Thursday, April 29, 2010
NAHU News April 29
Federal High-Risk Pool Will Exclude Those Who Already Have Insurance.
USA Today (4/29, Young) reports, "About 200,000 Americans whose illnesses have kept them from getting regular health insurance will not be allowed to enroll this summer in a new lower cost federal program for people like them because they already buy pricey state-run plans." USA Today adds, "The nation's new health law creates a far cheaper insurance program opening July 1 for people with pre-existing medical conditions. To qualify, a person can't have had health coverage for six months." As a result, "it excludes people already enrolled in 35 state high-risk pools offering insurance of last resort. The state pools charge high premiums...to help cover costs." HHS spokeswoman Jenny Backus "said the federal pools are a temporary fix to help uninsured people with pre-existing conditions get coverage until 2014."
Op-Ed: States' Decisions About High-Risk Pool Could Prove Early Test Of New Health Law. Grace-Marie Turner, president of the Galen Institute, writes in a Wall Street Journal (4/29, subscription required) op-ed that Friday is the deadline for states to notify HHS if they intend to participate in the federal high-risk pool for people with pre-existing conditions. The program is a temporary measure until insurers can no longer deny coverage to those people, as provided in the healthcare law. To date, Nebraska and Georgia have said that they will not participate. Georgia's insurance commissioner John W. Oxendine wrote HHS Secretary Kathleen Sebelius, saying that he believes the program would "ultimately become the financial responsibility of Georgians in the form of an unfunded mandate." Turner says that if more states decide to opt out of the federal high-risk pool, this could put pressure the Administration to increase funding for state programs.
Health Action Network
Health Care Reform WellPoint to Cover Young Adults Before the Law Requires: WellPoint, along with several other health insurance companies, announced on Monday that its affiliated health plans will take steps to prevent a gap in coverage that could leave many young Americans uninsured. WellPoint, UnitedHealthcare, Humana, Kaiser Permanente, and Aetna said they will initiate a provision of the new health care law ahead of schedule. The new health care law will extend the dependent age for coverage to 26 for plan years beginning September 23, 2010. As a proactive measure to assist its members, beginning on June 1, WellPoint's affiliated health plans will allow young adults to remain on their parents' policies even before this health care reform provision takes effect.
Coverage Gap for Members of Congress Resolved: White House officials announced this week that a problem with particular language in the new health care reform law has been resolved, closing the coverage gap for members of Congress and their staff. Lawmakers and staff had expressed concern that they would be forced out of their current health care coverage under the Federal Employees Health Benefits Program prior to the creation of state-run exchanges in 2014.
Coverage Gap for Members of Congress Resolved: White House officials announced this week that a problem with particular language in the new health care reform law has been resolved, closing the coverage gap for members of Congress and their staff. Lawmakers and staff had expressed concern that they would be forced out of their current health care coverage under the Federal Employees Health Benefits Program prior to the creation of state-run exchanges in 2014.
Wednesday, April 21, 2010
TAX CREDIT FOR THE SMALL BUSINESS OWNER-IRS WEBSITE
Small Business Health Care Tax Credit: Frequently Asked Questions
The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. The following questions and answers provide information on the credit as it applies for 2010-2013, including information on transition relief for 2010. An enhanced version of the credit will be effective beginning in 2014. The new law, the Patient Protection and Affordable Care Act, was passed by Congress and was signed by President Obama on March 23, 2010.
Employers Eligible for the Credit
1. Which employers are eligible for the small employer health care tax credit?
A. Small employers that provide health care coverage to their employees and that meet certain requirements (“qualified employers”) generally are eligible for a Federal income tax credit for health insurance premiums they pay for certain employees. In order to be a qualified employer, (1) the employer must have fewer than 25 full-time equivalent employees (“FTEs”) for the tax year, (2) the average annual wages of its employees for the year must be less than $50,000 per FTE, and (3) the employer must pay the premiums under a “qualifying arrangement” described in Q/A-3. See Q/A-9 through 15 for further information on calculating FTEs and average annual wages and see Q/A-22 for information on anticipated transition relief for tax years beginning in 2010 with respect to the requirements for a qualifying arrangement.
2. Can a tax-exempt organization be a qualified employer?
A. Yes. The same definition of qualified employer applies to an organization described in Code section 501(c) that is exempt from tax under Code section 501(a). However, special rules apply in calculating the credit for a tax-exempt qualified employer. A governmental employer is not a qualified employer unless it is an organization described in Code section 501(c) that is exempt from tax under Code section 501(a). See Q/A-6.
Calculation of the Credit
3. What expenses are counted in calculating the credit?
A. Only premiums paid by the employer under an arrangement meeting certain requirements (a “qualifying arrangement”) are counted in calculating the credit. Under a qualifying arrangement, the employer pays premiums for each employee enrolled in health care coverage offered by the employer in an amount equal to a uniform percentage (not less than 50 percent) of the premium cost of the coverage. See Q/A-22 for information on transition relief for tax years beginning in 2010 with respect to the requirements for a qualifying arrangement.
If an employer pays only a portion of the premiums for the coverage provided to employees under the arrangement (with employees paying the rest), the amount of premiums counted in calculating the credit is only the portion paid by the employer. For example, if an employer pays 80 percent of the premiums for employees’ coverage (with employees paying the other 20 percent), the 80 percent premium amount paid by the employer counts in calculating the credit. For purposes of the credit (including the 50-percent requirement), any premium paid pursuant to a salary reduction arrangement under a section 125 cafeteria plan is not treated as paid by the employer.
In addition, the amount of an employer’s premium payments that counts for purposes of the credit is capped by the premium payments the employer would have made under the same arrangement if the average premium for the small group market in the State (or an area within the State) in which the employer offers coverage were substituted for the actual premium. If the employer pays only a portion of the premium for the coverage provided to employees (for example, under the terms of the plan the employer pays 80 percent of the premiums and the employees pay the other 20 percent), the premium amount that counts for purposes of the credit is the same portion (80 percent in the example) of the premiums that would have been paid for the coverage if the average premium for the small group market in the State were substituted for the actual premium.
4. What is the average premium for the small group market in a State (or an area within the State)?
A. The average premium for the small group market in a State (or an area within the State) will be determined by the Department of Health and Human Services (HHS) and published by the IRS. Publication of the average premium for the small group market on a State-by-State basis is expected to be posted on the IRS website by the end of April.
5. What is the maximum credit for a qualified employer (other than a tax-exempt employer)?
A. For tax years beginning in 2010 through 2013, the maximum credit is 35 percent of the employer’s premium expenses that count towards the credit, as described in Q/A-3.
Example. For the 2010 tax year, a qualified employer has 9 FTEs with average annual wages of $23,000 per FTE. The employer pays $72,000 in health care premiums for those employees (which does not exceed the average premium for the small group market in the employer's State) and otherwise meets the requirements for the credit. The credit for 2010 equals $25,200 (35% x $72,000).
