The healthcare reform bill, often referred to as “Obamacare”, doesn’t mean  a lot to workers who receive employer-sponsored coverage, but for those that buy individual insurance on the open market, it changed a lot.  Six months after enactment, health insurers could not place lifetime limits on the value of coverage or revoke existing coverage.  Starting in 2014, however, insurers must accept all applicants, including anyone with preexisting conditions.  Until then, individuals with preexisting conditions who have been uninsured for more than 6 months will be eligible to enroll in the national high-risk pool and receive subsidized premiums.

Another big change that effected this population was the requirement to be insured or face a monetary penalty.  Early retirees and self employed individuals have to be able to purchase coverage through state based plans.  Tax credits are now made available to individuals and families with income between 133-400% of the poverty line.  You should speak to your local CPA about these tax credits.

Lastly, if you are 55 years of age and are enrolled in an employer sponsored retiree health plan, your costs could have possibly been lowered.  Under the government reinsurance program, employers were reimbursed for 80% of retiree claims between $15,000-$90,000.  The program will end on January 1, 2014.  Speak to your insurance liaison to help pick the most beneficial plan for you.

The new healthcare reform bill doesn’t mean  a lot to workers who receive employer-sponsored coverage, but for those that buy individual insurance on the open market, it changes a lot.  Six months after enactment, health insurers cannot place lifetime limits on the value of coverage or revoke existing coverage.  Starting in 2014, insurers must accept all applicants, including anyone with preexisting conditions.  Until then, individuals with preexisting conditions who have been uninsured for more than 6 months will be eligible to enroll in a new national high-risk pool and receive subsidized premiums.

Another big change effecting this population is the requirement to be insured or face a monetary penalty.  Early retirees and self employed individuals are going to be able to purchase coverage through state based plans.  Tax credits will be made available to individuals and families with income between 133-400% of the poverty line.  You should speak to your local CPA about these tax credits.

Lastly, if you are 55 years of age and are enrolled in an employer sponsored retiree health plan, your costs may soon be lowered.  Under the government reinsurance program, employers will be reimbursed for 80% of retiree claims between $15,000-$90,000.  The program will end on January 1, 2014.  Speak to your insurance liaison to help pick the most beneficial plan for you.

CPA Rockville – Want to stay ahead of the health care “side car” bill?  Here are a few things to keep in mind:

1) Watch for coverage changes.  If you’re uninsured and have health problems, you may become eligible for a new federal high-risk insurance pool this year.  Watch for information at http://www.hhs.gov.

2) Find a doctor now.  There could be shortages, as the reconciliation bill is ultimately expected to add 32 million people to the insured population.

3) Consider long-term care coverage.  Under the new provision, a new voluntary long-term care benefit that would pay cash out to people who become disabled will become available.  You will only get the benefit if you have paid premiums into the program for at least 5 years, and this probably will not become available until 2011 at the earliest.  Again, watch for info at http://www.hhs.gov.

4) Plan ahead for new tax rules.  There will be a new 10% levy on indoor tanning services starting in July.  Also, a $2,500/year cap will be placed on allowable contributions to a tax-free flexible spending account in 2013 (it was 2011 in the original Senate bill).

5) Prepare for Medicare changes.  Beneficiaries who pay for drugs in the doughnut hole coverage gap are eligible for a $250 rebate in 2010.  In 2011, that group will get 50% off brand name drugs, and after that the hole will get a little smaller each year, and should effectively be zeroed out by 2020.  In 2011, certain preventive care will be free as well.

6) Be prepared to be insured by 2014.  If you are uninsured, by 2014, you will likely be required to have insurance or pay a penalty.  You should start preparing yourself now for that additional cost in your budget.  Contacting a financial planner in Rockville now, may help you be ready by then.  Medicaid is going to be expanded to include lower incomes.  For those who make less than $43,000/yr, there will be government assistance to help buy a plan.

CPA Rockville – High-income households will be paying more into Medicare as a result of the reform package.  What we do know for certain is that the Medicare payroll tax is going up for individuals making more than $200,000 in wages, and couples making more than $250,000.

Currently, the Medicare payroll tax is 2.9% on all wages, with the worker and his employer splitting the cost (1.45% each).  Under the new law, to begin in 2013, high-income individuals will pay an additional .9% points, making the workers share 2.35%.

In addition to this increase, if the reconciliation bill that passed the House Sunday is approved by the Senate, high-income households would also be subject to a new 3.8% Medicare tax on investment income starting in 2013.  This includes capital gains, dividends, interest, annuities, royalties, and rents.  Any investment income that had previously been characterized as “tax exempt”, however, would not be subject to the new tax.

Not all investment income may be taxable due to how the proposal is structured though.  Seeking advice from your financial adviser in Rockville, MD or certified public accountant (CPA) may help to prepare you for these upcoming changes.