Access to Independent Health Insurance Advisors Act of 2012 is Introduced

February 6th, 2012 | 1 Comment |
Category: Compliance and Regulatory, Health Care Reform, Uncategorized

On Friday, February 3, Senators Mary Landrieu (D-LA), Johnny Isakson (R-GA), Ben Nelson (D-NE) and Lisa Murkowski (R-AK), introduced S. 2068, the Access to Independent Health Insurance Advisors Act of 2012. Here is a link to NAHU’s press release about the measure, and here is a link to a fact sheet about the bill. 

S. 2068 is a bipartisan measure crafted to correct the unintended economic impact the Patient Protection and Affordable Care Act’s (PPACA) medical loss ratio (MLR) requirements have had on the agent and broker community nationwide. The bill will ensure that individual and small group health insurance consumers continue to have access to their agents and brokers by removing broker commissions from the MLR calculation in those markets.

The Access to Independent Health Insurance Advisors Act of 2012 is a complement bill to H.R. 1206, the bipartisan measure introduced in the House by Representatives Mike Rogers (R-MI) and John Barrow (D-GA). However, the Senate bill does differ from H.R. 1206 in a few key ways. S. 2068:

  • Limits the MLR exclusion to the individual and small group health insurance markets, where the impact is most severe;
  • Clarifies that any bonuses agents may receive remain a carrier administrative expense. Unlike commissions, bonuses are paid by the carrier and can be reasonably deemed administrative expenses;
  • Strikes language to expand the state MLR adjustments, as the majority of states that applied have already received their determination from the Department of Health and Human Services (HHS). Under S. 2068, the waiver process will remain as is.

There are a few things you can do to help advance S. 2068. First, please click here to send an Operation Shout! message to your senators. If your senators are not sponsors of the measure already, you will be provided a link to a letter that you can customize to encourage co-sponsorship of S. 2068. If you are represented by a senator who is already an original co-sponsor, you will be able to send him or her a thank you letter for their support.

Second, keep a close watch on your e-mail this week. The sponsors of the new measure have asked NAHU to provide them with updated economic data about the impact of the PPACA MLR requirements on health insurance agents and brokers. NAHU will be sending an updated version of its economic survey to all members on Wednesday. Please watch for it and fill it out completely. The more responses we get, the more valid the results. 

Finally, continue to work on adding House co-sponsors to the complement to our Senate legislation, H.R. 1206.  We want to continue to build momentum for both bills, with the hope of encouraging prompt action on both of them. Click here to send a message to your congressional representative about H.R. 1206. As with the Senate bill, if he or she is already a co-sponsor, a thank you message will be sent. If not, you can send a letter asking for your representative’s support on H.R. 1206.

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House Votes to Repeal the CLASS Act

February 6th, 2012 | No Comments |
Category: Compliance and Regulatory, Health Care Reform, IRS, Taxes, Uncategorized
By ASSOCIATED PRESS | 2/1/12 11:46 PM EST

WASHINGTON – The Republican-led House on Wednesday voted to repeal a financially troubled part of the 2010 health care law that was designed to provide affordable long-term care insurance.

The House vote comes months after the Obama administration suspended the Community Living Assistance Services and Support program, known as the CLASS Act.

Health and Human Services Secretary Kathleen Sebelius in October said she was unable to find a way to make the program financially solvent.

Still, the White House has said it does not support repealing the program, under which workers would pay a monthly premium during their careers and collect a daily cash benefit if they become disabled later in life.

Republicans have targeted the program as part of their overall goal of dismantling the health care overhaul law. Action on the bill in the Democratic-controlled Senate is uncertain.

“Republicans are committed to repealing and defunding it, piece by piece if necessary,” House Speaker John Boehner (R-Ohio) said of the health care bill after the CLASS Act vote.

The House vote was 267-159, with 28 Democrats joining all 239 voting Republicans in support.

The Senate has ignored House votes in the past year to repeal the entire health care law or to block funding for parts of it. One of the few changes Congress has been able to bring about concerned a requirement for small businesses to file more health care paperwork.

The CLASS Act was supposed to address the crisis in long-term care coverage. Currently some 10 million Americans need long-term care, and that number is expected to hit 15 million by 2020. But only about 8 percent of people buy private long-term care insurance.

Under the voluntary program, a priority of the late Sen. Edward Kennedy, monthly premiums would be used to finance benefits of at least $50 a day for those needing long-term care. The money would go for services at home or to help with nursing home bills.

But government actuaries determined that unless a large number of healthy people signed up, premiums would have to soar to unaffordable levels to meet the growing needs of the disabled.

