Health Care Reform
The Hatcher Agency has a team of Obamacare licensed and trained agents available to help enroll anyone looking for health insurance through the new marketplace. Call us at 1-800-359-3748 and ask for Robin.
We're committed to providing frequent updates on all things reform so you can plan accordingly. A Reference on Health Care Reform Second Edition found below. A guide written specifically to help you better understand and navigate the Affordable Care Act.
The Hatcher Agency published a Supplement: Affordable Care Act Provision Delays and Updates found here in September of 2013 that includes new information and updates. It is critical to use these booklets together when reviewing or searching for important health care reform provisions.
With the new Health Insurance Marketplace now open we're receiving a lot of questions on how the new law affects those already with insurance. Hatcher Agency CEO Greg Hatcher explained it recently on THV11. Watch it here.
Consumers may have to dig a little deeper into their wallets to pay for health care in the Obamacare insurance exchanges, according to a new analysis by Avalere Health. To read more, click here.
The Obama administration has delayed until 2015 a significant consumer protection in the law that limits how much people may have to spend on their own health care.
The limit on out-of-pocket costs, including deductibles and co-payments, was not supposed to exceed $6,350 for an individual and $12,700 for a family. But under a little-noticed ruling, federal officials have granted a one-year grace period to some insurers, allowing them to set higher limits, or no limit at all on some costs, in 2014.
The grace period has been outlined on the Labor Department’s Web site since February, but was obscured in a maze of legal and bureaucratic language that went largely unnoticed. When asked in recent days about the language which appeared as an answer to one of 137 “frequently asked questions about Affordable Care Act implementation” — department officials confirmed the policy.
Source: Washington Post
Upon passage of the Affordable Care Act, The White House made available the option of keeping your doctor and current health care plan. However, the new Healthcare.gov website now has new wording when it comes to the provision as discovered by The Weekly Standard. Read the answer to that very qustion recently added to the site:
The wording has changed to - "Depending on the plan you choose in the Marketplace, you may be able to keep your current doctor." Doctors may be only available through certain networks, just as in the current system. And only plans that existed in their current form on March 23, 2010, are eligible to be kept.
Sources: Healthcare.gov and The Weekly Standard
The Obama Administration announced it is delaying until 2015 the requirement that businesses with more than 50 employees provide health insurance to their workers or pay a penalty.
The announcement by the Internal Revenue Service comes after numerous complaints from businesses that the requirements were too complicated and difficult to implement in time.
However, the only provisions that have been delayed are as follows:
· 6055/Individual Mandate reporting (that would have taken place in 2015 for 2014
· 6056/Pay or Play reporting (that would have taken place in 2015 for 2014)
· 4980H pay or play rules
No other provisions of the ACA are impacted by the announcement. THE FOLLOWING ACA PROVISIONS (among others) CONTINUE TO APPLY:
· Individual mandate. Presumably, the IRS will monitor compliance with the individual mandate through self-certification on each individual’s tax return
· The marketplace notice. Unless the administration delays the exchanges (which I believe is unlikely), employers are required to send the marketplace notice. Also, the affordability/minimum value box on the notice is still relevant. Affordability/minimum value are not concepts limited to the 4980H pay or play rules—they are concepts relevant to ANY employee (part-time, full-time, temp, etc) of ANY employer (regardless of size) who is eligible for employer sponsored coverage and who wishes to apply for a subsidy in the exchange. I repeat—those concepts are not delayed solely because the 4980H rules are delayed.
· The Health Insurance Reforms that go into effect as of the first day of the plan year that begins in 2014 (e.g. the 90 day waiting period).
· PCORI Fee (which is due at the end of this month if you have a calendar plan year or a plan year that ended in October or November of 2012)
· Transitional Reinsurance Fee.
· W-2 reporting
· The limit on Health FSA salary reductions
Important Resources on the Affordable Care Act (click on the documents below):
Hatcher Agency News Footage:
Health Care Reform Articles of Interest (click on the documents below):
An overview of some key tax provisions of the ACA, especially those affecting employers and employees that are not directly engaged in providing health care, follows.
ACA provisions already in place also follow.
Additional Medicare tax on wages
Effective in 2013, the ACA adds an additional 0.9 percent Medicare tax on wages above $200,000 for individuals and $250,000 for married couples filing jointly.
New Medicare tax on investment income
Starting in 2013, there is a new Medicare tax that applies to investment and business income. The ACA has added a 3.8 percent tax on the net investment income of single taxpayers with adjusted gross incomes above $200,000 and joint filers with an adjusted gross income over $250,000. Individuals who are material participants in a trade or business may be exempt from this tax, and instead subject to self-employment taxes only on the portion of their incomes that represents compensation for services. Business owners should consult their tax advisors regarding the complex interaction of these rules.
The decision to uphold the ACA means that a tax penalty will apply to most U.S. citizens and legal residents if they fail to maintain minimum essential health coverage on themselves and their dependents. This provision is effective in 2014, with the full phase-in of the penalty amounts occurring in 2016. The basic penalty for an individual (without consideration of any dependents) is $95 for 2014, $325 for 2015, and $695 for 2016 and later years (adjusted for inflation after 2016). A variety of exemptions and limitations are included to prevent the penalty from imposing undue burdens on low income individuals and families, as well as on certain specified classes of individuals (e.g. members of an Indian tribe, individuals not living in the U.S., etc.). Click here for a flowchart detailing the individual mandate.
