Credit is available from 2010 through 2013. Credit can be as much as 50% after 2013.
  20. 20. Implementation What will (or is expected to) happen and when By June 30, 2010
  21. 21. Implementation What will (or is expected to) happen and when 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.
  22. 22. Implementation What will (or is expected to) happen and when 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.
  23. 23. Implementation What will (or is expected to) happen and when By September 30, 2010 Medicare Part D (Prescription Drug Coverage) participants who have fallen into the “doughnut hole” will receive a $250 rebate
  24. 24. Implementation What will (or is expected to) happen and when By September 30, 2010 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%)
  25. 25. Implementation What will (or is expected to) happen and when By September 30, 2010 Medicare Part D (Prescription Drug Coverage) participants who have fallen into the “doughnut hole” will receive a $250 rebate. In 2010, the TROOP (true out-of-pocket expense) will be $4,550 = $310 + $630 + $3,610
  26. 26. Implementation What will (or is expected to) happen and when By September 30, 2010 Medicare Part D (Prescription Drug Coverage) participants who have fallen into the “doughnut hole” will receive a $250 rebate. The “doughnut hole” is expected to be completely closed by 2020.
  27. 27. Implementation What will (or is expected to) happen and when By September 30, 2010 New insurance policies offered hereafter must exclude preventative care and screenings from annual deductibles and co-pays.
  28. 28. Implementation What will (or is expected to) happen and when By September 30, 2010 Except for cases of fraud, there will be no lifetime coverage ceilings or limits.
  29. 29. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011
  30. 30. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011 “Doughnut hole” gap participants will get 50% discount on prescriptions while they are in the “hole”.
  31. 31. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011 New voluntary long-term care plans will be made available for nursing home or in-home care.
  32. 32. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011 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.
  33. 33. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011 Employers will be required to report the value of employee health insurance benefits on their W-2 Forms.
  34. 34. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011 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.
  35. 35. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011 FSA’s, HSA’s, and MSA’s can no longer reimburse participants for non-prescription drugs and medical supplies.
  36. 36. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011 Small employers may qualify for “Simple” Cafeteria Plans whose non-discrimination provisions are not as strict as those of regular Section 125 Plans.
  37. 37. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011 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.
  38. 38. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2011 Drug manufacturers will be assessed an annual fee of $2.5 billion.
  39. 39. 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
  40. 40. How big is a trillion? A million seconds is about 11 days
  41. 41. How big is a trillion? A million seconds is about 11 days A billion seconds is about 31.7 years
  42. 42. How big is a trillion? A million seconds is about 11 days 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
  43. 43. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2012 No major changes in health care provisions.
  44. 44. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2012 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.
  45. 45. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2013 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%
  46. 46. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2013 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.
  47. 47. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2013 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.
  48. 48. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2013 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!
  49. 49. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2013 Flex Spending Account (FSA) contributions are decreased from a maximum of $5,000 annually to max. of $2,500.
  50. 50. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2013 Threshold for itemizing medical expenses increases from 7.5% of Adjusted Gross Income (AGI) to 10% of AGI.
  51. 51. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014
  52. 52. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014 States create “insurance exchanges” where individuals without coverage or businesses seeking to cover employees can shop for healthcare coverage.
  53. 53. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014 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.
  54. 54. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014 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.
  55. 55. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014 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.
  56. 56. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014 A penalty may also be imposed on a percentage of income basis by comparing household income to annual income tax filing requirements.
  57. 57. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014 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 2014 2.0% for 2015 2.5% for 2016 and later
  58. 58. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2013 Employers with more than 50 employees will be penalized for not providing health insurance.
  59. 59. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2013 Employers with more than 50 employees will be penalized for not providing health insurance. First 30 employees are exempted.
  60. 60. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014 Employers with more than 50 employees will be penalized for not providing health insurance. First 30 employees are exempted. Fine after exemption can be $2,000 per employee.
  61. 61. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014 Refundable tax credit for those who buy individual health insurance for those who have income between 100% and 400% of FPL (currently about $22K)
  62. 62. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2014 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.
  63. 63. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2016 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.
  64. 64. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2018 40% surtax added for so called “Cadillac” plans
  65. 65. Implementation What will (or is expected to) happen and when Beginning Calendar Year 2018 40% surtax added for so called “Cadillac” plans that cost for singles for >$10,200, and families > $27,500
  66. 66. Got a Question??? Contact us or e-mail your questions to: Greener Accounting and Tax Service LLC 758 Lee Street Jefferson GA 30549 Phone: (706) 387-0087 Email: info@greenertaxes.com 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.

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