President of Texas State Financial and Health Justin Holland was contacted by Peggy O’Hare which is the health care reporter at the business desk of the San Antonio Express news. Justin is a member of the San Antonio Association of Health Underwriters which has been a sound and solid resource for many leading agents and brokerages in the South Texas area with staying connected to the constant changes the industry encounters. Our brokerage is based out of San Antonio, Texas but protects individuals, families, and businesses all over the state.
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SAN ANTONIO EXPRESS NEWS:
Report:Pricier health plans more popular off ACA exchanges
For consumers who use their health insurance frequently, the more expensive gold and platinum plans can offer a better value.
“If a client is ill or they’ve got a family member who has a prolonged illness or has some medical problems, that’s where we really dig in and put a pencil to the gold and platinum plans that are available,” said independent insurance agent Justin Holland, founder and owner of Texas State Financial & Health, a San Antonio firm. “They know that they’ll meet their out-of-pocket maximum very quickly.”
Both Camp and Holland are members of the San Antonio Association of Health Underwriters, a group of licensed independent health insurance agents, brokers and benefits consultants.
Platinum plans — which provide the greatest protection available to consumers, but cost more to purchase — generally cover 90 percent of the average person’s medical costs. Gold plans cover around 80 percent of those costs on average.
Silver plans cover around 70 percent of the average person’s medical costs. Bronze plans — the least expensive tier of health insurance — cover 60 percent.
Insurers anticipated mid-priced silver plans would prove most popular both on and off the government exchanges. But they predicted only 37 percent of consumers buying health insurance outside of those exchanges would select silver plans, compared to 58 percent of customers shopping in government-run markets.
Holland said the reason for silver plans’ popularity on the exchanges is simple. Lower-income consumers who also qualify for the cost-sharing reduction benefit — which limits how much they pay out of pocket for deductibles, copays and other expenses — are required to select silver plans to receive that discount.
Texas State Health Insurance would like to help clients be aware of the tax provision provisions of The Patient Protection and Affordable Care Act of 2010, also known as “OBAMA CARE” in concert with the enactment of the Health Care and Education Tax Credits Reconciliation Act of 2010, resulted in a number of changes to the US tax code. As such there are a number of tax implications for individuals and businesses. With the healthcare exchanges that opened on October 1, it’s time to take a closer look at what it all means for you and your business.
Healthcare Exchanges, which are also referred to as Health Insurance Marketplaces, are officially open for enrollment on October 1, 2013. Some of these exchanges are run by the state in which you reside. Others are run by the federal government.
Individuals (including self-employed) who do not currently have insurance or buy insurance on their own can use these marketplaces to buy insurance, which becomes effective January 1, 2014. When you get health insurance through the Marketplace, you may be able to get the new advance Premium Tax Credit that will immediately help lower your monthly premium.
The Congressional Budget Office projects that seven million–primarily uninsured people–will use the exchanges to purchase private health insurance. The rest, including the 170.9 million people already covered by their employer’s insurance, as well as the 101.5 million enrolled in government health programs, are not affected and need not take any action.
Starting January 2014, United States citizens and legal residents must obtain minimum essential health care coverage for themselves and their dependents, have an exemption from coverage, or make a payment when filing a 2014 tax return in 2015. The Individual Mandate is also known as the Individual Shared Responsibility Payment.
The payment varies and is based on income level. In 2014, the basic penalty for an individual (no dependents) is $95 or 1% of your yearly income (whichever is higher), with substantial increases in subsequent years. For example, in 2015, the penalty is $325 or approximately 2% of income, whichever is higher. In 2016, it increases to $695 or 2.5% of income (again, whichever is higher), indexed for inflation thereafter.
Most people already have qualifying health care coverage and will not need to do anything more than maintain that coverage throughout 2014. Self-insured ERISA policies used by larger employers, as well as Medicare, Medicaid, and CHIP (Children’s Health Insurance Program), and all of the health insurance plans offered by the exchanges fall under the category of minimum essential health care coverage.
Note: Certain individuals are exempt from the tax and include: (1) people with religious objections; (2) American Indians with coverage through the Indian Health Service; (3) undocumented immigrants; (4) those without coverage for less than three months; (5) those serving prison sentences; (6) those for whom the lowest-cost plan option exceeds 8% of annual income; and (7) those with incomes below the tax filing threshold who do not file a tax return($10,000 for singles and $20,000 for couples under 65 in 2013).
