[vendtalk] FW: NAMA Special Legislative Bulletin

Tue May 11 14:48:37 UTC 2010

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Subject: Fwd: NAMA Special Legislative Bulletin 

This is the breakdown of the Health Care Reform bill I mentioned on Friday's
call.  

>>> "NAMA (Jo Bradshaw)" <jbradshaw at vending.org> 3/31/2010 2:31 PM >>>

March 31, 2010

SPECIAL LEGISLATIVE BULLETIN NO. 10 - 04

Overview of Provisions in the Federal Health Care Act

The U.S. Congress passed and yesterday President Obama signed the final
section of health care reform, The Reconciliation Act of 2010 (H.R. 4872). 

The following is a general overview of provisions of interest to NAMA
membership. Many groups are still reviewing the legislation, Congress has
already started discussing changes, and the administration is just now
beginning implementation. So please continue to contact NAMA and your own
tax counsel when considering changes to your business operations. This
remains a preliminary review and the legislation continues to be
interpreted. Your NAMA government affairs team is actively engaged in this
and will notify you of additional information as it becomes available.   

Individuals:
Required Coverage:
All U.S. citizens and legal residents must have some minimum amount of
health insurance coverage beginning January 1, 2014. Health care insurance
will include various government-sponsored programs such as State Insurance
Exchanges, eligible employer-sponsored plans, plans in the individual
market, grandfathered group health plans and other coverage as recognized by
the Secretary of Health and Human Services in coordination with the
Secretary of the Treasury.

In approximately 90 days, there will be coverage for people who have lost
health insurance and can't qualify for an individual policy.  If an
individual hasn't had insurance for six months, and can't afford or doesn't
qualify for insurance because of a pre-existing medical problem, they may be
eligible for this new federal "high risk" pool to be offered by the end of
June. 

Individuals who fail to have medical insurance by 2014 will be subject to a
penalty equal to the greater of: (1) 2.5% of household income in excess of
the taxpayer's household income for the tax year or (2) $695 per uninsured
adult in the household. The penalty will be phased in from 2014 to 2016.  In
2014, the penalty will be the greater of 1% of household income over the
filing threshold or $95; for 2015, it will be the greater of 2% of household
income over the filing threshold or $325; and for 2016 it will be the full
2.5% or $695 amount.

Pre-existing conditions:
Beginning this September, the new law is expected to stop insurance
companies from rejecting children or excluding coverage because of
pre-existing medical problems.

Adult Dependent:
The health care legislation changed the definition of "dependent" to include
money spent for the medical care of any child who has not yet reached age
27.  Children under 27 can remain on their parent's health insurance plan.

Individual Tax Credit for Health Insurance:
Individuals may be eligible for a tax credit to help cover the cost of
health insurance premiums for individuals and families who purchase health
insurance through a state health benefit exchange. Eligibility depends on
income. The premium assistance credit is available for individuals (single
or joint filers) with household incomes between 100% and 400% of the federal
poverty level (for the family size involved) who do not receive health
insurance through an employer or a spouse's employer.  This tax credit will
be available beginning in 2014.

Flexible Spending Account:
Starting in January, individuals will not be allowed to use flexible
spending account funds for over-the-counter medication. The maximum amount
available for reimbursement of medical expenses, under a health flexible
spending account in a year, cannot exceed $2,500. This provision is
effective 2013.

Medical Care Itemized Tax Deductions:
The maximum amount a taxpayer can claim for the itemized deduction for
unreimbursed medical expenses is increased from 7.5% of Adjusted Gross
Income (AGI) to 10% of AGI for regular income tax purposes. This is
effective for tax years beginning 2013, except that for 2013, 2014, 2015 and
2016, if either the taxpayer or the taxpayer's spouse turns 65 before the
end of the tax year, the increased threshold does not apply and the
threshold remains at 7.5% of AGI.

Adoption Credit Increases:
For 2010, the maximum adoption credit is increased to $13,170 per eligible
child (a $1,000 increase).  This increase applies to both non-special needs
adoptions and special needs adoptions. Also, the adoption credit is made
refundable.  The new dollar limit and phase-out of the adoption credit are
adjusted for inflation in tax years beginning after Dec. 31, 2010.

Youth Insurance Plans:
Beginning 2014, the State Insurance Exchanges will offer a high deductible
"young invincibles" policy for those younger than 30 which will include 3
doctor visits plus catastrophic coverage. A plan will also be offered for
those under 21.

Medicare Tax Increase:
The legislation imposes a 0.9 percent surtax on wage income over $200,000
for individuals and $250,000 for couples. The tax would not be deductible.
It is also not indexed to inflation. An additional 3.8 percent Medicare tax
on income derived from interest, dividends, annuities, royalties, and rents
for individuals with income over $200,000 and couples over $250,000 is
added. This is also not indexed for inflation. These tax increases are
effective 2013.

Medical Device Fees:
An excise tax of 2.3% on the sale of any taxable medical device will begin
this year. 

