December 17, 2017

You’re the Boss Blog: This Week In Small Business: The Employer Mandate

Dashboard

A weekly roundup of small-business developments.

What’s affecting me, my clients and other small-business owners this week.

Must-Reads

Clate Mask shares some ugly truths about owning a small business, and Nouriel Roubini says that a new period of uncertainty and volatility has begun.

The Economy: Seven Charts

Manufacturing activity increased, but the service sector slowed. Construction spending rose in May. Small-business borrowing rose, and SurePayroll’s Small Business Scorecard reports increased optimism. Nissan expands production in the United States, and the Restaurant Performance Index hits a 14-month high. The Agriculture Department expects food prices to climb. Apparently sequestration wasn’t as bad as feared, and these seven charts show where the economy is headed.

Jobs: Hiring Up

The economy added more jobs than expected in June, and ADP reports that small-business hiring beat forecasts, too. Another survey found that nearly a third of manufacturers and distributors plan to increase the size of their work force in 2013, and 10 of 36 states saw employment growth in June. But the National Federation of Independent Business said that small-business employment edged down for a second straight month. Minneapolis has the lowest unemployment rate for a major city.

Health Care: Mandate Delayed

The health care law employer mandate has been delayed until 2015, and Ed Rogers believes that the decision could hurt small businesses. Ezra Klein says the employee mandate should not be delayed — “it should be repealed.” The Wall Street Journal apologizes for not being “critical enough” about the Affordable Care Act. Connecticut struggles to get ready to introduce coverage. More than 40 percent of uninsured Americans aren’t aware that they could be required to buy coverage next year, according to a Gallup survey.

Online Payments: Bitcoin Mania

Many small businesses are embracing Bitcoin, and some wonder if it will drive more sales (and for those still wondering what it is, here’s a definition). A Google-backed distributed currency exchange is trying to make it easier for people to pay others with the alternative currency. Michel Bauwens explains how the “Bitcoin 1 percent” manipulate the currency, deceive its user community, and make its future uncertain. Kate Craig-Wood explains how she made a fortune with bitcoin. This ATM will turn bank notes into bitcoins, and the Winklevoss Twins want to sell you a bitcoin fund. Here are eight ways investing in bitcoins could go terribly wrong, and a seminar that will explore the currency’s future.

Employees: Amy’s Baking

Amy’s Baking Company makes news again by requiring employees to sign a contract. Amanda MacArthur explains how restaurant tipping is evolving. A Staples survey finds workers want naps, better technology, and the ability to work from home. Former MSNBC and “Saturday Night Live” interns target NBCUniversal in a lawsuit, while thousands of other emboldened and disgruntled former interns are potentially eligible to sue media companies. A teacher has worn the same outfit in his yearbook photo for 40 years. A grumpy cat becomes a “cat-alyst” for social good.

Entrepreneurs: The Walking Dead

An entrepreneur explains how he went from a village boy to chief executive of India’s largest bus-ticketing service. Kim Kaupe says there are four ways entrepreneurs can avoid becoming the walking dead. This is how tech entrepreneurs in three different countries get on their bikes. A new live radio show will let Americans vote on contestants’ ideas for business ventures. A Detroit entrepreneur transforms personal tragedy into lifesaving inventions. A 10-week training program from the Kauffman Foundation that promises to build skills in entrepreneurship is accepting applications from military veterans.

Cash Flow: This American Business

Jules Olbermann tells the story of how separate accounts helped keep her and her husband together. PayPal Galactic can help you pay for that Mars vacation you always wanted. Ira Glass explains why “This American Life” is thriving as a business. An online marketplace and a crowdfunding platform team up. Chris Peden shares a small-business owner’s guide to applying for a mortgage.

Start-Up: 30 Days To Live

Jacob Goldstein says that his start-up has only 30 days to live, and Andrew Montalenti explains why start-ups fail. Ariel Diaz thinks start-up schools are incredible places to recruit outside of Silicon Valley. This five-time entrepreneur shares five crucial ways to know when you should start up, and here’s how to try out your business idea before you dive in. New York barely breaks the top 20 in start-up investment per capita (and a prank brings out the best and worst in its citizens).

Around The Country: Boating is Back

Jon Xavier explains how the Defense of Marriage Act ruling complicates business, but California’s wedding industry loves the Prop 8 ruling and studies show that the L.G.B.T. market is affluent and influential. The boating industry makes a comeback. In a new contest, Wal-Mart offers entrepreneurs a chance to compete for shelf space. These are the top 10 states for new manufacturing jobs. Oregon gets closer to a plan to provide free college education.

