Come tax time next year, there will be many accountants and business leaders scratching their heads as they determine how to handle the flurry of calculations laid out by the new health care reform act.
“I don't know about you, but I can't wait to do tax calculations next year,” said Tony Deutsch, CPA/PFS, MT with Concannon Miller and Co. in Bethlehem.
He was being facetious, of course, but this kind of attitude was felt by many who gathered Aug. 1 for a presentation by Concannon Miller and the Hampson Mowrer Kreitz insurance firm. The packed event –
“The Supreme Court Ruled. Now What?” – was held in Bethlehem at the Best Western, routes 512 and 22.
The panel was comprised of Deutsch, Vince Phillips, lobbyist from the Pennsylvania Association of Health Underwriters; David Vassilaros, director of health care reform and regulatory affairs with Capital Blue Cross; Milan D. Slak, JD, LL.M, Esq., a CPA, with Concannon Miller and Co.; and moderator Todd Linn, manager of the benefits division for HMK Insurance.
Panelists discussed many issues related to the new Patient Protection and Affordable Heath Care Act, which is also known as ObamaCare.
One issue which was discussed at length by Deutsch and Slak was the Medicare Surtax that takes effect in 2013. This tax will call for individuals to pay 3.8 percent of the lesser amount of net invested income or modified adjusted gross income over certain threshold amounts.
“This is something that could impact everyone in this room, potentially,” Deutsch said.
This tax can be applied to interest, dividends, annuity distributions, rents, royalties and other monies, but not to salary, wages or bonuses and other incomes.
Planning can help ease the burden of these taxes, Slak said.
The complexity of the Medicare Surtax is just one of the changes explained at the seminar left many attendees looking more than a little confused.
The panel also discussed the additional 0.9 percent surtax on higher income households. The tax applies to wages and self-employment income in excess of the thresholds laid out by the act and must be collected by employers.
For single taxpayers the threshold is $200,000; married taxpayers filing jointly have a threshold of $250,000; and married individuals filing separately have a threshold of $125,000.
Deutsch predicted that another area that's going to create “a headache” is a change to W-2 reporting.
Employers must now report the value of employer provided health insurance coverage on each employee's W-2.
Described as “Orwellian” by Vassilaros, who handles health care reform and regulatory affairs with Capital Blue Cross, the changes aren't particularly good for insurance companies.
Insurance will soon be offered through a government-run exchange whereby insurance companies will pass their products through a battery of regulations before they're able to sell them.
Essentially, insurance companies will be strictly regulated and have to offer better services at lower prices, Vassilaros said. The changes will, most likely, put many insurance companies out of business.
“There's already an insurance company in central Pennsylvania that's gone out of business,” said Vince Phillips, a lobbyist from the Pennsylvania Association of Health Underwriters.
Because the new program calls for one million individuals who have not previously been insured to become insured there will be a significant shortage of doctors, Phillips said.
More than 190 regional business leaders attended the event, forcing the hosts to split the forum into two seatings. For more information on the act, visit www.HHS.gov or contact your local insurance agent.
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