Health reform bill: Inside peek at 5 new rules you need to know
September 25, 2009 by Kerry IsbergPosted in: Health care, Records documentation, Special Report, policies
It’s likely some version of the newest healthcare reform proposal to come out of Washington will not only become law, but also change the way you do your job — as early as Jan. 1 — particularly in five areas.
The Senate Finance Committee just released its 10-year, $856-billion proposal, which would extend health coverage to 29 million uninsured Americans.
The package, authored by Chair Max Baucus (D-MT) and referred to as a “Chairman’s Mark” because there’s no legislative language drafted yet, is considered a compilation of the most popular (i.e., effective, but conservative and least expensive) ideas presented thus far. It’s likely that some version of this plan will pass after the typical party revisions and compromises.
Here are some key stipulations and proposed effective dates where appropriate:
1. Additional information reporting duties. Under current law, Payroll isn’t required to report the value of employer-provided health insurance benefits to IRS on the Form W-2. However, some employers voluntarily report in Box 14 the salary reduction amount under a cafeteria plan resulting in tax-free employee benefits.
The Mark proposes requiring companies to report on the W-2 the value of the employer-provided benefit for each person’s health insurance
If someone received coverage under multiple plans (e.g., medical, dental, vision), Payroll would report the aggregate value. Generally, use the same value for all similarly situated employees with the same category of coverage (e.g., single or family health insurance).
Effective: first taxable year after 12/31/09.
2. More payroll deductions. The proposal creates a refundable tax credit for eligible individuals and families who purchase health insurance through proposed new state cooperatives (i.e., “exchanges”). Those opting for this coverage would pay premiums through payroll deductions.
There’d be a fall enrollment period, during which applicants would have to provide info from their previous year’s tax return to qualify for coverage during the next calendar year.
Employers who don’t offer such coverage will have to repay the credit amounts. The assessment may be capped at $400 per worker (all workers, not just those who qualify for tax credits). Note that employees who are offered affordable coverage through their employer can’t get the tax credit – so in those cases, the employer assessment shouldn’t apply.
Illegal immigrants wouldn’t be eligible for the credit. To prevent them from participating, personal data (i.e., name, Social Security Number and date of birth) would have to be verified against SSA’s database. Those in the U.S. legally but whose status is expected to expire in less than a year aren’t allowed to take the credit.
Effective: not specified.
3. Stricter reimbursement rules for qualified medical expenses. The Mark proposes no longer allowing the cost of over-the-counter (OTC) medicines (except those prescribed by a doctor) to be reimbursed through a health flexible spending account or health reimbursement account. In addition, the cost of these medicines couldn’t be reimbursed on a tax-free basis through a health spending account or an Archer medical spending account.
Effective: taxable years beginning after 12/31/09.
4. Creation of a Simple Cafeteria Plan. This change eases the participation restrictions, allowing more small businesses to offer tax-free benefits to employees. The proposal exempts employers who make contributions for employees under a simple cafeteria plan from pension plan nondiscrimination requirements applicable to highly compensated and key employees.
The safe harbor also applies to the nondiscrimination requirements for specific qualified benefits offered under the cafeteria plan, including group term life insurance, coverage under a self-insured group health plan and benefits under a dependent care assistance program.
This provision would apply to employers with an average of 100 or fewer employees during either of the two preceding years.
Effective: taxable years beginning after 12/31/10.
5. Loosening of long-term care insurance restrictions. Under current law, employees participating in a cafeteria plan can’t pay premiums for long-term care insurance not otherwise paid for by their employers on a pre-tax basis through salary reduction. That’s because any product advertised, marketed and offered as long-term care is a nonqualified benefit specifically not permitted under a cafeteria plan.
The Chairman’s Mark, however, would allow reimbursement for employee-paid premiums for a qualified long-term care insurance contract through a flexible spending arrangement (whether or not under a cafeteria plan) and therefore be excluded from gross income.
Effective: taxable years beginning after 12/31/10.
Tags: Baucus, health coverage, IRS, social security, W-2
September 28th, 2009 at 1:54 pm
For the life of me, I don’t understand why everyone is spinning their wheels concerning something that hasn’t happened yet…..and might not happen at all!
