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What Government Run Health Care Means for You
– September 15, 2009
With so much talk and debate of the new public health care bill going on right now, it is important to know what kind of impact a government run health care option would have on both businesses and individuals. The problem, however, is that the specific details of the bill change almost daily.
In order to provide the most up to date details of the health care bill, the following bullet points have been compiled to show what is currently being discussed:
For businesses:
- All employers with total payroll over $250,000 will be required to provide "Qualified Health Benefits" for their employees and their dependents or pay a payroll tax of up to 8% of payroll.
- Employers will be required to pay 72.5% of premiums for their employees and 65% of premiums for dependent coverage.
- No annual or lifetime limits on coverage for all health plans.
- After five years, all plans will also be required to meet the "Qualified Health Plan" definition - ERISA plans will no longer have design flexibility.
- Flexible Spending Accounts (FSAs), Health Spending Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) will no longer be eligible for over-the-counter medical purchases.
- New record keeping requirements.
- A premium tax will be levied on all participants in fully-insured and self-insured plans to fund the comparative effectiveness research program (new tax).
For individuals:
- Individuals will be required to have health insurance or face a tax penalty.
- If an individual's employer offers health insurance, the individual would be unable to enroll in the public health care plan.
- Individuals can keep their current employer offered health insurance plans if those plans meet the federal minimum standards set. However, the standards are not yet set so it remains unclear as to how many employers will be able to keep offering health care if a public plan is available.
- In order to pay for the public health care option, a new tax (or "sliding surcharge") could be imposed upon the income of the top 1.2% of earners. It would apply to families with income of more than $350,000 per year and individuals making at least $280,000. The surcharge would only be applied to income over the thresholds and range from 1% to 5.4%.
These points represent the most significant changes for businesses and individuals. We will be carefully monitoring the activities in Congress as well as attending various conferences to keep track of this issue. If you would like additional information about any of the points discussed above, please contact our office.
Roy Prestwood, CPA
Tax Partner
318.213.7609
rprestwo@hmvcpa.com
Roy has more than 20 years of experience in the accounting industry. His focus is in taxation, specifically relating to physicians and medical services.
Chris Solomon
Tax Department
318.429.2112
csolomon@hmvcpa.com
Chris is a member of the tax department in our Shreveport location. He received his Bachelor of Science in Finance from Louisiana State University in Shreveport.