Possible Changes in Medicare Costs IN 2016

Although the Centers for Medicare and Medicaid Services (CMS) has not yet announced changes for 2016, the following might be expected, based on preliminary information released:

Monthly Medicare premium – The standard Part B premium of $104.90, which has not changed the past three years, is likely to increase in January 2016 for many beneficiaries.  It is still possible for the Secretary of the U.S Department of Health and Human Services to intervene to temper the increases.  If that does not happen, Medicare premiums could look like this, based on current reports:

  • Beneficiaries receiving Social Security retirement benefits – $104.90 (no change, since retirement benefits are projected to include no cost-of-living increase).
  • Beneficiaries not receiving Social Security retirement benefits and with Modified Adjusted Gross Income (MAGI) below $85,000 for single tax filers and below $170,000 for joint filers – $159.30, a 52% increase.
  • Beneficiaries with MAGI above these thresholds – between $233.00 and $509.80, including Income-Related Monthly Adjustment Amount (IRMAA), compared to a range of $146.90 to $335.70 in 2015. There could also be increases in the IRMAA for Part D.

Part B deductible – Also unchanged the past three years, the current deductible of $147 may increase, but no announcement has been made.  Of course, beneficiaries enrolled in Medicare Advantage and many Medicare Supplement plans would not be subject to payment of this amount.  However, it would undoubtedly be reflected in increased Medicare Supplement premium rates upon renewal.

Part A out-of-pocket costs for inpatient care – These costs – currently $1,260 per stay of 1-60 days, $315 per day for days 61-90, and $630 per day for each of 30 lifetime reserve days – typically rise by modest amounts each year and will likely increase in 2016.

Part D coverage gap – The amount of drug cost that sends a beneficiary into the coverage gap and the amount of out-of-pocket cost at which the beneficiary leaves the gap will both rise in 2016.  The percentage of the cost of generics while in the gap will slightly decrease, and the copay amounts paid for both brands and generics once out of the gap will slightly increase.

 

How Your Income Affects Your Premium Tax Credit

You are allowed a premium tax credit only for health insurance coverage you purchase through the Marketplace for yourself or other members of your tax family. However, to be eligible for the premium tax credit, your household income must be at least 100, but no more than 400 percent of the federal poverty line for your family size. An individual who meets these income requirements must also meet other eligibility criteria.

The amount of the premium tax credit is based on a sliding scale, with greater credit amounts available to those with lower incomes.  Based on the estimate from the Marketplace, you can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out-of-pocket for your monthly premiums.  These payments are called advance payments of the premium tax credit.  If you do not get advance credit payments, you will be responsible for paying the full monthly premium.

If the advance credit payments are more than the allowed premium tax credit, you will have to repay some or all the excess.  If your projected household income is close to the 400 percent upper limit, be sure to consider the amount of advance credit payments you choose to have paid on your behalf.  You want to consider this carefully because if your household income on your tax return is 400 percent or more of the federal poverty line for your family size, you will have to repay all of the advance credit payments made on behalf of you and your family members.

For purposes of claiming the premium tax credit for 2014 for residents of the 48 contiguous states or Washington, D.C., the following table outlines household income that is at least 100 percent but no more than 400 percent of the federal poverty line:

 Federal Poverty Line for 2014 Returns
100% of FPL . 400% of FPL
One Individual $11,490 up to $45,960
Family of two $15,510 up to $62,040
Family of four $23,550 up to $94,200

The Department of Health and Human Services provides three federal poverty guidelines: one for residents of the 48 contiguous states and Washington D.C., one for Alaska residents and one for Hawaii residents. For purposes of the premium tax credit, eligibility for a certain year is based on the most recently published set of poverty guidelines at the time of the first day of the annual open enrollment period for coverage for that year. As a result, the premium tax credit for 2014 is based on the guidelines published in 2013. The premium tax credit for coverage in 2015 is based on the 2014 guidelines. You can find all of this information on the HHS website.

Use our Interactive Tax Assistant tool to find out if you are eligible for the premium tax credit. For more information, see the instructions to Form 8962 and the Questions and Answers on the Premium Tax Credit on IRS.gov/aca.

