Obama signs the Patient Protection and Affordable Care Act. Source: Wikipedia

Obama signs the Patient Protection and Affordable Care Act. Source: Wikipedia

Telling Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.

Now that the Exchanges are operating, at least somewhat, I know there are a lot of questions. I will try to answer all of your questions. (Or try to find out from Nancy Pelosi.)

Oops. Lost $67 Million. If Found, Return To IRS.

To help pay for Obamacare, the IRS set aside $67 million. The only problem is that it’s lost. If you find it, it’s yours. The IRS has no intention of looking for it. They promise, however, that they will try to keep better record-keeping in the future.

Employers Still Face October 1st Deadline For Employee Notification

All employers are required to provide employees with notices describing the health insurance marketplaces. This is one of the many provisions of the Affordable Care Act that was not delayed. The Department of Labor has created notice templates for employers who provide health benefits and employers who do not. All employers, regardless of their size, must distribute these by October 1, although there is no penalty for failing to do so.

If you already have health insurance through your employer, you do not need to worry about applying for insurance through the exchanges, which should be available on-line by November.

Should An Employee Take The Employer’s Coverage?

You are not obligated to do so but, if not, you may not be able to change your mind later. In addition, you may find that your premiums will increase because your employer is not contributing to the cost.

In addition, you will probably find that if your premiums are reasonably low, your deductible will be very high. The average premium for the second lowest cost plan, the silver plan, will be $328 before tax credits, but the annual deductible will be more than double that of someone in an employer-sponsored plan. You will be paying about 40 percent of the drug costs, with deductibles ranging from $1,500 to $5,000.

Are You Subject To A Penalty?

Generally, if you are uninsured for three or more months during 2014, you will be subject to a penalty via your tax return due by April 15, 2015.

  • For 2014, the penalty is the greater of one percent of your adjusted gross household income, with a minimum of $95 per adult, and $47.50 per child under 18.
  • For 2015, the penalty is the greater of two percent of your adjusted gross household income, with a minimum of $325 per adult, and $162.50 per child under 18.
  • For 2016, the penalty is the greater of 2.52 percent of your adjusted gross household income, with a minimum of $695 per adult, and $347.50 per child under 18.

Do You Qualify For The Health Care Subsidy?

You qualify if you are single and earn up to $45,960, or are a family of four and earn up to $94,200. You must have insurance through one of the exchanges. If you want an estimate, give me a call.

Your Out-Of-Pocket Costs

The annual limit on out-of-pocket maximums was delayed until 2015 for you if you are in a group health plan. This postponement does not apply to an individual policy you purchase through the exchanges. The annual out-of-pocket limits you must pay were set at $6,350 for an individual and $12,700 for families for 2014.

In other words, if you are paying out-of-pocket for cancer or diabetes treatments, for example, your costs are not capped for another year.

Your W-2 Reporting

Many of you had the value of your medical coverage reported on your W-2 last year under the description as ‘DD.’ Contrary to some information given out by the IRS last year, this reporting is intended for informational purposes only, and is not included in your income, on your W-2 or otherwise. Only those employers who have more than 250 employees will have to report this information. This reporting is the cost of your benefit that your employer is providing for you.

FSA Contributions For 2014

The Affordable Care Act fixed employee contributions to flexible spending accounts (FSAs) for 2013 at $2,500; this cap is to be adjusted for inflation. The 2014 cap should remain the same.

For 2014

  • Benefit Limits and Exclusions: Lifetime limits have already been eliminated on certain essential health benefits, and in 2014, annual limits on essential health benefits are phased out.
  • Cost-Sharing Limitations: You may see lower deductibles or lower out-of-pocket limits.
  • Waiting Periods: Once you are eligible, for coverage, you can enroll within 90 days.
  • Fees and Taxes: Insurers and employers will now have a mound of paperwork and additional taxes to pay. Therefore, your cost of health care will increase dramatically.
  • Government Reporting: In order to determine if you are eligible for a premium tax credit or cost-sharing subside, you will receive a copy of the coverage report that your employer or insurer submits.
  • Wellness Incentives: Wellness incentives may be offered by your employer to reward you for making healthy choices. Your participation will help lower the cost of the health care increase.

Quip: Don’t you long for the good old days when Uncle Sam lived within his income and without most of yours?

Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.

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  • levp

    Ha ha, Nancy Pelosi, ha! I’m laughing so hard – well, not really.

    If you have questions, and you are not a fan of web sites (https://www.healthcare.gov/ ), you can call them 24/7: 1-800-318-2596.

    • oy

      or https://nystateofhealth.ny.gov/ since you’ll be rerouted to the NYS exchange. Call M-F 8a-8p, or Sat 9a-1p @ 855.355.5777 and listen for options for a Navigator, these individuals are better trained at giving you estimates than some snarky lawyer with column that doesn’t recognize that a $5,000 deductible is better than a $100k+ bill that forces you into bankruptcy, but less bankruptcy means less work for Mr. Reisman.

  • levp

    Also, $67 mil were not “lost” – read the original report instead of just the Tea Party sites:

    Federal financial accounting standards require the identification of both direct and indirect costs to accurately measure and manage the full cost of Federal programs. Direct costs include, for example, the salaries of staff working directly on the effort and the cost of work done by contractors supporting a specific effort. Indirect costs include, for example, rent, communications, and information technology support.

    We found that the IRS did not track all costs associated with implementation of the ACA, including costs not applied to the HIRIF. The IRS did establish a methodology to track ACA costs in its accounting records. However, the IRS informed us that it accounted for only direct costs, such as labor and contract costs, because it did not believe indirect costs should be recovered from the HIRIF.

    The IRS’s use of HIRIF funding for ACA direct labor and contract costs is consistent with the requirement that the HIRIF be used for Federal administrative expenses necessary to carry out the requirements of the ACA. However, by not identifying and tracking indirect costs, the IRS lacks complete information regarding the full cost of ACA implementation. This lack of complete information on ACA implementation costs limits the IRS’s ability to accurately report to stakeholders the total resources it applied to ACA implementation and fully estimate the resources needed in the future for this effort. We believe that had the IRS identified these costs, it would have been better able to report to stakeholders the full impact of the ACA implementation on its resources.

    In FYs 2010 through 2012, the IRS received funds from the HIRIF for annual direct labor and related benefit costs totaling $ 162 million cumulatively. However, our review of the IRS’s records indicated that it did not account for or attempt to quantify any indirect costs during FYs 2010 through 2012. Based on the IRS’s own internal cost accounting guidelines, the indirect costs associated with these direct labor charges likely totaled approximately $ 67 million for FYs 2010 through 2012. The excluded indirect costs relate to providing employees with the workspace, support, and ongoing access to the full range of tools and technology support necessary for the performance of their jobs. For example, while the IRS may have been able to place most new employees hired for the ACA in existing leased space, it still had to pay rent on this space, could not use the space for other purposes, and could not consider the space for inclusion in its ongoing space reduction efforts.

    http://www.treasury.gov/tigta/auditreports/2013reports/201313115fr.html

  • levp

    In addition, you will probably find that if your premiums are reasonably low, your deductible will be very high.

    So, ACA is not socialism?! I’m shocked. Shocked, I tell you!

    Fox News helpfully explains:

    The mandate, requiring every American to purchase health insurance, appeared in a 1989 published proposal by Stuart M. Butler of the conservative Heritage Foundation called “Assuring Affordable Health Care for All Americans,” which included a provision to “mandate all households to obtain adequate insurance.”

    The Heritage Foundation “substantially revised” its proposal four years later, according to a 1994 analysis by the Congressional Budget Office. But the idea of an individual health insurance mandate later appeared in two bills introduced by Republican lawmakers in 1993, according to the non-partisan research group ProCon.org. Among the supporters of the bills were senators Orrin Hatch, R-Utah, and Charles Grassley, R-Iowa, who today oppose the mandate under current law.

    In 2006, Republican presidential candidate Mitt Romney, who was then governor of Massachusetts, signed off on a law requiring individuals of the state to purchase health insurance. American Bridge 21st Century, a Democratic opposition research group, on Wednesday released a 2006 video in which Romney says he is “very pleased” with the mandate.

    “With regards to the individual mandate, the individual responsibility program that I proposed, I was very pleased that the compromise between the two houses includes the personal responsibility mandate. That is essential for bringing the health care costs down for everyone and getting everyone the health insurance they need,” Romney says in the video.

    http://www.foxnews.com/politics/2012/06/28/individual-health-care-insurance-mandate-has-long-checkered-past/

    • MicoJones

      Not a Tea party member…not a fan of Romney. That said…you forgot to mention that Mitt Romney’s plan didn’t raise taxes or cut Medicare. Pretty big difference if you ask me.

      • levp

        Here is from the conservative Cato Institute:

        1. Mitt Romney increased taxes the moment he signed RomneyCare. RomneyCare increased net government spending. That in itself is an increase in the tax burden. All that remains to be determined is who will pay for that added spending and when they will pay it. The fact that the incidence of that added tax burden fell after Romney left office does not mean that’s when the added tax burden was created.

        2. Mitt Romney has raised taxes on as many people as Barack Obama has. Half of RomneyCare’s new spending was financed by the federal government through the Medicaid program, which is financed through federal taxes, which fall on taxpayers in all 50 states. That means that when Romney financed half of RomneyCare’s new spending by pulling down more federal Medicaid dollars, he increased taxes on residents of all 50 states.

        3. RomneyCare was born of, and expanded, a corrupt scheme by Massachusetts politicians to tax residents of all 50 states. What motivated Romney to enact RomneyCare, as former Romney/Obama adviser Jonathan Gruber explains here, was the widespread desire (within Massachusetts) to hang on to $385 million of federal Medicaid money that Massachusetts had secured using one of Medicaid’s notorious and fraudulent “provider tax” scams. In other words, the whole purpose of RomneyCare was to enable Massachusetts to hold on to $385 million that it received by defrauding and taxing residents of other states. And of course, Romney/RomneyCare caused the tax burden that Massachusetts effectively imposes on non-Massachusetts residents to grow.

        http://www.cato.org/blog/romneycare-making-fool-every-republican-it-touches-2006

        On Medicare, this is from AARP:
        “11 Myths About Health Care Reform” (too long to quote)
        http://www.aarp.org/health/health-insurance/info-09-2012/medicare-and-health-care-reform-myths.html

        • guest

          Let me try and understand your point: when a Republican institutes mandatory health care, it’s bad. When a Democrat does, it’s good. I expect nothing less from your usual one-sided, 100% partisan views. Such attitudes are why Congress is constantly deadlocked.

          • levp

            Pay attention please: the poster before me wrote that “Mitt Romney’s plan didn’t raise taxes or cut Medicare”. I’m simply replying to that.

            For the record, I’m for universal single payer health care system, which neither Obamacare nor Romneycare are.

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