April 29, 2010 –Utah Business
It was 1910. A ship sailed from Liverpool, England to North America. On the ship, headed for a new life, were the Young family, including Thomas, age 15. View Full Article
NEW GROUPS TO BE INCLUDED IN UTAH HEALTH EXCHANGE'S LARGE GROUP PILOT PROJECT
April 29, 2010 – Utah Business
The Utah Health Exchange (UHE) announced that four additional companies will participate in the pilot program designed to admit large-employer groups into the Exchange, earlier than originally anticipated. When established last year, the plan was opened for early testing to small employers, 2-50 individuals. The Utah Health Exchange was not scheduled to admit large employer groups for beta testing until Fall 2011.
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Patient Protection and Affordable Care Act
April 29, 2010 – NAM - Engler
President Obama’s health care reform laws will keep employers busy for years to come, first trying to understand and then responding to the complicated new regulations, mandates and taxes.
The President signed H.R. 3590, the Patient Protection and Affordable Care Act, on March 23, 2010 and H.R. 4872, the Health Care and Education Reconciliation Act, on March 30. Taken together, the two laws represent the most sweeping government restructuring of the U.S. health care system since the 1960s.
The National Association of Manufacturers (NAM) was active throughout the legislative process, working to defeat the most damaging proposals – such as the public option – and maintaining important protections for employers, such as continuation of the Employee Retirement Income Security Act (ERISA).
Despite these successes, the laws represent major new burdens that make it more difficult for manufacturers in the United States to compete in the global economy. The laws’ profound impact on manufacturers of all sizes starts immediately and will grow as additional provisions take effect through 2018.
The most prominent change occurs in 2014, when individuals are required by federal law to purchase health insurance. This “individual mandate” is matched by a requirement that employers with 50 or more workers either provide appropriate insurance coverage or pay a fee for certain employees.
Employers should also expect the unexpected. Although the NAM warned Congress of the consequences of removing the tax deduction for Medicare prescription drug subsidies, many lawmakers expressed surprise when companies announced multi-million-dollar accounting charges after the law’s enactment.
Ultimately, the greatest impact may lie in what the legislation fails to do – control costs. Employers can expect premiums to continue increasing each year as the statute’s many mandates and programs enter into effect.
The summary below provides year-by-year highlights of the most significant provisions for which manufacturers should prepare. Much remains to be determined as Executive Branch agencies write the regulations.
The NAM remains actively engaged in all these issues, the regulatory process and potential legislative fixes. To help us, we ask for your input and experience. Please let us know how the new health care laws are affecting your company, your employees and your ability to compete.
For a printable version of this information, please visit www.nam.org/healthcaresummary
Health Care Reform: A Year-by-Year Summary of Major Provisions
2010
Medicare Part D Prescription Drug Subsidy
What: Elimination of the exclusion from gross income for company subsidies of prescription drug plans for Medicare Part D eligible retirees.
Who is Affected: Companies that receive subsidies for Medicare Part D eligible retirees. Although this provision goes into effect in 2013, manufacturers have already had to report the impact of this change on their earnings.
Small Business Tax Credits
What: Federal tax credits available to employers who provide coverage, have no more than 25 employees and whose annual wages average less than $50,000.
Who is Affected: Different credits are available depending on the size of the company. The credits will start in 2010 and rise in 2014 to a maximum of 50 percent of the cost of premiums offered by the smallest businesses – those with 10 or fewer workers.
Temporary Reinsurance Program
What: A temporary reinsurance program for retirees over age 55 who are not yet eligible for Medicare. The program reimburses up to 80 percent of health care expenses between $15,000 and $90,000 per retiree. Although the statute language provides some flexibility, the Administration expects employers to use the reimbursements to reduce the cost of providing medical coverage.
Who is Affected: Employers who provide retiree health benefits. The program ends in January 2014 or when funding runs out, whichever is earlier.
Benefit Mandates
What: No lifetime limits on coverage; restricts annual limits and no rescissions. Also, prior to 2014, effective September 23, 2010, the law provides for dependent care covered up to age 26 for adult children without an offer of employer-sponsored coverage.
