Wednesday, March 31, 2010

Health insurance premium will go up for young and old

Kaiser Family Foundation has produced a summary of the new health care law at

Meanwhile, various actuaries have projected health insurance premium for young Americans will go up by 15 to 17% on average when the mandate kicks in in 2014, see

Seniors who have Medicare Advantage supplement policies will see their premiums go up substantially as well.

Monday, March 22, 2010

Health care gains start soon — bigger ones later
By RICARDO ALONSO-ZALDIVAR, Associated Press Writer Ricardo Alonso-zaldivar, Associated Press Writer – Mon Mar 22, 7:39 pm ET

WASHINGTON – The first changes under the new health care law will be easy to see and not long in coming: There'll be $250 rebate checks for seniors in the Medicare drug coverage gap, and young adults moving from college to work will be able to stay on their parents' plans until they turn 26.

But the peace of mind the president promised — the antidote for health care insecurity, whether you favored or opposed his overhaul — is still a ways beyond the horizon, starting only in 2014. Insurers then will be barred from turning down people with medical problems, and the government will provide tax credits to help millions of working families buy coverage they can't afford now.

Health care overhaul will bring real change, but it's going to happen slowly.

President Barack Obama plans to sign the main legislation Tuesday in the White House East Room after a bitterly divided House approved it Sunday night. That will cap a turbulent, yearlong quest by the president and congressional Democrats to remake the nation's health care system, fully one-sixth of the U.S. economy.

Obama's signature will start the Senate considering a package of changes the House also has approved. But the main overhaul will already be officially on the books.

Still, if Obama wants to actually preside over the expansion of coverage to more than 30 million people, he'll first have to persuade a majority of Americans to re-elect him in 2012.

"For people who have the greatest need, a number of things will start quickly and make a difference," said DeAnn Friedholm of Consumers Union. For others, 2014 may seem like a long way away. "Some people may be frustrated that it's going to be several years, but that is the reality of what it takes to make these significant changes," she added.

The main reason that Obama's plan phases in slowly boils down to cost. The Medicare cuts and tax increases to finance the bill start early; the subsidies to help people purchase coverage come later. That combination keeps the cost of the overhaul under $1 trillion in its first decade, as Obama promised. Republicans call it an accounting gimmick — but in past years they also resorted to it.

Here's a look at some of the major impacts for consumers:


Roughly a third of people in their 20s are uninsured, so allowing young adults to remain on their parents' plans until 26 would be a significant new option for families.

Adult children would not be able to stay on a parental plan if they had access to employer coverage of their own. But they could get married and still be covered. (Grandkids, however, would not qualify.) Regulations will clarify to what degree young adults have to be financially dependent on their parents.

Other reforms starting this year would prevent insurers from canceling the policies of people who get sick, from denying coverage to children with medical problems, and from putting lifetime dollar limits on a policy.

These changes will spread risks more broadly, but they're also likely to nudge insurance premiums somewhat higher.

Obama's plan also includes an important new program for the most vulnerable: uninsured people who can't get coverage because of major medical problems. It's intended to provide an umbrella of protection until the broad expansion of coverage takes effect in 2014.

The government will pump money into high-risk insurance pools in the states, making coverage available for people in frail health who have been uninsured for at least six months. The premiums could still be a stretch, but for people who need continuing medical attention, it could make a dramatic difference.

"For people who have not been able to get anything, who have expensive chronic illnesses or other conditions, it could be a lifesaver," said Friedholm.

There is a catch, however. The $5 billion Obama has allocated for the program is unlikely to last until 2014. In fact, government experts have projected it could run out next year.

Among seniors, the plan will create both winners and losers. On the plus side, it gradually closes the dreaded "doughnut hole" prescription coverage gap, improves preventive care and puts a new emphasis on trying to keep seniors struggling with chronic diseases in better overall health.

But it also cuts funding for popular private insurance plans offered through the Medicare Advantage program. About one-quarter of seniors have signed up for the plans, which generally offer lower out-of-pocket costs. That's been possible because the government pays the plans about 13 percent more than it costs to cover seniors in traditional Medicare. As the payments are scaled back, it could trigger an exodus from Medicare Advantage.