What Information Must a Health Coverage Provider Report to the IRS

For purposes of the health care law, the information that health coverage providers, including employers that provide self-insured coverage, report to the IRS includes the following:
• The name, address, and employer identification number of the provider
• The responsible individual’s name, address, and taxpayer identification number – or date of birth if a TIN is not available
• If the responsible individual is not enrolled in the coverage, providers may, but are not required to, report the TIN of the responsible individual
• The name and TIN, or date of birth if a TIN is not available, of each individual covered under the policy or program and the months for which the individual was enrolled in coverage and entitled to receive benefits
• For coverage provided by a health insurance issuer through a group health plan, the name, address, and EIN of the employer sponsoring the plan, and whether the coverage is a qualified health plan enrolled in through the Small Business Health Options Program – known as SHOP – and the SHOP’s identifier
A taxpayer identification number is an identification number used by the IRS in the administration of tax laws. Taxpayer identification numbers include Social Security numbers.
Reporting of TINs for all covered individuals is necessary for the IRS to verify an individual’s coverage without the need to contact the individual.
If health coverage providers are unable to obtain a TIN after making a reasonable effort to do so, the provider may report a covered individual’s date of birth in lieu of a TIN. A health coverage provider will not be subject to a penalty if it demonstrates that it properly solicited the TIN.
In addition to the information it reports to the IRS for each covered individual listed on the information return, a health coverage provider must include a phone number for the provider’s designated contact person – if any – that the individual recipient of the statement can contact for answers to questions about information on the statement.
For information about when and how to report this information, see our Questions and Answers on Information Reporting by Health Coverage Providers on IRS.gov/aca.

Medicaid Estate Recovery: Barrier to Medicaid Enrollment

With more people becoming eligible for Medicaid, one question repeatedly comes up: “will receiving Medicaid coverage jeopardize my family home?” Depending on the circumstances, the answer can be complicated. But states can do much to make it less complex.

The fact is that states can recover against the estates of some Medicaid beneficiaries, but only after the beneficiary passes away, and only in certain circumstances. Federal law actually requires that states try to recover from the estates of Medicaid beneficiaries who received nursing facility services and/or home and community-based services when they were age 55 or older. In other words, federal law sets the floor for Medicaid estate recovery by states.

Complicating matters is that states have the option to recover for more than what is federally required. States may recover from individuals age 55 and older for any items or services covered under the state’s Medicaid plan. California is one of just a few states that has taken the option to recover for all covered services provided to individuals age 55 and older. Currently, a bill is moving through the state legislature to limit recovery to only what is federally required. Last year, a similar bill received unanimous support from the California legislature, but was vetoed by the governor due to budgetary concerns.

It is important to keep in mind that there are exceptions to when a state can recover and from whom it can do so. For example, Medicaid estate recovery cannot occur during the lifetime of a surviving spouse or when there is a surviving child under age 21 or a blind or disabled child of any age. Also, states must establish procedures for waiving estate recovery when it would cause an undue hardship. Yet many states do not have clear undue hardship policies, leading to increased denials and making it difficult for family members to figure out who qualifies for a hardship waiver and in which circumstances.

State policy makers should also realize that, for the next couple of years, states will not keep recovered claims for the Medicaid expansion population and after 2016 will still keep only a small amount. When states recover from the estates of former Medicaid beneficiaries, they return to the federal government the portion that represents the federal share of expenditures on an individual’s Medicaid covered services. Since services provided to the Medicaid adult expansion population are 100 percent federally funded for the first three years (2014-16), and almost fully federally funded thereafter, states will have to return to the federal government the full amount collected (and in future years close to the full amount). States are essentially serving as a collection agency for the federal government.

Many have identified estate recovery rules as a potential barrier to enrollment in Medicaid. Individuals may be hesitant to enroll in Medicaid because they own a home that they want to leave to their adult children when they pass away. Advocates must urge states to limit estate recovery to what is federally required, and advocate for clear exceptions policies to ensure that individuals and families feel comfortable enrolling in Medicaid and getting the care that they need.

What Employers Need to Know about the Affordable Care Act

The health care law contains tax provisions that affect employers. The size and structure of a workforce – small or large – helps determine which parts of the law apply to which employers. Calculating the number of employees is especially important for employers that have close to 50 employees or whose work force fluctuates during the year

The number of employees an employer has during the current year determines whether it is an applicable large employer for the following year. Applicable large employers are generally those with 50 or more full-time employees or full-time equivalent employees. Under the employer shared responsibility provision, ALEs are required to offer their full-time employees and dependents affordable coverage that provides minimum value. Employers with fewer than 50 full-time or full-time equivalent employees are not applicable large employers.

For more information on these and other ACA tax provisions, visit IRS.gov/aca.

Does the Affordable Care Act Guarantee Healthcare as a Right?

