by Daniel Kittell | Healthcare, News, Tax Planning, Tax Planning - Individual
Our world is filled with seemingly constant changes and developments, however, most Americans have been paying close attention to the potential changes coming out of Washington. While President Trump made many statements about how he would revamp Washington if elected, one long-awaited claim has finally been revealed: his, and the GOP’s, promise to repeal and replace Obamacare. Now that their plan has been presented to the general public, questions many are asking include, what exactly does the plan entail? And how, or will, it affect me specifically, the taxpayer? Below are several points that will attempt to identify the main differences between the GOP’s plan and Obamacare, and what that truly means for you, the taxpayer.
- Changes the Insurance Mandate
Under Obamacare, individuals and employers are required to either buy or offer coverage, or else face a fine. The GOP’s plan would do away with those penalties for both individuals and employers. However, in an attempt to prevent individuals from simply adding coverage when they need care, the GOP’s plan would permit insurance companies to enforce higher premiums on individuals who do so for the first year of their coverage.
- Changes in Medicaid
Another major difference between Obamacare and the GOP plan is how they approach Medicaid. Many who gained coverage under Obamacare did so through Medicaid provisions, including an expansion that covered those within 138% of poverty levels, as well as a federal payout to those states that expanded their coverage and insured those newly eligible. The GOP plan would eventually eliminate the expansion, only giving states extra funding for those enrolled before 2020, and provide a set amount of money to states based on their enrollment numbers in 2016, rather than providing open-ended matching for Medicaid beneficiaries.
- Changes in Age-based Premiums
While Obamacare did allow insurance companies to vary their premiums based on factors such as location, tobacco use and age, there was a 3-to-1 limit based on age. Essentially, the premium for an older individual could not be more than three times the amount charged for a younger person purchasing the same plan. The GOP would alter this limit and allow insurance companies to charge older individuals up to five times the amount of those who are younger.
- Changes in Tax Credits
The tax credits under Obamacare subsidized insurance for those using government-run insurance exchanges, providing credits based on the enrollee’s income and cost of coverage in their area. The GOP’s plan would tie credits to age and income (rather than cost of coverage), and would look to end cost-sharing subsidies. Credits would start at $2,000 for those in their 20’s and increase gradually, reaching to $4,000 for those over 60. However, these credits would only be available to individuals making $75,000 or less and households making $150,000 or less.
The GOP’s bill would still allow adults under the age of 26 to be covered under their parent’s plans, as well as maintain the provision blocking insurers from denying coverage to those with pre-existing conditions. Because the plan has significant reviews to undergo , and most likely many amendments to be made, before American’s see a final proposal, many will want to wait and see before assuming they may qualify for specific credits or that their coverage may be affected based on age or income. Though change will certainly occur, taxpayers would be advised to maintain their current coverage until the final bill is passed.
If you have any questions about how the changes to the Health Care Laws may affect you, please contact me at [email protected].
by Pete McAllister | Accounting News, Audit and Accounting, Healthcare, IRS, News, Professional Services, Resources, Retail & Distribution, Tax Consulting, Tax Planning, Tax Planning - Individual, Tax Preparation - Individual
As the third year of the Patient Protection and Affordable Care Act (PPACA) approaches, employers need to be aware of additional fees that will be assessed on insurers and plan administrators of self-insured plans beginning in 2013. In addition, reporting health care costs to the government begins.
The new fees will increase the cost of providing group health plans for employees. They include:
- Fees to fund research on patient-centered outcomes
- Transitional reinsurance fees
- Pay or play penalties
- Cadillac tax
Fees to fund research on patient-centered outcomes
Health care reform created the Patient-Centered Outcomes Research Institute (PCORI), which is charged with promoting research to evaluate and compare the health outcomes and clinical effectiveness, risks, and benefits of medical treatments, services, procedures, and drugs. PCORI is to be funded in part by fees assessed on health insurers and sponsors of self-insured group health plans. This fee is commonly referred to as the “comparative effectiveness fee” or “PCORI fee.” The PCORI fee will be assessed at $1.00 times the average number of covered lives (employees and dependents) for the first plan or policy year ending on or after October 1, 2012. Employer plan sponsors must choose a method for calculating the average number of covered lives for their required annual fees by December 31, 2012, for calendar year plans.