September 28th, 2009 at 2:20 pm
I agree with Linda. What we really need is a paradym shift. It is time we cut the employer from the equasion. Get everyone used to the fact that they are responsible for their own Health Insurance. Ted Kennedy may be right, every American has a right to medical care……BUT…..everyone does not have a RIGHT to health care insurance. That is a personal responsibilty. And it should start when a person reaches age 18 (or 21 at least). An accident policy and a Health Savings Acct would do the trick, with a tax credit against earnings. The earlier one got insured, the cheaper it should be.
If this administration does not STOP making it so difficult to run a small business, pretty soon there will be no taxes to collect…..no jobs to be had……Get a Clue!
September 28th, 2009 at 2:51 pm
I am in total agreement with Linda! So much information about health care reform/plans is passed around the internet causing many so much heartburn. It is nice to be kept informed, but let’s not get excited/upset about something that hasn’t yet happened or may never happen.
September 28th, 2009 at 2:52 pm
It’s not just “this administration” — the shift toward the employee’s rights at the expense of the employer has been taking place for many years. It’s politics in general, not just Democrats or Republicans — and a lot of it comes from special interest groups and lobbyists, as well as labor unions. The solution must be not bi-partisan but non-partisan — for once, we need to look at what’s right and not what’s politically expedient for either party. Our political system makes us a free country, but it also contributes to all of our myriad ills.
September 28th, 2009 at 2:59 pm
I get such a kick out of individuals like Jagger. Right now my health insurance premium for the month is $1300.00 that equates to $7.55 per hour worked (based on a 40 hour week). Now if I was to keep the same insurance and want a Health Savings Account that would mean that I would have to deposit $302.33 per week just to pay the premium. That does not include deductables, copays and the like. The question I have is where is the money to come from? I understand that persons of wealth do not want others beneath them to have the same as they have when it comes to all things including health care. I have worked for over 40 years and have seen family health plans go from $75.00 per month to over in many cases $2000.00 per month. Explain to me how the average person making $32000.00 per year can pay a health care premium of over $15000.00 per year.
September 28th, 2009 at 3:21 pm
My own paradigm shift is coming over the next 4 elections and it will involve voting anti-incumbent every single time. We need more turnover at the Federal and State levels, in both elected and appointed positions.
September 28th, 2009 at 3:56 pm
I agree, We need to remove the politicians from office that seem to be so disconected with the will of the people they represent. We do not want the government to take over any private industry, (automotive, banking, healthcare). Our freedoms are in the balance here and we need to stand and say NO to Washington.
September 28th, 2009 at 4:20 pm
I dissagree with everyone’s comments before me. First of all, health insurance has never been a right of the employee, unless the employee was a member of a union. It is the union’s that gave union members the right to insurance through their union contracts.
Other than that, there is no contract between employer and employee that gives everyone the right to insurance.
Companies, in a bid to get the best employees they could find and to keep them, included a group insurance policy as a inticing benefit. If the employee was hired and told part of their employment included a benefits package. Then the employee had a right to the benefit package the employer offered
If a US Citizen went to school or worked their way up from an entry level position and became the kind employee that employers wanted working for them, they could bargin for a position with a company that provided a good benefits package. In otherwords, those productive individuals earned their insurance by their skills and hard work.
Unfortuneately the govenment got involved and started dictating to employer’s they had to treat all employee’s equally, no matter if their skills were equal.
Now we have a country of people who arn’t motivated to improve their way of life by education and hard work. In fact a good share of our young people believe they can go to work and do nothing at work and expect to get paid at the end of the week for doing nothing. Then when the employer chooses to terminate their employment they sue screaming discrimination.
In addition to that illegal’s from other countries have heard that if they come to the US they will be able to live off the system and they begin to feel they are entitled to all this free stuff at the expense of the hard working citizens who have paid their dues.
These hard working citizens who have paid their dues by going to school and working hard are becoming fewer and fewer. Those citizens who have not paid their dues by working hard are becoming more and more while they are living off the rewards of those few motivated hardworking citizens.
If this continues and people continue to expect more for less this county will fall and we will become a third world country like the ones the illegals are fleeing from.
No one should get something for nothing and as long as that is the attitude of both the republican and democrate party there is no hope for the future of this county.
September 28th, 2009 at 4:29 pm
I left off something very important, the insurance companies themselves. The government again, got involved and screwed things up.
If the insurance companies went accross state lines and develed compitition amongst themselves, insurance would not cost so much. But the politicians are staying away from the important fix because they work for the insurance lobbyist not the people who voted them into office, whom they are supposed to work for.