Tax on "Cadillac" Insurance Plans
A 40% tax is imposed on any "excess benefit" associated with
employer-sponsored health coverage.  "Excess benefit" means the amount by
which the aggregate cost of the coverage exceeds an annual limitation
specified in the act.  For 2018, the annual limitation is $10,200 for
self-only coverage or $27,500 for all other coverage.  Retirees and
employees in certain high-risk professions or who repair or install
electrical or telecommunications lines have a higher limit.  After 2018, the
annual limitation is adjusted for inflation.  This provision begins in 2018.

Disclosure:
Next year, all employers will list the amount of health benefits on
individual W-2 tax forms.

Small Businesses:
Small Business Tax Credit
Small businesses with 25 or fewer employees with average wages of less than
$50,000 would be eligible for a credit of up to 50% of non-elective
contributions the business makes on behalf of their employees for insurance
premiums.  Tax-exempt organizations would get a 35% credit against payroll
taxes. This credit is available this year.

Small businesses with 10 or fewer employees and average wages of less than
$20,000 would get 100% of the credit.  This credit would be phased out, up
to the 25-employee limit.  The $20,000 average annual wages figure will be
indexed for inflation after 2013.  This tax credit is available this year.

Large Businesses:
Employer Responsibility:
An employer with an average of at least 50 full-time employees in the
previous calendar year is a large employer. A large employer that does not
offer coverage for all its full-time employees, or offers minimum essential
coverage that is unaffordable, or offers minimum essential coverage that
consists of a plan under which the plan's share of the total allowed cost of
benefits is less than 60%, is required to pay a penalty if any full-time
employee is certified to the employer as having purchased health insurance
through a state exchange with respect to which a tax credit or cost-sharing
reduction is allowed or paid to the employee.

The penalty for any month is an excise tax equal to the number of full-time
employees over a 30-employee threshold during the applicable month
(regardless of how many employees are receiving a premium tax credit or
cost-sharing reduction) multiplied by one-twelfth of $2,000. (Total FTE - 30
X $2,000). This provision is effective 2014.

Employers with 200 or more employees must auto enroll new full time
employees into health plans offered by an employer with an employee opt out
if they demonstrate that they have coverage from another source. The penalty
for not auto-enrolling in the case of an extended waiting period which
exceeds 60 days is $600. 

Wellness Programs:
The legislation permits employers to establish premium discounts or rebates
to modify co-pays or deductibles up to 30% to encourage participation in
health promotion or disease prevention programs. It also promotes and
encourages worksite wellness programs.

Disclosure:
Next year, all employers will list the amount of health benefits on
individual W-2 tax forms.

Insurance Companies:
Insurance Plans:
The U.S. Department of Health and Human Services will create qualified
nonprofit health insurance groups to offer health insurance.  Starting in
2014; there will be state based insurance exchanges and alternate exchanges
for small business. These exchanges will be limited to small groups and
individuals until 2017. The exchanges will also offer young invincible
policy (which will include 3 doctor visits plus catastrophic coverage), and
under age 21 plans. Starting in 2017 larger groups may be allowed to
purchase health insurance in these exchanges. 

Type of Coverage:
The legislation requires that starting August 2010 medical insurance plans
have no lifetime limits, restricts annual limits, and eliminates
rescissions. Starting 2014 there can be no annual limits, and no exclusions
for pre-existing conditions. In 2018, plans must also cover preventative
services.

Health Insurance Fees: 
The legislation imposes considerable annual fees on the health insurance
sector, according to the following schedule: 
$8 billion in 2014; 
$11.3 billion in 2015-2016; 
$13.9 billion in 2017; 
$14.3 billion in 2018. 
For subsequent years, the fee shall be the amount from the previous year
increased by the rate of premium growth.

Implementation Timelines:
There are several different dates when parts of health care reform will
begin. Some will start as soon as this summer, others won't begin for 8
years. For example: 
insurance company mandates (2010), 
fees on various health-related industries (2011 and later), 
Medicare "donut hole" fix (2011), 
increases in the Medicare tax for wealthier taxpayers (2013), 
individual coverage mandate (2014), 
Medicaid expansion (2014), 
creation of state exchanges (2014), and
the 40% tax on "Cadillac" health insurance plans (2018). 

This remains a preliminary review and the legislation continues to be
interpreted. Your NAMA government affairs team is actively engaged in this
and will notify you of additional information as it becomes available.
Please let us know if you have any questions, and we will keep you informed
as further interpretations and implementation occur. We will also provide
updates during our legislative sessions during the NAMA OneShow. 
___________________________________________________________________________

Ned MonroePam GilbertKim Radulski
(703) 435-1210(703)-43-1210(312) 346-0370 ext: 223
nmonroe at vending.org
pgilbert at vending.org
kradulski at vending.org

Sandy LarsonMary Lou Monaghan
(626) 229-0900(678) 916-3852 
slarson at vending.org
mmonaghan at vending.org 

National Automatic Merchandising Association 
20 N. Wacker Drive, Suite 3500, Chicago, IL 60606 / Phone: (312) 346-0370 /
(312) 704-4140 
Copyright C 2009 NAMA. All Rights Reserved. Contact NAMA 
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20 N. Wacker Drive, Suite 3500, Chicago, IL 60606

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