Last month, we debunked an email which claims that folks will have to pay taxes on their group health benefits starting next year. That is patently false.
But it is true that new reporting requirements go into effect in 2011, and that's where I "missed the mark:"
"First, the relevant portion of Obamacare© doesn't take effect until 2018.
Second, only so-called "Cadillac plans" are subject to this provision."
Wrong, Henry.
Bob Graboyes, Senior Healthcare Advisor for the National Federation of Independent Business (NFIB), points out to me (in email) that:
1) The W-2 reporting provision does kick in in 2012. (That is, the form filed in 2012 on 2011 wages.) However, we believe the provision really starts earlier. If someone leaves his job in 2011, the employer must provide the W-2 – with the added info – within a few weeks of the employee’s departure.
2) It applies to all health insurance benefits, and not just to Cadillac plans. To my knowledge, there’s no difference in the reporting of Cadillac plan benefits and other insurance benefits.
Further research confirmed Bob's points. The reason that this is so important is that all of these additional requirements increase the actual cost of sponsoring a group health insurance plan (as if rate increases alone aren't onerous enough).
Now, I did get the third point correct: benefits aren't taxable - yet. But two outta three is not acceptable, so I'll dock myself a days blog-pay.
As long as we're on the subject of how ObamaCare© will increase the cost of doing business, it's worth noting another cringe-worthy provision that's been under the radar (but won't be for long), which "mandates that all businesses, tax-exempt organizations, and federal, state and local government entities will be required to issue IRS Form 1099 to vendors from which they purchase goods totaling $600 or more during a calendar year beginning in 2012."
Currently, the threshold is $2000, certainly a more reasonable number. This is particularly problematic for small businesses, which may have a number of vendors with whom they spend just at or above $600 (think business cards and letterhead, a new laser printer or fuel). Rotsa ruck, by the way, prying loose Office Depot's or BP's EIN (Employer Identification Number) in order to comply.
Now, one might think that accountant-types would view this new requirement (and the billable hours that would accrue as a result of it) as a major windfall, but one would be wrong. Noted tax-blogger Joe Kristan sets the record straight:
"Unless you are in the write-up business (basically, bookkeeper-for-hire), it’s an unmitigated nightmare. It generates an enormous compliance burden – for us, as well as for our clients – while generating paper that we will ignore in preparing business returns. The 1099s are cash basis, while most businesses are accrual, so matching the 1099s is pretty much impossible."
Of course, one might be tempted to believe that "hey, government-types are smart, surely they know what they're doing."
And again, one would be wrong. Christina Romer, the outgoing chairperson of the President's Council of Economic Advisers, said on Wednesday (September 1st) that:
"[s]he had no idea how bad the economic collapse would be. She still doesn't understand exactly why it was so bad. The response to the collapse was inadequate. And she doesn't have much of an idea about how to fix things."
And these are the kinds of people now in charge of our health care.
Is there a pill for that?
But it is true that new reporting requirements go into effect in 2011, and that's where I "missed the mark:"
"First, the relevant portion of Obamacare© doesn't take effect until 2018.
Second, only so-called "Cadillac plans" are subject to this provision."
Wrong, Henry.
Bob Graboyes, Senior Healthcare Advisor for the National Federation of Independent Business (NFIB), points out to me (in email) that:
1) The W-2 reporting provision does kick in in 2012. (That is, the form filed in 2012 on 2011 wages.) However, we believe the provision really starts earlier. If someone leaves his job in 2011, the employer must provide the W-2 – with the added info – within a few weeks of the employee’s departure.
2) It applies to all health insurance benefits, and not just to Cadillac plans. To my knowledge, there’s no difference in the reporting of Cadillac plan benefits and other insurance benefits.
Further research confirmed Bob's points. The reason that this is so important is that all of these additional requirements increase the actual cost of sponsoring a group health insurance plan (as if rate increases alone aren't onerous enough).
Now, I did get the third point correct: benefits aren't taxable - yet. But two outta three is not acceptable, so I'll dock myself a days blog-pay.
As long as we're on the subject of how ObamaCare© will increase the cost of doing business, it's worth noting another cringe-worthy provision that's been under the radar (but won't be for long), which "mandates that all businesses, tax-exempt organizations, and federal, state and local government entities will be required to issue IRS Form 1099 to vendors from which they purchase goods totaling $600 or more during a calendar year beginning in 2012."
Currently, the threshold is $2000, certainly a more reasonable number. This is particularly problematic for small businesses, which may have a number of vendors with whom they spend just at or above $600 (think business cards and letterhead, a new laser printer or fuel). Rotsa ruck, by the way, prying loose Office Depot's or BP's EIN (Employer Identification Number) in order to comply.
Now, one might think that accountant-types would view this new requirement (and the billable hours that would accrue as a result of it) as a major windfall, but one would be wrong. Noted tax-blogger Joe Kristan sets the record straight:
"Unless you are in the write-up business (basically, bookkeeper-for-hire), it’s an unmitigated nightmare. It generates an enormous compliance burden – for us, as well as for our clients – while generating paper that we will ignore in preparing business returns. The 1099s are cash basis, while most businesses are accrual, so matching the 1099s is pretty much impossible."
Of course, one might be tempted to believe that "hey, government-types are smart, surely they know what they're doing."
And again, one would be wrong. Christina Romer, the outgoing chairperson of the President's Council of Economic Advisers, said on Wednesday (September 1st) that:
"[s]he had no idea how bad the economic collapse would be. She still doesn't understand exactly why it was so bad. The response to the collapse was inadequate. And she doesn't have much of an idea about how to fix things."
And these are the kinds of people now in charge of our health care.
Is there a pill for that?
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