HAPPY NEW YEAR!!!! AND HERE'S WHAT TO EXPECT FOR 2011 UNDER HEALTH REFORM

Happy New Year

So here we are on the verge of 2011.  Listed below are some of the changes that are going into effect in 2011.....maybe.  The reason I say maybe is because we never know what is going to be taken out or watered down under PPACA, as in the case of employers moving their medical plans from one carrier to another terminates your grandfathered status.  As you know, that was overturned.  Click here for more information on this. 

PPACA in 2011

1)       Establish National Voluntary Long-Term Care Insurance (Class Act-Community Living Assistance Services and Support Program)- Average premium could be approximately $150/Month.  There is a 5 year Cliff Vesting (can't use for first five years of paying in). And you must be actively at work 3 out of the 5 years you are paying in.  For more information on this, click here.

2)       Employers must report value of each employees health coverage on their W-2.  Employer must report the entire cost, not just the employers portion.

3)       Limits OTC medication reimbursements in FSA, HSA, HRA unless prescribed.  You are not able to use your HSA for over the counter medications unless you have a prescription.  Get your doc to write you prescriptions for a year for all your OTC meds, you just need to keep in on file.

4)       Penalties for Unqualified distributions from HSA increased to 20% from 10%.

5)       Fees imposed on Pharmaceutical Manufacturers and Importers

 So with that said, I hope you all have a Happy and Safe New Year!

MERRY CHRISTMAS!!!!

FROM OUR HOUSE TO YOURS, MAY YOU AND YOUR FAMILY HAVE A VERY MERRY CHRISTMAS.  GOD BLESS AMERICA AND GOD BLESS OUR TROOPS DURING THIS MOST FESTIVE OF HOLIDAYS. 

Virginia, Judge Hudson, Just Said No!!.....To The Individual Mandate

In Virginia, U.S District Court Judge Henry Hudson stated in a 42 page opinion that "Neither the Supreme Court nor any court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market". 

In other words, Judge Hudson, a 2002 republican appointee from former President George W. Bush, was the first federal Judge to "Just Say No" to the Individual Mandate.  However, two other Judges from Virginia and Michigan have upheld the law.  Both of these Judges are Democrat appointees. 

According to incoming Speaker of the House, John Boehner, "Cash-strapped states should carefully weigh the benefits of investing time and resources in Obamacare's implementation now that its central mandate (Individual Mandate) has been ruled unconstitutional.

So what does this mean?  Well since Judge Hudson only ruled against the Individual Mandate it means that the Federal Government can go ahead with setting up the rest of the legislation. And it seems that the White House isn't going to be eager to have this pushed to the Supreme Court where Republicans hold a 5-4 majority.  It could take as long as two years for it to finally arrive.

Also, this could mean that if the Individual Mandate is taken off the table, we are pretty much where we are now, except, all coverage will be guaranteed issue, which is "no questions asked health insurance".  Therefore, most of the people who get coverage will be the ones who need it.  And, as the health reform law is set-up, they will be able to get it any time they want, so why pay for it now when they don't need it?  Moreover, if only the people who need coverage are getting it, there will be huge adverse selection issues.  In turn, premiums will skyrocket and we could be in much, much worse shape than we are now. 

In addition, there is also a lawsuit that has been filed in Florida that has 20 states backing it and being heard by U.S. District Judge Roger Vinson.  The lawsuit states that the $2.5 Trillion  Health Care reform pushed through by the Obama Administration violates state government rights and would force huge spending requirements on already cash-strapped state governments.  The case is set to be heard on Thursday, December 16, 2010.

"Read My Lips, I'm Rolling Back Bush-Era Tax Credits".......Well, Perhaps Not.

In an address to the to the American people this evening, December 6, 2010, the President indicated that compromises needed to be made.   It seemed that he was talking more to democrats, almost trying to convince them that his decisions/compromises were necessary.  In his address, he slated several items which he was going to take back to the democratic caucus:

1. Temporary 2% Reduction in Payroll Taxes
2. 2 Year Extension of Bush-Era Tax Credits-At first, the President was trying to get the extension for the middle class only and remove it for Americans earning more than $250K per year. 
3. 13 Month Extension on Unemployment Benefits
4. Estate Tax Compromise-2 Years at 35% with a 5 Million Exemption
5. 1 Year Reduction in Social Security Taxes-This was a late add-on. 

