by Admin. | Dec 19, 2019 | Health Care Reform, healthcare, Obamacare, Tax
BREAKING: HIT and Cadillac Tax Repealed
Congress has voted to fully repeal the Cadillac Tax and Health Insurance Tax effective January 1, 2021. This means the Health Insurance Tax will still be in place for 2020 and will be gone in 2021.
Both unpopular taxes with bipartisan approval delayed the Cadillac Tax but put the Health Insurance Tax(HIT) back in for 2020 earlier this summer. See
Cadillac Tax Out Health Insurance Tax (HIT) Back In. Below are summaries of these two taxes that are now fully repealed.
Whats is the Health Insurance Tax (HIT)?
Health Insurance Tax: This tax included in the Affordable Care Act (ACA) increased the cost of health care coverage for consumers and employers in every state. The ACA imposed a new sales tax on health insurance that started at $8 billion in 2014, increased to $14.3 billion by 2018, and continued to increase each year.
The HIT costing an estimated 2.5%-3% added surcharge or an estimated $500/family annually and $241 for Seniors. Website
Stop The Hit calculates $5,000 as the average tax for a 10 man small business for example.
Update:On December 20, 2019, President Trump signed into law a full repeal – with varied effective dates – of three ACA taxes: the Cadillac Tax, the Health Insurance Industry Fee (a.k.a. the Health Insurer Tax), and the Medical Device Tax. Additionally, the agreements extended the Comparative Effectiveness Research Fee (CERF) through 2029.
The HIT fee is in effect in 2020, then fully repealed and will no longer exist in and after 2021.
Whats is the Cadillac Tax?
The
Cadillac Tax was to take effect in 2022 and had been twice delayed since its original inception scheduled for Jan 2014. This tax called for a 40% excise tax on the amount of the aggregate monthly premium of each primary insured individual that exceeds the year’s applicable dollar limit, which will be adjusted annually to the Consumer Price Index plus 1%.
The 40% excise tax applies to the cost of employer health plan coverage exceeding certain threshold amounts, which were originally set for 2018 at $10,200 for individuals or $27,500 for families.
Originally, the
Cadillac Tax was pushed back by the behest of Unions to 2018 from the original proposed 2014 date. Most Unions with generous health care packages would not be complaint within that time frame. For average Gold Plans in regions such as NY, the widely unpopular Cadilac Tax would have been felt.
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by Admin. | Jul 21, 2019 | family health insurance, group health insurance, Health Care Reform, healthcare, Obamacare, Tax
Last week the House voted the unpopular Obamacare Cadillac Tax to be permanently repealed 419-6. However, much like a bad cold, the Health Insurance Tax (the HIT) is back for 2020. Website Stop The Hit calculates $5,000 as the average tax for a 10 man small business for example.
Who’s affected?
No one escapes the $16 billion HIT. The return of the Health Insurance Tax (HIT) means higher costs and fewer jobs for hardworking Americans. Absent immediate Congressional action to delay the HIT, small businesses and families will face $500 on average in higher premiums for 2020. To make matters worse, the increased cost burden on small businesses from the HIT could result in the U.S. workforce being reduced by 152,000 to 286,000 jobs over a decade. Te HIT is projected to increase premiums for seniors by $241.
How much for 2020?
For Small business, this translates to an estimated 2.5%-3% added surcharge. For States like NYS where there is already approx. 16% added surcharge to high premiums, this becomes daunting. It is no surprise the unpopular HIT was suspended. In 2017, payers escaped making $13.9 billion in payments due to the moratorium, according to a 2018 analysis by Oliver Wyman, commissioned by UnitedHealth Group. This may have saved consumers billions on their insurance coverage.“The taxes on health insurance are non-deductible for federal tax purposes for health insurers,” the report explained.
In some states, such as Vermont, the price of insurance would have more than quadrupled. The payer trade group published a fact sheet on this. “Allowing a tax to resume in 2020 valued at an annual level of $16 billion, would saddle individual market consumers, small businesses, state Medicaid programs, and Medicare Advantage enrollees with higher health care costs,
Can this be repealed?
Relief from the health insurance tax would result in real savings to the American people. We strongly urge Congress to provide an additional two-year suspension of the health insurance tax by passing H.R. 1398.
Learn more about how we are successfully helping navigate SMB for 20+ years. If you have any questions or would like additional information, please contact us at 855-667-4621 or info@medicalsolutionscorp.com.
by Admin. | Jun 16, 2019 | healthcare, individual health insurance, latest health insurance news, Tax
On June 13, 2019, the Departments of Labor, Health & Human Services and Treasury released final rules concerning Health Reimbursement Arrangements (HRAs). The 497-page rule includes the creation of two new types of HRAs, the “Individual Coverage HRA” and the “Excepted Benefit HRA.”
