Employer Based Health Coverage Don't Meet Obamacare's Standards?

There appears to be more questions than answers concerning the new health care bill.  The Motley Fool sums it up best.  Below is an over-view of the new law.  My only comment is that regardless of how much press there is, or how many arguments there are, this health care bill is LAW and there are penalties for not complying.  Learn what you can, do what you can.

What Your Health Care Will Look Like Under Obamacare

Obamacare's provisions promise that everyone will have individual health insurance, and the individual mandate within the legislation requires everyone to have that coverage or face potential penalties. Yet millions of Americans are worried about what their insurance policies will look like after Obamacare fully takes effect and whether the coverage those policies will provide will be better than what many of them already have.

Not all of the details have been fleshed out yet. But early signs point to a few likely things you'll see from your health insurance when Obamacare's provisions take full effect.

1. Those without employer-based group coverage now will likely get better benefits.

 One likely outcome of the Affordable Care Act is that the vast majority of individual health insurance plans — as opposed to group plans that employers provide — will have to provide more comprehensive coverage than they do currently. A 2012 study from researchers at The University of Chicago found that among the roughly 14 million Americans who have individual health coverage rather than group coverage through an employer or other organization, more than half of those plans didn't provide enough benefits to qualify under Obamacare's standards.

Under Obamacare, those substandard plans will be replaced by newer coverage. Some preliminary figures from state health insurance exchanges show that in many states, that new coverage is coming with higher premiums, especially for those plans that provided much more limited benefits than will be required under the new law. Whether better benefits will provide enough of an offset to result in lower overall costs will vary from person to person and across different policies. People who have minimal health expenses will likely end up paying more overall, while those who use their health benefits more often could see cost savings under Obamacare plans.

2. Those covered under employer-provided plans already have generally strong coverage.

The same study also examined people covered under group plans, typically through their employer. The differences in quality were staggering. The study authors divided different insurance policies into tiers based on how much of a patient's medical bills each policy would cover. In group plans, almost two-thirds of members had policies that covered 80% or more of their costs, compared to just 2% of those who had to get their coverage individually. Moreover, thanks to employer contributions, those in group plans paid less than half what individual-plan members paid in out-of-pocket costs.

As a result, most people covered by their employers would probably prefer to keep their existing coverage. But many workers are afraid that employers might choose to discontinue offering health insurance of their own, deciding instead to let Obamacare's other provisions take care of their workers.

3. Whether employers will continue providing coverage will depend greatly on how health insurance exchanges look.

Despite fears of widespread employer abandonment of group health-insurance coverage, the 2012 National Survey of Employer-Sponsored Health Plans from HR consulting firm Mercer found that very few employers plan to cancel their health insurance benefits after Obamacare takes full effect. But smaller employers were much more likely to say they would cut coverage — with 16% of employers with fewer than 500 employees planning health plan cuts compared to just 6% of employers with 500 or more workers.

For many, the decision may well hinge on what the individual and small-business health insurance exchanges under Obamacare end up looking like. States have the choice to run their own exchanges, but if they don't, the federal government will have exchanges to cover their residents. Many states have already released some details about their exchanges, although others are still pending. With open enrollment in the exchanges still scheduled for Oct. 1, 2013, it should be much clearer soon whether it will make sense for employers to drop coverage even in the face of penalties for some businesses that drop their plans, as well as the loss of tax credits that some eligible businesses will get for providing coverage.

Waiting for the details

Unfortunately, there's still a lot up in the air about how Obamacare will work, especially as some states are still figuring out what they will offer their citizens under the law. Clearly, some people will get far better health insurance coverage under Obamacare than they do now. But some people will also end up paying more than they do now for coverage they'd be just as happy to keep if they could.

How Obamacare Changed Your Taxes

As much as Obamacare will affect your medical care and your health insurance coverage, the effects don't stop there. The legislation also made major changes to the tax laws — with ramifications not just for this year but extending well into the future.

Lawmakers embedded several different tax provisions into the broader Obamacare legislation. Those changes will have an impact on taxpayers at all income levels.

Perhaps the biggest change in the law expanded the tax that workers currently pay for Medicare to cover both higher amounts and different types of income. Until this year, workers paid 1.45% of their wages in Medicare withholding taxes, with employers paying another 1.45% out of their own pockets. Self-employed individuals paid the combined 2.9% on their own. Although the amount of wages subject to Medicare tax used to be limited in the same way as Social Security withholding, that changed in 1991, and by 1994, the limits on wages subject to Medicare taxation were removed entirely.

