Showing 15 posts in Tax.
Michigan’s tax on paid health care claims is not preempted by ERISA, according to a decision by the United States Court of Appeals for the Sixth Circuit. On remand from the United States Supreme Court, the federal appellate court held that the Health Insurance Claims Assessment Act does not impermissibly interfere with the uniform administration of group health plans or impose additional burdens on self-insured plans and third-party administrators. Read More ›
The Michigan Health Insurance Claims Assessment Act is back for reconsideration before the United States Court of Appeals for the Sixth Circuit. The act imposes a tax on paid health care claims that is used to fund the state share of Michigan’s Medicaid program. The act had been upheld by the federal appeals court in 2014 against an ERISA preemption challenge brought by an organization representing self-insured group health plans and third-party administrators.
The Supreme Court recently remanded the case to the federal court of appeals for reconsideration in light of a decision holding that a Vermont all-payers claim database statute interfered with the uniform administration of ERISA plans and was therefore preempted. Read More ›
Categories: Medicare/Medicaid, Tax
The US Supreme Court's Ruling on the Affordable Care Act will not Change Employers' Responsibilities
On June 25, 2015, the Supreme Court of the United States issued a ruling related to the Patient Protection and Affordable Care Act (the "Act") in the case of King v Burwell. The issue that the Court addressed was whether tax credits were available to individuals who purchased health insurance coverage through a Health Insurance Exchange ("Exchange") that was established by the Federal government.
An Exchange serves as a marketplace where individuals can compare various health insurance plans and ultimately purchase health insurance coverage. The Act requires an Exchange to be established in each State. If a State fails to establish its own Exchange, the Federal government is required to step in and establish the Exchange for that State. The Court's decision had the potential to preclude tax credits for individuals purchasing insurance through the Federal Exchanges in 34 States, including Michigan.
This issue was of significant importance because of its implications for the Act's Employer Mandate, which generally requires large employers to offer health insurance coverage to their full-time employees. The tax credits provided under the Act serve as the lynchpin for liability under the Employer Mandate. Despite the fact that a large employer may fail to offer health insurance coverage to its full-time employees, it will not be penalized if those employees do not obtain coverage through the Exchange and receive a tax credit. Therefore, large employers located in States that have a Federal Exchange could arguably avoid penalties for their failure to offer coverage to their full-time employees; such employees would not receive a tax credit when purchasing health insurance coverage on the Exchange and would not trigger the penalty. Read More ›
Rural hospitals across the United States struggling to stay open
According to the National Rural Health Association, approximately 50 hospitals in the rural United States have closed since 2010. The number of annual closures is growing. Congressional healthcare budget cuts and policy changes significantly affect rural hospitals because rural hospitals often have a disproportionate number of patients who are covered under Medicare, Medicaid or who are uninsured. A number of factors affect and pose challenges to rural hospitals. One challenge is the difficulty of attracting talent, which often means paying more to healthcare professionals in order to recruit them for employment at a rural hospital. Other challenges facing rural hospitals include:
- changing demographics;
- advances in medical practice that the hospital may be unable to implement;
- new federal regulations and standards that create additional compliance related pressure; and
- lower reimbursement rates for Medicare and Medicaid.
Closures of rural hospitals may force individuals to travel long distances for medical care, which may lead to an increase in mortality rates. The closures may discourage business ventures in rural areas due to the increased costs associated with not having a healthcare facility nearby. Metropolitan hospital closings have increased recently, but the existence of medical care alternatives in metropolitan areas typically reduces the effects that closures have on patients. Read More ›
On February 18, 2015, the Internal Revenue Service (“IRS”) provided further guidance related to the issue of how certain employer health insurance reimbursement arrangements are treated under the Affordable Care Act (“ACA”).
As we explained in a previous post, after the Health Insurance Marketplace opened for business, many employers recommended that their employees use it to purchase individual health insurance policies, with the promise that the premium costs would be reimbursed by the employer. In fact, such employee reimbursement strategies were aggressively marketed to employers as a solution to reduce costs and comply with the requirements of the ACA. Little did these employers (and marketers) know, such arrangements exposed the employers to significant penalties under the ACA.
Prior guidance made clear that such arrangements – whether funded on a pre- or post-tax basis – may be subject to the ACA’s market reforms. Employers that offer reimbursement arrangements that violate the ACA are subject to a $100 per day per affected employee penalty.
On Nov. 7, the U.S. Supreme Court decided it would hear a case concerning the health insurance subsidies provided to millions of Americans under the Patient Protection and Affordable Care Act. A June 2015 decision is expected in the case of King v. Burwell, which challenges the Internal Revenue Service’s authority to regulate tax-credit subsidies for coverage purchased through health insurance marketplaces established by the federal government (such as the Michigan health insurance marketplace). Nationwide, more than four out of five people who have received coverage through a federal marketplace are getting a tax credit. Read More ›
The United States Court of Appeals for the Sixth Circuit has upheld Michigan’s tax on paid health care claims in an opinion published on August 4. The decision has very significant implications for the State of Michigan, which uses the revenues to partially fund the Medicaid program, and for employers, group health plans, and third-party administrators, which are subject to the tax. Read More ›
Categories: 6th Circuit Court of Appeals, Tax
The Patient Protection and Affordable Care Act requires that certain health insurance providers pay an annual fee based on the net premiums they wrote during the preceding calendar year. The providers required to pay this fee include health insurance issuers; health maintenance organizations; certain insurance companies; insurers providing Medicare Advantage, Medicare Part D, or Medicaid coverage; and multiple employer welfare arrangements.
In order to calculate the fees, the Internal Revenue Service (“IRS”) must obtain information related to the amount of net premiums written by each health insurance provider. This is accomplished through IRS Form 8963 (Report of Health Insurance Provider Information). Health insurance providers are required to submit Form 8963 to the IRS by April 15 of each year. Read More ›
On Feb. 12, 2014, the U.S. Department of Treasury and the Internal Revenue Service published final rules (the “Final Rules”) related to the Employer Shared Responsibility provisions of the Patient Protection and Affordable Care Act (“PPACA”). The Employer Shared Responsibility provisions, referred to as the “Employer Mandate,” generally require certain employers to offer minimum essential health care coverage to their full-time employees or face penalties. The Employer Mandate was originally scheduled to become effective on Jan. 1, 2014 but was delayed until Jan. 1, 2015.
The Final Rules include a second delay of the Employer Mandate. They provide that employers who employ 50 – 99 full time equivalent employees will not be required to comply with the Employer Mandate until Jan. 1, 2016. Additionally, those employers who employ 100 or more full time equivalent employees must offer minimum essential coverage to only 70 percent of those full time employees by Jan. 1, 2015 (as opposed to the 95 percent coverage requirement under the previous regulations). Those employers employing 100 or more full time employees will be required to offer coverage to 95 percent of all full time employees by Jan. 1, 2016. The chart below summarizes the basic details concerning this delay. Read More ›
On August 31, 2012, a federal district court ruled that the Michigan Health Insurance Claims Assessment Act is not preempted by the federal Employee Retirement Income Security Act. The act imposes a 1% tax on paid health insurance claims for services rendered in Michigan to residents of Michigan. The tax is assessed against commercial insurers, HMOs, nonprofit health and dental corporations, Medicaid managed care organizations, specialty prepaid health plans, third-party administrators, and group health plan sponsors. The act, which took effect on January 1, 2012 and expires on December 31, 2013, authorizes the state to collect up to $400 million in revenues each year, which are used to fund the Michigan state share of the Medicaid program. When combined with the federal multiplier, the tax will generate $2.4 billion in funding for Michigan’s Medicaid program. Read More ›
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