by Stephen Reed | Accounting News, Healthcare, Industry - Healthcare, News
The Consolidated Appropriations Act (CAA) was signed into law in late December, 2020 under former President Trump. It tackles multiple long-debated healthcare policies. The law stipulates new regulations that will require providers, insurers, and employers to provide consumers with data pertaining to coverage and costs before consumers receive care. This means that Americans will now have access to information that could change the way they shop for healthcare.
No Surprise Billing
Included in the CAA is the No Surprise Act (NSA). The NSA includes requirements for health insurers and group health plans to provide information and tools for consumers to better navigate their healthcare. Surprise billing — also known as balance billing — has long been debated for patients in covered out-of-network situations, such as when receiving emergency services. However, due to the NSA, beginning January 1, 2022, health plans must treat these out-of-network services as if they were in-network when calculating patient cost-sharing. Patients won’t be held accountable to the “surprise” bill, with insurers and providers handling any payment disputes.
A range of consumer protections are also included, such as a mandatory advance cost estimate. Health plans are obligated to implement a price transparency tool and provide accurate, up-to-date directories on public websites. Furthermore, providers will be prohibited from billing patients more than the applicable in-network cost sharing amount, and a penalty of up to $10,000 for each violation can apply.
A New Final-Offer Arbitration Process
The NSA also creates a new final-offer arbitration process to decide how much insurers must pay out-of-pocket network providers. If an out-of-network provider is dissatisfied with a health plan’s payment, it can initiate arbitration. The arbitrator must choose between the final offers submitted by each party after analyzing various factors, including the health plan’s historical median in-network rate for comparable services.
Health Insurer-Related Policies
The Act includes many health insurer-related policies such as forbidding “gag clauses” in contracts between plans and healthcare providers that limit access to cost and quality data. The law calls for reporting on drug costs and similar issues, and contains provisions related to “non-qualitative treatment limitations” for mental health or substance use disorders.
The Future for Healthcare Consumers
The price and quality transparency requirements set forth in the CAA can empower healthcare consumers to make informed decisions, and they’ll now have the ability to shop for high-quality healthcare at a fair price. The overall healthcare system and insurance markets will likely evolve quickly to reflect the demands of a more educated consumer with actionable data at their disposal.
by Jean Miller | Accounting News, News, Tax, Tax Planning, Tax Planning - Individual, Tax Preparation - Individual
In late December of 2020, President Trump signed into law the Consolidated Appropriations Act, 2021 (the Act), which included the long-anticipated pandemic-related Tax Relief Act of 2020. It also included the Taxpayer Certainty and Disaster Relief Act of 2020, which extends or makes permanent numerous tax provisions, including tax breaks for individuals. The following is an overview of these key tax-related provisions for individuals.
Medical Expense Deduction
The Tax Cuts and Jobs Act (TCJA) set the threshold for itemized medical expense deductions at 7.5% of Adjusted Gross Income (AGI), but this threshold was scheduled to return to 10% of AGI as set in the Affordable Care Act. However, the expense deduction had been extended perpetually by Congress, allowing a taxpayer to continue to deduct their total qualified unreimbursed medical expenses that exceed only 7.5% of their AGI. The Taxpayer Certainty and Disaster Relief Act of 2020 made this threshold permanent.
Charitable Contribution Deduction
Generally, charitable donations are tax-deductible only if you itemize your taxes, but the Coronavirus Aid, Relief, and Economic Security (CARES) Act incorporated a provision that authorized individuals who don’t itemize to deduct up to $300 ($600 for married couples filing jointly) in cash donations in 2020. The Taxpayer Certainty and Disaster Relief Act of 2020 extended this provision into 2021 and makes it more valuable for married couples filing jointly.
Taxpayers who do itemize their deductions are typically limited to a 60% cap (i.e., the amount of charitable donations you could deduct generally could not exceed 60% of your AGI). As in 2020, that limit has been suspended in 2021.
Mortgage Insurance Premium Deduction
The Taxpayer Certainty and Disaster Relief Act of 2020 includes a one-year extension of the mortgage insurance premium deduction, so premiums paid or accrued through December 31, 2021 can be deducted on tax returns by those who itemized deductions and otherwise qualify for the mortgage insurance premium deduction.
Exclusion for Canceled Mortgage Debt
Cancelled or forgiven debt by a commercial lender can be counted as income for tax purposes. However, the Mortgage Forgiveness Debt Relief Act of 2007 generally allowed for taxpayers to exclude canceled mortgage debt from their taxable income, but only for a finite number of years. The Taxpayer Certainty and Disaster Relief Act of 2020 extended the Mortgage Forgiveness Debt Relief Act of 2007 through 2025.
Residential Energy-Efficient Property Credit
Individuals who have implemented certain energy-efficient upgrades to their homes (i.e., solar electricity, solar water heaters, geothermal heat pumps, and small wind turbines) are eligible for the residential energy-efficient property credit. The credit had been set to phase out after 2021, but the Taxpayer Certainty and Disaster Relief Act of 2020 extended it as follows:
- Continuing the rate applicable to 2020, eligible property that is put into service in 2022 will qualify for a credit worth up to 26% of the property cost
- Eligible property that is put into service in 2023 will qualify for a credit worth up to 22% of the property cost.
by Pete McAllister | Accounting News, CARES Act, News, Tax
The Consolidated Appropriations Act, 2021 (the Act) signed into law by President Trump on Dec. 27, 2020 includes significant modifications to the Employee Retention Tax Credit (ERC) enacted under the CARES Act. The credit originally provided a 50% refundable tax credit for businesses that maintain employee payroll, even amidst temporary business closures due to government-mandated lockdowns, or considerable downturns in gross receipts due to loss of business. This article will highlight changes to the ERC for 2021.
Period of Credit Availability
The CARES Act originally provided credit for qualified wages paid after March 12, 2020 and before Jan. 1, 2021. The new law extends availability of the credit for qualified wages to the first two quarters of 2021 (before July 1, 2021).
Amount of Credit
Under the original law, the credit amount was set at 50% of the qualified wages paid to the employee, plus the cost to continue providing employee health benefits. The Act increases the credit amount to 70% of qualified wages, which is intended to include the cost of employee health benefits.
Maximum Credit Amount
The CARES Act capped the credit at $5,000 per employee for all qualified wages paid during 2020, but the Act increases the maximum credit to $7,000 per employee for each of the two quarters in 2021, so the maximum credit for 2021 will be $14,000.
Eligibility Requirements for the Credit
In order to qualify for the ERC under the original law, businesses must have been experiencing full or partial suspension of operations due to a Covid-19 lockdown order. They could also qualify if, for any quarter in 2020, gross receipts were less than 50% of gross receipts for the same quarter in 2019. With the passage of the Act, businesses whose operations are either fully or partially suspended by a government-mandated lockdown order due to Covid-19 or whose gross receipts are less than 80% of gross receipts for the same quarter in 2019 can qualify for the ERC.
Credit Eligibility Whether or Not Employees Are Working
For a company with more than 100 employees, the original law under the CARES Act did not provide credit for wages paid to employees who were performing services for the employer in some capacity. However, a company with 100 employees or less did qualify for the credit, even if the employee was working. The Act raises this threshold to 500 employees, so that for the first two quarters of 2021, a company with 500 or fewer will be eligible for the credit, even if employees are working.
PPP Loan Eligibility
A company that received a Paycheck Protection Program (PPP) loan was not eligible for the ERC under the original CARES Act. With the passage of the Act, companies that received a PPP loan in 2020 may also qualify for the ERC. To prevent double dipping, a credit may not be claimed for wages paid with the proceeds of a PPP loan that have been forgiven. However, amounts paid that were either not forgiven or are over and above the PPP loan amounts can be included for ERC purposes.