All of us hardworking productive citizens and small business owners need to go on a nationwide strike and shut down for a few days or even a week. That would stop the flow of money going into the government to the point that maybe the politicians would start to listen to what the citizens of this great country want. They can’t operate if we quit giving them the money to do so.
September 28th, 2009 at 6:01 pm
Are people aware of what “medical” care costs? My daughter broke her leg on a Sunday afternoon. We went to the closest Hospital Emergency. She is insured both with Aetna and Aflac. At the Hospital, they xrayed the leg, and decided it needed at cat scan. After waiting and waiting (don’t now why, they weren’t that busy) the nurse asked my daughter if she needed something for pain. She said, oh, I’m alright. The nurse kept asking and telling her she didn’t have to be in pain, until my daughter finally said, “alright” thinking they would bring a little blue pill. But no, she came with a needle. At that point, she reneiged, “no needles please” but the nurse assured her it wouldn’t hurt blah blah blah. When the bill came, that shot cost $191 for the Meds and $258 for the nurse to shoot it . The cat scan was $2100 and the time spent (abou5 5 hrs) in the emergency ward was $2000. Something is very wrong with this picture. They knew she had insurance.
September 28th, 2009 at 6:05 pm
Once again, not one plan that has been proposed will protect older workers. They all allow the insurance companies to discriminate by age. Those of us who are older must pay more to support the younger healthier(?) generations. Until they come up with a more equitable way to charge for health care, I will not support any of their plans and will urge all seniors to do the same. Our voice is not being heard. Expect a backlash.
September 28th, 2009 at 9:23 pm
I have to agree with Sandra,There is to much government involvement in our day to day life.
September 29th, 2009 at 8:05 am
I agree with Sandra 100% and it explains a part of the problem with the cost of health care. In Jagger’s case above it could be what is called in the service industry as “up sell” to pay for all of the monies lost from giving free services to people who do not have coverage, or benefits packages have become weaker over the years, or paying for free service illegal’s. HMO’s are more the long term cause of the condition of our current health care situation.
September 29th, 2009 at 8:26 am
Sandra while I can appreciate both your formal schooling and school of hard knocks, it is your job as good supervisor to manage the performance of those people who want to come to work and do nothing for a pay check. Of course if you are working in a union atmospher your hands are restricted but not tied. As long as you are following the contract to a T you can teminate on poor job performance and the Union will stand by you when you go to court. But most important is the feeling I got when I read your comments, I could be wrong and I apologize if I am but here it is.
There are many people who have education and skills that are out of work or working for minimum wage. Some living with their children in campers, tents and cars. They deserve to be treated if they are sick. This may burn some people but charging for health care proceedures on a sliding scale with a maximum of 4 dependents allowed could help the average poverty level family. There was a time not so long ago when I had to tell my 13 year old who called me from school crying that I could not take her to the doctor for a severe bladder infection because I had no money to pay for the visit.
I have mixed feelings about illegals. They are a drain but they are also a prop. Somehow the people who employ the illegals should be covering a portion of thier health care. Do you know any poor farmers or packing house owners? Most of their children drive $40,000 trucks to high school. Oh, I forgot, they bought it with the 3% loan they got from the government. I know I sound a bit bitter but I recently had lunch with a stock broker who said a local farmer had bragged to him about getting a check from the government and investing it in stocks last week and had already made 12% on his 3% loan. Actually, I am a little bitter. Hopefully we will work toward making some form of health care available for all who need it.
September 29th, 2009 at 10:02 am
It is amazing to me what the average middle class family is willing to spend on stuff, especially for our kids- such as computers, phones, ipods, lessons, vacations, expensive clothes- I see kids with gold chains, hair extensions and acrylic nails! And we work very hard to supply these items- spending less time at home with our kids and when we are with them we are shopping…Yet when it comes to health care we want it for ‘free’. Amazing.
I agree that our citizens should have access to quality health care however I do not believe it is up to the gov to supply it. Lets face it- do we really want to trust them with our health! Things should be taken care of at the state and local levels. Everyone should be responsible for their own and if you ‘truly’can’t afford it then there should be some state run options. NH has a program for the children which I believe should be expanded to cover adults also. Just my two cents.
September 29th, 2009 at 10:44 am
I am surprised that no one has commented on the changes to Flexible Spending Accounts. The government is about to take away, and very soon (1/1/2010), over the counter medications as a viable expense. A few things are wrong with this picture:
1. Many plans have start dates that have already occurred for 2009/2010 and employees made elections that included purchasing over the counter medications over 12 months. If this goes into effect employees may lose that money unless provisions are made to allow employees to change their elections.