6. What is the maximum credit for a tax-exempt qualified employer?
A. For tax years beginning in 2010 through 2013, the maximum credit for a tax-exempt qualified employer is 25 percent of the employer’s premium expenses that count towards the credit, as described in Q/A-3. However, the amount of the credit cannot exceed the total amount of income and Medicare (i.e., Hospital Insurance) tax the employer is required to withhold from employees’ wages for the year and the employer share of Medicare tax on employees’ wages.
Example. For the 2010 tax year, a qualified tax-exempt employer has 10 FTEs with average annual wages of $21,000 per FTE. The employer pays $80,000 in health care premiums for those employees (which does not exceed the average premium for the small group market in the employer's State) and otherwise meets the requirements for the credit. The total amount of the employer’s income tax and Medicare tax withholding plus the employer’s share of the Medicare tax equals $30,000 in 2010. The credit is calculated as follows:
(1) Initial amount of credit determined before any reduction: (25% x $80,000) = $20,000(2) Employer’s withholding and Medicare taxes: $30,000(3) Total 2010 tax credit is $20,000 (the lesser of $20,000 and $30,000).
7. How is the credit reduced if the number of FTEs exceeds 10 or average annual wages exceed $25,000?
A. If the number of FTEs exceeds 10 or if average annual wages exceed $25,000, the amount of the credit is reduced as follows (but not below zero). If the number of FTEs exceeds 10, the reduction is determined by multiplying the otherwise applicable credit amount by a fraction, the numerator of which is the number of FTEs in excess of 10 and the denominator of which is 15. If average annual wages exceed $25,000, the reduction is determined by multiplying the otherwise applicable credit amount by a fraction, the numerator of which is the amount by which average annual wages exceed $25,000 and the denominator of which is $25,000. In both cases, the result of the calculation is subtracted from the otherwise applicable credit to determine the credit to which the employer is entitled. For an employer with both more than 10 FTEs and average annual wages exceeding $25,000, the reduction is the sum of the amount of the two reductions. This sum may reduce the credit to zero for some employers with fewer than 25 FTEs and average annual wages of less than $50,000.
Example. For the 2010 tax year, a qualified employer has 12 FTEs and average annual wages of $30,000. The employer pays $96,000 in health care premiums for those employees (which does not exceed the average premium for the small group market in the employer's State) and otherwise meets the requirements for the credit.
The credit is calculated as follows:
(1) Initial amount of credit determined before any reduction: (35% x $96,000) = $33,600 (2) Credit reduction for FTEs in excess of 10: ($33,600 x 2/15) = $4,480(3) Credit reduction for average annual wages in excess of $25,000: ($33,600 x $5,000/$25,000) = $6,720(4) Total credit reduction: ($4,480 + $6,720) = $11,200(5) Total 2010 tax credit: ($33,600 – $11,200) = $22,400.
8. Can premiums paid by the employer in 2010, but before the new health reform legislation was enacted, be counted in calculating the credit?
A. Yes. In computing the credit for a tax year beginning in 2010, employers may count all premiums described in Q/A-3 for that tax year.
Determining FTEs and Average Annual Wages
9. How is the number of FTEs determined for purposes of the credit?
A. The number of an employer’s FTEs is determined by dividing (1) the total hours for which the employer pays wages to employees during the year (but not more than 2,080 hours for any employee) by (2) 2,080. The result, if not a whole number, is then rounded to the next lowest whole number. See Q/A-12 through 14 for information on which employees are not counted for purposes of determining FTEs.
Example. For the 2010 tax year, an employer pays 5 employees wages for 2,080 hours each, 3 employees wages for 1,040 hours each, and 1 employee wages for 2,300 hours.
The employer’s FTEs would be calculated as follows:
(1) Total hours not exceeding 2,080 per employee is the sum of:
a. 10,400 hours for the 5 employees paid for 2,080 hours each (5 x 2,080)b. 3,120 hours for the 3 employees paid for 1,040 hours each (3 x 1,040)c. 2,080 hours for the 1 employee paid for 2,300 hours (lesser of 2,300 and 2,080)
These add up to 15,600 hours
(2) FTEs: 7 (15,600 divided by 2,080 = 7.5, rounded to the next lowest whole number) 10. How is the amount of average annual wages determined?
A. The amount of average annual wages is determined by first dividing (1) the total wages paid by the employer to employees during the employer’s tax year by (2) the number of the employer’s FTEs for the year. The result is then rounded down to the nearest $1,000 (if not otherwise a multiple of $1,000). For this purpose, wages means wages as defined for FICA purposes (without regard to the wage base limitation). See Q/A-12 through 14 for information on which employees are not counted as employees for purposes of determining the amount of average annual wages. Example. For the 2010 tax year, an employer pays $224,000 in wages and has 10 FTEs.
The employer’s average annual wages would be: $22,000 ($224,000 divided by 10 = $22,400, rounded down to the nearest $1,000)
11. Can an employer with 25 or more employees qualify for the credit if some of its employees are part-time?
A. Yes. Because the limitation on the number of employees is based on FTEs, an employer with 25 or more employees could qualify for the credit if some of its employees work part-time. For example, an employer with 46 half-time employees (meaning they are paid wages for 1,040 hours) has 23 FTEs and therefore may qualify for the credit.
12. Are seasonal workers counted in determining the number of FTEs and the amount of average annual wages?
A. Generally, no. Seasonal workers are disregarded in determining FTEs and average annual wages unless the seasonal worker works for the employer on more than 120 days during the tax year.
13. If an owner of a business also provides services to it, does the owner count as an employee?
A. Generally, no. A sole proprietor, a partner in a partnership, a shareholder owning more than two percent of an S corporation, and any owner of more than five percent of other businesses are not considered employees for purposes of the credit. Thus, the wages or hours of these business owners and partners are not counted in determining either the number of FTEs or the amount of average annual wages, and premiums paid on their behalf are not counted in determining the amount of the credit.
14. Do family members of a business owner who work for the business count as employees?
A. Generally, no. A family member of any of the business owners or partners listed in Q/A-13, or a member of such a business owner’s or partner’s household, is not considered an employee for purposes of the credit. Thus, neither their wages nor their hours are counted in determining the number of FTEs or the amount of average annual wages, and premiums paid on their behalf are not counted in determining the amount of the credit. For this purpose, a family member is defined as a child (or descendant of a child); a sibling or step-sibling; a parent (or ancestor of a parent); a step-parent; a niece or nephew; an aunt or uncle; or a son-in-law, daughter- in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
15. How is eligibility for the credit determined if the employer is a member of a controlled group or an affiliated service group?
A. Members of a controlled group (e.g., businesses with the same owners) or an affiliated service group (e.g., related businesses of which one performs services for the other) are treated as a single employer for purposes of the credit. Thus, for example, all employees of the controlled group or affiliated service group, and all wages paid to employees by the controlled group or affiliated service group, are counted in determining whether any member of the controlled group or affiliated service group is a qualified employer. Rules for determining whether an employer is a member of a controlled group or an affiliated service group are provided under Code section 414(b), (c), (m), and (o).
How to Claim the Credit
16. How does an employer claim the credit?
A. The credit is claimed on the employer’s annual income tax return. For a tax-exempt employer, the IRS will provide further information on how to claim the credit.