"It's not all black and white; sometimes it's gray," said James Firman, president of the National Council on the Aging. "Overall we think this plan is very good, and will provide some significant benefits for seniors. There will be some pain among some people in Medicare Advantage plans."

The prescription coverage gap will be totally closed in 2020. At that point, seniors will be responsible for 25 percent of the cost of their medications until Medicare's catastrophic coverage kicks in, dropping their copayments to 5 percent.


The real transformation of America's health insurance system won't take place until 2014.

Four breathtaking changes will happen simultaneously:
  • Insurers will be required to take all applicants. They won't be able to turn down people in poor health, or charge them more.
  • States will set up new insurance supermarkets for small businesses and people buying their own coverage, pooling together to get the kind of purchasing clout government workers have now.
  • Most Americans will be required to carry health insurance, either through an employer, a government program or by buying their own. Those who refuse will face fines from the IRS.
  • Tax credits to help pay for premiums will start flowing to middle-class working families, and Medicaid will be expanded to cover more low income people. Households making up to four times the poverty level — about $88,000 for a family of four_ will be eligible for assistance. But the most generous aid — including help with copayments and deductibles — will be for those on the lower-to-middle rungs of the income scale.
When all is said and done, the majority of working-age Americans and their families will still have employer-sponsored coverage, as they do now. But the number of uninsured will drop by more than half. Illegal immigrants would account for more than one-third of the remaining 23 million people without coverage.

Cost could be the Achilles' heel of the whole effort.

"I hope it is not repealed, because we do need to extend coverage to most of our population," said Gail Wilensky, who ran Medicare for President George H.W. Bush and remains a leading health care adviser to Republicans. "But it could well be substantially modified. It expands coverage, but it does very little to take on two other major issues: improving quality and leveling the rate of growth in spending."

Also see

Saturday, March 13, 2010

Senate, Obama spar over health plan's pet projects
By ALAN FRAM, Associated Press Writer Alan Fram, Associated Press Writer

WASHINGTON – President Barack Obama says he wants projects helping specific states yanked from the health care bill Congress is writing. Democratic senators, being senators, beg to differ.

The Senate-approved health measure lawmakers hope to send to Obama soon would steer $600 million over the next decade to Vermont in added federal payments for Medicaid and nearly as much to Massachusetts.

Connecticut would get $100 million to build a hospital. About 800,000 Florida seniors could keep certain Medicare benefits. Asbestos-disease victims in tiny Libby, Mont., and some coal miners with black lung disease or their widows would get help, and there are prizes for Louisiana, the Dakotas and more states.

"We're going to do what we have to do to get a bill out of the House and Senate," said James Manley, spokesman for Senate Majority Leader Harry Reid, D-Nev. As for Obama's wish list of deletions: "We'll certainly keep it in mind as we pull together a final bill."

That tepid salute underscores the prickliness with which many senators have greeted what they consider Obama's meddling in their business and raises questions about how successful the president will be in erasing the special projects from final legislation.

It also highlights a spat between a White House and Senate, dominated by the same party, that the president has ignited just as he needs to garner support to finally push his No. 1 legislative goal to passage over monolithic Republican opposition and nervous Democrats.

Obama's proposal to eliminate state-specific items comes with polls finding heightened public opposition to backroom political deals. Republicans have been happy to fan that discontent. Many Democrats, particularly House moderates facing tight re-election battles this fall, are eager to dissociate themselves from such spending.

The president wants votes from House Democrats "who were deeply offended by those provisions in the Senate bill," said Sheryl Skolnick, who analyzes federal health legislation for CRT Capital Group of Stamford, Conn. "Clearly the math was, 'I gain more in the House by taking out those provisions than I lose in the Senate.'"

Obama has railed against the "ugly process" of cutting special deals, but the president and his top advisers were prime players in negotiations on the agreements to win votes and push the legislation forward.

Republicans say Obama's push to remove deals for states won't help. Because every Democratic senator voted for that chamber's bill and all its special provisions, even voting later to remove them leaves those Democrats in a pickle, Senate Minority Leader Mitch McConnell, R-Ky., told reporters Friday.

