TASC Health Care Reform Watch Page

At TASC, we closely monitor the moves taking place in Health Care Reform. Especially important to us is any language being put forth in the bill(s) that would affect tax-advantaged employer sponsored health benefits, such as Flexible Spending Accounts (FSA), Health Reimbursement Arrangements (HRA), and Health Savings Accounts (HSA).

This web page is a portal for politically-neutral information about Health Care Reform as it relates to TASC products and services and how our customers may be affected by any legislative changes. TASC CEO, Dan Rashke, has access to Washington insider connections; he knows what is really being discussed and we will share those findings with you here on this page.

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LATEST NEWS!   Updated 11/20/2009

 

SENATE BILL  (released 11/18/09)


Majority Leader Harry Reid (D-NV) has released the legislative language for “ The Patient Protection and Affordable Care Act.” The Congressional Budget Office (CBO) estimates that provisions in the 2,074 page bill will cost $849 billion between 2010 and 2019. Below is a brief summary of key provisions of interest, followed by the latest information on the expected schedule for the Senate debate.

 

KEY PROVISIONS REGARDING TAX-ADVANTAGED BENEFIT PLANS

  • Imposes Excise Tax on High-Cost Plans: Beginning in 2013, imposes a 40 percent excise tax on plans that exceed $23,000 for families and $8,500 for individuals [Note: The previous version set the excise tax threshold at $21,000 and $8,000, respectively.] Contributions to FSAs, HSAs, and MSAs are included in determining the threshold for the excise tax.
  • Caps Flexible Spending Accounts (FSAs): Beginning January 1, 2011, caps contributions to FSAs at $2,500 with no indexing for future inflation.
  • Requires Prescription to Receive Reimbursement for Drugs Under Account-Based Plans: Beginning January 1, 2011, requires individuals to obtain a prescription for drugs, including over the counter medicines, as a requirement for reimbursement. [ Note: The previous version made this provision effective on January 1, 2010.]
  • Establishes Small Business Cafeteria Plans: Beginning January 1, 2011, establishes SIMPLE cafeteria plans.   [Note: We are reviewing the language more closely and will send an update once that review has been completed].

SCHEDULE


Tomorrow, Senator Reid is expected to begin the process to hold a procedural vote that would take place on Saturday. If Senator Reid obtains sixty votes, the Senate could debate the motion to proceed to the health care legislation for up to thirty hours bringing them into Sunday. Should the Senate adopt to motion to proceed, Senator Reid will offer the “ Patient Protection and Affordable Care of 2009” as a substitute amendment to H.R. 3950, a “shell bill” that will serve as the legislative vehicle for the health care reform legislation. Some Republican Senators have expressed their intent to require a reading of the bill, which would likely take the Senate into Tuesday and at the conclusion of which, the Senate would recess for Thanksgiving. Upon return from the recess, the Senate floor debate would begin in earnest with the bill fully amendable. Please note that the schedule is still very fluid.

 

NOTE: See an updated version of our Healthcare Reform Bills chart that includes this new information.



HOUSE BILL 

 

FROM 11/10/2009

H.R. 3962, the House health bill (Affordable Health Care for America Act) PASSED by a narrow margin on 11/7/09.  It moves on to the Senate next.

 

We have written a lot here about the various bills and sections of each that may have an impact on tax-advantaged benefit plans.  To make these issues easier to understand, we've created an easy-to-read Healthcare Reform Bills chart (updated 11/20/09) that provides a snapshot of the proposed changes in both the House and Senate bills and briefly describes how they might affect you and your employees.  

 

FROM 10/30/2009

Weighing in at 1,990 pages it is a combination of three other bills that were put forth by House Education and Labor, Energy and Commerce, and Ways and Means committees.  After reviewing the legislation we found the following items of interest for tax-advantaged benefit plans.

1. Sec. 531. Distributions for medicine qualified only if for prescribed drug or insulin. Provides that nontaxable reimbursements from health flexible spending accounts, health reimbursement arrangements, and health savings accounts do not include a medicine or drug unless the medicine or drug is prescribed or is insulin. Applies to expenses incurred after 12/31/10.

2. Sec. 532. Limitation on health flexible spending arrangements under cafeteria plans. Limits salary reduction contributions to health flexible spending arrangements to $2,500 (indexed to the consumer price index). Cap applies to taxable years beginning after 12/31/12.

3. Sec. 533. Increase in penalty for nonqualified distributions from health savings accounts. Increases the 10 percent penalty on distributions from health savings accounts that are not used to pay for health related expenditures to 20 percent. Applies to taxable years after 12/31/10.

4. Sec. 542. Offering of exchange-participating health benefit plans through cafeteria plans. Provides that coverage purchased through the Exchange may not be purchased on a pre-tax salary reduction basis unless the purchaser’s employer is eligible to offer employer coverage through the Exchange.

