Insuring Resources Commentary:
I've numbered the items within the MJ editorial so I can address them for you a bit easier:
1.This is very likely and a key reason why prices for health care will continue to increase as there are simply not enough primary care doctors as they seek to specialize and increase their earning potential.
3. Supposedly HHS (the agency that is writing the implementation rules) is working closely with insurers to get it right concerning what should be administrative costs and which should be left on the health care side of the ledger.
4. The smaller the plan, the higher the increase. Although in Wisconsin this mandate only impacts about 26% of all employer coverage. still for small groups, premiums will definitely rise because of this.
5. This will definitely lead the employers impacted to reduce benefits. This is not a great idea as part of the financing mechanism.
6. There are many reasons why wages may be kept lower. This is one of them but a larger one includes the tax credits available to businesses with salary's that average less than $50,000.
7. Employers will definitely cut hours of many workers to part-time so that they avoide the penalties within the bill related to their employees accessing the exchange if they don't offer health insurance.
Summary:
There are numerous problemns with this reform package. The essential component is that health care should be paid on a "episode of care" basis rather than the current fee-for-service basis. We also need greater incentives for providers to install lean efficiencies... this should have been written in the legislation.
---------------- ------------------
Businesses prepare to handle health care reform
Companies find they may have unexpected costs as part of legislation
Milw. Journal 5/29/10
Editorial by John Torinus
Seminars and webinars abound on how business can cope with the 2,300-page Obamacare, and attendees quickly learn that there are as many unintended consequences in the new law as intended and that there are as many unknowns as knowns.
It is an exceedingly complex bill, replete with unanswered questions that resulted from the unseemly way in which the House and Senate versions were mashed together.
Businesses, including those in the health care sector, also learn that, while the new law deals with the issue of the uninsured in the country, it deals minimally with their major issue: out-of-control medical inflation.
Human relations executives I talk to are predicting that costs and premiums will continue to rise sharply, even more so with the new law. Hence, the work of real reform of the way U.S. care is delivered and paid for continues, at least in the private sector.
Let's look first at some of the unintended consequences already discovered in the wet ink of the new law and then at the continuing real reforms outside the Washington Beltway.
First, an early list of unintended consequences:
1.• Because 32 million more people will be covered, because insured people use about twice as much health care as the uninsured, and because no increase in the supply of doctors was built into Obamacare, there will be a severe shortage of doctors to serve the newly insured. Doctors and dentists already are turning away Medicaid recipients because of below-market reimbursements. Some are spurning Medicare patients.
2.• Companies have already taken billions of dollars in hits on their financials because of the lost subsidies for retiree drug benefits. Accounting rules require that they recognize the higher future liabilities for their drug programs.
3.• The requirement that insurance companies serving small businesses must spend at least 80% of premiums on direct health care charges has them in a quandary. Depending on how the regulators define payouts, their overheads could be more than 20%. If they can't meet the new test, they will exit the business.
4.• Premiums could rise as companies are required to cover children up to age 26. That added coverage doesn't come without a cost, so companies may reset their premium schedules to say the more children, the higher the premium.
5.• The "Cadillac tax" on high-cost plans ($27,500 for a family plan) may drive companies and their unions toward consumer-driven health plans. Those plans are less expensive because they bring down costs and premiums. A consumer-driven health plan could keep premiums below the Cadillac level. An estimated 60% of all plans will face the 40% surtax when it takes effect in 2018.
6.• The 4% surtax will become a bargaining issue as part of total compensation, and therefore could have a downward effect on wages and other benefits.
7.• Employers will probably cut part-time employee hours to fewer than 30 hours per week to stay under the threshold for required coverage or penalties for non-coverage.
8• Some companies are calculating whether to keep or drop coverage and pay the low fines in the law. Some will get out of the health care game.
Meanwhile, of necessity, real reforms of the major issues facing health care continue, and even accelerate.
Wisconsin innovators are often in the lead. Among the reforms:
• Growth continues in people covered under health savings accounts, now estimated at 10 million, up from 8 million a year ago. Another 10 million are estimated to be covered in plans with health reimbursement arrangements. This is a new army of engaged consumers who will insist on better value. These plans work. They cut costs and premiums; employees love them; and they're becoming part of retirement planning, a companion to 401(k) plans.
• This month, 150 Wisconsin health care leaders held a summit to embark on payment reform. They seek an escape from payment by procedures - a poorly devised system - to payment by episode of care.
• Serigraph found a broker who has cut deals for bundled prices on elective procedures in hospitals across the country, proving such reform is possible. A medical bill doesn't have to be a Babel of line items.
A. • John Toussaint of ThedaCare in Appleton now has 27 health care systems across the country signed up to instill lean disciplines. Costs and errors plummet when that happens.