17. Can an employer (other than a tax-exempt employer) claim the credit if it has no taxable income for the year?
A. Generally, no. Except in the case of a tax-exempt employer, the credit for a year offsets only an employer’s actual income tax liability (or alternative minimum tax liability) for the year. However, as a general business credit, an unused credit amount can generally be carried back one year and carried forward 20 years. Because an unused credit amount cannot be carried back to a year before the effective date of the credit, though, an unused credit amount for 2010 can only be carried forward.
18. Can a tax-exempt employer claim the credit if it has no taxable income for the year?
A. Yes. For a tax-exempt employer, the credit is a refundable credit, so that even if the employer has no taxable income, the employer may receive a refund (so long as it does not exceed the income tax withholding and Medicare tax liability, as discussed in Q/A-6).
19. Can the credit be reflected in determining estimated tax payments for a year?
A. Yes. The credit can be reflected in determining estimated tax payments for the year to which the credit applies in accordance with regular estimated tax rules.
20. Does taking the credit affect an employer’s deduction for health insurance premiums?
A. Yes. In determining the employer’s deduction for health insurance premiums, the amount of premiums that can be deducted is reduced by the amount of the credit.
21. May an employer reduce employment tax payments (i.e., withheld income tax, social security tax, and Medicare tax) during the year in anticipation of the credit?
A. No. The credit applies against income tax, not employment taxes.
Anticipated Transition Relief for Tax Years Beginning in 2010
22. Is it expected that any transition relief will be provided for tax years beginning in 2010 to make it easier for taxpayers to meet the requirements for a qualifying arrangement?
A. Yes. The IRS and Treasury intend to issue guidance that will provide that, for tax years beginning in 2010, the following transition relief applies with respect to the requirements for a qualifying arrangement described in Q/A-3:
(a) An employer that pays at least 50% of the premium for each employee enrolled in coverage offered to employees by the employer will not fail to maintain a qualifying arrangement merely because the employer does not pay a uniform percentage of the premium for each such employee. Accordingly, if the employer otherwise satisfies the requirements for the credit described above, it will qualify for the credit even though the percentage of the premium it pays is not uniform for all such employees.
(b) The requirement that the employer pay at least 50% of the premium for an employee applies to the premium for single (employee-only) coverage for the employee. Therefore, if the employee is receiving single coverage, the employer satisfies the 50% requirement with respect to the employee if it pays at least 50% of the premium for that coverage. If the employee is receiving coverage that is more expensive than single coverage (such as family or self-plus-one coverage), the employer satisfies the 50% requirement with respect to the employee if the employer pays an amount of the premium for such coverage that is no less than 50% of the premium for single coverage for that employee (even if it is less than 50% of the premium for the coverage the employee is actually receiving).
Page Last Reviewed or Updated: April 19, 2010
Accessibility Freedom of Information Act Important Links IRS Privacy Policy USA.gov U.S. Treasury
The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. The following questions and answers provide information on the credit as it applies for 2010-2013, including information on transition relief for 2010. An enhanced version of the credit will be effective beginning in 2014. The new law, the Patient Protection and Affordable Care Act, was passed by Congress and was signed by President Obama on March 23, 2010.
Employers Eligible for the Credit
1. Which employers are eligible for the small employer health care tax credit?
A. Small employers that provide health care coverage to their employees and that meet certain requirements (“qualified employers”) generally are eligible for a Federal income tax credit for health insurance premiums they pay for certain employees. In order to be a qualified employer, (1) the employer must have fewer than 25 full-time equivalent employees (“FTEs”) for the tax year, (2) the average annual wages of its employees for the year must be less than $50,000 per FTE, and (3) the employer must pay the premiums under a “qualifying arrangement” described in Q/A-3. See Q/A-9 through 15 for further information on calculating FTEs and average annual wages and see Q/A-22 for information on anticipated transition relief for tax years beginning in 2010 with respect to the requirements for a qualifying arrangement.
2. Can a tax-exempt organization be a qualified employer?
A. Yes. The same definition of qualified employer applies to an organization described in Code section 501(c) that is exempt from tax under Code section 501(a). However, special rules apply in calculating the credit for a tax-exempt qualified employer. A governmental employer is not a qualified employer unless it is an organization described in Code section 501(c) that is exempt from tax under Code section 501(a). See Q/A-6.
Calculation of the Credit
3. What expenses are counted in calculating the credit?
A. Only premiums paid by the employer under an arrangement meeting certain requirements (a “qualifying arrangement”) are counted in calculating the credit. Under a qualifying arrangement, the employer pays premiums for each employee enrolled in health care coverage offered by the employer in an amount equal to a uniform percentage (not less than 50 percent) of the premium cost of the coverage. See Q/A-22 for information on transition relief for tax years beginning in 2010 with respect to the requirements for a qualifying arrangement.
If an employer pays only a portion of the premiums for the coverage provided to employees under the arrangement (with employees paying the rest), the amount of premiums counted in calculating the credit is only the portion paid by the employer. For example, if an employer pays 80 percent of the premiums for employees’ coverage (with employees paying the other 20 percent), the 80 percent premium amount paid by the employer counts in calculating the credit. For purposes of the credit (including the 50-percent requirement), any premium paid pursuant to a salary reduction arrangement under a section 125 cafeteria plan is not treated as paid by the employer.
In addition, the amount of an employer’s premium payments that counts for purposes of the credit is capped by the premium payments the employer would have made under the same arrangement if the average premium for the small group market in the State (or an area within the State) in which the employer offers coverage were substituted for the actual premium. If the employer pays only a portion of the premium for the coverage provided to employees (for example, under the terms of the plan the employer pays 80 percent of the premiums and the employees pay the other 20 percent), the premium amount that counts for purposes of the credit is the same portion (80 percent in the example) of the premiums that would have been paid for the coverage if the average premium for the small group market in the State were substituted for the actual premium.
4. What is the average premium for the small group market in a State (or an area within the State)?
A. The average premium for the small group market in a State (or an area within the State) will be determined by the Department of Health and Human Services (HHS) and published by the IRS. Publication of the average premium for the small group market on a State-by-State basis is expected to be posted on the IRS website by the end of April.
5. What is the maximum credit for a qualified employer (other than a tax-exempt employer)?
A. For tax years beginning in 2010 through 2013, the maximum credit is 35 percent of the employer’s premium expenses that count towards the credit, as described in Q/A-3.
Example. For the 2010 tax year, a qualified employer has 9 FTEs with average annual wages of $23,000 per FTE. The employer pays $72,000 in health care premiums for those employees (which does not exceed the average premium for the small group market in the employer's State) and otherwise meets the requirements for the credit. The credit for 2010 equals $25,200 (35% x $72,000).
6. What is the maximum credit for a tax-exempt qualified employer?
A. For tax years beginning in 2010 through 2013, the maximum credit for a tax-exempt qualified employer is 25 percent of the employer’s premium expenses that count towards the credit, as described in Q/A-3. However, the amount of the credit cannot exceed the total amount of income and Medicare (i.e., Hospital Insurance) tax the employer is required to withhold from employees’ wages for the year and the employer share of Medicare tax on employees’ wages.