Around the World: Your Flight Number

In Colombia, Coke tests a bottle made of ice. Israel’s start-up culture is luring more M.B.A.’s. A film banned as pornography in China was accidentally shown on a large screen in a public square. And in case you were wondering, here’s what your flight number means.

Management: Relocating

Laurie McCabe explains eight ways to grow your small business, while a family business owner learns a few hard lessons about succession. Larry Kudlow interviews successful manufacturers about how they can afford to make things in America, and Jim Smith lists six important small-business tasks for the second half of 2013. Joe Taylor Jr. says there are five ways that relocating a small business can cut costs. A few tech giants offer advice to small-business owners, and here are five business lessons from the “Fresh Prince of Bel Air.”

Marketing: Why It Isn’t Working

Craig Newmark reminds us of the glorious future of shopping. Jim Connolly explains why your marketing isn’t working, and Andrew Gothelf suggests three ways to motivate your sales team (and they are not about money). Jay Baer shares three modern marketing mistakes. Barbara Austin wonders if you really need to do in-person marketing. These are 15 e-mail subject line formulas that work, and here are three Web site add-ons that are worth buying.

Social Media: Must-Use Sites and Apps

Jeff Bullas looks into the facts, figures and statistics of social media. Here is how social media is driving huge online video growth. This infographic explains the five essential elements of viral content, and here are seven “must-use” sites and apps to boost social media. Megan Conley explains how to increase your Google+ engagement, and Lynn White shares advice on how to use Facebook to promote events. The federal government spent $630,000 to “buy” Facebook fans when it could have used these techniques.

Red Tape: Regulatory Issues

Paychex identifies the top five regulatory issues of the summer, and Rick Harrison slams anti-business regulations. Many small-business owners back taking action on climate change. The General Services Administration continues to exceed its small-business goals, and the Small Business Administration and Native American Contractors Association agree to a strategic alliance. Hundreds of new laws went live on July 1.

Mobile: The 99 Percent

Here are seven mobile marketing stats that will amaze you, and this is how to avoid mobile-app overload. Felix Salmon explains why mobile payments will never take off. A major app vulnerability could affect 99 percent of Android devices.

Technology: Mind-Blowing Products

A couple of ZDNet editors delve into the challenges and opportunities that small businesses face in making decisions about technology. This new printing method works on any surface. Gartner predicts that tech spending will reach $3.7 trillion in 2013. Yahoo kills a dozen more products to sharpen its focus, while Google continues to work on these “mind-blowing products.” Here are 10 traditional industries that have been transformed by tablets, and these are the worst cloud outages of 2013 (so far).

Tweet Of The Week

@CherylHeppard: If your own market is small right now, pair up with another, stronger marketer and release your product together.

The Week’s Best Quote

Ryan Derousseau says you can change your luck: “There are tons of ways to fix the problem you’re having, especially if it’s not life-and-death. All you need to do first is change your perspective of the problem. Once that’s accomplished, then that first small step can take place.”

This Week’s Question: Have you tried accepting bitcoins for payment? Can you explain what a bitcoin is?

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/07/08/this-week-in-small-business-the-employer-mandate/?partner=rss&emc=rss

Bucks Blog: Family Medical Costs Still Rising

The good news is health care costs are going up more slowly. The bad news is that families continue to see larger medical bills.

The typical cost to cover a family of four now exceeds $22,000, including the amount paid in insurance premiums and out-of-pocket costs, according to the latest Milliman Medical Index for 2013. Milliman, an actuarial and benefits consultant, puts the cost at slightly less than the amount a family might pay to send a child to an in-state public college for a year.

This year’s increase over last was only 6.3 percent, according to the analysis from Milliman, having dropped steadily from the 7.8 increase it calculated for the year-over-year increase in 2010. But the total dollar increase is about $1,300, and families are paying several thousand dollars more than they were just a few years ago, increasing more than $5,000 since 2009. “The dollar amount is still significant,” said Chris Girod, an actuarial expert for Milliman.

Milliman calculates that employers pick up the bulk of the costs, paying nearly $13,000 of the overall tab.The employee pays the remaining $9,000, divided between the worker’s share of premiums and that worker’s out-of-pocket costs.

