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Health Insurers’ 4Q Balance Sheets May Be Immune From Flu Effects

New Tax Increases to Help Fund ACA Five new tax increases went into effect this year to help fund the Affordable Care Act. Here is a rundown on what is going up and who will pay the bill: Cap on FSA contributions : Health-care flexible spending accounts (FSAs) require enrollees to decide in advance how much money they’ll contribute for the coming year. Most employers capped employee contributions at $5,000. But beginning in 2013, the Affordable Care Act caps annual employee contributions at $2,500. Deductions for medical expenses: Currently, taxpayers who itemize their returns can deduct the medical expenses from their taxable income that exceed 7.5 percent of their adjusted gross income. The health care act increases that threshold to 10 percent in 2013. The higher income threshold means many taxpayers with high medical bills will no longer qualify for the deduction. Seniors 65 and older and their spouses are exempt from the change until 2016. Medicare hospital tax hike: The Medicare Part A tax rate on wages – which pays for hospital, hospice, nursing home and home care services – will go from 1.45 percent to 2.35 percent for individuals with income above $200,000 and families with income above $250,000. Married couples who file separately and earn more than $125,000 are also subject to the tax hike.

QUOTABLE It’s a one-time opportunity to strive for complete coverage and catch up to the richer states. It is not fair that a working mom in Arkansas could be disadvantaged in the same way that if she were in Maine, she’d be advantaged. — Joe Thompson, Arkansas State Surgeon General on expanding government health coverage

because these new entrants to the market will have the initial backing of the federal government, they may have an unfair advantage over competitors. CO-OPs are required to meet the same state and federal quality and financial standards as other health insurance plans. So far, 23 organizations have been awarded $1.8 billion in CO-OP loans to offer coverage in 23 states. They will also

have to contend with the challenge of persuading health-care providers to align with an unknown and untested entity.

Investment income surtax: Tax rates on investment income will increase from 15 percent to 18.8 percent. The 3.8-percentage-point “unearned income Medicare contribution tax” applies to interest, dividends, capital gains, annuities, royalties and other types of investment income. But it only applies on investment income above the $200,000 and $250,000 thresholds.


Medical device excise tax: The 2.3 percent excise tax on medical device sales will affect products, from artificial hips and bedpans to stents and defibrillators. The tax is a tradeoff of sorts for the device industry, which, like insurers and pharmaceutical companies, will see substantial new revenue when the health law requires millions of people to start buying insurance in 2014.

wealth Fund. The group’s report also concluded that health insurance is becoming less affordable for low- and middle-income households,


A little-known provision in the Affordable Care Act will create these new member-based health insurance companies called Consumer-Oriented and Operated Plans, or CO-OPs, which are member-based. DID YOU



Minneapolis and Seattle already have CO-OPs in place, and their supporters say they allow consumers to have a say on contracts with providers, as well as on issues of patient access, quality of care and the efficiency of clinical care. But opponents of CO-OPs argue that

IF CONGRESS DECIDES TO START TAXING WORKERS’ HEALTH BENEFITS as a means to raise revenue as part of an effort to rein in the federal deficit, more than half of American workers would switch to a less costly plan or drop coverage. Source: Employee Benefit Research Institute

44 InsuranceNewsNet Magazine » February 2013

Health insurance costs rose far higher than incomes between 2003 and 2011, with a family’s premiums jumping 62

percent while income rose just about 11 percent, according to the Common-

with total insurance premiums amounting to 20-25 percent of median incomes in most states. Deductibles are also soaring,

doubling from 2003 to 2011. In 2011, average annual premiums for family plans ranged from about $12,400 to nearly $17,000. The report blamed the high cost of premiums largely on increased costs of providing care and what it called inefficiencies in the health care system.

Family Premiums




February 2013