The president's people have a lot of work to do as they write the regulations that will shape Obamacare. They need to be careful not to do mortal damage to the insurance industry they bashed on their way to victory. Short of a complete national takeover, which didn't fly with the people and therefore Congress, they need the industry.
And his disciples need to let private sector reformers proceed without hindrance because there is not enough money in the country to pay for all the health care they have promised if costs aren't reined in. He needs the real reformers to succeed.
John Torinus is chairman of Serigraph Inc. of West Bend and a founder of BizStarts Milwaukee, a nonprofit organization dedicated to fostering entrepreneurship in southeastern Wisconsin.
Showing posts with label tax credit. Show all posts
Showing posts with label tax credit. Show all posts
Sunday, May 30, 2010
Monday, May 17, 2010
IRS Lays Groundwork for Tax Credit For Health Insurance
Insuring Resources Commentary:
The rule development regarding the small business tax credit may ultimately be decided at the Supreme Court, rather than in a good dialogue between business interests and HHS, Labor, the IRS and others that implement and then ultimately enforce them. Check back often for more details on the impact of these rules as they are developed and implemented and their effect on small business interests and consumers. This is only the beginning and I will stay on top of this.....because,
the details are obviously lacking at this poin. Particularly, I wonder about small, professional oriented businesses who have less than 50 employees but have an average wage of more than $50,000. This appears to be a problem for small Arcitecture firms, law firms, dental and physician practices and fledgling health insurance consultants.
----------------------------------------
May 17, 2010 |
By ALLISON BELL - National Underwriter
The Internal Revenue Service has come out with guidelines for small commercial and nonprofit employers that want to take advantage of a new health insurance tax break.
The small employer health insurance tax credit guidelines, given in IRS Notice 2010-44, include examples that can help employers and their benefits advisors determine whether the employers are eligible for the tax break, and exactly how much of the new federal health insurance tax credit the employers can claim.
Calculating exactly how small an employer is for tax credit purposes will depend partly on the definition of “full-time equivalent” employee, officials write in the notice.
“In general, employees who perform services for the employer during the taxable year are taken into account in determining the employer’s FTEs, average wages, and premiums paid,” officials write.
But “partners in a business and certain owners are not taken into account as employees,” officials write. “Specifically, sole proprietors, partners in a partnership, shareholders owning more than 2% of an S corporation.
Owners and partners need not count family members or other dependents who are members of their households as employees when they are trying to qualify for the tax credit.
Season workers count toward the FTE total only if they work for an employer on more than 120 days during the taxable year.
IRS officials devote another section to computing workers’ hours.
The IRS issued the notice to implement a new tax law, Section 45R of the Internal Revenue Code, which was added by Section 1421 of the new Patient Protection and Affordable Care Act.
PPACA and a companion act, the Health Care and Education Reconciliation Act, are part of what federal agencies have dubbed the Affordable Care Act.
This year, the new ACA small business tax break will offer small employers a tax credit equal to at least half the cost of single coverage, if the employees earn average wages of less than $50,000 per year.
The tax credit is not available to ordinary government employers, but it is available to small businesses, small tax-exempt employers, and government-affiliated tax-exempt employers that can be described as section 501(c) organizations.
“For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by eligible small business employers and 25% of premiums paid by eligible employers that are tax-exempt organizations,” officials write in a summary of the notice.
Employers with 10 or fewer FTE employees that pay annual average wages of $25,000 or less can qualify for the maximum credit.
Employers with 10 to 25 FTE employees that pay annual wages of $50,000 or less can qualify for a smaller tax credit.
WASHINGTON -- Pitching President Barack Obama's health care law to skeptical business owners, the IRS on Monday will announce ground rules for small firms wishing to claim a new federal tax credit for health insurance.
Created under the health overhaul law, the tax credit covers up to 35 percent of the premiums that certain small businesses pay on behalf of their workers. The IRS notice addresses unanswered questions about the benefit, which is available starting this year.
The agency's action comes days after the nation's largest small business lobbying group announced it was joining a lawsuit challenging the health care law. The National Federation of Independent Business argues that Congress overstepped its constitutional authority by imposing a requirement that most Americans obtain health insurance either through an employer, a government program or buying it directly.
The IRS notice clarifies that employers can apply the credit toward dental and vision benefits, not just medical coverage. A fact sheet released by the Treasury Department also says that employers can claim the federal benefit even if they receive state tax credits for their insurance premiums.
The White House estimates up to 4 million small businesses may qualify for the tax credit, but it's not clear how many will be eligible. To begin with, they have to provide health insurance _ and many small employers don't. To qualify, companies must pay at least 50 percent of their workers' premiums.
Eligibility is also limited by company size and wages. A firm has to have fewer than 25 full-time workers averaging less than $50,000 a year in pay.