There has been vigorous debate over whether the slowing down in the rate of health care costs is because of the weak economy, efforts to bring costs under control or some other reason. The Milliman report does not predict whether families should expect the good news to continue. “There isn’t one single driver pushing this down right now,” said Mr. Girod.

Because the index reflects the costs for a family insured under an employer, which is representative of most people who have coverage, Milliman is fairly cautious about the impact of the Affordable Care Act on health care costs in the near future. The new marketplaces for health insurance, expected to make their debut in October to offer coverage in 2014, are largely aimed at people who have to buy insurance on their own. While there are provisions in the federal law aimed at reducing overall health care costs, it may take a while to see any proof that these steps are effective, Mr. Girod said. “The jury is out right now, and there are opportunities for improvement,” he said.

Article source: http://bucks.blogs.nytimes.com/2013/05/22/family-medical-costs-still-rising/?partner=rss&emc=rss

Economix Blog: Casey B. Mulligan: Massachusetts Employees Will Keep Their Health Plans

DESCRIPTION

Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

Massachusetts and a few neighboring states are likely to experience the Affordable Care Act a lot differently than the rest of America.

Today’s Economist

Perspectives from expert contributors.

Massachusetts is often held up as a window into America’s health insurance future, because it embarked on what came to be called the Romneycare reform six years ago. Like the Affordable Care Act provisions going into effect nationwide next year, Romneycare aimed to increase the fraction of the population with health insurance by imposing mandates on employers and employees and by subsidizing health insurance plans for middle-class families without employer plans.

Because the subsidized plans are available for only low- and middle-income families whose employers do not offer affordable health benefits, some analysts fear employers around the nation will drop their health benefits as the Affordable Care Act goes into full effect, resulting in millions of people losing the opportunity to get health insurance through an employer.

But some people say they believe this fear is likely to be unfounded, because the propensity of Massachusetts employees to receive employer-sponsored health insurance was hardly different after Romneycare went into effect than it was in the years before.

The details and dollar amounts in the Massachusetts health care law differ from the national Affordable Care Act, and for that reason alone I hesitate to infer too much from the Massachusetts experience. Even if the two laws were essentially the same, the effects in Massachusetts could be different than the national effects because Massachusetts has a different population and business environment than the rest of the nation.

Last week I explained how specific types of employers could be expected to drop their health benefits during the next couple of years: those employers that currently offer benefits but nonetheless pay much of their payroll to people living in households below 300 percent of the federal poverty line, who are eligible for the most generous federal subsidies as soon as their employer ceases to offer benefits.

Massachusetts has an extraordinary fraction (almost two-thirds) of its population above 300 percent of the federal poverty line, and as a result practically all Massachusetts employers will prefer to retain their health benefits over the next few years, even though a significant fraction of employers elsewhere will not.

One way to quantify the difference between Massachusetts employers and employers elsewhere is in the percentage of payroll going to employees from families below 300 percent of the poverty line. At a national level, the percentage varies from 4 percent in Internet publishing to about 50 percent in restaurants and private household employers. The national average is 20 percent, compared with 13 percent in Massachusetts.

Employers have a variety of factors to consider in their benefit offering decisions, but I have made some estimates that focus on the payroll-composition statistics noted above. By my estimates, employers with percentages of 26 to 35 percent of employees above 300 percent of the poverty level have a sufficiently high percentage that they are likely to have been offering health insurance benefits before the Affordable Care Act. Yet they have a low enough percentage that their employees gain on average if the employer health benefit is dropped and employees take the subsidies available through the Affordable Care Act’s health insurance exchanges.

About 10 percent of employees with health insurance live in a state and work in an industry with compensation percentages in the range where profits are to be gained by dropping employer health insurance. But none of them live in Massachusetts, and some states that border Massachusetts, including New Hampshire and Connecticut, are in a similar situation.

A number of states and industries – especially the industries I emphasized last week – have more than 35 percent of their payroll paid to people in families under 300 percent of the poverty line and are unlikely to be offering employee health benefits.

But those employers in Massachusetts who have 35 percent of their payroll paid to people in families under 300 percent of the poverty line are more likely to offer some kind of health benefit, in part because of Romneycare’s incentives to create “cafeteria plans” in which employees authorize pretax salary to be withheld from their paychecks for the payment of health insurance premiums.

Under the federal law, the Massachusetts cafeteria plans will lose some of their advantages to employers in terms of avoiding penalties for failure to offer health benefits.

