Details of the HIR Reconciliation Bill

[jobwithout]

Changes in the reconciliation bill include:

Annuity Tax: H.R.4872 proposes a new 3.8 percent (up from the 2.9 percent proposed by President Obama) tax on high income ($200,000/individual; $250,000 married) unearned income. Unearned income would include interest, dividends, annuities, royalties or rents. This is a new tax on annuities. It would tax only on annuity distributions, not accumulations. The tax would become effective in 2013.

High Value Health Insurance Tax/Timing: The bill delays the high value health insurance tax to 2018. The high value health insurance tax is a 40 percent tax, payable by the insurer or, where the plan is a self insurance plan or for purposes of flexible spending arrangements (FSAs), by the plan administrator or employer.

High Value Health Insurance Tax/Threshold: The health reconciliation bill includes an increase in the threshold at which the high value health insurance tax is triggered. The new thresholds would be $27,500 for family coverage and $10,200 for individual coverage (higher thresholds—$39,950 and $11,850 respectively—would apply for those in high-risk occupations). The threshold amounts are indexed. An employer’s age and gender demographics, if not representative of a national risk pool, could be taken into account in calculating the tax. Stand-alone dental and vision coverage would not be included in the calculation of the total value of health insurance.

FSA Limitation: The new $2,500 annual limit (indexed) on FSAs would be delayed by two years, to 2013.

Employer Responsibility The bill contains new assessment levels for employers that do not offer (affordable) health insurance and that employ workers who receive federal subsidies for buying health insurance. The new assessments are:

$2,000 per full time worker, for firms with 50 or more “full time equivalent” workers, where an employer does not offer health insurance and has at least one worker who uses a federal subsidy to buy coverage. “Full-time equivalent” means an employer would count part-time workers by adding up all the part-time hours worked in a month and then dividing by 120 to reach the number of “full-time equivalent” workers that employer has. Full-time equivalent workers are counted “solely” for purposes of determining whether the employer has 50 or more workers and thus is subject to the assessment.

An assessment will be based on the number of workers above 30. (For example, a firm with 100 workers would pay the assessment based on 70 workers.) No assessment will be imposed during the 30-day waiting period (for health coverage), starting from date of hire.

Individual Mandate: H.R.4872 contains a new fine for individuals who fail to comply with employer mandate. The fine would be the greater of $695 or 2.5 percent of income. The fines are phased in, reaching their full impact in 2016.

Insurance Reforms: The effective dates for a number of the insurance reforms were changed in the health reconciliation bill. The new effective dates, applicable to group health plans, are as follows:



For the prohibitions against lifetime limits, rescissions, excessive waiting periods, initial restrictions on ability to deny coverage for preexisting conditions (e.g., for children), and the requirement that all insurance plans allow coverage of non-dependent children up to age 26: six months after date of enactment

For absolute prohibition against use of preexisting conditions and prohibition against annual benefit limits: 2014:

Until 2014, the requirement that group health plans permit coverage of non-dependent adult children up to age 26 is limited to insureds whose employers do not offer health insurance

The reconciliation health bill also increases federal subsidies to make individual purchases of health insurance affordable, closes the Medicare Part D (prescription drug benefit) “donut hole” (the current law rule that results in Medicare Part D beneficiaries paying for 100 percent of the cost of their prescription drugs for amounts between $2,830 and $4,550), modifies the mechanisms by which savings are achieved in Medicare Advantage programs, and modifies and delays until 2014 the fees assessed against the health insurance industry.

H.R.4872 also modifies the revenue-raising codification of the economic substance doctrine, which requires a transaction to have economic substance as well as tax benefits. The codification would impose a penalty on understatements of tax liability attributable to a transaction lacking economic substance, and the method by which the economic substance doctrine would be applied would be clarified.

[KoKo]

1. 2014!!!!For absolute prohibition against use of preexisting conditions

:wtf:
For absolute prohibition against use of preexisting conditions and prohibition against annual benefit limits: 2014:

[YewNork]

2. Penalty for not having insurance is too low

Why is the fine for not having insurance so low?
My private insurance costs me $290/month or $3480/year.

Based on a penalty of $695 or 2.5% of income (whichever is higher), it means that unless my income exceeded $139,200, it would be cheaper
for me to just pay the penalty, and then buy insurance if I get sick - because they wouldn't be able to deny me coverage.

Not that I would do it. I value my insurance, but don't you think many people would?

You'd think the penalty would be higher than what health insurance would cost, so that people would want to buy insurance instead./

[denimgirly]

3. Insurers: "Thank god...those pesky pre-existing pesents now can die with no loss to us"