2. Many drugs such as Zytec and Claritin are now available over the counter which cuts down on visits to the doctor for prescription refills thus saving the employee/participant money on office co-pays and prescription co-pays. I cannot understand the reasoning here in eliminating over the counter medications without doctors prescription.
3. The vendors of over the counter medications, drug stores, Target, Walmart, etc., have just had to install software upgrades to identify FSA eligible over the counter medications. Why aren’t these groups fighting this, they had to spend thousands of dollars to implement this software that was mandated by the IRS.
Limiting the dollar amount for Flex plans limits those that rely on using the tax favored money to help pay for on-going medical problems. This is making employees more accountable for their own expenses and in turn allows insurance to be structured to make employees have to pick up more out of pocket expense.
I don’t understand why more employers and employees are not upset by the changes to Flex plans. We all need to make contact with our congress members about these changes and COMPLAIN!!! These changes could go into effect JANUARY 1, 2010!! That’s just 3 months away folks!!
September 29th, 2009 at 12:53 pm
If # 1 above goes into effect, what does that do to the employees regarding their taxes? Does that then become taxable income? What about those who negotiated at the time of hire with the company & the company agreed to pay the entire medical premium (employee only), will they now have to pay taxes on that benefit?
My feeling is that this “overhaul” of our medical/health insurance system should be done in stages instead of a wholesale change all at once just to get it done. Doing it properly is the most important thing. Take one area, work on that and then when that is completed, move on to the next section. This will allow for a more thorough and more insightful process to this issue. The less government involvement (regardless of the political party in power) in general is better. When our country was founded it was said, “The government that governs least, governs best.” That axiom still applies today, but is being followed less and less over the past several decades by both political parties. When government wants to take over something, it tends to make things more difficult and often more expensive, regardless of what is promised. I would rather that they do this right, not just fast, to get it done.
September 29th, 2009 at 3:43 pm
JLee,
Careful with your generalizations. If you want to see poor farmers, I suggest you drive anywhere into rural America. I’m speaking from firsthand- farmer’s-daugher experience on the IL/IA border.
True there are many wealthy farmers who are mass-producing our food (and as a byproduct degrading the foods’ nutrients, but that’s another blog). But many, many, many farmers are SOL just like every other middle class American.
Just wanted to keep it real.
September 30th, 2009 at 1:20 pm
The governement doesn’t need to provide us with health insurance. If you work and you want it, you should buy it if you want it. We don’t need Socialism and the continued entitlement mentality in this country, we were a proud people who used to thank “God” for what we had and worked hard to get it.
For Mike, spending $1,300 for health insurance per month, you probably have a Cadillac of a plan. You should ask your employer about changing the deductible, co-pay, prescription plan coverages to get the monthly premium amount down. Don’t act like you are a helpless victim, talk to your human resources or benefits department to see what they are doing at annual negotitations.
I believe charitable care should be eliminated from hospitals, as it is driving up the insureds rates. If people need care and they can’t afford it, they should be required to sign a work agreement with the health care provider to pay it back or agree to cancel their cell phone, internet service, take back a vehicle, not buy the newest Nikes or skip a take out meal or two and work to pay it back. Way back in the day when we were a capitalist society, people would trade and barter for things, might not be a bad way to go back to, as things were cheaper then and people seemed to get the care they needed.
The other thought would be, that if people need care, we already have a fully funded government health care system through the Veteran’s Administration. If able bodied people don’t have insurance and need care, they could go there and agree to sign a Military service or National Guard contract to help pay off the health care services they received and fulfill those obligations to satisfy their debt. After all, we are only talking that less than 10% of the population is uninsured.
September 30th, 2009 at 2:09 pm
Health care and health Insurance are not Rights. Read the constitution and the Bill of Rights, you won’t see them mentioned.
If the private sector wants to make money by providing a service that people need, ( medical insurance ) that’s fine, best of luck to them. If we don’t like it, it’s not mandatory. (except in Massachusetts)
Health Insurance should be like auto insurance. If people were not already paying for auto insurance, they would say they could not afford that either. What peple are trying to say is they can’t afford the health insurance and a plasma TV, cell phone, cable TV, internet, ipods and vacations. How about priority, if it’s so darn important to have health insurance, it should be at the top of your financial list, up there with lets say food & rent.
