March 28th, 2010

Healthcare Reform Bill 2010 and Health Care Reform Details, Costs, and Updates.  During a rare late Sunday night vote, the US House of Representatives passed the Senate version of the Health Care Reform bill into law.  The measure was passed without a single Republican vote, and will forever change the landscape of the healthcare industry as we know it.

The true costs of health care reform aren’t yet known.  Many large corporations will have to take hits to their earnings when they devalue tax assets that were set up when Medicare D came in to the market.  Now, the federal government has changed the way that companies have to account for the subsidies they receive for retirees on their prescription drug coverage plans.

Basically, the companies were previously allowed to deduct the entire cost of retiree prescriptons, including the portion that was paid for via a subsidy from the federal government.  After the bill passed, the portion of the drugs paid for by the subsidy is no longer tax deductible, and therefore a reduction in the deferred tax asset must occur.

What does that mean? For AT&T, it means a $1.6 billion decline in earnings.  Although this doesn’t represent an actual cash outlay of $1.6 billion, it will negatively impact their financial results and earnings.

Small businesses feel an even bigger pinch.  For the first time, many will be REQUIRED by law to offer their employees health insurance.  If they don’t, they could face a $2,000 fine per employee.  As small businesses didn’t typically offer the same types of health care plans as large corporations, they usually don’t have the complex tax assets that AT&T and other companies to devalue.  The cost of health care for these companies could require significant cash investments.

For some Americans, the cost of health care reform means the Medicare payroll tax will be extended to investment income – but only on singles earning over $200,000 or marrieds earning over $250,000. 

If you make over 400% of the poverty line, little in the bill will help you. Your main benefits will include not being declined for pre-existing conditions, and the remote possibility that premiums will be lower.

There’s also a 40% tax on “cadillac” health care plans – which are basically really good health care plans that only the wealthy can purchase.  “Cadillac” is defined as a plan that costs an individual $10,800 annually or more and a family $27,500 or more. Break that down into monthly premiums and it’s $900 monthly for an individual or around $2,292 monthly for a family.

The true costs of healthcare are not known yet.  We don’t know if we will be better off financially before or after the reform.  As with anything, it depends on who you are and what you make.

Source:

CNN Money