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Archive for January 28th, 2012

The latest rollout of the federal health care overhaul offers consumers a rebate if their insurers spend too little on actual medical care and too much on administrative costs. Easy To Insure ME has the answers

But Floridians may miss out on the rebates that will start in 2012.

Pressed by the insurance industry, state regulators will soon ask the federal government for a waiver from the requirements, which begin Jan. 1.

The Florida Office of Insurance Regulation confirmed Tuesday it will request a reprieve until 2014, when the health care law’s coverage guarantees kick in.

In a written statement, the office said enforcing profit limits in 2011 could “disrupt” the insurance market in Florida, where 4 million people are uninsured. Commissioner Kevin McCarty was not available for questions.

The state already is suing to overturn the health care law.

The new requirements are supposed to help increase the value of coverage for consumers and make health insurers “more accountable” by publicly reporting spending and premiums, federal health officials say.

Consumer advocates, such as Consumers Union, publisher of Consumer Reports, largely consider the requirements a win. The idea of a waiver — similar moves are afoot in Georgia, Iowa, Maine and South Carolina — got a tepid response.

“We generally feel the industry does cry wolf,” said Walt Dartland, executive director of the Consumer Federation of the Southeast. “Our position is generally when we have an issue like this, we’re against the waiver — you’ve got to prove that.”

Essentially, the rules require insurers that offer small group and individual health plans must spend 80 percent of their revenue on care outside administrative costs. Large group insurers — plans covering 50 or more people — must spend 85 percent of their revenues on care.

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It’s called the “medical loss ratio.” If it’s too high, rebates will become due in 2012 in an account credit or payment.

Nationally, 9 million people would be eligible for rebates averaging 4 for individual policies, according to the U.S. Health and Human Services Department. Group plan figures weren’t available, nor were Florida rebate values.

The new rules announced Monday apply to 75 million Americans. Self-insured plans aren’t included.

Currently, Florida requires insurers to operate at 65 to 70 percent loss ratios. The insurance office plans to ask for a waiver for the small group and individual markets, though it said it needs at least two more weeks to finish the request. U.S. Health and Human Services Secretary Kathy Sebelius would decide whether to grant it.

After months of federal review, insurers won breaks but failed to get a broader array of business costs factored into medical spending. For example, plans with fewer than 75,000 members will get adjustments to help them comply, and ones with fewer than 1,000 members will be exempt from the rebates.

Nearly all taxes can be figured into the ratio, as well as spending to improve health care.

And states can win waivers to use lower rates if they show insurance would be disrupted by higher requirements.

Florida insurance executives complained the tougher requirements will disrupt their finances and limit their ability to insure people.

Without a waiver, some insurers could be forced to lower their rates to meet the threshold or find a creative way to pay for rebates, said Blue Cross Blue Shield of Florida executive Randy Kammer, a member of the industry-dominated Florida Health Insurance Advisory Board, which endorsed a waiver in September.

Blue Cross Blue Shield of Florida, the state’s largest insurer, expects to meet the requirement. A nonprofit, the insurer faces less financial pressure from Wall Street, said Kammer, vice president for regulatory affairs and public policy.

But others face steeper costs. About 45 percent of people nationally who buy their own insurance are in plans exceeding the limits, according to federal officials

An analyst for Citigroup estimated last month that Golden Rule, a subsidiary of United Healthcare, would face .1 million in rebates for its 119,000 insured Floridians, based on 2009 figures.

That’s a 9 average rebate in Golden Rule’s biggest state.

At a Sept. 24 state hearing to gather evidence for the waiver, Golden Rule vice president Mike Corne warned that customers could face fewer options for insurance because of the crunch imposed by tougher profit limits.

Customers, who often seek Golden Rule individual policies absent a workplace plan, could find fewer companies willing to add new policies, and fewer businesses seeking a place in the market, said Corne, arguing for a phased approach.

“We will figure out how to adjust our business model, but I think we would be better off with handling this over time,” Corne said.

Summer is a common time of year for people to move. Children are out of school and the weather is more conducive to trekking across any significant distance.

Summertime is also ideal for starting a tax preparation business. Beginning this process at mid-year permits an individual to complete all arrangements for a successful opening next tax season. A tax practitioner usually begins income tax preparation courses in late summer and studies throughout the fall. By year-end, the Registered Tax Return Preparer examination should be ready to pass.

Whenever a move occurs related to a job, the moving expenses are usually a tax deduction. All individuals who move because of work qualify, not just anyone starting a tax preparation career. Taxpayers who are eligible to deduct moving costs are not even required to itemize deductions in order to benefit.

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Finding taxpayers who have moved is a sound strategy for building clientele of a federal tax preparation service. Both new and experienced tax practitioners can use the end of summer as an opportunity for reaching out to those who moved this year. Now is the time to remind them about retaining records of moving expenses that they will need when their tax returns are prepared.

Costs for travel to the new location are among the deductible expenditures. This includes transportation expenses for all family members. A standard mileage rate is applicable for each vehicle used as transport. Only one trip per person is allowed. The cost of lodging during travel is counted as moving expense, but not the cost of meals while traveling.

Deductible moving expenses also include costs for packing, transporting, and in-transit storage of household goods. Individuals who move can also deduct the cost of disconnecting utilities at former homes and connecting at new homes.

Other costs related to moving in at a new location are not deductible. Also, anyone who is partially reimbursed by an employer for moving expenses should retain records of the reimbursements, which reduce the tax deduction.

In addition to a move having a connection to work, the IRS has two requirements for taxpayers to meet in order to deduct moving expenses. First, the new job location must be at least 50 miles farther from the former home than was the previous job location.

Secondly, full-time work in the new area must last for at least 39 weeks of the first 12 months after moving. This requirement is 78 weeks during the first 24 months for the self-employed. Sometimes moving expenses are deducted on a tax return that’s due before this requirement is met. In that case, tax preparer ethics require mentioning to taxpayers that the requirement must be eventually satisfied.

Tax preparer duties when moving expenses are deductible involve gathering the records of eligible expenses as well as calculating the distance and time tests. Then, Form 3903 is completed. A tax preparer should also assist taxpayers by completing Form 8822, which notifies the IRS of the address change.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.