Politico
Congressional Budget Office estimates released Tuesday predict the health care overhaul will likely cost about $115 billion more in discretionary spending over ten years than the original cost projections. The additional spending — if approved over the years by Congress — would bring the total estimated cost of the overhaul to over $1 trillion. Republicans pounced on the news, which they called another sign that the Obama administration makes promises it cannot deliver. ‘The American people wanted one thing above all from health care reform: lower costs, which Washington Democrats promised, but they did not deliver,’ said House Minority Leader John A Boehner (R-Ohio). But a Democratic leadership aide on Capitol Hill said the Congress will have to stay within the budget. ‘Just like other authorized programs, the discretionary programs in health reform will need to compete for funds within set budgetary limits,’ the aide said. The Congressional Budget Office expects the federal agencies to spend $10 billion to $20 billion over 10 years on administrative costs to implement the overhaul. The CBO expects Congress to spend an additional $105 billion over 10 years to fund discretionary programs in the overhaul. The CBO released the estimates in response to a request from California Rep. Jerry Lewis, ranking Republican on the House Appropriations Committee. POLITICO story…CBO letter
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Debit Card Entity Clarifies Over-the-Counter Changes for 2011
Within Section 9003 of the PPACA health reform law, IRS Code was amended so that over-the-counter (OTC) drugs will no longer be reimbursable unless they are prescribed by a physician as of Jan. 1, 2011. This prohibition affects health Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs). Many plans currently allow participants to use electronic payment cards or debit cards when purchasing OTC items. When electronic payment is permitted, existing substantiation rules allow for automatic reimbursement at the point of sale if a merchant uses the Inventory Information Approval System (IIAS).
The entity in charge of the IIAS (Special Interest Group for IIAS Standards, or SIGIS) issued a news release on how it will address the OTC drug prohibition. It indicated that, effective Jan. 1, 2011, OTC drugs will be reclassified, changing from “Eligible” to “Dual Purpose.” This means that these items can no longer be auto-substantiated. Beginning Jan. 1, 2011, participants will be able to submit OTC drug purchases for reimbursement if they obtain a letter of medical necessity or prescription from their physician. The press release included a sample of OTC drugs, including acid controllers, allergy/sinus/cold/flu medicines, laxatives, pain relief medicines, sleep aids and sedatives and stomach remedies.
Click here to view the press release.
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The IRS released Revenue Ruling 2010-13 which includes the average premium for the small group market when determining the Small Business Health Care Tax Credit. The credit was created as part of the Patient Protection and Affordable Care Act (“PPACA”), as amended, which helps small businesses afford the cost of covering their employees. The credit is effective immediately, and applies to organizations with fewer than 25 full-time equivalent employees, including tax-exempt organizations, with certain income limitations. The organizations must make a minimum contribution towards their employees’ health insurance premiums. The amount of the contribution toward the premium is based on the lesser of:
- The amount of nonelective contributions paid by the eligible small employer on behalf of employees under the arrangement during the taxable year, and
- The amount of nonelective contributions the employer would have paid under the arrangement if each such employee were enrolled in a plan that had a premium equal to the average premium for the small group market in the State (or in an area in the State) in which the employer is offering health insurance coverage.
The law required the Secretary of Health and Human Services (HHS) to determine the average premiums within a State or area in the State. This is to assist with the average premiums used in Option 2 of the calculation, above. Revenue Ruling 2010-13 contains a chart indicating the average premium rates for the small group market in all 50 states and the District of Columbia for the 2010 taxable year.
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In the recently decided case of Dorsey v. Holman, 2010 U.S. Dist. LEXIS 41295 (D.D.C. Apr. 27, 2010) a Washington D.C. law firm terminated their employee, Debra Dorsey, after a year of disability-related leave. The employee elected COBRA in late 2008. Subsequently, the American Recovery and Reinvestment Act of 2008 (ARRA) was passed in February, 2009, and the employee made the request to her employer to be provided the subsidy following a conversation with a DOL official who confirmed her eligibility for the subsidy. The employer denied the request. It viewed the termination as voluntary because the employee failed to return after her FMLA leave expired. Even after a DOL representative called the employer and stated that the COBRA premium should be subsidized, the employer again denied the request.
U.S. District Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia dismissed the case, ruling that ARRA states that its COBRA-related provisions should be treated as though they are part of the Employee Retirement Income Security Act (ERISA). Collyer pointed out that the DOL has provided guidance on its web site and directs individuals denied the COBRA subsidy to complete an “Application for Review of Denial of COBRA Premium Reduction.” The DOL advises that the department will act on any application within 15 days of getting the document. It is significant to note that Debra Dorsey did not follow this process and instead sued her former employer. The conversations with DOL officials did not follow the DOL’s expedited review process. The court held that the DOL’s review process is required before a Qualified Beneficiary can sue over an ARRA subsidy denial.
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My good friend Dave Cleary (the Video Benefits Guy), has produced a nice overview of the massive Health Care Reform Legislation. He reviews and highlights the landmark changes to benefits and the very substantial new taxes on individuals and employers that you need to know about NOW .
Dave reviews the Good, the Bad and the UGLY in chronological order as these huge changes phase in from 2010 to 2018. Take a look at Parts 1 and 2 – Dave also offers personalized branded versions of his videos for employee benefits brokers, consultants and employers. Thanks Dave!!
http://videobenefitsguy.com/HealthcareReformVideo.aspx
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