Based on the combination of these two factors — that no Massachusetts industries have 26 percent to 35 percent of their employees under 300 percent of the poverty line, and that Massachusetts employers will lose the advantages of their cafeteria plans — I calculate that employers offering health insurance in Massachusetts are one-third as likely to drop their employee health plans over the next couple of years as are employers in the rest of the nation.

That’s because the percentage of the United States work force at risk of losing its employer insurance (because of the tendencies of their industry and states to have low- and middle income employees) is three times the percentage of the Massachusetts work force in the same situation.

Article source: http://economix.blogs.nytimes.com/2013/05/22/massachusetts-employees-will-keep-their-health-plans/?partner=rss&emc=rss

Economix Blog: The Bad Economy Behind the Health Care Slowdown

In today’s paper, I took a look at a major innovation in health care delivery, one that Obama administration officials think might play a big role in holding down health costs in the future. It is called accountable care, and the general idea is to enlist doctors and nurses in the fight to control spending.

But how much have such shifts away from fee-for-service medicine already contributed to the big slowdown in health care costs?

That has been one of the biggest puzzles in health economics — indeed, in all of public economics — in the last few years. Policy makers broadly consider rising health costs to be the single biggest long-term budget challenge, and those same rising costs are eating away at workers’ wages. Economists figured that Americans would spend less on health care because of the deep recession and sluggish recovery. But health costs have slowed even more than they expected given the size of the downturn, leading many to surmise that other factors were at work.

A new study from the Kaiser Family Foundation helps sort out definitively what is the bad economy and what is not. All in all, Kaiser estimates that 77 percent of the cost slowdown is due to the recession, with the remaining quarter due to “continuing changes in the way health care is delivered, but also to rising levels of patient cost-sharing in private insurance plans that discourage use of services.”

A quarter might not seem like much, but in an interview, Drew Altman, the president of the Kaiser Family Foundation, described it as “the whole ballgame” for holding down costs as time goes on. “It’s more than just the A.C.A. reforms, those are just beginning,” he said, referring to the Affordable Care Act. “But in the long run, those are the most important ones, because they have the force of Medicare and national policy behind them.”

He expects that higher co-payments and deductibles — cases in which an insured person needs to pay more for health care out of pocket — will have a major, underappreciated role in holding down costs in the future, too. “It’s this quiet revolution in insurance,” he said.

In the last few years, accountable care organizations have represented a little revolution of their own, moving from being a mere idea to covering millions of Medicare and privately insured patients.

The one I profiled works like this: Advocate Health Care, a major health system in the Chicago area, struck a deal with the insurer Blue Cross Blue Shield of Illinois. The two jointly picked about 380,000 people who were insured by Blue Cross and used Advocate’s doctors or hospitals. They then projected their expected health costs. If Advocate can keep costs below that amount, the insurer and the provider split the savings. If it cannot, its revenue is at risk.

That gives Advocate a huge financial incentive to prevent illness, reduce complication rates and cut out unnecessary procedures and tests, all while keeping those 380,000 people coming back to Advocate doctors. And it makes the most expensive patients, often those with multiple chronic conditions, like diabetes and heart disease, centers for cost savings.

Thus far, the experiment seems to be working. Advocate has started initiatives to prevent asthma attacks, end elective inductions of labor before 39 weeks of pregnancy and reduce readmissions to the hospital after a patient is discharged, among others. Those changes have resulted in a cost reduction of about 2 percent over all.

Many other health systems have made more incremental steps toward what health economists like to call value-based care, such as accepting bundled payments for a patient’s course of treatment, rather than charging an insurer per procedure. Medicare and Medicaid have also been pioneers in paying for quality, not quantity. For instance, Medicare recently instituted a policy of penalizing hospitals when patients are readmitted after being discharged. Hospitals might not like it. But there are signs it is squeezing spending out of the system.

Indeed, in a recent interview, Secretary Kathleen Sebelius of the Department of Health and Human Services cited falling readmission rates as one of the strongest early signs that the Affordable Care Act is working to bend the health care cost curve.

Article source: http://economix.blogs.nytimes.com/2013/04/24/the-bad-economy-behind-the-health-care-slowdown/?partner=rss&emc=rss

Case Study: Bakery Owner Talks About Coping With Health Insurance Changes

Rachel Shein, center, is trying to figure out how to comply with the new health insurance law.Sandy Huffaker for The New York Times Rachel Shein, center, is trying to figure out how to comply with the new health insurance law.