In his recent celebratory remarks after the Supreme Court (SCOTUS) upheld the legality of subsidies/tax credits under the Affordable Care Act (ACA), President Obama had this to say: “Five years ago, after nearly a century of talk, decades of trying, a year of bipartisan debate — we finally declared that in America, healthcare is not a privilege for a few, but a right for all.” (1)

It would be good if this were true, but it is not. Healthcare as a right has been debated over many years, but is still not in place for all Americans as this country remains an outlier among advanced industrial countries around the world. Instead, despite the ACA, we continue to have a patchwork of ever-changing programs assuring access to health care for some people some of the time.

Let’s look at what we do have in this respect. In the 1960s, Congress established a broad right to health care under statutory law by enacting Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) for the elderly, disabled, people living in poverty, and children. In the 1980s it passed the Emergency Medical Treatment and Active Labor Act (EMTALA) requiring all Medicare-funded hospitals with emergency departments to provide appropriate emergency and labor care. More recently, Congress passed the Mental Health Parity and Addiction Equity Act (MHPAEA) in 2013, which assures a right to equal access to care for patients with medical and mental health problems. SCOTUS has established a right to health care for prisoners and has protected some limited rights for women’s reproductive care (2), but has never interpreted the Constitution as guaranteeing a right to health care for all Americans. In fact, the words “health,” “health care,” “medical care,” and “medicine” do not appear in the Constitution. (3)
It is disingenuous to claim that health care is a right in the U. S. when we consider these inconvenient facts:

  • 35 million uninsured, plus another similar number underinsured.
  • The first question asked of us in seeking care is “what is your insurance?”
  • 21 states have opted out of Medicaid expansion under the ACA.
  • Medicaid eligibility and coverage varies widely from one state to
  • another, in many cases falling far short of necessary care.
  • As the costs of insurance and health care continue to rise and shift
  • more to patients, a growing part of the population cannot afford either and forgo seeking care.
  • More than 40 million Americans now have an account in collection for medical debt. (4)

This situation stands in sharp contrast to elsewhere in advanced societies. Healthcare has been recognized as a right since 1948 when the General Assembly of the United Nations adopted a Universal Declaration of Human Rights including access to health care. (5) The right to health care was also later adopted by the World Health Organization (WHO) in its Declaration on the Rights of Patients. (6) As a result, most of Western Europe, Scandinavia, the United Kingdom, Canada, Taiwan, and many other countries have one or another form of national health insurance assuring access to care for their populations. Here we spend twice as much and still have no universal access to health care.

Can we ever see this country coming around to universal access to health care based on medical need, not ability to pay? The record shows that we never can, or will, as long as we permit corporate stakeholders in our medical-industrial complex to call the shots, and as long as they succeed in perpetuating our exploitive for-profit system. There is a fix — single-payer national health insurance, as embodied in H. R. 676, Expanded and Improved Medicare for All.

To read John Geyman’s new book on Obamacare:
How Obamacare is Unsustainable: Why we need a single-payer solution for all Americans.

References:
1. Obama, President Barack. Read Obama’s full remarks on Supreme Court Ruling. U. S. News.

2. Curfman, G. King v. Burwell and a right to health care. Health Affairs Blog, June 26, 2015.

3. Ruger, JP, Ruger TW, Annas, GJ. The elusive right to health care under U. S. law. New Engl J Med, June 25, 2015.

4. Hillebrand, G. Consumer advisory: 7 ways to keep medical debt in check. Consumer Financial Protection Bureau, December 11, 2014.

5. Adopted by the General Assembly on December 10, 1948. Printed in: von Munch, I, Buske, A. (eds). International Law: Essential Treaties and Other Relevant Documents, 1985: 435ff.

6. Carmi, A. On patients’ rights. Med Law 10 (1): 77-82, 1991

Get to Know the Small Business Health Care Tax Credit

If you are a small employer, you might be eligible for the Small Business Health Care Tax Credit, which can make a difference for your business.   To be eligible for the credit, you must:

  • have purchased coverage through the Small Business Health Options Program – also known as the SHOP marketplace
  • have fewer than 25 full-time equivalent employees
  • pay an average wage of less than $50,000 a year
  • pay at least half of employee health insurance premiums

For tax years beginning in 2014:

  • The maximum credit increases to 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers.
  • To be eligible for the credit, you must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program  Marketplace or qualify for an exception to this requirement.
  • The credit is available to eligible employers for two consecutive taxable years.   Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments is more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

There is good news for small tax-exempt employers, too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability. Refund payments issued to small tax-exempt employers claiming the refundable portion of credit are subject to sequestration.