Who is Affected: Employers with current/grandfathered plans, including ERISA plans.
2011
Grants for Small-Employer Wellness Programs
What: Grants for up to 5 years to small employers to establish wellness programs.
Who is Affected: Businesses with fewer than 100 workers that institute wellness programs (as defined by HHS) are eligible for government grants, with total funding of $200 million available through 2014.
Community Living Assistance Services and Supports (CLASS) Act
What: An entitlement program to provide long-term care services funded through employee premiums.
Who is Affected: Program is voluntary for employees. The extent of employer responsibility with regard to employee enrollment responsibilities is uncertain and likely to be clarified in regulations.
Pharmaceutical Tax
What: Pharmaceutical manufacturers will collectively pay a new excise tax, starting at $2.5 billion in 2011 and rising to $4.1 billion in 2018.
Who is Affected: The excise tax is part of $84.8 billion in new fees, rebates and discounts for which the pharmaceutical industry is responsible over the next decade.
2012
Medical Device Tax
What: A 2.3-percent excise tax on the sale of any taxable medical devices.
Who is Affected: Tax applies to medical devices from bedpans to surgical instruments, but not to items sold widely in retail outlets, such as canes and reading glasses purchased by consumers.
2013
Medicare Tax on Wage Income
What: A 0.9-percent surtax on wage income more than $200,000 for individuals and $250,000 for couples. Not deductible, not indexed to inflation.
Who is Affected: Individual and joint taxpayers with income above those amounts, shareholders and small business owners that file as pass-through entities. The tax is not indexed for inflation, so the number who will pay the tax will grow each year.
Medicare Tax on Investment Income
What: An additional 3.8-percent Medicare tax on income derived from capital gains, interest, dividends, annuities, royalties and rent for individuals with income above $200,000 and couples above $250,000.
Who is Affected: Upper income individuals and couples, shareholders and small businesses filing as pass-through entities. The tax is not indexed for inflation, so the number of those affected will grow.
Flexible Spending Accounts and Health Savings Accounts
What: Limits tax deductions for contributions to health Flexible Savings Accounts (FSAs) to $2,500. Beginning in 2011, over-the-counter drugs will no longer qualify as medical expenses for FSAs and Health Savings Accounts (HSAs).
Who is Affected: Individual contributors to FSAs and HSAs. Business plans that include contribution programs may require modifications.
2014
Employer Mandate for companies with over 50 Full-Time Equivalent Employees
Companies that do not provide health coverage:
Fees: What: A $2,000 per full-time employee fee, if one employee receives a credit via a new state insurance exchange. (The exchanges are state-based systems offering access to compare and purchase private coverage.)
Who is Affected: Employers who have at least one full-time employee who receives a premium tax credit must pay a fee of $2,000 per full-time employee – excluding the first 30 full-time employees from the assessment. (Tax credit is based on affordability as defined by statute and applies to household incomes below 400 percent of the federal poverty level.)
Companies that do provide health care coverage:
Fees: What: The lesser of a fee of $2,000 for each full-time employee or $3,000 for each employee receiving a credit in the exchange.
Who is Affected: Employers who offer coverage but have at least one full-time employee receiving a premium tax credit. (Tax credit is based on affordability as defined by statute and applies to household incomes below 400 percent of the federal poverty level.)
Free Choice Vouchers: What: Vouchers in the amount equal to the highest percentage employer contribution to any of its own insurance plans. Employee may use the voucher to purchase insurance from the exchange in lieu of company offered benefits.
Who is Affected: Employers who have full-time employees whose household income is below 400 percent of the federal poverty level and whose individual coverage contribution falls between 8- 9.8 percent of their adjusted gross income.
Auto Enrollment: What: Auto enrollment in health plan
Who is Affected: Employers with more than 200 employees who offer health coverage must automatically enroll their employees in a health care plan. Employees can opt out. The effective date is not yet certain and regulations could push this earlier.
Fees on Health Insurance Providers
What: Health insurance providers will collectively pay a new tax, starting at $8 billion in 2014 and rising to $14.3 billion in 2018.