Going forward, though, Obamacare imposes additional Medicare taxes on certain individuals. In particular, two groups will be affected:

• Joint filers with wages or other work-related earnings greater than $250,000 and singles earning more than $200,000 will have to pay an additional 0.9 percentage points in Medicare tax, bringing their total to 2.35% for employees or 3.8% for self-employed workers. Employers are supposed to handle this requirement in their withholding, but for two-earner couples, that may prove impossible, as your employer will have no knowledge of what your spouse earns.
• Those with total adjusted gross incomes of more than $250,000 for joint filers or $200,000 for singles will have Medicare taxes imposed on their investment income as well. On whatever amount of investments exceeds the $250,000 gross-income level, you'll have to pay the full 3.8% surtax yourself.

The net effect on high-income earners will be to bring total top tax brackets to 43.4% — the 39.6% regular tax amount plus the 3.8% Medicare tax.

Hitting lower-income workers

Those who earn less than these $200,000 and $250,000 thresholds shouldn't assume that their taxes will be unaffected by Obamacare. New limitations on flexible spending arrangements have hit taxpayers of all income levels, limiting the amount you can set aside tax-free in a flex plan to $2,500 per year. Previously, there was no technical upper limit, although most employers imposed a $5,000 maximum. But for those who have high levels of predictable medical expenses, the forced reduction in flex-plan use could cost you hundreds of dollars in extra income, Social Security withholding, and Medicare withholding taxes.
Moreover, those who rely on deducting medical expenses won't be able to get as big a tax benefit from them. Obamacare raised the floor on itemized medical expenses from 7.5% of gross income to 10%. That may not sound like much, but it could reduce your deduction by thousands of dollars and thereby increase your tax bill substantially.

Will you get any benefit?

The question, of course, is whether Obamacare's benefit will exceed the extra taxes you'll pay. The jury's still out on that question, but some have watched the way that health insurance and hospital stocks have reacted to Obamacare and have concluded that much of the benefit will go to industry players rather than to individuals. For newly covered individuals, the fact that they'll have coverage at all may be the only benefit they'll get from Obamacare, with higher taxes simply being part of the price we all pay for it.

Regardless, as you consider your taxes this year, don't forget about the new Obamacare provisions. Planning for them now could save you from a big headache down the road.

To read the entire article provided by The Motley Fool, you can click here and gain access.

Information on the New Health Care Bill Provided by the IRS

Lots of people are asking questions about the new Health Care Bill.  Yours truly is also learning the news ends and outs.  The hold up for some tax professionals is the wait for IRS affiliate tax attorneys to explain the Health Care Bill, so we don't misinterpret or get it wrong.  For some reason, the explanation of the new Health Care Bill is slow in coming.

 

The IRS has launched a new site and below is the information pertaining to that site and more information on the Health Care Bill

 

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The IRS has launched a new Affordable Care Act Tax Provisions website at IRS.gov/aca to educate individuals and businesses on how the health care law may affect them. The new home page has three sections, which explain the tax benefits and responsibilities for individuals and families, employers, and other organizations, with links and information for each group. The site provides information about tax provisions that are in effect now and those that will go into effect in 2014 and beyond.

Topics include premium tax credits for individuals, new benefits and responsibilities for employers, and tax provisions for insurers, tax-exempt organizations and certain other business types.

Visitors to the new site will find information about the law and its provisions, legal guidance, the latest news, frequently asked questions and links to additional resources.

Several other federal agencies have a role in implementing the health care law, including the Department of Health and Human Services, which has primary responsibility. To help locate additional online resources from the Department of Health and Human Services, the Department of Labor and the Small Business Administration, the IRS has issued a new Web-based flyer - Healthcare Law Online Resources (Publication 5093).

New Information Concerning the Affordable Care Act; IRS Form 720

All of us are becoming more familiar with the mandated Health Care Bill.  Below is information which arrived in my inbox this AM.  Not sure of all the particulars yet, will include in the blog, once I'm 100% sure of what is expected.

Patient-Centered Outcomes Research Institute Fee

The Affordable Care Act imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fee, required to be reported annually on the second quarter Form 720 and paid by its due date, July 31, is based on the average number of lives covered under the policy or plan.
The fee applies to policy or plan years ending on or after October 1, 2012, and before October 1, 2019.

