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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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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New Regulation Requires Health Plan Option Summary in 2012

September 1st, 2011 | No Comments |
Category: CDHC, Compliance and Regulatory, Health Care Reform, PPACA, Uncategorized
This month, the Departments of Labor and HHS proposed rules for the “uniform summary of coverage” that is required under PPACA. Heath insurers and group health plans (including grandfathered plans) must provide consumers with clear, consistent and comparable information about their health plan benefits and coverage beginning in 2012. Specifically, the proposed regulations provide rules implementing PPACA provisions that would ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices.These forms include:

  • A Summary of Benefits and Coverage
  • A uniform glossary of terms commonly used in health insurance coverage

Summary of Benefits and Coverage

The summary document will include the key features of the plan or coverage such as the covered benefits, cost-sharing provisions, and coverage limitations and exceptions. Consumers will receive the summary when shopping for coverage, enrolling in coverage at each new plan year, and within seven days of requesting a copy from a health insurance issuer or group health plan.

The Summary of Benefits and Coverage will also include a new, standardized health plan comparison tool called “Coverage Examples” that illustrate what proportion of care expenses a health insurance policy or plan would cover under common benefits scenarios. The Center for Consumer Information and Insurance Oversight (CCIIO) will provide standards for plans and issuers to simulate claims processing for each scenario so consumers can see an illustration of the coverage they get for their premium dollars under a plan.

Uniform Glossary of Terms

Under the proposed regulations, insurance terms will be the same across all plans. Insurance companies and group health plans will be required to make available a uniform glossary of terms used in health insurance coverage, for example “deductible” and “co-pay.” This will allow an easier comparison of insurance plans, and the Departments of HHS and Labor will post the glossary on both www.HealthCare.gov and www.dol.gov/ebsa/healthreform/.

Click here to read the proposed regulations.

Click here to read the Model Summary of Coverage.

Click here to read the fact sheet.
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Survey Says: Some Large Employers Will Consider Dropping Group Health Coverage

August 30th, 2011 | No Comments |
Category: CDHC, Health Care Reform, PPACA

By TOM MURPHY, AP Business Writer

INDIANAPOLIS (AP) — Nearly one of every 10 midsized or big employers expects to stop offering health coverage to workers once federal insurance exchanges start in 2014, according to a new survey from a large benefits consultant.

Towers Watson also found in a survey completed last month that an additional 20 percent of the companies are unsure about what they will do.

Another big benefits consultant, Mercer, found in a June survey of large and smaller employers that 8 percent are either “likely” or “very likely” to end health benefits once the exchanges start.

Employer-sponsored health insurance has long been the backbone of the nation’s health insurance system. But the studies suggest that some employers, especially retailers or those offering low wages, feel they will be better off paying fines and taxes than continuing to provide benefits that eat up a growing portion of their budget every year.

The exchanges, which were devised under the health care overhaul, may offer an alternative for their workers. These exchanges aim to provide a marketplace for people to buy insurance that can be subsidized by the government based on income levels.

A large majority of employers in both studies said they expect to continue offering benefits once the exchanges start. But former insurance executive Bob Laszewski said he was surprised that as many as 8 or 9 percent of companies already expect to drop coverage a couple of years before the exchanges start.

Such a move comes with potential payroll-tax headaches and could subject firms to fines. It also would give their employees a steep compensation cut if companies don’t raise pay in exchange for ending coverage.

“Dropping coverage is going to be very difficult for these (companies) to do,” said Laszewski, a consultant who was not involved with the studies.

Towers Watson’s Randall Abbott said the survey results should be seen as a snapshot of how companies are thinking now. They can’t be viewed as a final decision because there are still many unresolved variables. No one knows what the exchanges will be like or whether consumers will accept them, and companies may change their thinking once they learn more about the overhaul.

The health care overhaul also faces court challenges, and President Obama is up for re-election next year, two more variables that could shape what happens in 2014.

Copyright © 2011 The Associated Press. All rights reserved.