Who is Affected: Any entity engaged in the business of providing health insurance.
Wellness Incentives
What: Permit employers to offer employees rewards of up to 30 percent of the cost of employer-paidcoverage (with authority for HHS to increase up to 50 percent) for employees who participate in wellness programs and meet certain health-related goals.
Who is Affected: Employers who offer wellness programs.
2018
Tax on High-Cost Insurance Plans
What: Impose a 40-percent excise tax on insurers of employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage.
Who is Affected: This tax on high-value health plans will have an adverse impact on companies with plans that cost more, such as small self-insured plans and those with older workforces. The tax will either increase costs or, more likely, cause employers to eliminate benefits to fall below the threshold, limiting options for employers and employees alike.
Copyright © 2010 National Association of Manufacturers
COBRA PREMIUM SUBSIDY NOW EXTENDED THROUGH MAY 31, 2010
April 29, 2010 – Holmes Robert and Owen HRO
It is time to revise COBRA premium subsidy notices - again! The COBRA 65 percent premium subsidy has been extended through May 31, 2010. The subsidy was enacted in 2009 to help workers who lost their jobs as a result of the economy maintain their employer-sponsored health insurance. The subsidy previously expired on March 31, 2010.
Click here to read the full alert.
TAX INCREASES
April 29, 2010 – NAM Capital Briefing
Finally, as the tax cuts enacted in 2001 and 2003 approach their expiration date, small and medium-sized manufacturers face looming tax rate increases for individuals, capital gains, dividends and estate taxes. Following the tax cuts of 2003, the U.S. economy grew at double the pace of the previous three years and faster than the average pace during the previous three decades. If these tax cuts are permitted to expire, manufacturers will face additional burdens that will prevent them from adding jobs in the future.
A report recently released by the independent Milken Institute and commissioned by the NAM, Jobs for America: Investment and policies for economic growth and competitiveness, outlines the jobs that could be created by taking pragmatic steps to address the problems above.
Instead of proposing to eliminate the corporate tax altogether – a move unlikely to garner widespread support in Congress – the Milken Institute analyzed the impact of reducing the corporate tax rate from its current 35 percent to the OECD average of 22 percent. The results: 350,000 new manufacturing jobs in the next decade.
Restoring the R&D tax credit, strengthening it by 25 percent and making it permanent would create more than 300,000 new manufacturing jobs within 10 years. This would enable businesses to plan for increases in their R&D spending to create new products and services.
In addition to the Milken report’s recommendations, extending the 2001 and 2003 tax rate cuts that were so valuable to small and medium manufacturers will not only prevent the job losses that would come with the expiration, but also create a more certain and stable environment that will allow small businesses to begin hiring and expanding.
Manufacturing has always been vital to the health of our nation’s economy and will play a key role in our recovery. But in order to do what they do best, manufacturers need the right policies in place. The NAM will continue to draw attention to the impact our nation’s tax policy has on manufacturers and work with Congress to create a tax environment more conducive to job creation.
R&D TAX CREDIT
April 29, 2010 – NAM Capital Briefing
In December, the research and development (R&D) tax credit – which is a proven incentive for stimulating private sector investment in R&D – expired for the 14th time since it was first enacted in 1981. Last year, the U.S. ranked 17th out of 21 major industrialized countries in offering R&D tax incentives. The credit’s expiration, however, has now left us dead last.
The R&D tax credit has been a key to growth in the manufacturing economy. It fuels innovation, which translates into new product development and increased productivity. However, many manufacturers performing R&D in the United States have been courted by other countries offering more generous and permanent R&D tax incentives in an effort to attract U.S. based R&D. The uncertainty of America’s R&D tax credit mitigates its incentive value.
OSHA UNVEILS NEW PENALTY PROGRAMS
April 29, 2010 – NAM Capital Briefing
OSHA released details on two new proposals this week that aggressively increase safety enforcement efforts. One new program significantly increases existing penalty structures with higher fines. The new penalty scheme for OSHA inspectors will triple the average penalties levied on employers for certain violations. Additionally, OSHA announced its “Severe Violator Enforcement Program” that expands the frequency of OSHA inspections and increases the agency’s scrutiny on many categories of employers using an overly broad definition of a “severe” violator. Details: Keith Smith, (202) 637-3045.