Example. For the 2010 tax year, a qualified tax-exempt employer has 10 FTEs with average annual wages of $21,000 per FTE. The employer pays $80,000 in health care premiums for those employees (which does not exceed the average premium for the small group market in the employer's State) and otherwise meets the requirements for the credit. The total amount of the employer’s income tax and Medicare tax withholding plus the employer’s share of the Medicare tax equals $30,000 in 2010. The credit is calculated as follows:
(1) Initial amount of credit determined before any reduction: (25% x $80,000) = $20,000(2) Employer’s withholding and Medicare taxes: $30,000(3) Total 2010 tax credit is $20,000 (the lesser of $20,000 and $30,000).
7. How is the credit reduced if the number of FTEs exceeds 10 or average annual wages exceed $25,000?
A. If the number of FTEs exceeds 10 or if average annual wages exceed $25,000, the amount of the credit is reduced as follows (but not below zero). If the number of FTEs exceeds 10, the reduction is determined by multiplying the otherwise applicable credit amount by a fraction, the numerator of which is the number of FTEs in excess of 10 and the denominator of which is 15. If average annual wages exceed $25,000, the reduction is determined by multiplying the otherwise applicable credit amount by a fraction, the numerator of which is the amount by which average annual wages exceed $25,000 and the denominator of which is $25,000. In both cases, the result of the calculation is subtracted from the otherwise applicable credit to determine the credit to which the employer is entitled. For an employer with both more than 10 FTEs and average annual wages exceeding $25,000, the reduction is the sum of the amount of the two reductions. This sum may reduce the credit to zero for some employers with fewer than 25 FTEs and average annual wages of less than $50,000.
Example. For the 2010 tax year, a qualified employer has 12 FTEs and average annual wages of $30,000. The employer pays $96,000 in health care premiums for those employees (which does not exceed the average premium for the small group market in the employer's State) and otherwise meets the requirements for the credit.
The credit is calculated as follows:
(1) Initial amount of credit determined before any reduction: (35% x $96,000) = $33,600 (2) Credit reduction for FTEs in excess of 10: ($33,600 x 2/15) = $4,480(3) Credit reduction for average annual wages in excess of $25,000: ($33,600 x $5,000/$25,000) = $6,720(4) Total credit reduction: ($4,480 + $6,720) = $11,200(5) Total 2010 tax credit: ($33,600 – $11,200) = $22,400.
8. Can premiums paid by the employer in 2010, but before the new health reform legislation was enacted, be counted in calculating the credit?
A. Yes. In computing the credit for a tax year beginning in 2010, employers may count all premiums described in Q/A-3 for that tax year.
Determining FTEs and Average Annual Wages
9. How is the number of FTEs determined for purposes of the credit?
A. The number of an employer’s FTEs is determined by dividing (1) the total hours for which the employer pays wages to employees during the year (but not more than 2,080 hours for any employee) by (2) 2,080. The result, if not a whole number, is then rounded to the next lowest whole number. See Q/A-12 through 14 for information on which employees are not counted for purposes of determining FTEs.
Example. For the 2010 tax year, an employer pays 5 employees wages for 2,080 hours each, 3 employees wages for 1,040 hours each, and 1 employee wages for 2,300 hours.
The employer’s FTEs would be calculated as follows:
(1) Total hours not exceeding 2,080 per employee is the sum of:
a. 10,400 hours for the 5 employees paid for 2,080 hours each (5 x 2,080)b. 3,120 hours for the 3 employees paid for 1,040 hours each (3 x 1,040)c. 2,080 hours for the 1 employee paid for 2,300 hours (lesser of 2,300 and 2,080)
These add up to 15,600 hours
(2) FTEs: 7 (15,600 divided by 2,080 = 7.5, rounded to the next lowest whole number) 10. How is the amount of average annual wages determined?
A. The amount of average annual wages is determined by first dividing (1) the total wages paid by the employer to employees during the employer’s tax year by (2) the number of the employer’s FTEs for the year. The result is then rounded down to the nearest $1,000 (if not otherwise a multiple of $1,000). For this purpose, wages means wages as defined for FICA purposes (without regard to the wage base limitation). See Q/A-12 through 14 for information on which employees are not counted as employees for purposes of determining the amount of average annual wages. Example. For the 2010 tax year, an employer pays $224,000 in wages and has 10 FTEs.
The employer’s average annual wages would be: $22,000 ($224,000 divided by 10 = $22,400, rounded down to the nearest $1,000)
11. Can an employer with 25 or more employees qualify for the credit if some of its employees are part-time?
A. Yes. Because the limitation on the number of employees is based on FTEs, an employer with 25 or more employees could qualify for the credit if some of its employees work part-time. For example, an employer with 46 half-time employees (meaning they are paid wages for 1,040 hours) has 23 FTEs and therefore may qualify for the credit.
12. Are seasonal workers counted in determining the number of FTEs and the amount of average annual wages?
A. Generally, no. Seasonal workers are disregarded in determining FTEs and average annual wages unless the seasonal worker works for the employer on more than 120 days during the tax year.
13. If an owner of a business also provides services to it, does the owner count as an employee?
A. Generally, no. A sole proprietor, a partner in a partnership, a shareholder owning more than two percent of an S corporation, and any owner of more than five percent of other businesses are not considered employees for purposes of the credit. Thus, the wages or hours of these business owners and partners are not counted in determining either the number of FTEs or the amount of average annual wages, and premiums paid on their behalf are not counted in determining the amount of the credit.
14. Do family members of a business owner who work for the business count as employees?
A. Generally, no. A family member of any of the business owners or partners listed in Q/A-13, or a member of such a business owner’s or partner’s household, is not considered an employee for purposes of the credit. Thus, neither their wages nor their hours are counted in determining the number of FTEs or the amount of average annual wages, and premiums paid on their behalf are not counted in determining the amount of the credit. For this purpose, a family member is defined as a child (or descendant of a child); a sibling or step-sibling; a parent (or ancestor of a parent); a step-parent; a niece or nephew; an aunt or uncle; or a son-in-law, daughter- in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
15. How is eligibility for the credit determined if the employer is a member of a controlled group or an affiliated service group?
A. Members of a controlled group (e.g., businesses with the same owners) or an affiliated service group (e.g., related businesses of which one performs services for the other) are treated as a single employer for purposes of the credit. Thus, for example, all employees of the controlled group or affiliated service group, and all wages paid to employees by the controlled group or affiliated service group, are counted in determining whether any member of the controlled group or affiliated service group is a qualified employer. Rules for determining whether an employer is a member of a controlled group or an affiliated service group are provided under Code section 414(b), (c), (m), and (o).
How to Claim the Credit
16. How does an employer claim the credit?
A. The credit is claimed on the employer’s annual income tax return. For a tax-exempt employer, the IRS will provide further information on how to claim the credit.