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CCIIO Issues Guidance on HRAs and Restricted Annual Limit Waiver Process

August 30th, 2011 | No Comments |
Category: CDHC, Compliance and Regulatory, HRA, Health Care Reform, Health Reimbursement, IRS, PPACA, Uncategorized

  On Aug. 19, 2011, the Center for Consumer Information and Insurance Oversight (CCIIO) introduced supplemental regulatory guidance regarding the annual limit waiver application process. Specifically, the guidance clarifies that sponsors of stand-alone HRAs will not be required to seek waivers from PPACA rules that restrict annual dollar limits on the coverage of essential benefits.

As background, PPACA Section 2711 generally prohibits group health plans and issuers from offering coverage that imposes lifetime or annual limits on the dollar value of “essential health benefits,” but PPACA allows restricted annual limits with respect to essential health benefits for plan years beginning before Jan. 1, 2014. The waiver program is an application process permitted under PPACA whereby the secretary of HHS is permitted to temporarily waive the restricted annual limits for limited benefit or mini-med plans if compliance would result in a significant decrease in access to benefits or a significant increase in premiums. For plan years beginning on or after Jan. 1, 2014, all group health plans may not impose annual dollar limits on essential health benefits.

 Prior regulations provided that HRAs that were integrated with group health coverage were exempt as long as the other group health coverage complied with the restricted annual limit requirements, meaning a waiver would not be needed. In those prior regulations, the CCIIO also requested comments on the process that should be imposed with respect to stand-alone HRAs.

 The new guidance recognizes that “all HRAs set limits on the amount that can be spent” and that the limits would always be less than the applicable restricted annual limit amounts, which would ultimately result in a “significant decrease in access to HRA benefits.” Therefore, the guidance “exempts as a class all HRAs that are subject to the requirements of Section 2711 and that were in effect prior to Sept. 23, 2010, from having to apply individually for an annual limit waiver for plan years beginning on or after Sept. 23, 2010, but before Jan. 1, 2014.” This means that HRAs established prior to Sept. 23, 2010, which were otherwise subject to the restricted annual limit requirements, such as stand-alone HRAs, have been granted a waiver from the requirements without the need to actually request a waiver.

 Significantly, while stand-alone HRAs are now exempt from the restricted annual limit waiver process, they still must comply with the record retention and annual notice requirements contained in the “Technical Instructions for the Waiver Extension and Waiver Application Process,” available below.

 Finally, if an employer that maintains an HRA also maintains other coverage, whether or not that coverage is integrated with the HRA, that other coverage must meet the annual limit requirements or obtain a waiver. All waiver and waiver extension applications must be received by Sept. 22, 2011, as set forth in the previous guidance issued on June 17, 2011.

 Technical Instructions for the Waiver Extension and Waiver Application Process
CCIIO Supplemental Guidance
Additional Information

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U.S. Appeals Court Upholds Controversial Individual Health Insurance Mandate

June 30th, 2011 | 7 Comments |
Category: CDHC, Compliance and Regulatory, Health Care Reform, IRS, PPACA, State Legislation, Taxes, Uncategorized

June 30, 2011

 By Jerry Markon , Washington Post

 A federal appeals court on Wednesday upheld the most contentious provision of the health-care overhaul law, ruling that Congress can require Americans to carry insurance coverage.

 In backing the individual mandate, the U.S. Court of Appeals for the 6th Circuit in Cincinnati became the first appellate court to rule on President Obama’s signature domestic initiative. The decision also marked the first time a Republican-appointed judge has sided with the administration in evaluating the law’s constitutionality. 

“We find that the minimum coverage provision is a valid exercise of legislative power by Congress under the Commerce Clause,” Judge Boyce F. Martin Jr., a Democratic appointee, wrote for the majority. He was joined by Republican appointee Jeffrey Sutton.

 The 2 to 1 ruling was hailed by the Justice Department and administration allies, who called it an important bipartisan test of the law’s ability to withstand numerous legal challenges. Opponents of the health-care act disputed the ruling’s significance, calling it one incremental step in a legal struggle widely expected to wind up at the Supreme Court.

 “It’s an unfortunate decision,” said David Rivkin, a lawyer representing 26 states in a Florida-based lawsuit that also challenges the law. “By the time this gets to the Supreme Court, it’s not going to matter which decision was first or second,” added Rivkin, who predicted that the law will be overturned.