So why is this important to Health Reform (PPACA)?  It is important to health reform because these taxes could potentially have been a huge funding source for the reforms.  Just the elimination of the Bush-Era Tax credits alone could cost the Federal Government more that one trillion dollars.  This, in-turn, could hamper the amount the Federal Government would be able to push to the States in order to set-up the State-Run Health Reform Programs.  For more information on the funding of health reform,  please go to: "Guess Who Gets to Pay for Health Reform?" (PPACA)

The Class Act-Coming in 2011

Has anyone heard of the Community Living Assistance Services and Support Act or Class Act? (CLASS ACT) Well there really hasn't been too much discussed regarding this feature of the Health Reform (PPACA).  But it could be a good thing.....maybe. 

This is the Government-Run, Long Term Care Plan that is slated to go into effect in 2011.  As of right now, many of the details are yet to be ironed-out but below are some main points of the plan. 

1. Average premium should be in the $150 per month range (less for youngers, more for olders)
2. You must pay into the plan for 5 years before accessing any benefits
3. You must be actively at work at least 3 out of 5 years
4. Guaranteed Issue (Except for the limitations noted above)
5. It is a voluntary plan primarily delivered through employers-employers are able to opt-out or opt-in.  If employers opt-in employees area able to opt-out on a case by case basis.
6. According to The Congressional Budget Office (CBO), it projects the CLASS ACT will produce a total of $70 Billion in surplus by 2019. 

So these are the basic main points of the plan.  For many who would otherwise be un-insurable, this could be an excellent alternative to spending down assets and utilizing medicaid.

But, for those that are relatively healthy, have significant assets to protect, this may not be the option for you.  Those that are healthy will bypass this option and go to the individual market to purchase, arguably, better and more comprehensive coverage at a lower cost.  Therefore, what you are going to have is a huge pool of unhealthy people who will probably require Long Term Care at some point or another. 

Many critical thinkers believe that this plan is nothing more than a catastrophe waiting to happen.  According to Kent Conrad, (D-ND), Chairman of the Senate Budget Committee, speaking on the sustainability of the Class Act stated "a ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of."   

The 70 Billion surplus that the program is designed to achieve is primarily due, in large part, to not being able to access benefits for five years.  In other words there will be five years worth of buy-in and no benefits being paid out.  However, in that sixth year, as benefits are paid out,  the program will start a death spiral that will, more than likely,  be unsustainable. 

It would seem that the only way for this program to have any chance of being able to survive on its own would be to make the program mandatory, every person would need to buy in.  And we all know how well our current mandatory programs are working now. 

Make no mistake about this program, it is designed to subsidize the ever-increasing cost of those people who have no long term care insurance and are on medicaid.  If the government can get people to pay for something they are going to receive anyway, why not?

Could This Be The First Signs That The Hard Shell of Health Reform May Be Softening??!!!!

 "A LITTLE BIT SOFTER NOW........."  Below is information sent directly from Cigna Health Plan.  If you recall, any employer that made any kind of material changes to their health plan, including moving from one carrier to another, lost Grandfathered Status.  In Interim Revised Regulations, a health plan, after November 17th, 2010, will not lose Grandfathered Status simply because they move from one carrier to another.  Which is good because this part of the law was ridiculous and truly made no sense. Many plans may want to retain Grandfathered status so that their Health plan would not need to adhere to many of the provision in the PPACA (Health Reform).  This is also important because it could be seen as the hard shell of the PPACA under Democratic Rule starting to soften with the New Republican Controlled  House of Congress getting ready to be installed.

