HEALTH CARE REFORM
This week, President Obama is putting on the full court press to pass some sort of so called health care reform. According to the Integris Foundation, the Democratic plan inlcudes the following:
- A Health Insurance Exchange may be funded by the federal gover
nment and provides insurance for small business employees and individuals.
- Pre-existing conditions are covered.
- Low and moderate income persons (up to $43,000 for individuals and $88,000 for a family of four) receive government assistance on premiums.
- There is a maximum amount of annual out-of-pocket spending for medical care.
- Persons with incomes up to 133% of the federal poverty level may benefit through Medicaid.
- The penalty for not buying insurance is 2.5% of your adjusted gross income.
- A business with over $250,000 in annual employee payroll must offer insurance or pay 8% of payroll as a penalty.
- Several measures are designed to reduce Medicaid and Medicare costs.
Right now, funding for these "reforms" is targeted to come from upper income tax payers. However, since these taxpayers also have the greatest ability to enact sophisticated tax reduction strategies and if necessary movement of assets offshore, it is likely that these programs will eventually be funded by higher taxes for all. But in the meanwhile, it is projected that the maximum tax rate on high income earners will approach or exceed fifty percent in approximately half of the states since the new proposed federal tax maximum will be nearly forty percent. Small to medium sized business owners should be talking to their financial and insurance advisers NOW about strategies to handle what may become the most drastic increase in tax payer funded public entitlements in American history.