The rule development regarding the small business tax credit may ultimately be decided at the Supreme Court, rather than in a good dialogue between business interests and HHS, Labor, the IRS and others that implement and then ultimately enforce them. Check back often for more details on the impact of these rules as they are developed and implemented and their effect on small business interests and consumers. This is only the beginning and I will stay on top of this.....because,
the details are obviously lacking at this poin. Particularly, I wonder about small, professional oriented businesses who have less than 50 employees but have an average wage of more than $50,000. This appears to be a problem for small Arcitecture firms, law firms, dental and physician practices and fledgling health insurance consultants.
----------------------------------------
May 17, 2010 |
By ALLISON BELL - National Underwriter
The Internal Revenue Service has come out with guidelines for small commercial and nonprofit employers that want to take advantage of a new health insurance tax break.
The small employer health insurance tax credit guidelines, given in IRS Notice 2010-44, include examples that can help employers and their benefits advisors determine whether the employers are eligible for the tax break, and exactly how much of the new federal health insurance tax credit the employers can claim.
Calculating exactly how small an employer is for tax credit purposes will depend partly on the definition of “full-time equivalent” employee, officials write in the notice.
“In general, employees who perform services for the employer during the taxable year are taken into account in determining the employer’s FTEs, average wages, and premiums paid,” officials write.
But “partners in a business and certain owners are not taken into account as employees,” officials write. “Specifically, sole proprietors, partners in a partnership, shareholders owning more than 2% of an S corporation.
Owners and partners need not count family members or other dependents who are members of their households as employees when they are trying to qualify for the tax credit.
Season workers count toward the FTE total only if they work for an employer on more than 120 days during the taxable year.
IRS officials devote another section to computing workers’ hours.
The IRS issued the notice to implement a new tax law, Section 45R of the Internal Revenue Code, which was added by Section 1421 of the new Patient Protection and Affordable Care Act.
PPACA and a companion act, the Health Care and Education Reconciliation Act, are part of what federal agencies have dubbed the Affordable Care Act.
This year, the new ACA small business tax break will offer small employers a tax credit equal to at least half the cost of single coverage, if the employees earn average wages of less than $50,000 per year.
The tax credit is not available to ordinary government employers, but it is available to small businesses, small tax-exempt employers, and government-affiliated tax-exempt employers that can be described as section 501(c) organizations.
“For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by eligible small business employers and 25% of premiums paid by eligible employers that are tax-exempt organizations,” officials write in a summary of the notice.
Employers with 10 or fewer FTE employees that pay annual average wages of $25,000 or less can qualify for the maximum credit.
Employers with 10 to 25 FTE employees that pay annual wages of $50,000 or less can qualify for a smaller tax credit.
WASHINGTON -- Pitching President Barack Obama's health care law to skeptical business owners, the IRS on Monday will announce ground rules for small firms wishing to claim a new federal tax credit for health insurance.
Created under the health overhaul law, the tax credit covers up to 35 percent of the premiums that certain small businesses pay on behalf of their workers. The IRS notice addresses unanswered questions about the benefit, which is available starting this year.
The agency's action comes days after the nation's largest small business lobbying group announced it was joining a lawsuit challenging the health care law. The National Federation of Independent Business argues that Congress overstepped its constitutional authority by imposing a requirement that most Americans obtain health insurance either through an employer, a government program or buying it directly.
The IRS notice clarifies that employers can apply the credit toward dental and vision benefits, not just medical coverage. A fact sheet released by the Treasury Department also says that employers can claim the federal benefit even if they receive state tax credits for their insurance premiums.
The White House estimates up to 4 million small businesses may qualify for the tax credit, but it's not clear how many will be eligible. To begin with, they have to provide health insurance _ and many small employers don't. To qualify, companies must pay at least 50 percent of their workers' premiums.
Eligibility is also limited by company size and wages. A firm has to have fewer than 25 full-time workers averaging less than $50,000 a year in pay.
Saturday, January 23, 2010
What a Bipartisan Bill May Look Like.... if we get one at all
Insuring Resources Commentary:
Below is a link to a New York Times article depicting possible items included in a health care reform package. In this NY Times reporter's analysis of conversations with lawmakers, aides and health care policy experts he compiled these items as still doable in the post Super-majority Democratic Senate health care reform era. His list is similar to the blog post I provided a few days ago so you get the benefit of my analysis of what's possible again.
Here's my further analysis of these items:
-No pre-x for children makes sense, this probably has 85-90% support in both houses and would be agreed to easily in any health care bill.
-Dependent coverage up to age 25 is also a given. Wisconsin just approved this in 2009, effective 1/1/2010 for ages up to 27. This too would have substantial bi-partisan support.