 The differing interpretations reflected the deep divisions over a measure that has provoked vehement opposition and equally strong support among the public and politicians alike. More than 30 lawsuits have been filed since the Patient Protection and Affordable Care Act was pushed through Congress by Democrats in March 2010, resulting in several rulings by lower-court judges that, until now, have cleaved along partisan lines.

As a result, the ultimate fate of the statute, which aims to bring about the broadest changes to the health-care system in several decades, may not be known for a year or more. Lawyers for the plaintiffs in the 6th Circuit case said they will appeal directly to the Supreme Court but acknowledged that the justices probably will not take the case right away.

Most contested provision

 The health-care law seeks to extend medical coverage to 30 million uninsured Americans and make major changes in public and private health insurance. By far the most contested provision is the individual mandate, which requires most Americans to purchase at least a minimum level of health insurance starting in 2014 and imposes a tax penalty if they don’t.

Like other legal challenges, the lawsuit filed by the Thomas More Law Center – a Christian-oriented law firm in Michigan – says Congress overstepped its constitutional authority to regulate commerce.

A three-judge panel of the 6th Circuit disagreed. The mandate is constitutional, Martin wrote, because “Congress had a rational basis to believe” that the provision would affect interstate commerce and that it was “essential” to the law’s broader goals of reforming the health-care market.

Judge James Graham, a Republican appointee, dissented, but it was the concurrence of Sutton – a George W. Bush appointee and former law clerk for conservative Supreme Court Justice Antonin Scalia – that was most noteworthy.

Sutton wrote that “the government has the better of the arguments” and that “Congress did not exceed its power” in passing the individual mandate. But he also appeared to acknowledge that his word would not be final, writing, “The Supreme Court has considerable discretion in resolving this dispute.”

And in a phrase that heartened conservative opponents of the law, Sutton questioned whether the legislation will have other, perhaps unintended, consequences. “That brings me to the lingering intuition – shared by most Americans, I suspect – that Congress should not be able to compel citizens to buy products they do not want,” he wrote.

 “If Congress can require Americans to buy medical insurance today, what of tomorrow? Could it compel individuals to buy health care itself in the form of an annual check-up or for that matter a health-club membership?”

Tracy Schmaler, a Justice Department spokeswoman, said that the government welcomed the ruling “and its finding that Congress acted within its authority in passing this landmark health-care reform law.” She vowed that the department will continue to “vigorously defend” the law and said department officials believe that efforts to challenge it will fail.

 

Her words were echoed by a variety of Democrats and supporters of the law.

 

“Congress clearly has the authority to regulate the health insurance market, including protecting consumers from insurance industry abuses,” said Ethan Rome, executive director of Health Care for America Now. “Every step of the way, the health-care debate has been polluted by partisan politics. Today’s decision, made by judges appointed by both Republican and Democratic presidents, is immune to that criticism.”

 

No ‘ringing endorsement’

 

But Rivkin, citing some of the wording in Sutton’s concurrence, said the decision is “not at all a ringing endorsement of the constitutionality of the individual mandate.” And David Yerushalmi, a lawyer for the Thomas More Law Center, said that while the ruling was “disappointing,” Sutton “essentially kicked this thing upstairs to the Supreme Court.”

Yerushalmi said he is already drafting a petition asking the high court to hear the case, though he acknowledged that the justices will probably “put it aside” until other appellate court decisions are issued.

 

Two other federal appellate courts – the Richmond-based 4th Circuit and the 11th Circuit, based in Atlanta – recently heard oral arguments in lawsuits challenging various aspects of the health-care law’s constitutionality, and they are expected to issue decisions in the coming weeks or months. The U.S. Court of Appeals for the District of Columbia Circuit has scheduled oral arguments for September.

 

Three U.S. district judges have ruled in favor of the administration on the constitutionality of the individual mandate, while two district court judges have said it is unconstitutional. Those decisions were all along partisan lines, with Democratic-appointed judges supporting the administration and Republican appointees opposing it.  

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