Finally, if you can benefit from the credit even if you forgot to claim it on your 2014 tax return; there’s still time to file an amended return. Generally, a claim for refund must be filed within three years from the time the return was filed or two years from the time the tax was paid, whichever of such periods expires later. For tax years 2010 through 2013, the maximum credit is 35 percent of premiums paid for small business employers and 25 percent of premiums paid for small tax-exempt employers such as charities.

You must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For detailed information on filling out this form, see the Instructions for Form 8941. If you are a small business, include the amount as part of the general business credit on your income tax return.

If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if you don’t ordinarily do so.

For more information about the credit, visit the Small Business Health Care Tax Credit page on IRS.gov/aca.

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Get to Know the Health Care Law’s Employer Shared Responsibility Payment

Under the Affordable Care Act, applicable large employers – those with 50 or more full-time employees, including full-time equivalent employees – are required to take some new actions. To prepare for 2016, if your organization is an ALE, you need to track information each month in 2015, including:

  • Whether you offered full-time employees and their dependents minimum essential coverage that meets the minimum value requirements and is affordable
  • Whether your employees enrolled in the minimum essential coverage you offered

You need to track this information because you could be subject to an employer shared responsibility payment if your organization falls into either of these circumstances:

  • You offered coverage to fewer than 70 percent of your full-time employees and their dependents in 2015 and at least one full-time employee enrolled in coverage through the Health Insurance Marketplace and receives a premium tax credit. The 70 percent threshold is for 2015, after 2015 this increases to 95 percent.
  • You offered coverage to at least 70 percent of your full-time employees and their dependents in 2015, but at least one full-time employee receives a premium tax credit because coverage offered was not affordable, did not provide minimum value or the full-time employee was not offered coverage. After 2015, this threshold increases to 95 percent.

For more information about reporting requirements, visit the Employer Shared Responsibility Provisions Questions and Answers page on IRS.gov/aca.

Find out how ACA affects Employers with 50 or more Employees

Some of the provisions of the Affordable Care Act, or health care law, apply only to large employers, which are generally those with 50 or more full-time equivalent employees. These employers are considered applicable large employers – also known as ALEs – and are subject to the employer shared responsibility provisions and the annual employer information return provisions. For example, in 2016 applicable large employers will have annual reporting responsibilities concerning whether and what health insurance they offered in 2015 to their full-time employees.
All employers, regardless of size, that provide self-insured health coverage must file an annual return reporting certain information for individuals they cover. The first returns are due to be filed in 2016 for the year 2015.
Effective for calendar year 2015, ALEs with 100 or more full-time or full-time equivalent employees will be subject to the employer shared responsibility provision and therefore may have to make a shared responsibility payment. This applies to employers that do not offer adequate, affordable coverage to their full-time employees and one or more of those employees get a premium tax credit. The employer shared responsibility provisions will be phased in for smaller ALEs from 2015 to 2016.
Calculating the number of employees is especially important for employers that have close to 50 employees or whose workforce fluctuates throughout the year. To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12.
Employers with more than 50 cannot purchase health insurance coverage for its employees through the Small Business Health Options Program – better known as the SHOP Marketplace. However, Employers that have exactly 50 employees can purchase coverage for their employees through the SHOP.
For more information, visit our Determining if an Employer is an Applicable Large Employer page on IRS.gov/aca.

Find out how ACA affects Employers with fewer than 50 Employees

Most employers have fewer than 50 full-time employees or full-time equivalent employees and are therefore not subject to the Affordable Care Act’s employer shared responsibility provision.

If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an ALE for the current calendar year.  Therefore, the employer is not subject to the employer shared responsibility provisions or the employer information reporting provisions for the current year. Employers with 50 or fewer employees can purchase health insurance coverage for its employees through the Small Business Health Options Program – better known as the SHOP Marketplace.

Calculating the number of employees is especially important for employers that have close to 50 employees or whose workforce fluctuates throughout the year. To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year, and divides that total number by 12.

Employers that have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000 may be eligible for the small business health care tax credit if they cover at least 50 percent of their full-time employees’ premium costs and generally, after 2013, if they purchase coverage through the SHOP.

All employers, regardless of size, that provide self-insured health coverage must file an annual information return reporting certain information for individuals they cover. The first returns are due to be filed in 2016 for coverage provided during 2015.

For more information, visit our Determining if an Employer is an Applicable Large Employer page on IRS.gov/aca.