"They will have then voted for them before they voted against them," McConnell said of the bill's projects, an echo of the line that 2004 Democratic presidential nominee John Kerry uttered that proved politically damaging.

Obama came out with a summary last month of the nearly $1 trillion health overhaul legislation he wants. It specifically eliminates $100 million in extra Medicaid money the Senate bill provided solely to Nebraska to help win support from that state's Democratic Sen. Ben Nelson. The so-called Cornhusker Kickback drew such widespread scorn that even Nelson favors repealing it.

Obama also proposed changes in the Senate bill that, without mentioning it, deleted extra Medicaid money for Massachusetts and Vermont, the Florida Medicare exemption and some money for Michigan, according to White House officials.

Days later, at Obama's nationally televised meeting with bipartisan leaders on health care, his 2008 presidential rival, Sen. John McCain, R-Ariz., criticized the Senate bill for exempting 800,000 Florida seniors from cuts in the privately run Medicare Advantage program. Obama surprised him by agreeing, and that tone has carried over as the White House and top congressional Democrats labor to complete a compromise health package.

"We've made it clear to the Senate that the president's position in the final legislation should not contain provisions that favor a single state or a single district differently than others," White House spokesman Robert Gibbs said this week.

There are exceptions. The White House says $300 million for Louisiana, which helped win support from moderate Sen. Mary Landrieu, D-La., should survive because of that state's struggle to rebound from its 2005 pummeling by Hurricane Katrina.

Even so, Obama's targeting of state projects is going over poorly in the Senate.

Take Sen. Patrick Leahy, D-Vt., who helped win extra Medicaid money for his state in the Senate health bill.

Vermont is one of several states that have already boosted the benefits they provide to many poor people. All states would get added federal financing for a nationwide Medicaid expansion under the Senate bill. But states such as Vermont — already providing more generous benefits — say they're being shortchanged and don't want Obama taking that money away.

"What I told Harry Reid is that Vermont does the right thing, and I don't want Vermont to be penalized for doing the right thing," Leahy said.

The White House asked lawmakers to delete $100 million to build a public hospital in Connecticut inserted by Sen. Christopher Dodd, D-Conn. But the money will remain in the final bill, according to people familiar with Democratic negotiations who spoke on condition of anonymity to disclose the unannounced decision. Less certain is the fate of other money the White House wants eliminated for Montana.

Sen. Max Baucus, D-Mont., put a provision in the Senate health bill allowing many of the 2,900 residents of Libby to qualify for Medicare benefits. Some of them have asbestos-related diseases from a now shuttered mine.

"It simply doesn't make sense to ignore this obligation, or victims of these disasters," Baucus said.

Sen. Robert Byrd, D-W.Va., won a Senate provision making it easier for longtime coal miners or miners' widows to get compensation for black lung disease.

The Senate bill also has extra money for hospitals and doctors in North and South Dakota, Montana and Wyoming.


Associated Press writers Erica Werner and Charles Babington contributed to this report.

Friday, March 12, 2010

IRS Employees Charged with Stealing Money Orders

Granted, this doesn't happen very often, but it's another reason why I encourage taxpayers pay their tax obligations electronically. A few years ago, a security truck transporting thousands of IRS quarterly 1040ES payments overturned while crossing a San Francisco Bay Area bridge, losing many of the checks.

Direct ACH debits avoid the checks getting lost in the mail or getting misdirected at the taxing authorities, including keypunching errors by the government clerks. When taxpayers put their social security numbers on the checks, it also opens up the possibility of identity theft when the checks fall in the wrong hands. With banks truncating paper checks and provide only electronic images, the images are accessible by any bank employees. An ACH debit also avoids having to prove to the taxing authorities that the payment was made on time.
Covington, Ky. (March 11, 2010)
By WebCPA Staff

Two IRS Service Center employees in Covington, Ky., were charged in a 29-count indictment with stealing thousands of dollars in money orders.

Joseph Ligon, 37, and Lashon Weaver, 31, both of Cincinnati, were indicted for theft of government money.