Grandfathered Status Amendment Allows Plans to Change Policies and Carriers On November 15, the Departments of Treasury, Labor, and Health and Human Services jointly announced that they are amending the Interim Final Regulations on grandfathered health plan status under the Patient Protection and Affordable Care Act (PPACA). The amendment allows employers to switch insurance carriers and/or change their funding from Administrative Services Only (ASO) to fully insured without losing grandfathered status. The original Interim Final Regulations stated that changing insurance carriers would cause an insured group health plan that was in effect on March 23, 2010 (the date PPACA became law) to lose its grandfather status. For plans wanting to maintain grandfather status, this has been an important consideration. The Interim Final Regulations are amended as of November 17, 2010 to reflect the following changes for group health plans. These changes are not retroactive, nor do they apply to individual policies. Change of Insurer: If an insured plan changes insurance policies (new carrier) and the new policy is effective: Prior to November 17, 2010: The plan will lose grandfathered status. On or after November 17, 2010: The plan will not lose grandfathered status, provided no other changes are made to the plan that trigger loss of status (i.e., reductions in benefits or employer contribution). ASO to Insured: If a plan changes funding from self-insured to insured and the new policy is effective: Prior to November 17, 2010: The plan will lose grandfathered status. On or after November 17, 2010: The plan will not lose grandfathered status, provided no other changes are made that trigger loss of status. Documentation: The new health insurance carrier must obtain documentation of the prior plan’s terms from the new policyholder so the new carrier can determine whether the change in insurance policies will result in a reduction in benefits or employer contribution sufficient to trigger loss of grandfather status. There’s dual responsibility as the policyholder must also sufficiently provide the documentation to the carrier. Documentation includes: Benefits Individual cost-sharing Employer contributions Annual limits Yet to be Clarified The Federal government has yet to clarify whether a change in prescription drug formulary, network or funding status from insured to ASO will cause a loss in grandfathered status.

Guess Who Gets to Pay for Health Reform (PPACA)?

Paying for a One Trillion dollar Health Care plan isn't going to be easy.  However, this point may be moot as the republicans have vowed to kill health reform where it stands.  But for the sake of argument, and assuming that the republicans aren't able to stop the de-funding of the reforms, below is a listing of taxes, penalties and fees associated with paying the bill.

1. Taxes on Tanning Services-This should raise and estimated $10 Billion.  This starts in 2010
2. Penalties on Unqualified Distributions from HSA's.  The Penalty will be increase from 10% to 20% starting in 2011 and should raise an estimated $1.4 Billion
3. Fees on Pharmaceutical Manufacturers and Importers-This takes effect in 2011 and should raise an approximate $27 Billion.
4. Comparative Effectiveness Fee-This is a fee that is going to levied on every member in a health plan ($1 the first year then $2 per year after).  Comparative Effectiveness is where a Non-Governmental Third Party gathers and disseminates health care findings to decision makers.  This goes into effect in 2012 and should raise an estimated $2.6 Billion. 
5. Increase the itemize tax deduction for medical expenses from 7.5% to 10% of Adjusted Gross Income, starts in 2013 and should raise an approximate $15 Billion.
6. 2.3% excise tax on medical device manufacturers and importers.  This goes into effect in 2013 and should raise an estimated $20 Billion.
7. Limit Flexible Spending Account (FSA) deferral contributions to $2500 per year.  This will be indexed for inflation, will go into effect in 2013 and will raise an estimated $13 Billion.
8. Health Insurance Companies will be required to pay a fee in 2014 towards the cost of the reform and should raise an estimated $60 Billion.

If we total all these fees, taxes and penalties we come to approximately $149 Billion Dollars!

However, there are two taxes not mentioned that together raise an additional $220 Billion Dollars alone.

Starting in 2012, for people making over $200,000 Individually or $250,000 Filing Joint, there will be an additional .09% Medicare tax on incomes over that amount.  In addition, there will be  an additional 3.8% tax on unearned income (dividends, interest, etc) if earning over those thresholds.  Therefore, if you are earning close to those amounts as a married person, you may want to consider a divorce to protect your nest egg. That will get you to $400,000 before you're hit with the taxes.  As a side-note, not so sure I'd want to be around for any of those "honey we need to get a divorce" conversations.

Now, this still leaves a fairly large gap of funding that isn't accounted for and I'm supposing that much of it will rest on the backs of our employers by way of penalties and fines for not offering health insurance or not offering comprehensive enough health care coverage.

In addition, the Bush Tax Cuts are set to expire January 1, 2011 and this also would create a huge funding source.  However, it remains to be seen if President Obama is going to extend those tax cuts.  Because, if he does, in a sense he is de-funding his own Health Reform Law.