Experts have concluded, said Rep. Phil Gingrey (R-Ga.) that “the CLASS program can’t be operated without mandatory participation so as to ensure its solvency.” Unless it is terminated, he said, “it poses a clear danger to the fiscal health of our budget and to the American taxpayer.”

The administration finally has come to the conclusion “that we knew even before the bill passed, that this was unsustainable, it was unworkable, it was fatally flawed,” said the bill’s sponsor, Rep. Charles Boustany (R-La.).

But Rep. Henry Waxman (D-Calif.) said the Republican goal was to “tear down and dismantle programs that provide health care in the United States.” He said “the solution is to amend the program to make it work, not just repeal it and leave nothing in its place.”

Read more: http://www.politico.com/news/stories/0212/72353.html#ixzz1ldfVzFUJ

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Are employers able to waive or opt out of all health care reform?

January 31st, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, Health Care Reform, IRS, Taxes, Uncategorized

We keep hearing about the government issuing waivers, is it possible for employers to opt out of health care reform?  No, there is no waiver from all of health care reform. Employers may be thinking of the term “grandfathered plans,” which refers to plans in existence on March 23, 2010, which have made minimal changes, defined under regulations, and are therefore exempt from some, but not all, of health care reform’s mandates.

More abundant in the news, however, have been references to the “annual limit waivers,” which have been granted to many prominent restaurant chains and labor unions. The annual limit waiver was brought about due to the fact that health care reform first restricts, and then later prohibits (in 2014), annual dollar limits on the value of “essential health benefits.” Until 2014, restricted annual limits on essential health benefits are permissible under a three-year phased approach.

  • $750,000 for plan years beginning on or after Sept. 23, 2010, but before Sept. 23, 2011
  • $1.25 million for plan years beginning on or after Sept. 23, 2011, but before Sept. 23, 2012
  • $2 million for plan years beginning on or after Sept. 23, 2012, and Jan. 1, 2014

For plans issued or renewed beginning Jan. 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited.

A class of group health plans and health insurance coverage generally known as “limited benefit” plans or “mini-med” plans often has annual limits well below the restricted annual limits set out in the interim final regulations. Because this is often the only type of private insurance available to some workers, temporary waivers from the restricted annual limit requirements were previously available. For plan years beginning before Jan. 1, 2014, the interim final regulations allowed HHS to establish a program under which the requirements relating to restricted annual limits may be waived for plans that were offered prior to Sept. 23, 2010 — if compliance would result in a significant decrease in access to benefits or a significant increase in premiums.

However, in June 2011, HHS issued guidance to revise the waiver program to establish new procedures and impose an application cutoff of Sept. 22, 2011, for all waiver extensions and new waiver requests. This means that the waiver process has now concluded, and no waivers will be granted for new waiver applications received after Sept. 22, 2011. Applications received after Sept. 22, 2011, will not be accepted, which means that any plan or policy that did not receive a waiver must be in compliance with the annual dollar limits on essential health benefits described above.

If a plan was granted a waiver by Sept. 22, 2011, that plan will be required to submit an Annual Limit Update in order to retain eligibility for the annual limit waiver through 2014. The first Annual Limit Update must be submitted by Dec. 31, 2012, and the second by Dec. 31, 2013.

Click here for additional information about the waiver process.

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IRS Releases 2011 Versions of Publications 502 and 503

January 31st, 2012 | No Comments |
Category: Compliance and Regulatory, IRS, Taxes

  The IRS recently issued the 2011 versions of Publication 502 (Medical and Dental Expenses) and Publication 503 (Child and Dependent Care Expenses). Publication 502 describes what medical expenses are deductible on taxpayers’ 2011 federal income tax returns. The 2011 version includes clarifications with respect to breast reconstruction surgery, guide dogs/service animals, hearing aids, nursing services and provisions regarding health insurance costs for self-employed persons, and the health coverage tax credit. Publication 502 is used by taxpayers to determine what qualifies as a medical expense under Code 213(d), and many use this publication to help identify expenses that may be reimbursed or paid by health FSAs, HSAs or HRAs. However, employers sponsoring these plans who refer to Publication 502 must do so with caution, as it addresses the expenses that are deductible, but does not describe the various rules that need to be considered when administering health FSAs, HSAs or HRAs.

Publication 503 describes the requirements that taxpayers must meet in order to claim the dependent care tax credit (DCTC) under IRC § 21 for child and dependent care expenses. The 2011 version includes an explanation of how to calculate the DCTC when the taxpayer has multiple qualifying individuals, but one of them has no dependent care expenses. Following a similar concept of Publication 502, employers relying on Publication 503 should do so with caution, as the expenses reimbursable under an employer-sponsored dependent care assistance program may have different rules than the DCTC.