Refundable Tax Credit
Effective in 2014, certain taxpayers will be able to use a refundable tax credit to offset the cost of health insurance premiums so that their insurance premium payments do not exceed a specific percentage of their income. Qualified individuals are those with incomes between 133 percent and 400 percent of the federal poverty level. A sliding scale based on family size will be used to determine the amount of the credit. In addition, married taxpayers must file joint returns to qualify.
FSA (Flexible Spending Arrangements) contributions are limited to $2,500 per year starting in 2013 and indexed for inflation after that.
New Rules for HSAs and Archer MSAs
Tax on non-qualified distributions from HSAs and Archer MSAs that are used to cover the cost of over the counter medicine without a script increased to 20 percent starting in 2011. Medical devices, eyeglasses, contact lenses, copays, and deductibles are not affected, nor is Insulin even if it is non-prescription.
Medicare Part D
Medicare Part D, the tax deduction for employer provided retirement prescription drug coverage, was eliminated in 2013.
Increase in AGI Limit for Deductible Medical Expenses
In 2013 the limit for deductible medical expenses increased to 10 percent of AGI (7.5% in prior years); however, the 7.5 percent threshold continues through 2016 for taxpayers aged 65 and older, including those turning 65 by December 31, 2016.
Health Coverage of Older Children
The cost of employer provided health care coverage for children (through age 26) on tax returns is excluded from gross income.
Medicare Tax Increases for High Income Earners
Starting in 2013, there is an additional 0.9 percent Medicare tax on wages above $200,000 for individuals ($250,000 married filing jointly).
Also starting in 2013, there is a new Medicare tax of 3.8 percent on investment (unearned) income for single taxpayers with modified adjusted gross income (MAGI) over $200,000 ($250,000 joint filers). Investment income includes dividends, interest, rents, royalties, gains from the disposition of property, and certain passive activity income. Estates, trusts and self-employed individuals are all liable for the new tax.
Exemptions are available for business owners and income from certain retirement accounts, such as pensions, IRAs, 401(a), 403(b), and 457(b) plans, is exempt.
If you run an income-generating business with no employees, then you’re considered self-employed (not an employer) and can get coverage through the Marketplace and use it to find coverage that fits your needs.
Note: You are not considered an employer even if you hire independent contractors to do some work.
If you currently have individual insurance, that is a plan you bought yourself and not the kind you get through an employer, you may be able to change to a Marketplace plan.
Note: You can’t be denied coverage or charged more because you have a pre-existing health condition.
Small Businesses (50 or Fewer Employees)
If you have 50 or fewer full-time equivalent (FTE) employees (generally, workers whose income you report on a W-2 at the end of the year) you are considered a small business under the health care law.
As a small business, you may get insurance for yourself and your employees through the SHOP (Small Business Health Options Programs) Marketplace. This applies to non-profit organizations as well.
And, if you have fewer than 25 employees, you may qualify for the Small Business Tax Credit (see next section). Non-profit organizations can get a smaller tax credit.
Note: Beginning in 2016, the SHOP Marketplace will be open to employers with 100 or fewer FTEs.
As an employer, you must provide notification to your employees of coverage options available through the Marketplace and are required to provide this notice to all current employees and to each new employee beginning October 1st, 2013, regardless of plan enrollment status or full or part-time employment. The Department of Labor has sample notices that employers can use to comply with this regulation. One notice is for employers who do not offer a health care plan and the second for employers who offer a health care plan.
Small Business Health Care Tax Credit
Small businesses and tax-exempt organization that employ 25 or fewer, full-time equivalent workers with average incomes of $50,000 or less, and that pay at least half (50%) of the premiums for employee health insurance coverage are eligible for the Small Business Health Care Tax Credit. For tax years 2010 through 2013, the maximum credit is 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities.
Starting in 2014, the tax credit is worth up to 50% of your contribution toward employees’ premium costs (up to 35% for tax-exempt employers). The tax credit is highest for companies with fewer than 10 employees who are paid an average of $25,000 or less. The smaller the business, the bigger the credit is.
Note: The credit is available only if you get coverage through the SHOP Marketplace.