Transitional reinsurance fees
The transitional reinsurance program will require health insurance issuers, as well as certain plan administrators on behalf of self-insured group health plans, to make contributions to a transitional reinsurance program for the three-year period beginning January 1, 2014. This fee is likely to result in additional costs for employer plan sponsors and – depending on whether the plan at issue is self-administered – certain additional reporting obligations.
Pay or play penalties
In 2014, large employers with fifty or more full-time equivalent employees could be subject to two potential penalties: the No Coverage Penalty and the Unaffordable Coverage Penalty. The No Insurance Penalty subjects certain employers to a $2,000 per full-time employee penalty (excluding the first thirty full-time employees) under specific conditions. The Unaffordable Coverage Penalty applies if an employer offers its full-time employees the opportunity to enroll in coverage under an employer plan that either is unaffordable (relative to an employee’s household income) or does not provide minimum value. This penalty is $3,000 for every full-time employee who receives a subsidy for coverage in a state exchange.
In some cases, the total cost of these penalties may be less than the total cost of providing coverage. CliftonLarsonAllen’s Health Insurance and Penalty Calculator provides information about the impact of reform on individual companies.
Cadillac tax
Starting in 2018, insurers of employer-sponsored plans or companies that self-insure their own plans will be subject to an excise tax if their premiums are in excess of $10,200 for individual coverage and $27,500 for family coverage. Roughly 60 percent of large employers believe their plans would trigger the tax unless they take action to avoid it, according to a 2011 survey by Mercer, a human resources consulting firm. Although the tax is to be imposed on insurers, the effects are likely to trickle down to consumers.
Many health care reform provisions will impact the cost to provide health care coverage for employees. Employers should be aware of the additional fees and reporting requirements and work with their benefits consultants to determine the financial impact of health care on their businesses. Plan sponsors should have already verified that they have the systems in place to determine and report the aggregate cost of applicable employer-sponsored coverage for 2012 on employees’ Forms W-2.
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by Pete McAllister | Accounting News, IRS, Tax, Uncategorized
Last year was a violent year across the country due of a flurry of hurricanes, floods, earthquakes, and other natural disasters. If insurance proceeds didn’t make your clients whole, they may be entitled to a modicum of tax relief on their 2011 returns. And homeowners who suffered damage in a government-designated disaster area may be in line for a quick tax refund.
The basic premise is that you can deduct unreimbursed casualty and theft losses in excess of 10 percent of adjusted gross income (AGI) after subtracting $100 per event. For simplicity, let’s use the example of a couple with an AGI of $100,000 in 2011. Suppose that a storm caused extensive damage to their house costing them $9,000 after insurance reimbursements. Also, the couple paid $2,000 out-of-pocket for repairs due to a car accident. Due to the limits, they can deduct $800 ? not that much, but better than nothing.
Under a unique tax rule, a loss in a federal disaster area this year can be deducted on the 2011 tax return you’re about to file for the client, instead of waiting to file the 2012 return next year. If you’ve already filed the 2011 return, file an amended return claiming the loss.
Note that damage caused by a taxpayer’s own negligence may be deductible as well as losses that occur, even though they could have been foreseen or prevented. Furthermore, losses aren’t necessarily limited to damages to the home. However, clients aren’t entitled to any tax relief for damage occurring over a long period of time, such as withered landscaping caused by a severe drought.
Theft losses are grouped with casualty losses for this purpose. Again, each event must be reduced by $100 before the 10-percent-of-AGI limit is applied.
Under a unique tax rule, a taxpayer may claim a loss suffered in a federal disaster area on the tax return for the year preceding the year in which the casualty actually occurred. This can provide some much-needed relief in a pinch. For example, suppose a client’s vacation home was destroyed in a wildfire in a federal disaster area earlier this year. The loss can be deducted on the 2011 tax return you’re about to file for the client instead of waiting to file the 2012 return next year. If you’ve already filed the 2011 return, file an amended return claiming the loss.
The tax law limits only apply to personal losses claimed by a taxpayer on Schedule A of an individual return. There is no AGI limit or $100-per-event reduction for losses to business property.
Full Article: http://www.accountingweb.com/topic/tax/tax-tip-how-do-you-spell-tax-relief-c-s-u-l-t-y-loss
