Insurance Q&A

December 22, 2009

COBRA Subsidy in Defense Appropriations?

Filed under: Uncategorized — rrroark @ 1:53 pm

President Obama has signed H.R. 3326, a defense appropriations bill with a provision that will let involuntarily terminated workers seek the temporary 65% federal health benefits continuation subsidy up until Feb. 28, 2010. The Consolidated Omnibus Budget Reconciliation Act benefits continuation subsidy provision also will extend the period when terminated workers can get the subsidy to 15 months. Originally, the application cut-off date was going to be Dec. 31, 2009, and the subsidy was going to last just 9 months.

Congress created the COBRA subsidy program earlier this year, when it included the original subsidy provision in the American Recovery and Reinvestment Act of 2009. Before Congress created the subsidy, employees eligible for COBRA continuation benefits usually could get them only if they could pay 102% of the full cost of the coverage premiums.

The provision will also:

1. Require a special notice describing the new subsidy provisions to go out to all AEIs who have been on COBRA on or after Nov. 1, 2009, or whose qualifying event is an “involuntary termination” of employment occurring on or after Nov. 1, 2009;

2. Allow for a 60-day period for the retroactive payment of premiums for “assistance eligible individuals” whose subsidy period expired Nov. 30 and who failed to pay their premium for December coverage.

3. Let employees who are involuntarily terminated before Feb. 28, 2010, but get COBRA coverage that starts after Feb. 28, 2010, qualify for the subsidy.

The U.S. Department of Labor, the U.S. Department of Health and Human Services, and the Internal Revenue Service all could issue guidance concerning the subsidy extension.

December 21, 2009

Death Tax Changes in the Wind

Filed under: Uncategorized — rrroark @ 2:42 pm

Repealing the federal estate tax would increase the federal budget deficit by about $502 billion over the 10-year period starting in 2010, a Congressional Budget Office analyst predicts.

Current law calls for the estate tax to vanish in 2010, but to spring back to 2001 exemption and tax rate levels in 2011. If Congress let the estate tax system return to the 2001 exemption and tax rate levels, that would reduce the deficit by about $420 billion, the analyst, Pamela Greene, writes in a CBO issue brief.

Members of the House voted earlier this month to pass H.R. 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009, a bill that would continue the estate tax exemption and top tax rate at 2009 levels. The bill is now under consideration in the Senate.

Continuing the estate and gift tax rules that have been in effect in 2009 would cost about $234 billion from 2010 to 2019 if the exemption amount were not indexed for inflation, and about $244 billion over that period if the exemption amount were indexed for inflation, Greene estimates.

The 2009 estate tax exemption is $3.5 million for an individual and $7 million for a couple, and the top 2009 estate tax rate is 45%.

The 2001 estate tax exemption was $1 million for an individual and $2 million for a couple, and the top estate tax rate was 55%.

Greene suggests in the brief that Congress could supplement or replace the estate tax with an inheritance tax.

An inheritance tax “would be applied separately to each person inheriting assets,” Greene writes. “The inheritance tax could be set up so that heirs with lower income or less wealth paid a lower tax than did heirs with higher income or more wealth, so that smaller inheritances would be taxed at lower rates than larger inheritances, or so that closer relatives paid lower taxes than more distantly related heirs.”

Replacing the estate tax with an inheritance tax would require more taxpayers to file returns, but it might eliminate some tax planning strategies now used to reduce estate and gift taxes, Greene writes.

The CBO estate tax proposal review is available here.

Repealing the federal estate tax would increase the federal budget deficit by about $502 billion over the 10-year period starting in 2010, a Congressional Budget Office analyst predicts.

Current law calls for the estate tax to vanish in 2010, but to spring back to 2001 exemption and tax rate levels in 2011. If Congress let the estate tax system return to the 2001 exemption and tax rate levels, that would reduce the deficit by about $420 billion, the analyst, Pamela Greene, writes in a CBO issue brief.

Members of the House voted earlier this month to pass H.R. 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009, a bill that would continue the estate tax exemption and top tax rate at 2009 levels. The bill is now under consideration in the Senate.

Continuing the estate and gift tax rules that have been in effect in 2009 would cost about $234 billion from 2010 to 2019 if the exemption amount were not indexed for inflation, and about $244 billion over that period if the exemption amount were indexed for inflation, Greene estimates.

The 2009 estate tax exemption is $3.5 million for an individual and $7 million for a couple, and the top 2009 estate tax rate is 45%.

The 2001 estate tax exemption was $1 million for an individual and $2 million for a couple, and the top estate tax rate was 55%.

Greene suggests in the brief that Congress could supplement or replace the estate tax with an inheritance tax.

An inheritance tax “would be applied separately to each person inheriting assets,” Greene writes. “The inheritance tax could be set up so that heirs with lower income or less wealth paid a lower tax than did heirs with higher income or more wealth, so that smaller inheritances would be taxed at lower rates than larger inheritances, or so that closer relatives paid lower taxes than more distantly related heirs.”

Replacing the estate tax with an inheritance tax would require more taxpayers to file returns, but it might eliminate some tax planning strategies now used to reduce estate and gift taxes, Greene writes.

Refusing Medical Claims

Filed under: Uncategorized — rrroark @ 1:41 pm

the Independent Institute took a look at the numbers published by the American Medical Association:

According to the American Medical Association’s National Health Insurer Report Card for 2008 , the government’s health plan, Medicare, denied medical claims at nearly double the average for private insurers: Medicare denied 6.85% of claims. The highest private insurance denier was Aetna @ 6.8%, followed by Anthem Blue Cross @ 3.44, with an average denial rate of medical claims by private insurers of 3.88%

In its 2009 National Health Insurer Report Card, the AMA reports that Medicare denied only 4% of claims—a big improvement, but outpaced better still by the private insurers. The prior year’s high private denier, Aetna, reduced denials to 1.81%—an astounding 75% improvement—with similar declines by all other private insurers, to average only 2.79%.

Maybe there’s something to be said for the need to keep your customers satisfied in order to make that profit after all. Of course, lower denial rates are not necessarily a good thing. It could mean that more fraud goes undetected.

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