The indictment alleges that from July through November 2009, Weaver stole $7,784.62 in money orders. The indictment also accuses Ligon of stealing approximately $3,737.93 in money orders from June to October 2009.

In addition, the indictment also alleges that Ligon and Weaver, aided and abetted by each other, stole a $500 money order.

Ligon and Weaver were indicted by a grand jury in Covington on Thursday. If convicted, they each face up to 10 years in prison.

Wednesday, March 10, 2010

California's tax tactics undermine prosperity
Jason Clemens
Wednesday, March 10, 2010

California's bond rating is the country's lowest. The state faces near unprecedented unemployment and underemployment. State government and most counties face deficits for the foreseeable future. The solution to this predicament, some Sacramento politicians believe, is more taxes.

The underlying assumption of such an approach is that taxes don't have much impact on economic performance and that tax competition among states is irrelevant. But both matter a great deal and lie at the heart of why the state's economy is struggling.

The first faulty premise pervading Sacramento is that taxes don't influence economic decisions and performance. Volumes of research show how taxes change behavior and how they affect the economy.

When we tax something, we get less of it. In other words, much of the foundation for a prosperous society, like work effort, savings, investment and entrepreneurship, is influenced by taxes. Unfortunately, California has gone out of its way to tax these very things.

California imposes America's fourth-highest top marginal personal income tax rate, behind only Hawaii, Oregon and New Jersey. Progressivity of our personal income taxes is the nation's third steepest. That is, when Californians are successful and begin to earn more income, they face higher rates both absolutely and compared to other states.

Our corporate income tax is the country's eighth highest; our sales tax the highest. Perhaps even more disconcerting for Californians, given Prop. 13, is that there are 16 states with lower property tax burdens (compared to the overall economy) than California. That's in part why we continue to lose productive residents and businesses to other states.

A second faulty premise is that tax competition doesn't matter. In reality, people and businesses make decisions not only about their opportunities in California but also in other states.

This is a particular problem for California because, on most major taxes, we are not competitive with our neighbors. The starkest contrast is Nevada, which has no personal or corporate income taxes. Its state sales tax is 6.85 percent - lower than California's 8.25 percent.

Arizona beats California in every major tax category. Its top personal income tax rate is 4.5 percent, compared to California's 10.55 percent. Arizona ranks 18th in the country for its progressivity in income taxes - meaning workers and investors are punished less through higher tax rates as they earn more. Arizona's corporate income tax rate is 7 percent, compared to 8.8 percent in California. And its sales tax rate is just 5.6 percent.

Or consider Utah. Its top personal income tax rate is 5 percent - a flat rate, so there is no punishment for increased productivity. Utah's 5 percent corporate income tax is markedly lower than ours, and its sales tax rate is a little under 6 percent.

Research tells us that taxes matter and that tax competition is real. Our high taxes have not solved our fiscal predicament and, indeed, have made it worse by retarding economic growth.

This should be unacceptable to Californians given the state's economic potential. The solution is fairly straightforward: To restore prosperity we need lower, competitive taxes - and we need them now.

Jason Clemens is director of research and coordinator of the California Prosperity Project at the Pacific Research Institute in San Francisco.

This article appeared on page A - 12 of the San Francisco Chronicle

Read more:

Sunday, March 7, 2010

CBO: $10 trillion jump in debt under Obama budget

Our debt to GDP ratio is around 85% and rising (see, Congress recently raised the debt ceiling approching 100% of the country's GDP. Do we really want to follow Japan's foot step where the debt to GDP ratio is 200% and where the country's economy has been stagnant for 20 years?
By Jeanne Sahadi, senior writerMarch 5, 2010: 6:13 PM ET

NEW YORK ( -- If President Obama's 2011 budget were put into effect as proposed, the U.S. federal government would add an estimated $9.8 trillion to the country's accrued debt over the next decade, according to a preliminary analysis from the Congressional Budget Office.

Of that amount, an estimated $5.6 trillion will be in interest alone.

By 2020, the agency estimates debt held by the public would reach $20.3 trillion, or 90% of GDP. That's up from 53% of GDP in 2009.

Research done by economists Kenneth Rogoff and Carmen Reinhart has shown that such high levels of debt can cause a drag on economic growth.