Click here to view Publication 502.

Click here to view Publication 503.

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Massachusetts Individual Health Mandate Penalties for Tax Year 2012 Over $2500 per Family

January 9th, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, Health Care Reform, State Legislation, Taxes, Uncategorized
 Personal Income Tax

Technical Information Release 12- 2

  Massachusetts

Department of

Revenue

Individual Mandate Penalties for Tax Year 2012

Pursuant to G.L. c. 111M, § 2, the Department of Revenue is issuing this Technical Information Release to announce the penalty schedule for individuals who fail to comply in 2012 with the requirements under the Massachusetts Health Care Reform Act (the Act). See St. 2006, c. 58, as amended. The Act requires most adults 18 and over with access to affordable health insurance to obtain it. In 2012, individuals must be enrolled in health insurance policies that meet minimum creditable coverage standards defined in regulations adopted by the Commonwealth Health Insurance Connector Authority (the Connector). Individuals who are deemed able to afford health insurance but fail to comply are subject to penalties for each month of non-compliance in the tax year (provided that there is no penalty in the case of a lapse in coverage of 63 consecutive days or less). The penalties, which will be imposed through the individual’s personal income tax return, shall not exceed 50% of the minimum monthly insurance premium for which an individual would have qualified through the Connector.[1] 

These penalties apply only to adults who are deemed able to afford health insurance. On an annual basis, the Connector establishes separate standards that determine whether individuals, married couples and families can afford health insurance, based on their incomes and affordable health insurance premiums. Those who are not deemed able to afford health insurance pursuant to these standards will not be penalized. Individuals also have the opportunity to file appeals with the Connector asserting that hardship prevented them from purchasing health insurance (and, thus, that they should not be subject to tax penalties).[2]

 

For 2012:

  • Individuals with incomes up to 150% of the Federal Poverty Level are not subject to any penalty for non-compliance, as those at this income level are not required to pay an enrollee premium for Commonwealth Care health insurance. 

 

  • Penalties for individuals with incomes from 150.1 to 300% of the Federal Poverty Level will be half of the lowest priced Commonwealth Care enrollee premium that could be charged to an individual at the corresponding income level, based on the Connector’s Commonwealth Care enrollee premiums as of January 1, 2012.

 

  • Penalties for individuals with incomes greater than 300% of the Federal Poverty Level will be:

 

  • ages 18-26: half of the lowest priced individual Commonwealth Choice Young Adult Plan premium without drug coverage; and 
  • ages 27 and above: half of the lowest priced individual Commonwealth Choice Bronze premium with drug coverage, based on the Connector’s prices for these plans as of January 1, 2012.

 

  • The Department anticipates issuing an updated penalty schedule for tax year 2013.

 

  • Penalties for married couples who do not comply with the individual mandate rules (with or without children) will equal the sum of individual penalties for each spouse.

 

Penalties for 2012
IndividualIncome

Category*

 150.1-200% FPL 200.1-250% FPL 250.1-300% FPL Above 300% FPLAge 18-26 Above 300% FPL

Age 27+
Penalty $19/month$228/year $38/month$456/year $58/month$696/year $83/month$996/year $105/month$1,260/year

* Compare individual’s annual family household income to chart immediately below to determine applicable Federal Poverty Level (FPL).

** Yearly penalty amounts listed above based on non-compliance for entire year.

 Federal Poverty Level – Annual Income Standards

Family Size 150% FPL 200% FPL 250% FPL 300% FPL
1 $16,344 $21,780 $27,228 $32,676
2 $22,068 $29,424 $36,780 $44,136
3 $27,804 $37,068 $46,332 $55,596
4 $33,528 $44,700 $55,884 $67,056
5 $39,264 $52,344 $65,436 $78,516
6 $44,988 $59,988 $74,976 $89,976
7 $50,724 $67,620 $84,528 $101,436
8 $56,448 $75,264 $94,080 $112,896
For each additional person add +$5,736 +$7,644 +$9,552 +11,460

 

This Schedule reflects the Federal Poverty Level standards for 2011 and will be updated when the 2012 Federal Poverty Level standards are published in 2012.

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HSA Contributions Changes and the Last Month Rule

January 5th, 2012 | No Comments |
Category: Cafeteria Plans, Compliance and Regulatory, HSA, Health Savings Accounts, Taxes, Uncategorized

Q. How much can an individual contribute if she’s HSA eligible all year but changes from self-only to family coverage after her May 18, 2011, wedding?