Case Study

What would you do with this business?

Last week, we published a case study about Baked in the Sun, a wholesale bakery and distributor that is trying to decide how best to comply with the Affordable Care Act. Starting in January, the new law requires businesses with 50 or more full-time employees to offer health insurance or pay a penalty. Owned by Rachel Shein and Steve Pilarski, husband and wife, the company employs nearly 100 workers to bake and deliver freshly made pastries to coffee shops, hospitals and hotels in Southern California.

Baked in the Sun has offered health insurance to its employees in the past but many are young and healthy and have preferred to keep more money in their paycheck, rather than contribute to a health plan. Soon, though, almost all workers will have to carry health insurance — through their employer, a government exchange or other source — or pay a penalty. And, as the case study discussed, Ms. Shein and Mr. Pilaski are trying to decide whether they will offer health insurance, pay a penalty or outsource enough work that they can reduce their head count below 50 and be exempt from the law.

The article elicited lots of comments and strong opinions, as well as reports in other media outlets, including CNBC, which included Ms. Shein in a panel discussion about her company’s situation. Some readers argued that Baked in the Sun has a moral obligation to offer coverage. Others argued for a single-payer system that would allow owners to stop worrying about health insurance and focus on running their businesses.

Andrew Greenblatt, a senior vice president at Benestream, which helps low wage employees apply for government benefits, pointed out that under the Affordable Care Act, Medicaid has been expanded to cover families earning up to 138 percent of the poverty level, which means that workers who make minimum wage, especially single parents, may qualify.

And Alan Cohen, chief strategy officer for Liazon, a private insurance exchange for companies, suggested in a comment that many employees will be better off if the bakery chooses not to offer insurance and instead pays the government penalty. That’s because the employees would be likely to qualify for a subsidy at a government exchange that would allow them to insure their whole family — but only if their employer does not offer health insurance.

Of course, because neither the minimum level of coverage, nor the costs to all the insurance options have been finalized, lots of uncertainty remains. We contacted Ms. Shein for a follow-up conversation that has been condensed and edited.

A number of readers suspect that you are underestimating how much it would actually cost to insure your employees. Have you taken another look?

The insurance plans are still under development. My broker recently found one that was less than what I had found, but I’m not sure anyone knows what the final rules and prices will be.

Have you thought any further about how many of your employees will actually sign up for insurance if you offer it?

In the short run, when the individual penalty is low, there might not be much participation. We plan to have a meeting with our employees to see what kind of insurance they might want and which of them might be covered elsewhere.

Did this discussion have any impact on your thinking about whether you will pay the penalty or offer insurance?

The employees will all have access to health insurance whether we provide it, or we pay the penalty and they purchase it using a subsidy on the government exchange. We need to look at all the costs and tax implications and do whichever is least expensive for the business.

Are there any reader questions you want to answer?

Some readers claimed it was a moral imperative to provide insurance — but all employees will have insurance under the law.

Some readers thought your profit margin was too low and questioned how well your business was doing. What was your reaction?

Like many entrepreneurs we have great years where we can take vacations and put money into our kids’ college funds. Some years are leaner.

Do you think your customers would pay a few more cents for your baked goods — especially if it allows you to offer your employees health insurance?

Our products are unbranded and sold in hundreds of outlets so it would be hard to educate consumers about our employment practices. And the popularity of Wal-Mart shows that most consumers just want the best price.

You suggested in the article that you might have to raise your prices 4 percent to cover the cost of providing health insurance. But 4 percent of $8 million — your annual revenue — is $320,000. That’s a lot more than you estimated the cost of insurance. Couldn’t you just raise your prices 2 percent?

Yes, a 2- to 3-percent increase could cover the costs, but it’s a low margin business and pennies matter so we like to build in some buffer.

Would you favor a single-payer system?

I am in favor of a system that doesn’t penalize a business for being successful and able to hire more than 50 people and doesn’t deter us from wanting to grow. I am in favor of a system where everyone pays in, and everyone is covered. If that is a single-payer system, I’m for that.

Article source: http://boss.blogs.nytimes.com/2013/03/26/bakery-owner-talks-about-coping-with-health-insurance-changes/?partner=rss&emc=rss

Economix Blog: Casey B. Mulligan: The Health-Care Law and Retirement Savings

DESCRIPTION

Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

Because of its definition of affordability, beginning next year the Affordable Care Act may affect retirement savings.

