Continuing my Layman's Read Through of HR 3200 (Proposed Health Care Bill) - Part Four: The Reckoning
I decided to spice things up a bit here with the addition of "The Reckoning". I will leave it up to you to see if this constitutes a tongue-in-cheek reference to 80's sequels, or the reality of this bill. :)
As I mentioned in the last segment/post, I started a Wordpress blog to keep all of these posts in one place:
Here are my observations from pages 143 to page 204 of HR 3200:
SEC. 301. INDIVIDUAL RESPONSIBILITY.
For an individual's responsibility to obtain acceptable coverage, see section 59B of the Internal Revenue Code of 1986 (as added by section 401 of this Act).
MY NOTE: What you see above is the entirety of Section 301, which may be the shortest in the entire bill. As you can see this refers to a new tax that is created on those who don't have "acceptable" coverage. If the goal of this bill as stated in its primary title is "affordable health choices", doesn't it seem counterintuitive to tax those who don't have coverage?
I sincerely thought that the goal here was to widen the options available, including a public health option. Instead, this bill seeks to punish (tax) those who don't have acceptable plans. Why? I am certain that the newly appointed Health Commissioner would be the person in charge of determining what constitutes acceptable coverage. I don't like the idea of the government telling me if my insurance plan is acceptable or not.
Section 401 needs to be addressed out of order, since that's the one that creates a new section within the tax code. Here is the portion referenced there if you can figure it out: http://www4.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00006012----000-.html - I am not a CPA, but it looks like you will be paying a 2.5% tax on the vast majority of your income if you don't have coverage. So, for anyone who is currently saving money by going without any health insurance, your costs WILL increase under this plan.
You must either pay a premium, or pay a newly-created tax. Period.
SEC. 312. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TOWARDS EMPLOYEE AND DEPENDENT COVERAGE. (a)(3) MINIMUM EMPLOYER CONTRIBUTION FOR EMPLOYEES OTHER THAN FULL-TIME EMPLOYEES In the case of coverage for an employee who is not a full-time employee, the amount of the minimum employer contribution under this subsection shall be a proportion (as determined in accordance with rules of the Health Choices Commissioner, the Secretary of Labor, the Secretary of Health and Human Services, and the Secretary of the Treasury, as applicable) of the minimum employer contribution under this subsection with respect to a full-time employee that reflects the proportion of--
(A) the average weekly hours of employment of the employee by the employer, to
(B) the minimum weekly hours specified by the Commissioner for an employee to be a full-time employee.
MY NOTE: This comes back to what I said in a previous post about the Commissioner's level of authority in defining the term "full-time employee". Is this the type of thing that needs to be left up in the air? If the Commissioner determines that "full-time" is now 20 hours (or 60), that would dramatically affect the cost to employers.
SEC. 313. EMPLOYER CONTRIBUTIONS IN LIEU OF COVERAGE.
MY NOTE: This section allows employers to pay 8% of an employee's wages instead of covering them under a plan. Small employers (defined as employers with total payroll of under $400,000) can pay less. If the total payroll is under $250,000, employers are not required to pay anything at all on behalf of their employees with regard to health coverage.
My reading indicates that all employers must provide coverage, or pay an excise tax. I tried to research this, and I don't think that this is a current requirement.
SEC. 401. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE.
`(a) Tax Imposed- In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of--
`(1) the taxpayer's modified adjusted gross income for the taxable year, over
`(2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer.
MY NOTE: I read the entirety of Section 401 multiple times and very carefully. Basically, if you are not paying a premium, then you will be taxed for an amount not to exceed the national average premium for "self-only" coverage. The assumption here is that the government wants everyone to pay for acceptable coverage. Considering that the alternative is to pay taxes, it would seem like this bill makes it pretty much compulsory.
(5) RELIGIOUS CONSCIENCE EXEMPTION-
`(A) IN GENERAL- Subsection (a) shall not apply to any individual (and any qualifying child residing with such individual) for any period if such individual has in effect an exemption which certifies that such individual is a member of a recognized religious sect or division thereof described in section 1402(g)(1) and an adherent of established tenets or teachings of such sect or division as described in such section.
`(B) EXEMPTION- An application for the exemption described in subparagraph (A) shall be filed with the Secretary at such time and in such form and manner as the Secretary may prescribe. Any such exemption granted by the Secretary shall be effective for such period as the Secretary determines appropriate.
MY NOTE: Who knew? Apparently, under the current tax code, members of certain religious sects can avoid paying taxes for Social Security because their faith doesn't allow them to collect benefits under those types of programs. The tax code doesn't name these specifically, but before you decide to start your own religion, it does specify that the sect must have been in existence "at all times since December 31, 1950". I had no idea!
SEC. 412. RESPONSIBILITIES OF NONELECTING EMPLOYERS.
`(1) IN GENERAL- In addition to other taxes, there is hereby imposed on every nonelecting employer an excise tax, with respect to having individuals in his employ, equal to 8 percent of the wages
MY NOTE: This is a tax created on large employers only, since employers with payrolls under $400,000 don't have to pay as much (if under $250K, nothing at all). I'm not sure how I feel about this part - I can see the reason behind it, but I'm not sure if taxing companies that decide not to provide coverage is the way to go. I welcome your commentary on this.
SEC. 441. SURCHARGE ON HIGH INCOME INDIVIDUALS.
`(a) General Rule- In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to--
`(1) 1 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $350,000 but does not exceed $500,000,
`(2) 1.5 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $500,000 but does not exceed $1,000,000, and
`(3) 5.4 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $1,000,000.
MY NOTES: This entire section is kind of a bombshell. After this part, it states that the percentages in (1) and (2) above are going to be 2% and 3% respectively, unless the EXCESS FEDERAL HEALTH REFORM SAVINGS is over $150,000,000,000 (yes, that's billions). The "excess" here is anything over $525,000,000,000. Health reform savings is defined as "the aggregate reductions in Federal expenditures which have been achieved as a result of the provisions of, and amendments made by, division B of the America's Affordable Health Choices Act of 2009". If the savings reaches $700 billion, they will not tax the first two groups listed above.
Let me get this straight - you won't tax rich people IF you manage to save three-quarters of a TRILLION DOLLARS from this program?!? This is the ultimate empty gesture, in my humble opinion. I think it seems even more ludicrous to include this provision, since it seems as though no one has any intention of doing away with this tax at any point.
This reminds me of toll roads and other local taxing entities that are put in place "until the bond is paid off", but somehow new bonds are always necessary. Does anyone really expect the bookkeeping to reflect a surplus/savings at this level?
SUMMARY: Under these two titles both Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code are modified. New taxes are created in many ways.
If you have actually read all four of these posts, I applaud you, because I think you are ahead of most people, including many of our elected representatives.
Sec. 312. (c)(1) Should read "such" not "suchs"
Sec. 324 (a)(2) is an incomplete thought. It appears to be missing the words "there is a" in front of the word "coordination". Otherwise, this is not a complete sentence.
SEC. 806. REGULATIONS. There is no part (a) - starts with part (b).