Health News
Earlier today, Congress approved a bill that reduces paperwork requirements on small business by repealing what's known as the enhanced 1099 reporting requirements passed as part of the Affordable Care Act (ACA). Congress paid for this change by weakening the ACA's health insurance affordability protections for low- and moderate-income families. While repeal of 1099 reporting requirements is an important priority for small businesses, the costs of this adjustment should not come directly from the pockets of struggling families.
How did Congress pay for 1099 repeal?
Starting in 2014, the Affordable Care Act provides sliding-scale tax credits to help lower the costs of premiums for people earning up to 400 percent of the Federal Poverty Level (around $73,000 for a family of three.) The law allows the federal government to pay these tax credits directly to the insurer each month, so beneficiaries will only be billed for the amount of the premium they owe in excess of their tax credit. But if a person?s income changes during the year, they could potentially be eligible for an additional credit or owe an additional amount when they file their taxes. To strike a balance between recapturing subsidies and not hitting working families too hard, Congress placed caps in the ACA on how much low- and moderate-income families could be required to repay.
Earlier today, that balance was tipped against working families. Congress paid for the 1099 repeal by increasing the amount by $500, and sometimes more, that some low- and moderate-income families could have to repay at the end of the year if their annual income was higher than expected.
For example, a family may start the year off with a very low income and qualify for substantial premium tax credits each month. Midway through the year, one family member then gets a new job that raises the family?s income and offers health insurance, and they stop receiving monthly premium tax credits. However, at the end of the year that family will have to repay some of the tax credits they received when their income was lower, since their annual income turned out to be higher than their expected annual income when they qualified for the credits. The 1099 repeal bill passed by the Senate today increases the amount that many families in this situation will have to repay.
This provision is harmful to families and is politically dangerous because it:
Does this feel like déjà vu?
That?s because Congress already increased these repayment amounts to pay for a law passed last December that averted a scheduled 25 percent cut in Medicare reimbursement rates for doctors. We blogged about it then, warning that it was the first step down a slippery slope. We?re sorry to see Congress take yet another step down that dangerous slope today.
Katherine Howitt
Community Catalyst
(originally posted at Health Policy Hub here)
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- A Helping Hand For Small Businesses: Health Insurance Tax Credits
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- The Affordable Care Act: Before And After
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Health News
Sliding further down a slippery slope: Congress weakens ACA affordability protections again
Earlier today, Congress approved a bill that reduces paperwork requirements on small business by repealing what's known as the enhanced 1099 reporting requirements passed as part of the Affordable Care Act (ACA). Congress paid for this change by weakening the ACA's health insurance affordability protections for low- and moderate-income families. While repeal of 1099 reporting requirements is an important priority for small businesses, the costs of this adjustment should not come directly from the pockets of struggling families.
How did Congress pay for 1099 repeal?
Starting in 2014, the Affordable Care Act provides sliding-scale tax credits to help lower the costs of premiums for people earning up to 400 percent of the Federal Poverty Level (around $73,000 for a family of three.) The law allows the federal government to pay these tax credits directly to the insurer each month, so beneficiaries will only be billed for the amount of the premium they owe in excess of their tax credit. But if a person?s income changes during the year, they could potentially be eligible for an additional credit or owe an additional amount when they file their taxes. To strike a balance between recapturing subsidies and not hitting working families too hard, Congress placed caps in the ACA on how much low- and moderate-income families could be required to repay.
Earlier today, that balance was tipped against working families. Congress paid for the 1099 repeal by increasing the amount by $500, and sometimes more, that some low- and moderate-income families could have to repay at the end of the year if their annual income was higher than expected.
For example, a family may start the year off with a very low income and qualify for substantial premium tax credits each month. Midway through the year, one family member then gets a new job that raises the family?s income and offers health insurance, and they stop receiving monthly premium tax credits. However, at the end of the year that family will have to repay some of the tax credits they received when their income was lower, since their annual income turned out to be higher than their expected annual income when they qualified for the credits. The 1099 repeal bill passed by the Senate today increases the amount that many families in this situation will have to repay.
This provision is harmful to families and is politically dangerous because it:
- Increases financial penalties on low- and moderate-income families for having found a better job or gotten a raise. These new costs will impose financial hardship on already-struggling families.
- Reduces the number of people who will enroll in the advanced tax credits, since they will fear this type of unexpected cost. This means fewer people will get the coverage they need.
- Jeopardizes public support for the ACA. Stories of families owing substantial unexpected costs could lead to further decline in public support for the law.
Does this feel like déjà vu?
That?s because Congress already increased these repayment amounts to pay for a law passed last December that averted a scheduled 25 percent cut in Medicare reimbursement rates for doctors. We blogged about it then, warning that it was the first step down a slippery slope. We?re sorry to see Congress take yet another step down that dangerous slope today.
Katherine Howitt
Community Catalyst
(originally posted at Health Policy Hub here)
- Don't Chip Away Chip
Leaders, from Illinois and across the country, are calling on Congress to continue funding the Children?s Health Insurance Program by highlighting its success in reducing the number of uninsured children and warning that these children may lose coverage...
- The Federal Government Pays What? Tax Credits And Cost-sharing Subsidies Under The Aca.
Approaching the new changes associated with the Affordable Care Act (ACA) as a consumer can be a daunting task. Understanding what you may qualify for is tough, and where to look for information that makes sense is not easy either. Two concepts designed...
- After The Election: A Consumer's Guide To The Health Law
This post originally appeared on Kaiser Health News; by Mary Agnes Carey and Jenny GoldNow that President Barack Obama has won a second term, the Affordable Care Act is back on a fast track.Some analysts argue that there could be modifications...
- A Helping Hand For Small Businesses: Health Insurance Tax Credits
The Affordable Care Act (ACA) established a tax credit to help small businesses provide health insurance for their employees. According to a new study released today from Families USA and the Small Business Majority, 3.2 million small businesses, employing...
- The Affordable Care Act: Before And After
The public debate around the Affordable Care Act has given rise to rumors and myths around how it will affect our lives, our families and our businesses. No surprise really, when you consider the fact that a single (2,600-page) document is well on its...