Today’s Economist

Perspectives from expert contributors.

Employer contributions to employee pension plans are exempt from payroll and personal income taxes at the time that they are made, because the employer contributions are not officially considered part of the employee’s wages or salary (employer health insurance contributions are treated much the same way). The contributions are taxed when withdrawn (typically when the worker has retired), at a rate determined by the retiree’s personal income tax situation.

Employees are sometimes advised to save for retirement in this way in part because the interest, dividends and capital gains accrue without repeated taxation. In addition, people sometimes expect their tax brackets to be lower when retired than they are when they are working.

These well-understood tax benefits of pension plans will change a year from now if the act is implemented as planned. Under the act, wages and salaries of people receiving health insurance in the law’s new “insurance exchanges” will be subject to an additional implicit tax, because wages and salaries will determine how much a person has to pay for health insurance.

While much about the Affordable Care Act is still being digested by economists, they have long recognized that high marginal tax rates lead to fringe benefit creation. And the Congressional Budget Office has concluded that the act will raise marginal tax rates.

Were an employer to reduce wages and salaries (or fail to increase them) and compensate employees by introducing an employer-matching pension plan, the employee is likely to benefit by receiving additional government assistance with his health-insurance costs. The pension contributions will add to the worker’s income during retirement, except that the income of elderly people does not determine health-insurance eligibility to the same degree, because the elderly participate in Medicare, most of which is not means-tested.

Take, for example, a person whose four-member household would earn $95,000 a year if his employer were not making contributions to a pension plan or did not offer one. He would be ineligible for any premium assistance under the Affordable Care Act because his family income would be considered to be about 400 percent of the poverty line.

If instead the employer made a $4,000 contribution to a pension plan and reduced the employee’s salary so that household income was $91,000, the employee would save the personal income and payroll tax on the $4,000 and would become eligible for about $2,600 worth of health-insurance premium assistance under the act. (The employer would come out ahead here, too, by reducing its payroll tax obligations).

Even though the Affordable Care Act is known as a health-insurance law, in effect it could be paying for a large portion of employer contributions to pension plans. This has the potential of changing retirement savings and the relative living standards of older and working-age people.

Article source: http://economix.blogs.nytimes.com/2013/01/30/the-health-care-law-and-retirement-savings/?partner=rss&emc=rss

Economix Blog: The Tax Side of the Fiscal Cliff

Come January, if Congress fails to act, sweeping federal tax increases will hit in what is not at all affectionately nicknamed in Washington “taxmageddon.”

How big are those federal tax increases? The respected Tax Policy Center is out with a full analysis of the math, and estimates the impact at more than half a trillion dollars next year alone.

In the words of Eric Toder, one of the report’s authors, “It’s just a huge, huge number.” The paper is full of such numbers. About 9 in 10 Americans would see their tax bills go up. The average household would pay $3,500 more. The typical middle-income household would pay $2,000 more. An average household in the top 1 percent would pay $120,000 more. The average federal tax rate would climb a whopping 5 percentage points. Americans would have 6.2 percent less after-tax income.

The analysis walks through the pending tax increases. The payroll tax holiday goes away, raising taxes on America’s 160 million wage earners. New provisions from the Affordable Care Act bump up taxes on the investment income of high-income households, and the Bush tax cuts for capital gains and dividends expire. The Bush-era income tax cuts end as well, with the top rate climbing to 39.6 percent from 35 percent. Without adjustment, the alternative minimum tax affects millions more taxpayers. Tax credits enacted in the stimulus go away. The estate tax jumps. It goes on and on.

The Tax Policy Center’s analysis shows that the tax increases would be painful for everyone, rich and poor.

The very wealthy would have the biggest hit, with the top 1 percent of earners seeing their average federal tax rate climb by seven percentage points. The single biggest tax increase would be on dividend earnings, with the tax rate increasing by 20 percentage points.

But the poor would not go unscathed, either. For households in the lowest income quintile, earning less than $20,113 a year, the average federal tax rate would climb 3.7 percentage points, with taxes increasing $412 on average. That works out to about $8 a week.

“For us, it’s lunch,” said Roberton Williams, a study co-author. “For other people, it’s dinner and lunch and breakfast that day.”

Moreover, many low-income families, particularly those with children, would end up paying much more, because of changes like the halving of the child tax credit.