The CBO cited two big contributors to the jump in debt.

One is the president's proposal to extend the 2001 and 2003 tax cuts for the majority of Americans. The other is the proposal to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax (AMT).

Together those proposals would cost $3 trillion between 2011 and 2020.

"It points out the unwillingness of the administration to raise the revenues to pay for the size of government being proposed," said Robert Bixby, executive director of the Concord Coalition, a deficit watchdog group.

If Congress doesn't act, all of the Bush tax cuts are slated to expire at the end of this year and there will be no protection from the AMT.

But current law is not politically realistic, many say. That's why the administration prefers to compare the cost of its proposals to what lawmakers are likely to do -- namely, extend tax cuts and fix the AMT.

Hence, the White House Budget Office estimates that under the president's proposals, $8.5 trillion would be added to the country's accrued debt over the next decade, or $1.3 trillion less than the CBO estimate.

Either scenario is unsustainable, Bixby said.

The administration has also called the budget trajectory unsustainable and the president has created a fiscal advisory commission to recommend ways lawmakers can get annual deficits down to 3% of GDP by 2015.

That's well below where it would be under the president's budget, according to estimates from both the CBO and the White House. And while his proposals would chip away at deficits in the next few years, they start to climb again thereafter. By 2020, the annual deficit as a percentage of GDP will be 5.6%, according to the CBO. The White House estimates it will be 4.2%.

But there is no guarantee the fiscal commission's recommendations will be adopted by lawmakers.

The CBO notes that its estimates incorporate the Administration's revenue and spending assumptions for policies such as health reform and climate change, because the agency didn't have sufficient details from the White House about those policies to do its own analysis.

A full analysis of the president's budget will be published later in the month, the CBO said.

For more, go to

Monday, March 1, 2010

IRS Suspends FBAR Filing for Non-Citizens (for Now)
Washington, D.C. (February 26, 2010)
By WebCPA Staff

The Internal Revenue Service has temporarily suspended the requirement to file a Report of Foreign Bank and Financial Accounts for the 2009 and earlier calendar years, for people who are not U.S. citizens, residents or domestic entities.

Announcement 2010-16 temporarily suspends the requirement to file Form TD F 90-22.1, also known as the FBAR, as the IRS tries to clear up the definition of “United States person.” In addition, the IRS issued Notice 2010-23, which provides FBAR filing relief for some persons with signature authority and who own commingled funds.

In October 2008, the IRS published a revised FBAR form, together with accompanying instructions, changing the definition of “United States person.” The IRS received numerous questions and comments from the public concerning the changed definition. In response, and to reduce the burden on the public, the IRS issued Announcement 2009-51, 2009-25 I.R.B. 1105, which directed people to refer to the definition of “United States person” in the July 2000 version of the FBAR instructions to determine if they had a filing obligation.

This effectively suspended the filing of FBARs due on June 30, 2009, by people who were not U.S. citizens, residents, or domestic entities. Announcement 2009-51 stated that additional FBAR guidance would be issued for subsequent filing years and invited public comments.

After receiving a significant number of public comments, the Treasury Department published proposed FBAR regulations to provide taxpayers with guidance on who is required to file FBARs due on June 30, 2010, and how to answer FBAR-related 2009 federal income tax return questions.

The IRS and the Treasury Department now believe it is appropriate to provide the following administrative relief: The requirement to file an FBAR due on June 30, 2010, is suspended for persons who are not U.S. citizens, U.S. residents, or domestic entities. Additionally, all persons may rely on the definition of “United States person” found in the July 2000 version of the FBAR instructions to determine if they have an FBAR filing obligation for the 2009 and earlier calendar years. The definition of “United States person” there is: (1) a citizen or resident of the United States, (2) a domestic partnership, (3) a domestic corporation, or (4) a domestic estate or trust.

This substitution of the definition of “United States person” applies only with respect to FBARs for the 2009 calendar year and to earlier calendar years.

All other requirements of the 2008 version of the FBAR form and instructions, as modified by Notice 2010-23, remain in effect until changed by subsequent guidance issued by the Treasury Department, including the IRS.