-Grants to establish state-based health insurance exchanges for individuals and small businesses. This probably would pass both houses as it would most likely not be mandated for businesses or individuals. This could help alleviate some cost pressures for these groups. If a wide range of coverage options were offered through the Exchanges and states were encouraged to be innovative this could be very positive.
-The fed. gov't offer financial incentives for state Medicaid expansion to cover childless adults and parents. Wisconsin, with its BadgerCare program and other states who have already done this, would not be happy about this measure. In those cases perhaps there can be adjustments or bonuses to state's who go above and beyond the minimum or who have already accomplished it. This too has broad bipartisan support as long as Nebraska doesn't get its Cornhusker Kickback. Special deals cannot be a part of a compromise bill at this point. The public backlash would be too enormous.
-Tax credits for small business purchase of health insurance-- This is very bi-partisan friendly as most GOP health care proposals, including those offered by Rep. Paul Ryan (R-Janesville) and Sen. John McCain (R-Arizona), were centered on tax credit use to purchase health insurance.
This would perhaps get more GOP than Dems supporting it and would pass both houses.
For a lengthy analysis I authored of the Paul Ryan proposal for WPRI
2 years ago go to the web link at the upper left hand sidebar.
-The package could also include changes in Medicare, to reduce the growth in payments to doctors and hospitals while rewarding providers of high-quality, lower-cost care. To help older Americans, it could narrow a gap in Medicare coverage of prescription drugs, sometimes known as a doughnut hole. I don't understand why again the incentives only apply to Medicare for high quality, more efficient care. I just don't get why Congress is so reluctant to address the whole system rather than just Medicare. If they're going to make regulatory changes why sell it short and stop only at Medicare rather than addressing the whole system and the whole cost problem.
See link below to read the whole article
---------------------
From the New York Times article
"A New Search for Consensus on Health Care Bill"
The entire article linked: http://www.nytimes.com/2010/01/22/health/policy/22health.html?ref=todayspaper
By ROBERT PEAR and DAVID M. HERSZENHORN
Published: January 21, 2010
Below is a link to a New York Times article depicting possible items included in a health care reform package. In this NY Times reporter's analysis of conversations with lawmakers, aides and health care policy experts he compiled these items as still doable in the post Super-majority Democratic Senate health care reform era. His list is similar to the blog post I provided a few days ago so you get the benefit of my analysis of what's possible again.
Here's my further analysis of these items:
-No pre-x for children makes sense, this probably has 85-90% support in both houses and would be agreed to easily in any health care bill.
-Dependent coverage up to age 25 is also a given. Wisconsin just approved this in 2009, effective 1/1/2010 for ages up to 27. This too would have substantial bi-partisan support.
-Grants to establish state-based health insurance exchanges for individuals and small businesses. This probably would pass both houses as it would most likely not be mandated for businesses or individuals. This could help alleviate some cost pressures for these groups. If a wide range of coverage options were offered through the Exchanges and states were encouraged to be innovative this could be very positive.
-The fed. gov't offer financial incentives for state Medicaid expansion to cover childless adults and parents. Wisconsin, with its BadgerCare program and other states who have already done this, would not be happy about this measure. In those cases perhaps there can be adjustments or bonuses to state's who go above and beyond the minimum or who have already accomplished it. This too has broad bipartisan support as long as Nebraska doesn't get its Cornhusker Kickback. Special deals cannot be a part of a compromise bill at this point. The public backlash would be too enormous.
-Tax credits for small business purchase of health insurance-- This is very bi-partisan friendly as most GOP health care proposals, including those offered by Rep. Paul Ryan (R-Janesville) and Sen. John McCain (R-Arizona), were centered on tax credit use to purchase health insurance.
This would perhaps get more GOP than Dems supporting it and would pass both houses.
For a lengthy analysis I authored of the Paul Ryan proposal for WPRI
2 years ago go to the web link at the upper left hand sidebar.
-The package could also include changes in Medicare, to reduce the growth in payments to doctors and hospitals while rewarding providers of high-quality, lower-cost care. To help older Americans, it could narrow a gap in Medicare coverage of prescription drugs, sometimes known as a doughnut hole. I don't understand why again the incentives only apply to Medicare for high quality, more efficient care. I just don't get why Congress is so reluctant to address the whole system rather than just Medicare. If they're going to make regulatory changes why sell it short and stop only at Medicare rather than addressing the whole system and the whole cost problem.
See link below to read the whole article
---------------------
From the New York Times article
"A New Search for Consensus on Health Care Bill"
The entire article linked: http://www.nytimes.com/2010/01/22/health/policy/22health.html?ref=todayspaper
By ROBERT PEAR and DAVID M. HERSZENHORN
Published: January 21, 2010
Subscribe to:
Posts (Atom)