Of course, members of the administration and Congress are already hard at work behind closed doors, aiming to stave off some of the tax increases and spending cuts due by law — the “fiscal cliff,” as the Federal Reserve chairman, Ben S. Bernanke, calls it.

The study helpfully ranks the tax increases from those most likely to happen (the expiration of the payroll tax holiday and the new Affordable Care Act taxes) to those least likely to happen (the expiration of the Bush tax cuts for lower-income earners and of the alternative minimum tax patch).

Article source: http://economix.blogs.nytimes.com/2012/10/01/the-tax-side-of-the-fiscal-cliff/?partner=rss&emc=rss

Bucks: Flexible Spending Accounts: Getting Reimbursed for Over-the-Counter Drugs

Most over-the-counter drugs now require a prescription for FSA reimbursement.Bloomberg NewsMost over-the-counter drugs now require a prescription for FSA reimbursement.

New I.R.S. rules that went into effect this year, as part of the Affordable Care Act, made it harder for consumers to have non-prescription medicines reimbursed from health-care flexible spending accounts.

To be reimbursed for over-the-counter medicines, consumers now must obtain a prescription for the items—even though a prescription isn’t required to buy them in the first place.

The change has meant that customers whose employers provide them a dedicated debit card linked to their flexible spending accounts can’t use them to buy over-the-counter items, unless they get a prescription first. They then usually have to submit the prescription along with the receipt, to obtain the reimbursement. The rules apply to medicines like allergy pills, cough syrup, antibiotic ointment or ibuprofen (insulin, however, is exempt).

Flexible spending accounts let workers set aside pre-tax dollars from their paychecks to help pay for medical needs not covered by their health insurance. (The rules also apply to health savings accounts, another tax-savings vehicle).

In some cases, if the doctor knows the patient and has been treating him or her for a while, the physician may not mind providing the patient a written prescription for an over-the-counter drug, said Dr. Glen Stream, president of the American Academy of Family Physicians. In other cases, though, a doctor might want to see the patient in person before writing a prescription—which adds inconvenience and cost for the patient. “I think there is a lot of variability,” said Dr. Stream.

The whole thing has gotten so complicated that many employees appear to have given up seeking reimbursement for OTC medicines (possibly the whole point in the first place, since tax revenue increases for the government if people put less in their accounts in anticipation of not using that extra money for OTC medications).

Aon Hewitt, a large administrator of flexible spending accounts, has seen a 90 percent drop in requests for reimbursement for OTC items, says Craig Rosenberg, the firm’s national practice leader for health benefits administration. (The full impact won’t be entirely clear until after the end of the year, however, because some employees — especially those who don’t have dedicated FSA debit cards — save up their receipts and submit them all at once for reimbursement, and there’s usually a grace period after the end of the calendar year.)

FSAStore.com, an online store that sells only FSA-eligible items, has seen its sales of items affected by the eligibility change plummet because of the hassle of getting a prescription, said Maria Tenaglia, a spokeswoman for the FSAStore.com. (She said the site’s overall sales remain strong overall, however, since thousands of other OTC items, like blood pressure kits, still don’t require a prescription.)

To address the problem, FSAStore.com is offering a way to reduce the reimbursement hassle for patients. Customers with FSA debit cards can shop as usual at the online store, Ms. Tenaglia said. When they go to checkout, FSAStore.com will automatically flag items that now require a prescription.

If the customer provides their doctor’s contact information, FSAstore.com has teamed up with Wellpartner, a pharmacy services firm, to contact the physician’s office to obtain the prescription for processing. That way, the patient doesn’t have to deal with any paperwork. (A sample of the form sent to doctors’ offices notes that the patient is requesting a prescription for an over-the-counter item for FSA purposes). A request from Wellpartner, Ms. Tenaglia said in an e-mail, is no different from a request from a retail pharmacy: “They are experienced in communicating with physicians on pharmacy fulfillment.” She added that so far there have been “no issues” with the service.

If customers prefer, they can call the doctor themselves and have the prescription faxed or e-mailed. (The option to have FSAStore.com call your doctors isn’t available, though, if you lack a dedicated FSA debit card; in that case, you have to pay for the items, then submit a receipt and prescription manually to your claims administrator).

You can read more about the service here.

Have you tried to obtain reimbursement for OTC medicine? What was your experience?

Article source: http://feeds.nytimes.com/click.phdo?i=ce58193c0b782452148d37d57e5a9039