Not Much Good, Lots of Bad and Ugly
November 29, 2009
That’s our comment on the latest and greatest from Congress: the Senate version of the health care “reform” legislation. Never at a loss for euphemistic nomenclature, the Senate will now debate (and hopefully severely change) the “Patient Protection and Affordable Care Act.” Some of the lowlights:
- Companies with more than 50 employees, and which do not offer health insurance coverage, would be socked with a penalty of $750 for each full time worker if any of their employees obtained subsidized coverage on their own via the insurance “exchanges.”
- An additional 0.5% hospital insurance tax would be levied on wages in excess of $200,000 ($250,000 for joint filers) beginning in 2013.
- A 40% nondeductible excise tax would apply to health coverage in excess of $8,500 (single folk) or $23,000 (families). Also beginning in 2013, employers will issue some sort of 1099 to insurers indicating the amount subject to this excise tax for the coverage provided to all of the company’s employees. The insurer pays this one–surely they’re all happy about this proposal.
- Employers would be required to report the value of health benefits on employees’ Forms W-2, beginning in 2011. Yep–now you, too, can start paying tax on heretofore excluded employer-provided coverage.
- Here’s another goodie for the insurance companies: beginning with policy years ending after September 30, 2012, the insurers will be paying a “fee” with respect to each specified health insurance policy they issue on individuals residing in the good old U.S. of A. And that “fee” will initially be $2 times the average number of lives covered by the policy.
- For purposes of flexible savings accounts, health savings accounts and Archer medical savings accounts, the cost of over the counter medicine, in general, could not be reimbursed. This goodie comes into effect in 2011.
- The penalty for nonqualified health savings account distributions would be increased from 10% to 20% starting in 2011. And allowable contributions to such accounts would be capped at $2,500 annually.
- Here’s one: the floor beneath itemized medical expense deductions would be raised from the present 7.5% of adjusted gross income to 10%, starting in 2013.
- And lest we forget those of you (probably upper income folk) who think you just have to have that cosmetic surgery (lift/enhancement/augmentation/tuck/etc.), even though it may not be tax deductible–get ready to pay a 5% excise tax to Uncle Sam, over and above whatever you pay the Doc.