October 5th, 2009 at 1:37 pm
I completely agree with JAGGER!
October 6th, 2009 at 10:52 am
Thanks, Jenny. I was feeling like a lone wolf. Perhaps you would like to join me, and the Mom’s of the world. Go to: http://www.asamom.org. Check it out and join us if it is something you like. You don’t HAVE to be a Mom………..just feel like one.
October 8th, 2009 at 12:42 pm
For Scott – You stated
“For Mike, spending $1,300 for health insurance per month, you probably have a Cadillac of a plan. You should ask your employer about changing the deductible, co-pay, prescription plan coverages to get the monthly premium amount down. Don’t act like you are a helpless victim, talk to your human resources or benefits department to see what they are doing at annual negotitations.”
Our rates are extremely high for a small business. For instance, over the past couple of years, our PPO Plan for Family has risen to over $1600. Although the company pays a portion, it is still hard on everyone enrolled. We have negotiated until we are blue in the face but to no avail. In addition to the economy, we have a lot of insurance claims. These folks don’t want to have medical situations. We can’t, as a company, pick and choose who we insure.
It isn’t fair to our employees but that’s life. We are a small company with a few high-risk employees. So ALL of our employees’ premiums go up. There might be a similar sized company across town whose employees don’t file as many high-cost claims. Therefore, ALL of their employees benefit from lower premiums.
Scott, if you can figure a way for us to lower our health insurance premiums, it would be welcome. We have raised our deductibles, co-pays and prescription costs. At this point we are unable to change insurance companies because no one wants us. A few people might be able to get lower cost insurances through private companies, but in most cases, people’s hands ARE tied. Especially if there is a health condition involved.
October 8th, 2009 at 1:41 pm
Pam, I’m not sure what state you are in or how many employees your company must ensure, but we have utilized a local broker to help us. We have worked with Highmark Blue Shield. They have no medical underwriting so the rates are higher, but it was excellent coverage. We now went with Capital Blue Cross (we’re in Pennsylvania). They have limited medical underwriting (basically looking at prescription usage). We were able to offer a PPO and an HMO plan with the HMO obviously being cheaper. The plans are comparable, but there is no out of network coverage in the HMO and it is more managed care than the higher priced PPO. The deductible on both plans is $500 for an individual/$1000 for family. This includes a 3 tier prescription plan for both and includes a mail order program for maintenance drugs people may be taking.
We checked into another plan (HealthAmerica) that does medical underwriting with just the people currently enrolled. However, due to medical issues within the group, the premiums were too high so we stayed with Capital Blue Cross. This is our second year with them and it has been a great plan too. I selected the PPO plan and have no complaints with the coverage. We had no complaints with Highmark Blue Shield other than the premiums were just getting so high it hurts the participation levels. We do contribute 50% of the employee’s premium. We currently have 65 employees and have 23 people eligible for the insurance right now (our open enrollment period). We have 14 enrolled, 4 who waived & are covered under a spouse’s plan or a state plan and two who have to decide if they are enrolling or not.
The broker we are using is local, works with smaller companies, and they do the work of looking at the options and pricing and then present a single summary sheet to us with the best options for our company. They meet with us and review what we want to offer, our concerns, any other issues that may affect our decision, etc. This is much better than some other brokers I have had to deal with that bring in their 3 ring binders with 20 different plans or more and I would have to wade through everything!
Hope this is helpful to you. We have been in your situation and it is difficult as well as frustrating.
October 8th, 2009 at 3:05 pm
Have any of you looked into HSA plans? Our exectutives all chose an HSA. We are with United Health Care (Arizona) and they offer a choice of HSA or the regular 80/20 plans with deductibles. Our HSA plan is less than $250 a month, which is company paid, and the Company adds another $50 to their account each month. Most of them started out with a $2500 deposit (from IRA’s) into their account which is the amount they pay for any medical issues in the year. Everything else is covered 100%. Any of their savings acct they do not use is their’s forever, so it keeps them on top of what services they REALLY need, and they question the price of the things they do need. The Company used to pay (and still does for the employees who choose the traditional plan) over $300 for insurance that they had to pay $4000 before the co-pays disappeared. Sure they only had to pay 20% at the point of use, but that can be pretty steep if they broke and leg or something. With the HSA, $2500 is the most they ever have to pay in a year.