17. Can an employer (other than a tax-exempt employer) claim the credit if it has no taxable income for the year?
A. Generally, no. Except in the case of a tax-exempt employer, the credit for a year offsets only an employer’s actual income tax liability (or alternative minimum tax liability) for the year. However, as a general business credit, an unused credit amount can generally be carried back one year and carried forward 20 years. Because an unused credit amount cannot be carried back to a year before the effective date of the credit, though, an unused credit amount for 2010 can only be carried forward.
18. Can a tax-exempt employer claim the credit if it has no taxable income for the year?
A. Yes. For a tax-exempt employer, the credit is a refundable credit, so that even if the employer has no taxable income, the employer may receive a refund (so long as it does not exceed the income tax withholding and Medicare tax liability, as discussed in Q/A-6).
19. Can the credit be reflected in determining estimated tax payments for a year?
A. Yes. The credit can be reflected in determining estimated tax payments for the year to which the credit applies in accordance with regular estimated tax rules.
20. Does taking the credit affect an employer’s deduction for health insurance premiums?
A. Yes. In determining the employer’s deduction for health insurance premiums, the amount of premiums that can be deducted is reduced by the amount of the credit.
21. May an employer reduce employment tax payments (i.e., withheld income tax, social security tax, and Medicare tax) during the year in anticipation of the credit?
A. No. The credit applies against income tax, not employment taxes.
Anticipated Transition Relief for Tax Years Beginning in 2010
22. Is it expected that any transition relief will be provided for tax years beginning in 2010 to make it easier for taxpayers to meet the requirements for a qualifying arrangement?
A. Yes. The IRS and Treasury intend to issue guidance that will provide that, for tax years beginning in 2010, the following transition relief applies with respect to the requirements for a qualifying arrangement described in Q/A-3:
(a) An employer that pays at least 50% of the premium for each employee enrolled in coverage offered to employees by the employer will not fail to maintain a qualifying arrangement merely because the employer does not pay a uniform percentage of the premium for each such employee. Accordingly, if the employer otherwise satisfies the requirements for the credit described above, it will qualify for the credit even though the percentage of the premium it pays is not uniform for all such employees.
(b) The requirement that the employer pay at least 50% of the premium for an employee applies to the premium for single (employee-only) coverage for the employee. Therefore, if the employee is receiving single coverage, the employer satisfies the 50% requirement with respect to the employee if it pays at least 50% of the premium for that coverage. If the employee is receiving coverage that is more expensive than single coverage (such as family or self-plus-one coverage), the employer satisfies the 50% requirement with respect to the employee if the employer pays an amount of the premium for such coverage that is no less than 50% of the premium for single coverage for that employee (even if it is less than 50% of the premium for the coverage the employee is actually receiving).
Page Last Reviewed or Updated: April 19, 2010
Accessibility Freedom of Information Act Important Links IRS Privacy Policy USA.gov U.S. Treasury
Saturday, April 17, 2010
Anthem Updates the Agents on Reform 2010
New for 2010: Tax Credit for Small Groups
The IRS recently released materials for those wishing to claim the small business health care tax credit for 2010. A provision of the Patient Protection and Affordable Care Act (PPACA), this tax credit is designed to encourage small groups to offer health care coverage for the first time or enable them to maintain the coverage they already have. It will likely provide assistance to about four million small businesses.
This tax credit can be significant for a qualifying small group. In 2010, the maximum credit is 35% of employer-paid premiums; for tax-exempt organizations, the maximum is 25% of employer-paid premiums. In 2014, the maximum increases to 50% of employer-paid premiums; for tax-exempt organizations, it increases to 35% of employer-paid premiums. In order to qualify for the credit, the employer must not employ more than 25 employees and the average annual compensation of those employees must not exceed $40,000.
Here's a look at how a company with 10 employees could benefit:
Employees: 10
Wages: $250,000 or $25,000 per worker
Employer Health Care Costs: $70,000
2010 tax credit: $24,500 (35% credit) 2014 tax credit: $35,000 (50% credit)
For more examples, click here.
While there is no formal guidance yet, the IRS has provided educational resources for small businesses wishing to claim the credit this year. Click here to see the following information:
Eligibility rules
Amount of credit
Three simple step to determine a small group's eligibility
More tax credit scenarios
FAQs
You can expect more health care reform updates like this one throughout the year. We're eager to get information out to you as soon as possible, so you can help your clients get the most from the new legislation. As always, please contact your sales representative with questions or for more informatio
The IRS recently released materials for those wishing to claim the small business health care tax credit for 2010. A provision of the Patient Protection and Affordable Care Act (PPACA), this tax credit is designed to encourage small groups to offer health care coverage for the first time or enable them to maintain the coverage they already have. It will likely provide assistance to about four million small businesses.
This tax credit can be significant for a qualifying small group. In 2010, the maximum credit is 35% of employer-paid premiums; for tax-exempt organizations, the maximum is 25% of employer-paid premiums. In 2014, the maximum increases to 50% of employer-paid premiums; for tax-exempt organizations, it increases to 35% of employer-paid premiums. In order to qualify for the credit, the employer must not employ more than 25 employees and the average annual compensation of those employees must not exceed $40,000.
Here's a look at how a company with 10 employees could benefit:
Employees: 10
Wages: $250,000 or $25,000 per worker
Employer Health Care Costs: $70,000
2010 tax credit: $24,500 (35% credit) 2014 tax credit: $35,000 (50% credit)
For more examples, click here.
While there is no formal guidance yet, the IRS has provided educational resources for small businesses wishing to claim the credit this year. Click here to see the following information:
Eligibility rules
Amount of credit
Three simple step to determine a small group's eligibility
More tax credit scenarios
FAQs
You can expect more health care reform updates like this one throughout the year. We're eager to get information out to you as soon as possible, so you can help your clients get the most from the new legislation. As always, please contact your sales representative with questions or for more informatio
Wednesday, April 14, 2010
Headline News for Insurance Agents from NAHU
Proposed House Bill Would Double Penalties For Medicare Fraud.
The AP (4/14, Kennedy) reports, "Medicare fraud suspects would face longer prison sentences under a US House bill proposed Tuesday that also advocates biotechnology such as fingerprint scanning to ensure patients are getting the goods the government is billed for." Law enforcement officials "have warned Medicare fraud, an estimated $60 billion annual crime, is now more lucrative than dealing drugs. Until now the penalties have been far less severe." But, the "Medicare Fraud Enforcement and Prevention Act will double prison sentences from 5 to 10 years and fines from $25,000 to $50,000 for Medicare fraud-related crimes," and "create a new crime for illegally distributing patients' Medicare or Medicaid IDs or billing information, which would carry a maximum 3-year sentence."
The Palm Beach Post (FL) (4/14, Lantigua) reports, "In the heart of the Medicare fraud capital of the nation, two South Florida members of Congress declared war Tuesday. Representatives Ileana Ros-Lehtinen (R-Miami) and Ron Klein (D-Boca Raton) said they are presenting bi-partisan legislation aimed at criminals who steal billions of dollars from Medicare every year." Data show that "in South Florida alone, $952 million in false Medicare claims were filed last year by clinic owners, medical equipment vendors and medical personnel, almost all in Miami-Dade."