5. Require companies with a payroll of $500,000 or more to offer employees’ health coverage, or face minimum 2 percent penalty on payroll (up from $250,000 in earlier House versions). The penalty increases based on payroll (e.g., those with payroll greater than $750,000 would pay a penalty of 8.0 percent); and establish a public plan with negotiated rates; provider participation would be voluntary.  (Read more beginning on page 308.)

6. The legislation does not include a tax on high-cost health plans. The main financing mechanism is a 5.4 surtax on high-income individuals defined as married couples with adjusted gross incomes exceeding $1 million a year and individuals over $500,000. 

Other elements of the bill would:

  • Forbid plans from basing premiums or denials of care on factors such as pre-existing conditions, race, or gender, and restrict the use of age rating.
  • Require health plans for children to cover dental, hearing and vision care.
  • Require health plans offered through the exchange system (and employer plans) to cover preventive care.
  • Close the Medicare Part D prescription drug program “doughnut hole", which is the gap that exists when coverage for standard prescription expenses ends but catastrophic coverage has not yet begun.
  • Place a cap on patient out-of-pocket expenses.
  • Provide affordability credits for individuals and families that would help them pay their health insurance premiums as long as they meet certain income requirements.
  • Provide health insurance subsidies for small businesses.
  • Require negotiation of drug prices for Medicare.

We continue to watch this issue carefully and will provide you additional information as soon as it is available.  Coming soon!  A matrix that will give you a more snap-shot view of each of the proposed changes and how they might affect employers and participating employees.

 

 

In other related news...

  • US House Votes to Avert Cuts to Medicare Payments to Doctors (11-20-09) read more
  • What's in the Senate Health Bill For You? (11-19-09) read more
  • Proposed FSA Cap Could Mean Problems for Plans and Members (11-9-09) read more
  • House passes its healthcare bill (11-7-09) read more
  • House, Senate health care bills details (11-7-09) read more
  • How To Get the Most Out of Your Flexible Spending Plan (11-3-09) read more
  • House Dems unveil health care bill (10-29-09) read more
  • Details of Senate Finance health bill (10-15-09) read more

Health Care Reform Documents  

Advocacy

 

Are you concerned about a cap being placed on Flex plans?  If so, we urge you to advocate for your position and express your concerns to your congressional representatives.  It's easy for you to do just that.  Simply visit www.savemyflexplan.org , the pathway to Save Flexible Spending Plans.  This national grassroots advocacy campaign is sponsored by the Employers Council on Flexible Compensation (ECFC), a non-profit organization dedicated to the maintenance and expansion of private employee benefit programs on a tax-advantaged basis.

 

This informational website lets you advocate for your position. It provides a user-friendly way to send a message to your local representatives, to President Obama, and to Vice-President Biden. It is vital that your elected officials hear your concerns. 


Important Links   

  • CEO Blog - TASC CEO, Dan Rashke, writes often about heatlh care and other important things occuring in the benefits industry.      
  • TASC Provider News Blog - this site contains everything you need to know about TASC-specific plan/policy changes and enhancements.  We update the blog at least once a week with something new, so bookmark it and visit it often to stay in the know.  
  • Save Flexible Spending Plans - a comprehensive website dedicated to providing you with ways to share your health care stories and connect with your local and Washington political leaders.  You can also view news stories and calculate the impact changes to Flexible Spending Plans would have on your bottom line. 
 

Prior News Posts (follow the history...)

 

POSTED 10/20/09
The healthcare reform bill from the Senate Finance Committee has been released.  The bill is 1,500 pages long and for the most part is pretty much what we expected.  However, there are a couple of twists.  (See the Bill, the Committee Report (summary), and other documents below.)
  • The bill calls for the creation of a SIMPLE Cafeteria Plan (Pages 371-374 of the bill).  Much like the SIMPLE Plans in the retirement world, this would ease the non-discrimination requirements small employers face when implementing a Cafeteria Plan.
  • There appears to be a push amongst a handful of Senators to raise and index the proposed cap on total benefits an employee can receive (Page 337 of the Committee Report).  Their proposal would index the cap tied to the Consumer Price Index plus 1 percent.  These Senators are also talking about bumping the cap $1,850 a year for single employees and $5,000 a year for families for employees 55 years or older.
TASC feels both of these proposals are positive.  Too many times poor design of non-discrimination requirements have discouraged small employers from using these Plans.  Anything that can ease these regulations will increase acceptance, which ultimately will benefit employees.
 
This is a first, quick look at a very extensive document.  We will take a step back and review this material more closely.  Watch for more updates soon.