One part of the ACA aimed at expanding coverage is the concept of requiring employers to provide health insurance, also known as the employer mandate. Under that provision, an employer with 50 or more full-time equivalent employees is subject to an assessable payment if any full-time employee receives an applicable premium tax credit or cost-sharing reduction payment because of the employer failing to provide affordable minimum essential coverage.
The employer must pay an additional non-deductible tax of $2000 for all full-time employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3,000. This part of the ACA is scheduled to be effective in 2014. Click here for a flowchart detailing the employer penalty.
Insurance exchanges and health insurance premium tax credit In order to implement the individual mandate and certain other provisions of the ACA, affordable insurance exchanges must be created.
The exchanges will be state-based competitive marketplaces where individuals and small businesses can purchase affordable private health insurance. The insurance exchanges are scheduled to be operational by 2014. Starting in 2014, taxpayers may also claim a new refundable tax credit to help offset the cost of the health insurance premiums paid through an insurance exchange.
Health insurance coverage of older children
A popular provision of the ACA is the requirement that all group health plan or insurance issuers that provide coverage of dependent children must continue to make dependent coverage available to an adult child of the plan participants until the child turns 26 years of age. The ACA also amended the Code to provide that cost of such mandatory coverage was excluded from income.
Small Business Health Care Tax Credit
The ACA includes a small business health care tax credit, which is effective immediately. The credit applies to small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ 25 or fewer workers with average incomes of $50,000 or less.
Increase to the AGI limit of deductible medical expenses
Starting in 2013, in order for a taxpayer to claim an itemized deduction for medical expenses, those expenses must exceed 10 percent of AGI, up from the current threshold of 7.5 percent. For taxpayers who are age 65 or older, however, the 7.5 percent threshold will continue to apply through 2016.
Limit on employee contributions to health flexible spending arrangements
The ACA imposes a cap of $2,500 on the amount that an employee can elect to contribute to an employer’s flexible spending arrangement. This cap is scheduled to go into effect for plan years beginning in 2013.
Medicare Part D Deduction Effective in 2013, the ACA eliminates the tax deduction for employer-provided retirement prescription drug coverage in coordination with Medicare Part D.
Limits on deductions for health insurers with respect to executive compensation
Effective in 2013 and with respect to services performed after 2009, a health insurer cannot take a deduction of more than $500,000 for any current or deferred compensation paid to an officer, director, or employee.
Medical device excise tax Effective in 2013, there will be a 2.3 percent excise tax on the sale of certain medical devices. The tax is payable by the manufacturer, producer or importer of the device.
Imposition of annual fee on health insurance providers Beginning in 2014, health insurers will begin paying a fee on their net premiums.
Excise tax on high cost health insurance plans
Effective Jan. 1, 2018, there will be a new 40 percent excise tax on so-called “Cadillac” health insurance plans. This tax may be payable by the health insurer or the employer, depending on the nature of the arrangement.
Nondiscrimination testing for employer-provided health insurance plans. One provision of the ACA is that an employer plan providing health care coverage on an insured basis needs to comply with the same nondiscrimination standards that are currently applicable to employer sponsored self-insured plans. Under the ACA, if a plan is discriminatory, then the employer sponsoring the plan is subject to a $100 per day per individual excise tax. The IRS has delayed the effective date of this provision until it issues regulations. With the Court‘s decision affirming the ACA, employers sponsoring employee health insurance plans need to prepare for the IRS’s eventual release of regulations to determine whether an insured plan is discriminatory. It is equally important to remember that there are current nondiscrimination rules that apply to both self-insured health benefit and cafeteria benefit plans.
The ACA requires that pursuant to regulations to be issued by the U.S. Department of Labor, any employer to which the Fair Labor Standards Act applies, and that has more than 200 full-time employees, must automatically enroll new full-time employees in one of the employer’s health benefits plans (subject to the employee’s election to opt out) and to continue the enrollment of current employees in a health benefits plan offered through the employer. The DOL anticipates issuing regulations on this provision that would be effective in 2014.
ACA rules already in effect Several parts of the ACA are already in effect, including:
· Restrictions on over-the-counter medicine. The ACA amended several provision of the Code to restrict the reimbursement of expenses incurred for a medicine or a drug to only those medicines or drugs for which the employee has a prescription (regardless of whether such drug is available without a prescription) or is insulin. This change was effective on Jan. 1, 2011, so sponsors of flexible spending and similar arrangements should already have made adjustments.
· Health Savings Account (HSA) and Medical Savings Account early withdrawal penalties. As of Jan. 1, 2011, the penalty or additional tax on non-medical early withdrawals from an HSA increased from 10 percent to 20 percent. Similarly, the early withdrawal penalty from Archer Medical Savings Accounts increased from 15 percent to 20 percent.
· W-2 reporting of the value of employer provided coverage. Beginning in 2012, the ACA requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2. The amount reported does not affect tax liability, as the value of the employer excludible contribution to health coverage continues to be excludible from an employee's income, and, thus, is not taxable. Reporting this information is optional for employers that issued fewer than 250 W-2s in 2011.
This optional reporting will remain in effect until the IRS announces otherwise.
Bill O'Malley, director, Washington National Tax
Jim Sansone, director, Washington National Tax
Don Susswein, principal, Washington National Tax
ACA Provisions already in effect:
Guarantee Issue Provision
This provision prohibits the discrimination against individuals with pre-existing conditions.
Community Rating Provision
This provision prohibits insurers from imposing higher premiums based on gender or health status.