The South Florida Business Journal (4/14, Bandell) calls the bill "one of the first bipartisan efforts since the divisive passage of federal health care reform," and says that "there has been an increase in fraud, despite the efforts of a federal health care fraud task force, which has prosecuted more than 800 people and identified more than $2.5 billion in fraudulent claims since it started in 2006." Under the bill, HHS "would be required to provide law enforcement officials with real-time access to Medicare data, and immediately alert them to suspicious activity." The measure "would require the Government Accountability Office...to review the performance of the contractors who handle Medicare's billing system."
Tuesday, April 13, 2010
Monday, April 12, 2010
When do the Changes Affect me?
Many of the major changes in the legislation don’t go into effect until 2014. Those include:* Federal subsidies to help people buy coverage.* An end to insurers rejecting adult applicants with pre-existing medical conditions.* The requirement that nearly all Americans carry coverage.But some changes affecting insurance policies will come more quickly. Unless otherwise noted, these changes become effective on policies on the first renewal date after Sept. 23. For those with job-based coverage, that may mean a Jan. 1 date, or even later in 2011. They include:* No More Lifetime Limits on Coverage: Insurers and employers can no longer cap the amount spent on essential medical care over a person’s lifetime. Such limits are used to help hold down premiums and are more common in policies purchased by individuals. But about 16 percent of workers receiving insurance through an employer currently have a plan that caps coverage at between $1 million and $2 million, while 43 percent of covered workers have caps of $2 million or more, according to an employer survey by the Kaiser Family Foundation. The law bars the practice on all existing and new policies, according to analyses by insurers and employer groups. * New Restrictions on Annual Limits: Some insurance plans set annual dollar limits on coverage. Such practices will be prohibited for “essential benefits” for all new policies and for existing policies offered by employers. Existing policies in the non-group market will not be held to this standard. Specifics of the restrictions and the definition of “essential benefits” are yet to be developed by HHS. * Insurers Can’t Cancel Retroactively: Until now, insurers have been able to retroactively cancel policies, citing missing or incorrect information on applications for coverage, a practice that left some policyholders owing tens of thousands of dollars. The industry says such cancellations are necessary to combat fraud, but critics say they are improperly used to rid insurers of patients with costly illnesses. The new law bars the practice for all new and existing policies, except in cases of outright fraud. * Kids Can Join Your Plan: Young adults up to age 26 can join or remain or remain on a parent’s policy, so long as they aren’t eligible for coverage under their own employer’s policy. Some questions remain and may be answered by regulations now being drawn up by HHS. Insurers and employers are also barred from rejecting children under 19 with pre-existing medical problems or excluding coverage for those conditions. * Insurers Must Detail Spending, Face Rebates: This year, insurers must report how much revenue they spend on direct medical care versus administrative costs, which include such things as new equipment, disease management, executive salaries and profits. The HHS secretary must define what are considered administrative costs. Next year, if insurers fail to spend at least 80 percent of revenue (85 percent in large employer plans) on medical care, they must issue rebates to consumers and employers. Many large group insurers already meet those standards; a bigger impact could come in policies in the individual market. * Premium increases must be reported: Insurers must report their premium increases to the HHS secretary and provide justification for the increases. The rules apply to all new and existing policies, except self-insured employer plans. * Employers face new rules, rebates, costs: All new policies offered by employers must include both an internal and external appeals process so workers can contest coverage and other benefit decisions. The definition of a “new plan,” isn’t clear. It’s possible it could include an employer who switches insurance carriers. HHS is expected to define that in regulations.Employers that offer drug coverage to retirees will lose the ability to deduct a 28 percent federal subsidy in 2013, but must report the effects on financial statements this year. Some employers may drop or reduce such coverage for retirees as a result. Conversely, employers that cover early retirees’ medical costs will be able to apply for reimbursement of 80 percent of some expensive medical claims.Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.
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Kaiser Headline News
Kaiser Health News - Apr. 6: Consumers and employers who provide health insurance are scrambling to understand what will change in their premiums and benefits once provisions of the recently passed law go into effect.Unlike state insurance laws, which mostly affect policies individually purchased or offered through small and mid-sized businesses, the new federal legislation applies more broadly to nearly all types of private plans, say insurers and employer benefit experts. That includes policies offered by large self-insured employers, through whom about half of the nation’s covered workers get their insurance. Some new rules such as barring insurers from rejecting children with medical conditions or from canceling policies retroactively are aimed at problems that mainly affect the 17 million people who buy their own insurance in the so-called non-group market.But even the approximately 175 million Americans who get group coverage through their jobs will see changes.
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It will be up to the HHS secretary, for example:* To define the breadth of coverage in an "essential benefits package." * To determine how insurers will calculate how much they spend on direct medical care, a key point because insurers who don’t meet specific spending benchmarks must issue rebates to consumers.An HHS spokesman would not provide any details on when regulations will be issued. But, with some provisions set to go into effect by the end of September, pressure is on to move quickly.Among the unknowns is the effect on premiums in the next couple of years. New taxes on drug companies, device makers and insurers don’t begin until at least 2012. But when they do, many economists expect that the increases will be passed along to employers and consumers. Barring insurers from setting lifetime coverage limits may also put upward pressure on premiums.Over time, however, the Congressional Budget Office has estimated that some of the new rules – such as the creation of an online marketplace for insurance purchases – could result in savings that may slow premium growth for some types of coverage.By 2016, when the law is expected to be fully implemented, the CBO estimated that large employers would not be paying more in premiums than they would have done without the new law. That same year, small employers and their workers might see a slight decrease in premiums or up to a 1 percent increase, the CBO said. Individuals could see premium increases of 10 percent to 13 percent, mainly because the coverage purchased would be more comprehensive than what is often purchased in today’s market. For about half of the people buying their own coverage, those increases would be offset by federal subsidies, the CBO said.
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It will be up to the HHS secretary, for example:* To define the breadth of coverage in an "essential benefits package." * To determine how insurers will calculate how much they spend on direct medical care, a key point because insurers who don’t meet specific spending benchmarks must issue rebates to consumers.An HHS spokesman would not provide any details on when regulations will be issued. But, with some provisions set to go into effect by the end of September, pressure is on to move quickly.Among the unknowns is the effect on premiums in the next couple of years. New taxes on drug companies, device makers and insurers don’t begin until at least 2012. But when they do, many economists expect that the increases will be passed along to employers and consumers. Barring insurers from setting lifetime coverage limits may also put upward pressure on premiums.Over time, however, the Congressional Budget Office has estimated that some of the new rules – such as the creation of an online marketplace for insurance purchases – could result in savings that may slow premium growth for some types of coverage.By 2016, when the law is expected to be fully implemented, the CBO estimated that large employers would not be paying more in premiums than they would have done without the new law. That same year, small employers and their workers might see a slight decrease in premiums or up to a 1 percent increase, the CBO said. Individuals could see premium increases of 10 percent to 13 percent, mainly because the coverage purchased would be more comprehensive than what is often purchased in today’s market. For about half of the people buying their own coverage, those increases would be offset by federal subsidies, the CBO said.