Advantages of the Individual Coverage HRA:
- Funds can be used to reimburse the employee’s premiums for an individual health insurance policy.
- Reimbursements made to employees do not count towards the employee’s taxable wages.
- The employer can choose to roll-over unused amounts into the following year.
- Coverage can be offered to different classes of employees (e.g.; full-time, part-time, seasonal, salaried, hourly)
- An offer of the Individual Coverage HRA represents an “offer of coverage” under the employer mandate, however, contributions must meet affordability guidelines. The IRS will release further guidelines regarding this later.
Individual HRA restrictions:
- An offer of an Individual Coverage HRA cannot be made to any employee that is offered a traditional group health plan.
- If an offer of coverage is made to a class of employees, there is a minimum class size that is required. Size is typically 10% of that specific class of employees. For example, if an employer has 200 employees, a minimum of 20 employees would have to be in a specified class.
- Contributions can be in any amount that the employer chooses, but contributions must be consistent for all employees in a specified class.
- The employer must provide notice of the Individual Coverage HRA to employees.
- The employer must be able to substantiate that the employee is enrolled in an individual plan or Medicare (model notices are available).
- The employer must notify employees on an annual basis that the individual health insurance is NOT subject to ERISA.
The final rule also created the “Excepted Benefit HRA” which, starting in January of 2020, will permit employers to finance additional medical care. Employees can use the HRA without having to be enrolled in the group’s traditional health plan.
“Excepted Benefit HRA” include:
- The annual contribution is capped at $1,800.
- It must be offered in conjunction with a group health plan, but there is no requirement for the employee to enroll in that plan.
- The “Excepted Benefit HRA” cannot be used to fund group health or Medicare premiums.
- It can fund premiums for dental, vision, or short-term limited duration insurance.
Effective Date:
Employers who want to offer the “Individual Coverage HRA” for January 1, 2020, can do so but employees will need to enroll in an individual plan during the 2019 open enrollment period (November 1, 2019 – December 15, 2019).
If you have any questions or would like additional information, please contact us at 855-667-4621 or info@medicalsolutionscorp.com.
by Admin. | Jun 3, 2018 | family health insurance, group health insurance, Health Care Reform, NY News, Tax
NYS 2019 Rate Requests
Last Friday, June 1, 2018, the NYS 2019 Rate Requests filings were released. Great news for SMB! The total weighted average increases were a modest 7.5% small groups but 24% for the individual market. This early filing request deadline request requirement is not an Obamacare requirement. As per NY State Law carriers are required to send out notices of rate increase filings to groups and subscribers.
These are simply requests and the state’s Department of Financial Services has authority to modify the final rates. But they are the first indication of what New Yorkers can expect when shopping for health insurance on the individual marketplace at the end of this year. The news comes as insurance companies across the country brace consumers for another year of large rate hikes, owing in part to the composition of the individual market, and in part to the uncertainty over the future of the law under the Trump administration.
Background:
By contrast last year’s NYS 2018 Rate Request early filing request were higher at 11.5% small group but much lower 16.6% for individuals. The NYS final August 2018 rate approval are expected to be lower. For example, the final filing rates were aproved NYS 2018 Final Rates at 9.3% small group and 13.9% for individuals. Incidentally, the NYS 2017 Rates final rates were 8.3% small group and 12.3% for individuals. Using these past figures one projects a 2019 Final Rates of 6.5% small groups and 19% individuals.
With only 3 months of mature claims in 2018 to work of off Insurance Actuaries have little experience to predict accurate projections. Simply put the less credible information presented to actuarial the higher the uncertainty and higher than the expected rate increase. The national rate trend, however, has been much higher than in past years due to higher health care costs and the loss of Federal reinsurance fund known as risk reinsurance corridor.
Summary of 2019 Requested Rate Actions
Individuals:
Individual rates are expected to be higher than the small group market. The national rate trend, however, has been much higher than in past years due to higher health care costs Like other states throughout the nation, the 2019 rate of increase for individuals in New York is higher than in past years partly due to the termination of the federal reinsurance program. The loss of the program’s aka federal risk reinsurance corridor funds accounts for 5.5 percent of the rate increase.
The single biggest justification offered by insurers for the requested increases is the recent repeal of the individual mandate penalty –Tax Reform Bill Includes Repeal of Individual Mandate Beginning in 2019. The individual mandate, a key component of the Affordable Care Act, helped mitigate against dramatic price increases by ensuring healthier insurance pools. Insurers have attributed approximately half of their requested rate increases to the risks they see resulting from its repeal. Without the federal action, the average requested rate increase would be 12.1%. As DFS reviews all of the submissions, we will continue to ensure that any rate increases are fully and actuarially justified by appropriate medical cost increases and are not inadequate, excessive or unfairly discriminatory, in accordance with New York law.
