SENATOR JOHANNS EXPLAINS HEALTH CARE LEGISLATION

Senator Johanns has a good video explaining in 4 minutes how the health care bill will pass through Congress. I thought you might be interested. Clients seem to be asking what next.

Click here to view: Status of Health Care Legislation

WASHINGTON REFORMS HEALTH CARE AND TAXES

Sunday's night's health care bill will go down as one of those once-in-a-generation accomplishments. I'm not here to debate the merits of the bill - historians will still be doing that decades from now. But it's important to point out some important tax changes included in the bill and the companion "reconciliation" bill now before the Senate. (Just how important are they? Well, the Congressional Budget Office says the IRS will need $10 billion and 17,000 new employees to enforce its share of the new rules!)

Here are some of the key tax provisions:

• Starting immediately, certain small businesses with less than 10 employees will get a 35% credit for the cost of providing employee health benefits.
• Starting in 2011, employers will have to report the value of health benefits on Form W2.
• The penalty tax for Health Savings Account distributions not used for health care expenses doubles from 10% to 20%. This will discourage using HSAs for supplemental retirement savings.
• Starting in 2013, the 7.5% floor for deducting medical and dental expenses climbs to 10% (unless you or your spouse are 65 or older, in which case it remains at 7.5% until 2016).
• Healthcare flexible spending account contributions are capped at $2,500 per year.
• Starting in 2014, businesses with more than 50 employees will have to offer health benefits or pay a penalty of $750/employee.

The reconciliation bill includes one more unwelcome surprise.

• Currently, the Medicare tax is limited to 2.9% of earned income (earned income is income from wages and self employment like business, partnership and LLC income). The reconciliation bill imposes an additional Medicare tax of 0.9% on earned income above $200,000 (individuals) or $250,000 (families).
• It also adds a 3.8% "Unearned Income Medicare Contribution" on investment income - specifically, interest, dividends, annuities, royalties, capital gains, and rents - for taxpayers with Adjusted Gross Income above those same thresholds. Those new levies would take effect in 2013.

The complete bill is 1,018 pages, so it's going to take some time to analyze. But we'll be paying close attention as details become available. In the meantime, email us with any questions.

Larry Kopsa CPA

IS THIS REALLY OUR AMERICA???

VOTE AS IF YOUR FUTURE DEPENDS ON IT… BECAUSE YOUR HEALTH CARE DOES……

If this health care bill passes we will get - - - - - CHANGE!!!!!!

PLEASE PLEASE PLEASE watch this U tube video. If you can't get
it on your computer, send it to someone who can and then go see it.

We have to do something and NOW.

Know The Truth About The Government Health Care Bill

'HEALTH CARE SURTAX WOULD HURT ECONOMY, HEALTH CARE'

(Budget & Tax News) -- The Heartland Institute reports that "the top tax rates in 39 states would climb above 50% under a plan to overhaul the nation’s health care system, according to an analysis by the nonpartisan Tax Foundation." "'This proposed tax increase will be levied at a time when Americans can least afford it and will affect countless small businesses that file individual returns,' including sole proprietorships, S Corporations, and partnerships, said economist Jonathan Williams, director of the Tax and Fiscal Policy Task Force of the American Legislative Exchange Council. ... 'This tax increase is a job killer, plain and simple,' Williams added." See more at <http://www.heartland.org/publications/budget%20tax/article/25914/Health_Care_Surtax_Would_Hurt_Economy_Health_Care.html

THE GOVERNMENT ISSUES "GAG ORDER" TO INSURANCE COMPANIES

HHS "Gag Order" Sent To Insurers Prompts Outrage From GOP

ABC World News reported during a Senate Finance Committee hearing "a war of words broke out over what one of the nation's largest health insurance companies is saying about the bill." The order "issued last night by the Department of Health and Human Services" tells "insurance companies who serve Medicare recipients to stop 'misleading' and 'confusing' mailings, saying, quote, 'we are instructing you to immediately discontinue all such mailings and remove any related materials from your websites.'

The extraordinary order comes in response to a mailing the Humana Insurance Company sent to customers in the Medicare Advantage Program," that "warned that because of Medicare cuts in the healthcare reform bills, quote, 'millions of seniors and disabled individuals could lose many important benefits and services.'"

Some legal experts "say the order is unconstitutional." The AP reports Peter Ashkenzaz, a spokesman for the Centers for Medicare and Medicaid, said, "Because these are Medicare contractors, we want to make sure that the health plans' communications to beneficiaries are not violating marketing requirements or using protected information like Medicare mailing lists improperly."

The Washington Post quotes Robert Zirkelbach, a spokesman for America's Health Insurance Plans, "the industry's main lobbying group, as saying, "Seniors have a right to know how the current reform proposals will affect the coverage they currently like and rely on."

HEALTHCARE REFORM - WHAT'S HAPPENING IN WASHINGTON?

I see that you were on a round table on health care reform. I own a small business and I am concerned about being able to afford any additional expenses. Don’t they know in Washington that these are tough times? Can you tell me what is happening in Washington?

Wanda

Wanda, there are several proposals going on in Washington. The plan seems to be changing daily. President Obama wanted this passed by August 8th but the latest is that there are too many unanswered questions. I just sent out an email warning people that the government wants to take away some of our tax benefits to fund health care reform. In my opinion, if you make more of your hard-earned money subject to tax this is just a tax increase.

Here is what I know. Unfortunately, they are using the tax code as an enforcement tool, not just to raise money to offset the costs of reform. “Play or pay” is the plan that is most talked about. People would have to buy basic coverage and employers offer insurance or face a big fee. Both the House and Senate agree that is the way to make a requirement for universal coverage stick.

Many people are in opposition to this approach so there are battles ahead on the details. The biggest fight involves employer penalties.

House Democrats would threaten firms with an excise tax…8% of payroll if they fail to fund 65% of the insurance premium for an employee’s family coverage and 72.5% for singles. Smalls companies with payrolls of less than $250,000 would be exempt for the time being.

Even though small companies would be exempt, it is going to put them at a competitive disadvantage in attempting to hire and keep good employees.

Senate health lawmakers lean toward a different approach. They would impose a flat fee of $750 a year per full-time employee and $375 for each part-time worker from firms that don’t pay at least 60% of worker premiums for basic coverage. The requirement wouldn’t apply to small companies with fewer than 25 employees.

A third competing plan from Senate tax writers would give firms a pass if enough of their workers were able to buy insurance in the open market and didn’t take government sponsored coverage.

We will just have to wait and see what happens. Hopefully they are not so hung up on getting this passed by August 8th that they at least read the bill. It appears that the key is getting businesses to accept a mandate. If companies that are paying high health insurance believe health care reform will yield significant cost savings, they will go along with the plan.

But lawmakers will walk a tightrope trying to get the penalty just right. Set it too high and business support will evaporate. A penalty that is set too low could prompt many companies to pay it and ditch the hassle of insuring employees. That could leave the government stuck covering a slew of newly uninsured workers. If this were the case, we would have socialized medicine.

As someone recently said, “we will have our health care with the attitude of the IRS and the efficiency of the post office.”

Larry Kopsa CPA