Saturday, April 10, 2010
Thursday, April 8, 2010
Wednesday, April 7, 2010
Your HDHP and HSA in Tax Year 2010
If you have a plan that qualifies to open up a Health Savings Account and have not yet done so- then what are you waiting for? The design of the plans allows for consumers to deposit money into the savings account TAX FREE when used for qualified services! Check the IRS.gov website for the list of qualified medical expenses for the tax year in question. Because the contributions and determination of a qualified service is designated and regulated by the IRS, we advise and recommend all consumers to refer to their CPA's and to the IRS.gov website for all tax related questions. We are not tax advisers. We do however enroll our clients on HDHP's(High Deductible Health Plans) that qualify for these type of accounts and for Tax Year 2010 the following increases to contributions and deductibles are listed here as found on the IRS website.
- Tax Year 2010 Individual contribution to a HSA is; $3050, and for a family account the amount is; $6150. (As you can see from prior post the contributions have increased this Tax year by $50 for an individual and $200 for a family.)
Qualified HDHP for Tax Year 2010 have the following minimum and maximum deductibles:
- Individual minimum deductible is; $1200 and the maximum deductible is; $5950
- Family minimum deductible is; $2400 and the maximum deductible is; $11,900
For those over the age of 55 you are able to make additional "catch up" contributions, please ask your tax advisor about this opportunity!
Deadline for HSA Contributions for 2009 : April 15, 2010
For tax year 2009 contributions to your HSA account can be made all the way up to April 15, 2010.
- The maximum contributions for an individual account in 2009 is; $3000
- and for a 2 party or more account referred to as a family account in 2009 is; $5950.
HSA's are Health Savings Accounts that can be opened at a bank when you have a Qualified Health Insurance Plan in place. These plans are referred to as HDHP (High Deductible Health Plans)and in order to qualify they must meet the following minimum and maximum deductible in Tax Year 2009:
- for a individual plan the deductible is a minimum of $1150 with a maximum deductible of $5800.
- for a family plan the deductible is a minimum of $2300 with a maximum deductible of $11,600.
These figures reflect TAX YEAR 2009.
resources,
IRS.gov
Tuesday, April 6, 2010
HHS Secretary Sebelius Speaks on Health Insurance Reform Law
HHS Secretary Kathleen Sebelius is speaking about how the new health insurance reform law will give Americans more benefits and choices, leading to greater security for you and your family.
Watch the speech http://www.press.org/ click on the NPC Event videos under Kathleen Sebelius on the lower left side of webpage.
Watch the speech http://www.press.org/ click on the NPC Event videos under Kathleen Sebelius on the lower left side of webpage.
What happens this year for my family?
This year, allows young adults to stay on their parents’ health care plan until age 26. (This applies
to all plans in the individual market, all new employer plans, and existing employer plans if the
young adult is not eligible for employer coverage on his or her own. Beginning in 2014, children
up to age 26 can stay on their parent’s employer plan even if they have an offer of coverage through
their employer.) This will help cover the one in three young adults who are uninsured.
This year, prohibits insurance companies from denying children coverage based on pre-existing
conditions. Going forward, the Act will prohibit insurance companies from denying coverage to all
individuals. The Act will also end discrimination that charges beneficiaries more if they are sick
and limit the amount an insurance company can increase an individual’s premium simply due to
their age.
This year, requires new plans to cover prevention and wellness benefits at no charge to American
families by exempting these benefits from deductibles and other cost-sharing requirements.
Resources: Healthreform.gov
to all plans in the individual market, all new employer plans, and existing employer plans if the
young adult is not eligible for employer coverage on his or her own. Beginning in 2014, children
up to age 26 can stay on their parent’s employer plan even if they have an offer of coverage through
their employer.) This will help cover the one in three young adults who are uninsured.
This year, prohibits insurance companies from denying children coverage based on pre-existing
conditions. Going forward, the Act will prohibit insurance companies from denying coverage to all
individuals. The Act will also end discrimination that charges beneficiaries more if they are sick
and limit the amount an insurance company can increase an individual’s premium simply due to
their age.
This year, requires new plans to cover prevention and wellness benefits at no charge to American
families by exempting these benefits from deductibles and other cost-sharing requirements.
Resources: Healthreform.gov
Health Care Reform & The Small Business Owner
Health care reform as envisioned in current draft legislation would reduce the current burdens on small firms and their workers.
- Tax credits for small businesses. For the 2010 tax year up until the 2013 tax year, the credit will gradually be phased in. Businesses with fewer than 26 employees and average annual wages under $50,000 will eventually be eligible for credit in an amount up to 50% of nonelective contributions that the business makes, on behalf of its employees, for insurance premiums. Here's the good news for tax exempt nonprofit organizations: They would get a 35% credit against payroll taxes!
- Premium Cost Eligibility. To avoid an incentive to choose a high-cost plan, an employer’s eligible contribution is limited to the average cost of health insurance in that state.
- Employers with ten or fewer employees and average wages below $25,000 fair very well with the new reform. They will benefit from a 100% credit. Leased employees will be counted as employees, however 2% S corporation shareholders will not be included in the definition of employee.
- New reporting requirements. If an employer self-insures its employees, the employer must report certain information, including details on each individual obtaining the coverage, their coverage dates and various other information. These reporting requirements will become effective after 2013.
- Starting in January 2011, employers will be required to disclose, on each employee's Form W2, the value of the individual employee's health insurance coverage, sponsored by the employer.
reference sources: www.whitehouse.gov/.../Health-Care-Reform-and-Small-Businesses , http://www.whitehouse.gov/healthreform/small-business/tax-credit
What will happen to Illegal Immigrants?