Small Groups:
Most encouraging to see the average rate requests for the small group market reflect the increased stability of that market in New York State. The combination of 2-50 and 51-100 market underscores the stability for msall bsuinesses under 50 employees. Prior to the NYS regulatory combination, the 2-50 market was running an average 12-13% trend.
The Obamacare health insurance tax, aka The HIT, is responsible for approximately 2.5%. Whiel the HIT moratorium was approved it had indeed come back last year. The total projection is $14 Billion. Notably, Empire Blue Cross has filed a modest 6% increase as their portfoliio is running stable. Additionaly, Oscar’s inbdustry low 3% filing is practially at break-even considering the HIT.
THE THREE R – RISK CORRIDOR, RISK ADJUSTMENT & REINSURANCE designed to mitigate the adverse selection and risk selection. The problem, according to many insurance companies, is that the formula is flawed, and CareConnect executives have consistently complained that they are at an unfair disadvantage. The Cuomo administration has taken steps to ameliorate some of those problems, giving the DFS the authority to essentially overrule the federal numbers. In its first-quarter financial report, executives made clear that the risk adjustment penalty was a threat to its business.
| Company Name |
2019 Requested Rate Change |
| Aetna Life |
16.2% |
| CDPHP |
6.7% |
| CDPHP UBI |
6.1% |
| Crystal Run Health Insurance Company |
11.5% |
| Crystal Run Health Plan, LLC |
12.5% |
| Emblem |
12.0% |
| Empire Healthchoice Assurance |
6.0% |
| EmpireHealthchoice HMO |
5.2% |
| Excellus* |
3.8% |
| Healthfirst Health Plan, Inc. |
21.0% |
| Healthfirst Insurance Company, Inc. |
7.0% |
| Healthnow New York |
-0.1% |
| IHBC* |
3.8% |
| MetroPlus* |
4.7% |
| MVP Health Plan |
7.0% |
| MVP Health Service Corp* |
10.3% |
| Oscar |
3.0% |
| Oxford Health Insurance Inc* |
8.3% |
| UnitedHealthcare Ins Company of New York |
7.2% |
| Weighted average: |
7.5% |
Conclusion
Defined Contribution Choice: Instead, the correct approach for a small business in keeping with simplicity is a defined contribution model using a Private Exchange. This is a true defined contribution empowering employees with the choice of leading insurers offering paperless technologies integrating HRIS/Benefits/Payroll. Both employee and employers still gain tax advantage benefits under the business. Also, the benefits, rates and network size are superior under a group plan as THE RISK OUTLINED ABOVE ARE HIGHER FOR INDIVIDUAL MARKETS THAN SMALL GROUP PLANS.
To be clear: These trends affect a small subset of the insurance market—non-group plans that cover less than 2 percent of the population. Many qualify for tax credits that lower their net costs and reduce or eliminate the impact of year-to-year rate increases.However, non-group customers with incomes above 400% of the poverty level ($48,560 for a single adult) get no subsidy—and feel the full brunt of any hikes.
Resource
- You may view the NYS 2019 Rate Requests DFS press release, which includes a recap of the increases requested and approved by clicking here.
- For a custom analysis detailing YOUR upcoming 2018-2019 renewal please contact our team at Millennium Medical Solutions Corp (855)667-4621. We work in coordination with Navigators to assist with Medicaid, CHIP Child Health Plus, Family Health Plus and Medicare Dual Eligibles. We have Spanish, Russian, and Hebrew speakers available. Quotes can also be viewed on our site.
- See Health Reform Resource
*These averages may change based on DFS’s review of the rate applications.** Empire submitted a filing that DFS is evaluating.
Learn how a Private Exchange and our PEO Partnership can help your group please contact us at info@medicalsolutionscorp.com or (855)667-4621.
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by Admin. | Apr 10, 2018 | HSA, MEDICARE, Tax
2018 Annual Benefit Plans Maximums
If you would like a printable version of this guide, please email info@medicalsolutionscorp.com and we will gladly forward one to you.