POSTED 10/14/09

On October 13, 2009, the Senate Finance Committee approved by a 14-9 vote the healthcare reform bill proposed by committee chairman, Senator Max Baucus (D-MT).  The Senate Finance Committee's bill approved on Tuesday now needs to be merged with a version produced by the Senate Health, Education, Labor and Pension (HELP) Committee, before moving on to be merged with the House version.

 

The bill approved this week made not changes to items from previous versions of the bill that touch our industry.  While the cap on Flexible Spending Accounts (FSAs) is now set at $2,500 annually, currently at issue for our customers is the indexing of the FSA cap.  At present, the FSA cap would not be indexed annually for inflation.  This means your FSA would lose ground every year, and in fact would lose real buying power even before the bill is enacted in 2011.

 

Our industry is working hard on your behalf to provide Senators and Representatives with a better understanding of the real effect these benefits have on their constituents.  You can help by reaching out to your Senators and Representatives.  I encourage you to help in this cause.  It's not about lobbying or complaining, it's about communicating to your respective Senator or Representative about what this account means to you.  Communicating in this way will help the cause, because most Senators and Representatives take comments from their constituents more seriously than they do those from lobbyists.  It's easy; just visit http://www.savemyflexplan.org/ for more information and direction.  There you will find everything you need to be heard loud and clear.

 

Stay tuned to this page for more information as it becomes available.

POSTED 9/21/09

On Saturday morning the Senate Finance Committee posted a list of amendments to the America’s Healthy Future Act it released last week. In total, there were more than 500 amendments. Roughly 18 of the amendments related to our industry, and all of the 18 - which were proposed by Democrats and Republicans alike - are seen as very positive for our industry and for employers and employees who benefit from these types of Plans. The amendments include proposals to increase the cap on Flexible Spending Accounts (FSAs), to set-up better indexing of the cap, and to retain the tax deductions for over-the-counter medications. Senator Max Baucus (D-MT) and the Senate Finance Committee expect to begin deliberations on the Act later this week.

Here is a sampling of some of the proposed amendments:

  • Senator Charles Schumer (D-NY) proposed increasing the FSA cap to $3,000 and applying the same index to the FSA cap as that applied to the threshold for the excise tax.
  • Senators Olympia Snowe (R-ME) and Mike Enzi (R-WY) proposed increasing the FSA cap to $3,000 as well.
  • Senator Pat Roberts (R-KS) proposed increasing the FSA cap to $5,000 and allowing for the rollover of unused funds.
  • Senators Jon Kyl (R-AZ), John Ensign (R-NV), and John Cornyn (R-TX) all proposed eliminating the cap on FSAs.
  • Both Senators Orrin Hatch (R-UT) and Jim Bunning (R-KY) want to amend the bill so that over-the-counter medications qualify as medical expenses.
  • Hatch and Roberts also want to amend the bill to exclude FSAs from determination of threshold for excise tax.

As you can see, both Republicans and Democrats are proposing amendments, and so far all of the proposals are favorable from our standpoint. Perhaps the real message here is that we are still along way from this becoming law. The bill is moving through the process and will likely undergo a lot of changes before it hits the President’s desk. Stay tuned.

POSTED 9/16/09
As promised, the Senate Finance Committee released America’s Healthy Future Act of 2009 shortly before noon today (9/16/09).  A quick review of the 220-page Act indicates that our expectations stated in a previous post are generally in line with the Act.  Four items in the Act affect TASC and our customers:

  1. The cap on Flexible Spending Accounts (FSAs) is set at $2,000 per year.  No surprise there.
  2. The cap on healthcare is set at $8,000 for singles, and at $21,000 for families. The penalty for exceeding the cap is 35 percent of the amount that exceeds the thresholds.  The penalty (excise tax) is higher than I expected.
  3. Over-the-counter medications are no longer an eligible expense under FSAs, Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs).  This would go into effect in 2010!
  4. The caps (on FSAs and on overall healthcare) are tied to the Consumer Price Index (CPI). The first adjustment to these caps will not take place until 2014.

Another item will affect customers of our HSA services: the tax on distributions from a HSA for non-medical expenses will increase to 20 percent of the disbursed amount.  This change is scheduled to be effective January 1, 2010.

We will continue to keep our customers informed and will monitor developments closely as this progresses through the political process.

POSTED 9/16/09 " Beginning to Move" (from the TASC CEO Blog)

POSTED 9/15/09 " Closer, but Still a Way to Go" (from the TASC CEO Blog)

POSTED 8/31/09 " Edward (Ted) Kennedy - 1932-2009" (from the TASC CEO Blog)

POSTED 8/14/09 " What is TASC Doing?" (from the TASC CEO Blog)

POSTED 8/7/09 " The FSA Cap and Working Americans" (from the TASC CEO Blog)

For more history visit the TASC CEO Blog and click on the Health Care Reform category.