To learn more visit this page on the IRS web site: Patient-Centered Outcomes Research Institute Fee

Is the IRS Scandal Tied to the Health Care Bill? Read Deep

WASHINGTON — The first Congressional hearing into the Internal Revenue Service’s targeting of conservative groups for special scrutiny quickly turned into partisan jousting, with House Republicans pressing to expand the inquiry to other tax misdeeds closer to the White House, while Democrats tried to keep the focus narrow and under the purview of an I.R.S. chief appointed by President George W. Bush.

Steven T. Miller, the acting I.R.S. commissioner who has resigned, called the agency’s actions “obnoxious,” but told the House Ways and Means Committee they were not motivated by partisanship. And in testy exchanges, he said he had not misled Congress, even though he did not divulge the targeting efforts of a Cincinnati unit examining 70,000 applications for tax exemption.

He called the group’s centralization of applications from groups with names that included the words “Tea Party” or “patriots” simply “foolish mistakes” that “were made by people trying to be more efficient in their workload selection.”

      

With two additional hearings already scheduled for next week, it is clear the focus of Congressional inquires will extend well beyond the selection of 298 conservative groups for special scrutiny of their tax-exemption applications.

      

Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee, pressed Mr. Miller and Russell George, the Treasury’s inspector general for tax administration, on the releasing of tax information on Koch Industries, the giant family business of conservative benefactors Charles and David Koch, by a former White House economist, Austan Goolsbee. He also hit on the publication of donor lists for the National Organization for Marriage, which opposes same-sex unions, and the release of confidential applications for tax-exempt status to the investigative reporting outfit Pro Publica.

      

But at least initially, Republican efforts to expand the inquiry did not get much traction. The incidents of releases of confidential tax information were referred to the inspector general for investigation, but were found to be inadvertent, the witnesses said.

      

As for Republican inquiries on whether the targeting of conservative groups was divulged to Obama administration officials outside the I.R.S., Mr. Miller said “that would be a violation of law.”

“I would be shocked” if that occurred, he said.

      

President Obama has tried to get on top of the scandal, condemning the program, vowing changes and requesting Mr. Miller’s resignation. But many Republicans have greeted each of these moves scornfully. Mr. Miller, as an acting I.R.S. chief, was likely to step down in June anyway, unless nominated for the permanent position.

      

Joseph Grant, commissioner of the I.R.S.'s tax-exempt and government-entities division, announced Thursday that he, too, would be leaving in the next month. But Republicans jumped on news Thursday evening that Mr. Grant’s predecessor, Sarah Hall Ingram, who led the division when the targeting operation began, is now in charge of the I.R.S. division overseeing implementation of parts of the president’s health care law.

      

Ms. Ingram’s name did not appear anywhere in the inspector general’s report of the program, nor had Republicans singled her out for criticism until now. But Republicans were eager to link the I.R.S. scandal with their opposition to the health care law.

      

“Stunning, just stunning,” said Senator Mitch McConnell of Kentucky, the Republican leader.

According to the inspector general’s report, Mr. Miller was aware of the political targeting in March 2012, sending a team from I.R.S. headquarters in Washington to discuss it with the program’s leaders in Cincinnati. Yet a month later, Mr. Miller, then the deputy I.R.S. commissioner for enforcement, wrote a letter to Republican senators saying there was no targeting of conservative groups.

      

“There is a penalty for lying to Congress,” Mr. Boustany said.

      

The hearings will continue next week. On Tuesday, the Senate Finance Committee will hold its hearing, and its Democratic chairman, Senator Max Baucus of Montana, hopes to question Douglas Shulman, a Bush administration appointee who was I.R.S. commissioner during most of the targeting program.

      

On Wednesday, the House Oversight and Government Reform Committee and its combative chairman, Representative Darrell Issa of California, will hold its first hearing on the matter, and will question Lois Lerner, an I.R.S. official who appears to have had knowledge of the program almost from its inception in 2010. Last Friday, when she apologized for I.R.S. conduct, she told reporters she learned of the program through news reports last year.

      

Representative Jim Jordan, Republican of Ohio and a member of the oversight committee, has already accused Ms. Lerner of lying to Congress.

      

“Our job is to, in an appropriate fashion at the right pace, pursue the truth,” Mr. Jordan said.