Additional Tax on Businesses Not Offering Minimum Essential Coverage
Effective January 1, 2015 an additional tax will be levied on businesses with 50 or more full-time equivalent (FTE) employees that do not offer minimum essential coverage. This penalty is sometimes referred to as the Employer Shared Responsibility Payment or “Play or Pay” penalty.
You may have to pay this additional tax if you have 50 or more full-time equivalent employees and at least 1 of your full-time employees gets lower costs on their monthly premiums through the Marketplace.
Note: Employers with fewer than 50 FTE employees are considered small businesses and are exempt from the additional tax.
The amount of the annual Employer Shared Responsibility Payment is based partly on whether you offer insurance.
- If you don’t offer insurance, the annual payment is $2000 per full-time employee (excluding the first 30 employees)
- If you do offer insurance, but the insurance doesn’t meet the minimum requirements, the annual payment is $3000 per full-time employee who qualifies for premium savings in the Marketplace
Note: Unlike employer contributions to employee premiums, the Employer Shared Responsibility Payment is not tax deductible.
A health plan meets minimum value if it covers at least 60% of the total allowed costs of benefits provided under the plan. To determine whether other coverage meets minimum value, please contact us for assistance.
Note: All plans in the Marketplace meet minimum value, so any coverage offered through the SHOP Marketplace should qualify.
Excise Tax on High Cost Employer-Sponsored Insurance
Effective in 2018, a 40 percent excise tax indexed for inflation will be imposed on employers with insurance plans where the annual premium exceeds $10,200 (individual) or $27,500 (family). For retirees age 55 and older, the premium levels are higher, $11,850 for individuals and $30,950 for families.
Excise Tax on Medical Devices
Effective January 1, 2014, a 2.3 percent tax will be levied on manufacturers and importers on the sale of certain medical devices.
Indoor Tanning Services
A 10 percent excise tax on indoor tanning services went into effect on July 1, 2010. The tax doesn’t apply to phototherapy services performed by a licensed medical professional on his or her premises. There’s also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee.
Don’t hesitate to call us if you need assistance navigating the complexities of the new health care act. We’re here to help.
TEXAS STATE HEALTH INSURANCE – 1250 N.E. Loop 410 Suite #330 San Antonio, TX 78209 www.txstatehealth.com
Health Insurance Coverage for Texas Families, Individuals & Businesses
Texas State Health Insurance provides health insurance plans for individuals, families, seniors, and small businesses located in San Antonio, Texas and surrounding areas. Although we are based out of San Antonio our services reach all over the surrounding state of Texas. We understand that paying for great health care is not cheap. Although Health Insurance is helpful with routine checkups and prescription costs, everyone needs to keep in mind that the most important reason for being protected is when a major medical emergency arrives that could possibly lead to catastrophic costs. There are many questions about the Affordable Care Act or “Obama Care”. Texas State Health Insurance has partnered with the country’s leading insurance companies to help with the questions and concerns that you may have. Please do not hesitate to contact us to setup a time to visit about what options are best for you and or your small business.
While overseeing the client services for the local CPA and Accounting firm Rodriguez Holland, Co. P.C. Justin Holland realized that many of their clients needed assistance with their Health Insurance products. This became even more important with the upcoming Affordable Care Act “Obama Care” which was signed into legislation by President Obama in 2010. Starting in 2014, individuals will be assured of getting health coverage, regardless of health status. This means that all Americans have access to coverage, including those with pre-existing conditions.
Texas State Health Insurance provides health insurance plans for individuals, families, seniors, and small businesses located in San Antonio, Texas and surrounding areas. Although we are based out of San Antonio our services reach all over the surrounding state of Texas.
We understand that paying for good health care is not cheap whether it’s for a routine checkup or just a renewed prescription. The most important reason for being protected is when a major medical emergency arrives that could possibly lead to catastrophic costs.
The website for Texas State Health Insurance was designed to be easy for visitors to give you some insight on what to expect with Affordable Healthcare Act and research for questions you might have before contacting us to help in person. Although visitors have the ability to quote products from our website online, we welcome everyone to contact via email or by phone to visit and even schedule a consultation.
Thank you for visiting Texas State Health Insurance! We look forward to helping with all of your Health Insurance Needs.