Pension Contribution & Benefit Limits
|
2017 Limit
|
2018 Limit
|
| Section 401(k), 403(b), or 457(b) annual deferral |
$18,000 |
$18,500 |
| SIMPLE plan annual deferral |
$12,500 |
$12,500 |
| Section 415 maximums |
Annual benefit from defined
benefit plan |
$215,000 |
$220,000 |
| Annual additions to defined contribution plan |
$54,000 |
$55,000 |
| Maximum IRA contribution |
$5,500 |
$5,500 |
| Catch-up contribution limits |
| Retirement plan |
$6,000 |
$6,000 |
| SIMPLE plan |
$3,000 |
$3,000 |
| IRA |
$1,000 |
$1,000 |
| Compensation Amounts |
| Annual compensation limit |
$270,000 |
$275,000 |
| Grandfathered governmental plan participants |
$400,000 |
$405,000 |
| Highly compensated employees |
| any employee* |
$120,000** |
$120,000** |
| 5 percent owner |
no minimum |
no minimum |
| * Employer may elect to limit to top-paid 20%** Due to the look-back rule, applies in determining HCEs during following year |
| Key employees |
| officer |
$175,000 |
$175,000 |
| 1 percent owner |
$150,000 |
$150,000 |
| 5 percent owner |
no minimum |
no minimum |
| Small Employer Health Insurance Credit Average Wage Phase-Out |
$26,200 |
$26,600 |
|
|
Social Security/Medicare
|
2017 Limit
|
2018 Limit
|
| OASDI taxable wage base |
$127,200 |
$128,400 |
| OASDI tax rate – employer |
6.2% |
6.2% |
| OASDI tax rate – employee |
6.2% |
6.2% |
| Medicare tax rate – employer |
1.45% |
1.45% |
| Medicare tax rate – employee |
1.45%> |
1.45%> |
| Maximum income without reducing Social Security retirement benefits |
| SSRA* or over |
no limit |
no limit |
| year individual attains SSRA* |
$44,880/yr.^ |
$45,360/yr.^ |
| under SSRA* |
$16,920/yr. |
$17,040/yr. |
| > Employer must withhold additional 0.9% from compensation in excess of $200,000* Social Security Retirement Age (age at which an individual may receive an unreduced monthly benefit)
^ No limit on earnings beginning the month an individual attains SSRA |
Health Plan Limits
|
| Maximum Health FSA |
|
|
| employee deferral |
$2,600 |
$2,650 |
| carryover |
$500 |
$500 |
| Maximum HSA contribution. More 2019 HSA info, here. |
| individual |
$3,400 |
$3,450 |
| family |
$6,750 |
$6,850 |
| catch-up |
$1,000 |
$1,000 |
| Minimum HDHP deductible |
| individual |
$1,300 |
$1,350 |
| family |
$2,600 |
$2,700 |
| Maximum HDHP out-of-pocket |
| individual |
$6,550 |
$6,650 |
| family |
$13,100 |
$13,300 |
| Maximum out-of-pocket (non-grandfathered plans) |
| individual |
$7,150 |
$7,350 |
| family |
$14,300 |
$14,700 |
| Transitional Reinsurance Fee (per person) |
Only paid through the 2016 plan year. |
|
Note: The information and materials herein are provided for general information purposes only and have been taken from sources believed to be reliable, but there is no guarantee as to its accuracy.
Learn More About your 2018 Options
Contact Us Now Learn how our Agency is helping businesses thrive in today’s economy. Please contact us at info@medicalsolutionscorp.com or (855)667-4621.
by Admin. | Jan 22, 2018 | Health Care Reform, Obamacare, Tax
Cadillac Tax Delayed Two Years
We received the following communique from the Council of Insurance Agents & Brokers (CIAB) a delay in the Cadillac Tax for two years as a result of the passage earlier today in the US Senate of the continuing resolution (CR) to fund government until February 8th.
Implementation of the Cadillac Tax on health insurance plans will be delayed by two years, from 2020 to 2022, as part of a deal reached in Congress today to fund the government through February 8.
Repealing the Cadillac Tax is a top legislative priority for The Council and we’re pleased to see the two year delay included in this agreement. The agreement will also delay the medical device tax for two years and the health insurance tax for one year.
The Cadillac Tax imposes an annual 40 percent excise tax on plans with annual premiums exceeding $10,800 for individuals or $29,500 for a family. The Council strongly advocates for legislation that exclusively repeals the Cadillac Tax as championed by Senators Dean Heller (R-NV) and Martin Heinrich (D-NM), and Representatives Mike Kelly (R-PA) and Joe Courtney (D-CT).
The major hurdle to the effort continues to be the $87 billion cost associated with the bill, a figure with which The Council and our allies take issue. We will continue to work with our Congressional allies to see a full repeal of the tax.
Contact Us Now Learn how our Agency is helping buinsesses thrive in today’s economy. Please contact us at info@medicalsolutionscorp.com or (855)667-4621.