 A. This individual can take one of two approaches. 

General Rule: “Sum of the Monthly Contribution Limits Rule.” Accountholders’ annual HSA contributions are pro-rated based on the number of months they are HSA eligible under each contract type during the year. When this individual is enrolled in a self-only contract, she can contribute $254.17 per month (the statutory maximum annual contribution of $3,050 divided by 12 months). During the months that she is enrolled on a family contract, she can contribute $512.50 per month (the $6,150 statutory maximum annual contribution divided by 12 months). In this case, her month-by-month maximum contribution is as follows:

 Month Maximum Contribution
January $254.17
February $254.17
March $254.17
April $254.17
May $254.17
June $512.50
July $512.50
August $512.50
September $512.50
October $512.50
November $512.50
December $512.50
Total $4,858.33

 

 

Special Rule: “Last-Month Rule.” This special rule (which comes with a testing period requirement noted below) permits the individual to make a full year’s family contribution as long as she is enrolled in a family contract as of Dec. 1, 2011, regardless of when during the first 11 months of 2011 she is married and switches to a family contract. If she takes this approach, she must remain eligible through the end of the following 12-month “testing period.” The testing period ends on December 31 of the following year (2012 in the above example). If she loses HSA eligibility any time before December 31, 2012, she must include any contributions for months during which they were not eligible, except for the last-month rule, in her taxable income in the year she loses eligibility. In addition, excess contributions are subject to a 10% additional tax that year. Accountholders incur this penalty regardless of age.

If she loses HSA eligibility during the testing period, she must include in her 2012 taxable income any contribution she made in 2011 that is in excess of the pro-rated contribution maximum. Her maximum contribution would be $4,858.33, and any amount above that figure would be included in her 2012 taxable income, and she would pay an additional 10% tax on the excess contribution as well.

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US Appeals Court Rules Health-Care Law Is Constitutional

November 8th, 2011 | No Comments |
Category: CDHC, Compliance and Regulatory, Health Care Reform, Uncategorized
By Brent Kendall

Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–A federal appeals court in Washington ruled Tuesday that a key piece of last year’s federal health-care overhaul is constitutional, handing the Obama administration another legal victory ahead of the Supreme Court’s likely consideration of the law.

The U.S. Court of Appeals for the District of Columbia Circuit ruled that Congress, acting under its power to regulate interstate commerce, had the authority to require individuals to carry health insurance or pay a penalty.

“The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local–or seemingly passive–their individual origins,” Judge Laurence Silberman, a Reagan appointee, wrote for the court.

The 2-to-1 ruling marked the second time a Republican appointee has voted to uphold the law.

Judge Harry Edwards, a Carter appointee, joined Silberman’s ruling.

Judge Brett Kavanaugh, an appointee of President George W. Bush, dissented from the court’s decision, but he offered no opinion on the merits of the law. Instead, he said that lawsuits challenging the insurance mandate are premature because the mandate penalties amounted to a type of tax that can be challenged only after it is collected, rather than before.

A U.S. appeals court in Virginia adopted similar reasoning in September when it ruled that such lawsuits can’t proceed until individuals start paying penalties in 2015.

The D.C. Circuit is the third U.S. appeals court to rule for the Obama administration. A fourth, the 11th Circuit Court in Atlanta, ruled the law’s insurance mandate is unconstitutional.

It is a near certainty that the Supreme Court will resolve the matter, and the justices may indicate within days whether they will consider the health-care law during their current term.

The court is scheduled to discuss several challenges to the health-care overhaul during its private conference on Thursday.

If the justices decide during their Thursday meeting to hear one or more health-care cases, they could make the announcement that day or, more likely, disclose the decision in a written list of orders that is scheduled for release on Nov. 14. However, there is no guaranteed date for the court to reveal its plans.

If the court agrees to consider the health-care law, oral arguments will likely be scheduled for the spring of 2012, with a decision expected by the end of June.

Tuesday’s appeals court ruling is notable because the D.C. Circuit’s decisions traditionally get particularly close attention from the Supreme Court, in part because four of the justices–including Chief Justice John Roberts–previously sat in that circuit.

Silberman, the author of Tuesday’s ruling, is a well-respected conservative judge who has served on the court since 1985. Another Republican judicial appointee, Judge Jeffrey Sutton of the Cincinnati-based Sixth Circuit, provided a pivotal vote when that court upheld the health-care law in June.

Sutton wrote a concurring opinion upholding the insurance mandate as a reasonable way for Congress to exercise its authority over the insurance and health-care markets.

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