CORPORATE TAX RATE
April 29, 2010 – NAM Capital Briefing
Many American companies have substantial operations overseas and seek to sell their goods abroad – where 95 percent of the world’s consumers are located. Yet they are facing a tax climate that makes it increasingly difficult to compete with their foreign counterparts. The U.S. tax system, including high corporate tax rates, highly taxed exports and the "double tax" impact of a worldwide tax system, increases the cost of doing business for U.S. companies.
Manufacturers in America face the second highest statutory corporate tax rate among developed nations, trailing only Japan. The Administration’s budget proposal for the coming fiscal year would impose a $122 billion tax increase on worldwide American companies. The stifling corporate tax rate already puts manufacturers in a difficult position when trying to compete. The additional proposed tax hike would compound the problem by making the United States the only major country to impose immediate high taxes on foreign earnings.
BILL TO OVERHAUL OSHA ENFORCEMENT RECEIVES ATTENTION ON CAPITOL HILL
April 29, 2010 NAM Capital Briefing
This week both Congressional labor committees held hearings to further examine the Protecting America’s Workers Act (PAWA.) This misguided legislation changes the dynamics of the health and safety system in our nation’s workplaces by targeting employers with higher monetary and expanded criminal penalties for alleged compliance deficiencies. This approach is sure to impact the current collaborative relationship between employers and the Occupational Safety and Health Administration (OSHA). In response, the NAM submitted a statement to the Senate Health, Education, Labor and Pensions (HELP) Committee, available here.
UNVEILING OF SENATE CLIMATE LEGISLATION HITS PROCEDURAL ROADBLOCK
April 29, 2010 – NAM Capital Briefing
Plans for Sens. John Kerry (D-MA), Lindsey Graham (R-SC) and Joseph Lieberman (I-CT) to unveil draft climate and energy legislation this week hit a roadblock after Sen. Graham announced his intention to withdraw support for the legislation, which the coauthors have been drafting for the past six months. Late last week, Sen. Graham, the legislation's only Republican co-sponsor, objected to plans by Senate Majority Leader Reid (D-NV) to place controversial immigration reform legislation ahead of energy and climate legislation on the Senate agenda, which would diminish the bill's prospects for gaining 60 votes. The bill will need to reach a 60-vote threshold to move to the Senate floor for debate. Although discussions among Sen. Graham's office, the legislation's other coauthors and Senate leadership continue, it is unclear when the bill will be released. Although the NAM has participated in discussions with the legislation's authors, manufacturers have not yet reviewed actual text in order to assess the bill's impact on the manufacturing agenda. Details: Keith McCoy, (202) 637-3175.
JOBLESS CLAIMS DROP TO LOWEST LEVEL IN 4 WEEKS
April 29, 2010 – Today in Manufacturing.net
Initial applications for jobless benefits fell by 11,000 to 448,000, the lowest level in four weeks, further evidence the job market is slowly improving... continue
CHINA PLEDGES FAIRNESS TO FOREIGN COMPANIES
April 29, 2010 – Today in Manufacturing.net
Beijing promised foreign companies equal treatment with Chinese rivals in its most high-profile effort yet to quell complaints it's trying to squeeze foreign competitors out of its markets... continue
BILL TO OVERHAUL OSHA ENFORCEMENT RECEIVES ATTENTION ON CAPITOL HILL
April 29, 2010 NAM Capital Briefing
This week both Congressional labor committees held hearings to further examine the Protecting America’s Workers Act (PAWA.) This misguided legislation changes the dynamics of the health and safety system in our nation’s workplaces by targeting employers with higher monetary and expanded criminal penalties for alleged compliance deficiencies. This approach is sure to impact the current collaborative relationship between employers and the Occupational Safety and Health Administration (OSHA). In response, the NAM submitted a statement to the Senate Health, Education, Labor and Pensions (HELP) Committee, available here.
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