(from Carolyn McClanahan's Forbes'
column, 7/3/2012 - click here for the original post. Carolyn is a physician,
financial planner, educator and storyteller. For more on Carolyn, visit her Forbes'
profile.)
When the Affordable Care Act was originally passed, misinformation and inflammatory lies regarding the law made their rounds on the internet. Great examples from the right – seniors on Medicare would face rationed care, death panels were going to be enacted, or you would have to pay extra taxes on the sale of your home to name a few. Great examples from the left – the life of “Julia” and the exaggeration of the numbers who would be denied coverage because of preexisting conditions.
The lies and misinformation slowed down a bit over the past few months as everyone waited on the Supreme Court decision with rabid anticipation. Those against the law thought the case was all locked up to repeal. Immediately after the Supreme Court decision was released the misinformation started again. What a surprise (not really.) On Facebook, what showed up? The oldie but false picture of a van with the following painted on the side – “President OBAMA – If the Health Care Reform Plan is so Great, Why does it EXEMPT YOU, Michelle Obama, Congress, Senators, and their families? Page 114 Line 22”
I’ll debunk this in a minute, but first I want to share my hope for the people of this great country as the election approaches. My hope? We take the time to understand the problems in this country from more than our individual perspective and then obtain non-partisan education on solutions from reputable sources. We should choose our leaders based on truth, understanding, and a desire to improve our greatness instead of basing our decisions on rhetoric and ideology. When we hold ourselves to a higher standard in our own education on important matters, we can hold our leaders to a higher standard, and maybe they will begin to deliver. I am an optimist.
To help you focus on issues with health care, I point you to two non-partisan and highly reputable resources. These will help you pick through the bunk and exaggerations from both sides.
Kaiser Family Foundation:
This is the granddaddy of all sites on health care reform. There is a section with the basics, and delves as deep as you want to go into the details of health care and the Affordable Care Act. In addition, the good people at Kaiser Family Foundation provide regular updates and a roundup of the news in health care on The Scan. I also enjoy the regular polls they conduct and share from others on public opinion in numerous facets of health care.
FactCheck.Org:
This site looks at the facts behind statements in the press, chain emails, and other questionable propaganda. Sponsored by the Annenberg Public Policy Center, FactCheck.org goes beyond health care and is a great tool for all matters of fact in our public debates. In their archive, 408 articles are devoted to health care or the health care law. There is an abundance of misinformation out there, and this site helps you sort through the bull. It has an easy search engine if you are looking for a particular topic, like our lovely quote on the van.
So don’t rely on some photo of a van with billboard lies to learn what this law is about. Check out the facts for yourself. Even better, stop the misinformation and lies. As for the van? A waste of paint. Congress, the President, and the First Lady are subject to the law. The van doesn’t even reference the law – it references a draft of a bill not part of the Affordable Care Act. Page 114 of the real law discusses the four different levels of health insurance that would be sold on the exchange – and line 22 focuses on the “gold plan.” FactCheck.org backs me up on this one. In case you are curious, Title I, Section 1312 “Consumer Choice” contains the verbiage that Congress is required to use plans created under the law. You can actually go read it. Go to page 157, starting at Line 16.
Make no mistake about it. The Affordable Care Act has warts, but the majority of the law contains good provisions that will eventually make our country stronger and healthier. Learn what is good in the law, learn about the warts, and demand that our leaders move forward with further solutions.
Showing posts with label health care reform. Show all posts
Showing posts with label health care reform. Show all posts
Thursday, July 5, 2012
Monday, March 29, 2010
Health Care Reform - What Does it Mean to You?
On March 21st, change arrived in the form of the Patient Protection Act, as amended by the Health Care & Education Reconciliation Act of 2010. Health care reform has stirred anger, fear and relief, depending on what newspaper you read or whom you are talking to. There are so many initiatives in the 2,409 pages of the Act that it is impossible to cover them all here. However, after reading the Act as well as web sites, blogs, tax briefings and newspapers, I have attempted to sort out the issues that will impact you the most in the near future:
If you have college age kids or grandkids – They will be allowed to stay on their parent’s group plan or individual policy until they are 26 years old. So if they get out of school and can’t find a job, or their new job has no benefits, they will be covered.
If you are planning to retire early – You will have access to an insurance risk pool if you are retired, between 55 and 64 years old, and not in a retiree group plan. In 2014 health insurance exchanges will be available for you to acquire coverage.
If you are already retired and covered by Medicare – If you are covered by the Medicare Part D prescription drug plan and you reach the prescription drug coverage limit (currently $2,700) you are responsible for your drug costs until you reach a maximum out-of-pocket of $6,154. At this point Medicare coverage resumes. This gap is referred to as the “donut hole.” If you reach it in 2010, you will receive a $250 rebate. Beginning in 2011, there will be a 50% discount on brand-name drugs in the donut hole, and in 2020 the donut hole will be eliminated completely. Beginning January 2011, the co-payments and deductibles for preventative services such as check-ups will be eliminated as well.
If you have a seriously ill family member – Health insurance plans can no longer place lifetime limits on coverage, and the use of annual insurance limits will be restricted as well. By 2014, the use of any annual limits will be prohibited.
If you have a child or grandchild born with serious health problems – Plans can no longer deny coverage to children with pre-existing conditions.
There are other provisions of the Act that are far more controversial, such as requiring every person to have health insurance coverage by 2014 or pay a penalty; the expansion of Medicaid to cover many more people; and the requirement of states to create American Health Benefit Exchanges and Small Business Health Options Programs when state governments are already under financial pressure. These changes will not take effect immediately, so their financial impact will be felt more slowly. Which brings us to the next issue: How will we pay for this?
The threshold for itemized medical deductions is going up – Beginning in 2013 your medical expenses must exceed 10% (versus 7.5%) of your adjusted gross income before you can deduct them as an itemized expense. If you are over 65 you are exempt from the rule for tax years 2013 until 2016.
Medicare payroll taxes are going up – Beginning in 2013, there will be an additional .9% on earned income in excess of $200,000 for individuals and $250,000 for married couples filing jointly. It is not yet known how deferred compensation arrangements will be affected.
A new “unearned income Medicare contributions” tax has been created – Beginning in 2013, there will be a new 3.8% tax imposed on the lesser of your (i) net investment income or (ii) the excess of your modified adjusted gross income (AGI) over the threshold amount. The thresholds are $200,000 for single individuals, $250,000 for married filing jointly and surviving spouses, and $125,000 for married couples filing separately. Net investment income includes interest and dividends, as well as rents and gains from a passive activity. Distributions from IRAs are not included.
Example: Karen has a modified AGI of $220,000 and a net investment income of $40,000. The tax would apply to the lesser of her (i) net investment income of $40,000 or (ii) her modified AGI over the threshold amount for a single person ($220,000 – 200,000 = $20,000). In her case, the tax is 3.8% of $20,000 or $760.
There are other revenue enhancements that will impact you to a lesser extent:
• The cost of over-the-counter drugs not prescribed by a doctor can no longer be reimbursed through a Health Savings Account or Health Reimbursement account. This would include common allergy drugs such as Zyrtec. Any withdrawals from an HSA or HRA that are not used for qualified medical expenses will be penalized with a 20% tax.
• Some medical devices will incur an additional excise tax of 2.3%, but eyeglasses and hearing aids will be excluded.
We are still learning what this all means, and there will be additional debate and possible adjustments as we approach the many enactment deadlines. As always, we will work with you one-on-one to determine how these changes impact you personally, and will help you decide if any changes need to be made to your financial plan.
Jeannette A. Jones, CPA, CFP ®
jjones@taaginc.com
http://www.taaginc.com/
If you have college age kids or grandkids – They will be allowed to stay on their parent’s group plan or individual policy until they are 26 years old. So if they get out of school and can’t find a job, or their new job has no benefits, they will be covered.
If you are planning to retire early – You will have access to an insurance risk pool if you are retired, between 55 and 64 years old, and not in a retiree group plan. In 2014 health insurance exchanges will be available for you to acquire coverage.
If you are already retired and covered by Medicare – If you are covered by the Medicare Part D prescription drug plan and you reach the prescription drug coverage limit (currently $2,700) you are responsible for your drug costs until you reach a maximum out-of-pocket of $6,154. At this point Medicare coverage resumes. This gap is referred to as the “donut hole.” If you reach it in 2010, you will receive a $250 rebate. Beginning in 2011, there will be a 50% discount on brand-name drugs in the donut hole, and in 2020 the donut hole will be eliminated completely. Beginning January 2011, the co-payments and deductibles for preventative services such as check-ups will be eliminated as well.
If you have a seriously ill family member – Health insurance plans can no longer place lifetime limits on coverage, and the use of annual insurance limits will be restricted as well. By 2014, the use of any annual limits will be prohibited.
If you have a child or grandchild born with serious health problems – Plans can no longer deny coverage to children with pre-existing conditions.
There are other provisions of the Act that are far more controversial, such as requiring every person to have health insurance coverage by 2014 or pay a penalty; the expansion of Medicaid to cover many more people; and the requirement of states to create American Health Benefit Exchanges and Small Business Health Options Programs when state governments are already under financial pressure. These changes will not take effect immediately, so their financial impact will be felt more slowly. Which brings us to the next issue: How will we pay for this?
The threshold for itemized medical deductions is going up – Beginning in 2013 your medical expenses must exceed 10% (versus 7.5%) of your adjusted gross income before you can deduct them as an itemized expense. If you are over 65 you are exempt from the rule for tax years 2013 until 2016.
Medicare payroll taxes are going up – Beginning in 2013, there will be an additional .9% on earned income in excess of $200,000 for individuals and $250,000 for married couples filing jointly. It is not yet known how deferred compensation arrangements will be affected.
A new “unearned income Medicare contributions” tax has been created – Beginning in 2013, there will be a new 3.8% tax imposed on the lesser of your (i) net investment income or (ii) the excess of your modified adjusted gross income (AGI) over the threshold amount. The thresholds are $200,000 for single individuals, $250,000 for married filing jointly and surviving spouses, and $125,000 for married couples filing separately. Net investment income includes interest and dividends, as well as rents and gains from a passive activity. Distributions from IRAs are not included.
Example: Karen has a modified AGI of $220,000 and a net investment income of $40,000. The tax would apply to the lesser of her (i) net investment income of $40,000 or (ii) her modified AGI over the threshold amount for a single person ($220,000 – 200,000 = $20,000). In her case, the tax is 3.8% of $20,000 or $760.
There are other revenue enhancements that will impact you to a lesser extent:
• The cost of over-the-counter drugs not prescribed by a doctor can no longer be reimbursed through a Health Savings Account or Health Reimbursement account. This would include common allergy drugs such as Zyrtec. Any withdrawals from an HSA or HRA that are not used for qualified medical expenses will be penalized with a 20% tax.
• Some medical devices will incur an additional excise tax of 2.3%, but eyeglasses and hearing aids will be excluded.
We are still learning what this all means, and there will be additional debate and possible adjustments as we approach the many enactment deadlines. As always, we will work with you one-on-one to determine how these changes impact you personally, and will help you decide if any changes need to be made to your financial plan.
Jeannette A. Jones, CPA, CFP ®
jjones@taaginc.com
http://www.taaginc.com/
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