Healthcare Reform and Your Wellness

Significant healthcare changes started this month with more rolling out during October 2013 and January 2014. The reforms are tied into the Patient Protection and Affordable Care Act -- PPACA, or simply ACA giving consumers higher quality care at lower cost. Who is affected by the reforms? Consumers like you -- who include patients, healthy people, care givers, wage earners, retired and disabled persons, and employers. If you haven't already, familiarize yourself with healthcare and Medicare-related tax reforms. You could be better equipped to maximize every dollar you allocate to your individual and family's wellness.

Healthcare overview

January 1, 2013 federal subsidies began to be phased in for brand name prescription drugs affecting Medicare Part D benefits. The Medicare Pilot Program, a nationwide approach, encourages healthcare providers to coordinate and improve patient care. Instead of each doctor, service or hospital receiving separate payments, services are bundled and paid at a flat rate.

Now Medicaid recipients receive preventative services at zero or minimal cost, and primary care physicians (PCPs) receive increased payment for these services. In October 2013, the Children's Health Insurance Program (CHIP) receives funding. CHIP covers children not qualified for Medicaid because their families' incomes are too high. Furthermore, in January 2014, the Medicaid eligibility guidelines (eg, income) change and extend coverage to qualifying individuals and families.

January 2014 ushers in several directives affecting consumers and health insurance providers. Some middle class individuals and families become eligible for tax credits, and premium and cost-sharing subsidies to make private health insurance more affordable. Insurance providers no longer can charge higher rates and/or discriminate against consumers because of gender or pre-existing conditions. And, annual or lifetime dollar limited on health benefits will be eliminated. Government certified Health Insurance Exchanges will be established in each state to provide affordable health insurance choices to individuals and small companies (less than 100 employees).

Medicare's surtaxes and taxpayers

There are two Medicare tax structures affecting many consumers in the 2013 tax year. The first is the Medicare surtax. It is a 0.9% additional payroll tax based on earning thresholds: $200,000 for individual taxpayers, $250,000 for married taxpayers who file joint returns, and $125,000 for married taxpayers who file separate returns. When the threshold is met, it is at that point the taxpayer's employer imposes the 0.9% withholding.

Not a wage earner? You still may be subject to an additional Medicare surtax -- the Net Investment Income Tax (NIIT). It is a 3.8% tax applicable to certain individuals, trusts and estates. The Internal Revenue Service (IRS) uses your Modified Adjusted Gross Income (MAGI) and thresholds similar to the Medicare surtax (above paragraph) to determine who is subject to NIIT. All this information is meant as an overview and certainly not provided as an advisement.

Planning ahead starts today

Each health care consumer's situation is different. Whether your health status is good today or becomes chronically challenged, it's difficult to plan for actual medical needs and costs. Some consumers use pre-tax earnings for a flexible spending, health reimbursement, or health savings account. Others find increasing withholding, making quarterly tax payments, and contributions to a 401K help ease tax liabilities.

Why not take immediate advantage of what you can easily control? For example, learn everything about your existing health coverage -- even if you expect coverage to change soon. Take advantage of preventive medical services -- often, these are covered100%. Always choose in-network providers to save money. Have a high-deductible plan? Ask the service provider for the insurance company's cost, and negotiate a discount.

Do you take brand name prescription medication? Talk with your doctor about generic drugs. Often, generics are as effective as the brand but cost you less. You could be saving a lot of money over months or a year -- especially on meds taken daily. If your health insurance provider offers mail-order pharmacy, use it -- or at least try the service. Depending on the provider and prescription, a three-month supply can cost as little as a one-month supply!

It's the start of a new year. What better time than now to learn about healthcare reform and the decisions you may need to make during 2013 and beyond. It's time -- your wellness, and that of your family depend on it!

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