Associated Press - Apr. 4: Fresno, Calif. - Paula Medrano shifts uncomfortably on the doctor's examination table, holding out a wrist inflamed and swollen by arthritis. The 78-year-old has no health insurance, lives below the federal poverty level, and can't pay for the medication she needs.Just days before her appointment, President Barack Obama signed, with much fanfare, a historic bill to extend health care access to 32 million currently uninsured people. But Medrano and her daughter, Juana Aguirre, barely paid attention."It's a great thing, but it's not for us," said Aguirre. Medrano is an undocumented immigrant one of the 7 million uninsured people living in the United States who were explicitly excluded from the legislation, according to estimates by the Congressional Budget Office.The question of whether to extend coverage to illegal immigrants was so politically contentious that, under the approved legislation, they will not even be able to buy health insurance in the newly created purchasing pools called exchanges if they pay entirely out of their own pocket.Proponents of reducing immigration believe that allowing illegal immigrants access to health care is an incentive for them to come, and an unfair tax burden on Americans.Although the approved legislation explicitly excludes undocumented immigrants from participating in the exchanges, there is no foolproof way of verifying their documentation to keep them out, said Yeh Ling-Ling, executive director of Alliance for a Sustainable USA.They will also continue to have access to emergency medical assistance. "It is not fair on struggling Americans," said Yeh. What is clear is that as the ranks of the uninsured diminish, immigrants like Medrano will continue to patch together health care as they can at health centers such as Fresno's Clinica Sierra Vista, at hospital emergency rooms, or through programs like Healthy San Francisco, which offers universal health care to all who live in the city."We have to be very creative not asking for labs unless it's really essential, working with generics, working with drug companies, giving them samples," said Juan Carlos Ruvalcaba, the doctor seeing Medrano at Clinica, which charges on a sliding scale of $40 to $70, depending on the patient's ability to pay.Once an undocumented immigrant himself, Ruvalcaba was able to become a citizen and attend medical school because of an amnesty program in 1986. He remains committed to serving all patients, no matter their insurance or immigration status, but there is only so much he can do, he said.He was able to give Medrano the drugs she needed, but he asked, "What happens when they need a specialist? What if they end up in the emergency room, and end up with a big bill?"Some who work with this population are afraid that with the focus shifting onto providing care for the newly insured, those shut out of the system will be forgotten, left to fend for themselves with even fewer resources."It may make things worse — if you say 32 million are covered, there may be less done for these large groups who are here, who are working, who are such a large part of our agriculture industry," said Norma Forbes, executive director of Fresno Healthy Communities Access Partners, a nonprofit network of eleven health care organizations in California's rural Central Valley.Illegal immigrant won't be the only uninsured left: about 16 million Americans are estimated to remain outside the health care system even after access is expanded over the next few years, according to the Congressional Budget Office.This includes those who opt out, who don't know how to enroll, or who are exempted from the health insurance requirement because they can't afford the premiums, even with a subsidy.For these patients, there will indeed be fewer options as doctors, hospitals and other providers increase their caseload to take in new patients bearing insurance, said Dan Hawkins, who is charged with policy and research at the National Association of Community Health Centers."There will be greater concentration of care for the uninsured in fewer places," Hawkins said. Community health centers, the lynchpin of the safety net system now caring for the medically underserved, whether they are immigrants or citizens, will remain one of the places where people like Medrano will be able to see a doctor at an affordable cost.Federally qualified clinics got a substantial funding boost through the health reform package. They will get $11 billion in new funding over the next five years, which will allow them to double the number of patients they see, from 20 million a year now to 40 million people a year by 2015.Most of these new patients will come bearing new insurance cards, or be part of the larger pool qualifying for Medicaid. But among them will be illegal immigrants, said Hawkins."Health centers will continue to be open to everyone regardless of their ability to pay, undocumented immigrants and everyone else," he said. "We don't know how many of the uninsured we serve right now are undocumented. But we do know a health center is a better, and less expensive, place for them to get that care."
Monday, April 5, 2010
From The Headlines
Los Angeles Times - Mar. 28: Washington - Last week President Obama signed into law the most sweeping healthcare overhaul in generations. How the new health law could affect you, and how soon.Now that the bill is law, how do I sign up for my new insurance?Although there are some provisions that take effect this year, such as bans on lifetime limits and the denial of coverage to children with pre-existing conditions, the part of the bill that provides new insurance options does not take effect until 2014.By then states will have created insurance exchanges, possibly online, where people who don't get insurance from an employer or the government will be able to shop for policies that meet federal standards.The policies sold on exchanges will be regulated by state and federal authorities and will be subsidized for many low- and middle-income Americans.What's to stop my insurer from raising my rates between now and 2014?Under the new law, states and the federal government must create a process for reviewing rate increases starting with plans issued in 2010. Although this would not prevent insurers from raising rates in all cases, it is designed to discourage them from making unreasonable increases.Unreasonably high increases could prompt state authorities to exclude those plans from the insurance exchanges when they open in 2014.I have a pre-existing condition and recently lost my job and with it, my health benefits. What does this bill do for me?You can keep the plan that you had through your job, but your former employer is not required to continue paying a share of your premium. To help with the added cost, government subsidies are available to cover 65% of the premium for 15 months. But once that expires, you'll need to find insurance on your own.If you are unable to buy insurance because of your pre-existing condition, you may be eligible to join a national high-risk pool, which will be created this year and will also subsidize premium costs. But only individuals who have been uninsured for at least six months will qualify for this pool.I have prescription drug coverage under Medicare and will be hitting the "doughnut hole" pretty soon. What will the bill do to help me pay for my drugs?Under the Medicare Part D program, seniors pay 25% of their drug costs up to a yearly limit of $2,830. After that they must pay 100% of the costs until their out-of-pocket total reaches $4,550, at which point catastrophic coverage kicks in and seniors pay just 5% of the cost for the rest of the year.The difference between the yearly limit and the point where catastrophic coverage kicks in is called the "doughnut hole." In 2010, seniors who reach the coverage gap will be eligible for a $250 rebate.Starting in 2011, the government and pharmaceutical makers will begin phasing in subsidies and discounts on brand-name and generic drugs purchased in the gap.By 2020, this program will have eliminated the gap entirely by covering 75% of seniors' drug costs up to the catastrophic coverage limit.I have a great insurance policy through my employer and I don't want it to change. What's this I hear about taxing my plan?Democrats proposed bringing down healthcare costs by taxing "Cadillac plans" -- high-cost coverage plans provided by employers. Because employer-sponsored health benefits are not taxed, employers currently have an incentive to provide benefit increases rather than wage increases.The "Cadillac tax" which takes effect in 2018 will cap the tax-free status of health benefits. Insurers will pay 40 cents on every dollar they charge above $10,200 for individual coverage and $27,500 for family coverage.
Confused about Health Care Reform?
You are not alone! With the passing of the two new health care bills signed March 26th by Obama many folks are waking up scratching their heads and saying, "What happens now?"
Having been in the industry for over 14 years now I can honestly say this is the first time I am right there with you! My goal by using this blog is to reveal the answers to all of our questions as they become available from the powers that be! So who are the powers that be, well that is why there is so much confusion! With multiple States filing lawsuits against the Federal Government and legal departments of the insurance carriers still in session for explaining just what the ramifications the legislation will initiate we must all be patient, take a deep breath and work through this together to find out!
I hope to be that person, or blog if you will, that you sit down with your cup of Joe or smoothie and read the latest updates I post. The good news is I am in the industry, your questions and concerns are the same as mine and I will take the time to read up, ask questions and filter out THE BOTTOM LINE, of how YOU will be affected! Please, I encourage questions and I also encourage you to share my blog with others. So, take a deep breath, relax, and ask away! I am here to help!
Having been in the industry for over 14 years now I can honestly say this is the first time I am right there with you! My goal by using this blog is to reveal the answers to all of our questions as they become available from the powers that be! So who are the powers that be, well that is why there is so much confusion! With multiple States filing lawsuits against the Federal Government and legal departments of the insurance carriers still in session for explaining just what the ramifications the legislation will initiate we must all be patient, take a deep breath and work through this together to find out!
I hope to be that person, or blog if you will, that you sit down with your cup of Joe or smoothie and read the latest updates I post. The good news is I am in the industry, your questions and concerns are the same as mine and I will take the time to read up, ask questions and filter out THE BOTTOM LINE, of how YOU will be affected! Please, I encourage questions and I also encourage you to share my blog with others. So, take a deep breath, relax, and ask away! I am here to help!
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