MN Hospitality Advocate

Health Care Reform Isn’t Over Yet

Posted in Health Care Reform, Lodging Issues, Resort Issues, Restaurant Issues, Tourism Issues by hospitalityminnesota on March 24, 2010

While you might have thought the health care debate was over, it isn’t yet. Many potential steps remain before the final shape of this legislation is determined and its changes take effect. Today, the President signed the Senate-passed (and now House-passed) health bill into law. We now turn our full attention back to the Senate where Senators will begin tangling over the “fixer” or “reconciliation” bill (also passed by the House Sunday evening).

There are many concerns we have for the reconciliation bill, but below are some of the more troubling provisions for employers:

1. Employer mandate: The penalty for the “free rider” increases from $750 per employee to $2000 per employee if you don’t offer insurance for more than 50 employees. If you do offer insurance, but the employee share of premiums is “unaffordable” (greater than 9.5% of income), and that employee goes into the exchange and receives a tax credit, your fine is $3000 per employee!!

2. For the first time, it uses part-time employees when calculating how many full time employees for that determination of “over 50 employees”. The senate bill was silent on part-time workers.

3. A new 3.8% “Medicare” tax on non-wage income would be placed on high earners, income from interest, dividends, capital gains, and some profits from investments in partnerships and S-corporations. The revenues from the tax on unearned income would be credited to the Supplemental Medical Insurance trust fund. If the unearned income tax-and other proposed tax hikes on high-income individuals included in the President’s FY 2011 budget-become law, a high-income taxpayer could have an effective tax rate on capital gains and qualified dividends of 23.8 percent. Significantly, however, the effective tax rate on nonqualified dividends would be 43.4 percent.

4. The Cadillac tax on “high value” health plans is delayed from 2013 to 2018 – but it will now be only indexed to CPI inflation (Senate bill was CPI+1%). Since medical inflation is so much higher than CPI, this will, without a doubt, become the next Alternative Minimum Tax (AMT) and catch more and more plans every year.

5.  While stating they have removed the “Cornhusker Kickback,” the reconciliation bill also leaves in place special deals for Louisiana, Connecticut, the frontier states, and others, while adding in new special deals for states like Tennessee.

If the Senate makes any changes at all to the reconciliation package, it will have to go back to the House for yet another vote before going to the President for his signature.

David Siegel, CAE, IOM
Minnesota Restaurant, Lodging and Resort & Campground Associations and Hospitality Minnesota
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: