logo

 

Tom 

Tom Licciardello, CFP   

 Crissy
Cristina Licciardello

 Your Trusted Financial Advisors 


We don't predict the future, we help our clients prepare for it.
In This Issue
Tom's Desk
Key Measures of ACA
Taxes, Fees, Assessments
Q1 2013 Global Economic Market Review
Did You Know?
Join Our Mailing List
Quick Links
  
Follow me on Twitter

 

 Planning for Success
From the Desk of Tom Licciardello, CFP
Moving Forward
Boston
"Where are you from?"
  
We've all been asked that question hundreds of time, and if we are far from New England, chances are you've responded just as I have, "Boston".
  
After the tragedies we have experienced over the past several weeks, I've never felt more more proud to tell everyone, "I'm from Boston".  The manner in which our community has rallied to help one another has been profoundly moving, and it has helped start the healing process.  We will most certainly move forward together.
  
ACA, the Economy, and You
  
In this edition of our newsletter, we bring you the second in a series of articles informing you of the impact of the implementation of the Affordable Care Act.  As we move forward toward the full implementation of ACA, it is important to understand how it may affect your financial planning. Business owner, employee, retiree, or fellow advisor - changes are coming and we'll keep you informed.
 
Today, another favorable report on the jobs front has propelled inter-day record highs in the markets.  The housing market is staging impressive gains while interest rates remain historically low. These are indicators that our economy is trending toward recovery despite worries about sequestration, higher payroll taxes, and gridlock in Congress. What does that mean for your financial plan?
 
We will keep you informed about the implications on your investment decisions with an economy moving forward.  In this newsletter, there is an informative 1st quarter video review prepared by Kevin Barr, head of SEI's Investment Unit.  But we need to hear from you as well.
 
If we haven't had an opportunity to review your financial plan recently, or if there have been any significant changes in your financial picture, we need to meet.  The best financial plan is the one that is designed to help you reach your financial goals. 
 
As always, our team here in North Andover and at the home offices of Compass Capital Corporation in Braintree look forward to hearing from you.

 

The Patient Protection and Affordable Care Act

HPHC logo

A summary of key measures with financial impact on the cost of coverage

Several measures will come into play to pay for the Affordable Care Act's (ACA) various coverage expansion provisions and other requirements. These include a number of taxes, fees and assessments imposed primarily on employers and insurers. Here's a summary of some of the key items that will have a financial impact on the cost of coverage over the coming years.

  

Provision [see details below]

Who's impacted

When

ACA Reinsurance Fee

Health insurers

Self-insured groups

2014-2016

Health Insurance Tax

(aka Premium Tax)

Health insurers

Beginning

2014

Comparative Effectiveness Research Fee

Health insurers

Self-insured groups

October 1, 2012 to September 30, 2019

Elimination of Employer Tax Deduction for Retiree Drug Coverage

Employers

Beginning 

2013

Excise Tax on High-Cost Plans

Employers

Beginning

2018

Medicare Tax Increase on Higher Income Individuals

Consumers

Beginning

2013

Medical Device Company Tax

Medical device manufacturers

Beginning

2013


 
  
Taxes, fees and assessments under the ACA

                                

           ACA Reinsurance Fee

This fee supports a transitional reinsurance program for the individual market in each state from 2014 through 2016 to stabilize the market while other provisions of the ACA are implemented. All health insurance carriers and TPAs, on behalf of self-insured group health plans, submit ACA reinsurance fee contributions. The ACA reinsurance fee for 2014 is $63 annually or $5.25 per member per month.

 

 Health Insurance Company Premium Tax

This annual tax on health insurers is based on their market share of net premiums, or the sum of premiums earned from all policies during the previous year. The total amount to be collected across all health insurers in 2014, the first year of the tax, is $8 billion and increases each year thereafter. Not-for-profit insurers are assessed the fee based on half the value of their net premiums. Harvard Pilgrim has incorporated approximately 1% - 2% of premium for this tax.

 

 Comparative Effectiveness Research Fee  

The ACA created the Patient-Centered Outcomes Research Institute (PCORI) to conduct research to evaluate and compare health outcomes and the clinical effectiveness, risks and benefits of various medical treatments. Insurers and self-insured plans are required to pay a fee to fund this agency. Plans on a calendar-year basis will pay the fees for the 2012 through 2018 plan years. For plans not on a calendar-year basis, the fee applies to the first plan year ending on or after October 1, 2012. The fees do not apply to plan years ending after September 30, 2019. Harvard Pilgrim began including this fee in its fully insured rates in 2012.

 

In the first year, the fee is $1 per member per year. In the second and subsequent years, the fee will be $2 per member per year. Under a proposed rule that hasn't yet been finalized, plan sponsors of self-insured plans would be required to file a Form 720 "Quarterly Federal Excise Tax Return" annually that states their fee liability. The fee itself would be paid annually by July 31 of the calendar year immediately following the last day of the plan year. So for a self-insured plan with a plan year that ended on December 31, 2012, the first fee payment will be due by July 31, 2013.

 

Employer Tax Deduction for Retiree Drug Coverage Eliminated

As of January 1, 2013, employers who provide drug coverage for their retirees under Medicare Part D no longer receive a tax deduction for the subsidy payments they receive.

 

Excise Tax on High-Cost Plans

The so-called "Cadillac" tax will be effective in 2018. Under this provision, a 40% excise tax will be levied on the value of employer-sponsored coverage in excess of $10,200 for individual coverage and $27,500 for family coverage. The dollar thresholds are indexed to the Consumer Price Index (CPI) plus 1% in 2019 and to the CPI only in the years that follow. Retirees who are at least 55 but not yet eligible for Medicare and persons employed in certain high-risk professions such as firefighting, construction, mining, etc. have higher dollar thresholds before the tax applies.

 

Medicare Tax Increase on Higher Income Individuals

Effective January 1, 2013,the current Medicare payroll tax rate of 1.45% on wages increased by 0.9% on earned income exceeding $200,000 for persons filing an individual return and $250,000 for persons filing a joint return. There is also a 3.8% assessment on unearned income.

 

Medical Device Company Tax

Effective January 1, 2014, the ACA imposes an excise tax of 2.3% on the sale of any taxable medical device. The tax applies to both manufacturers and importers of medical devices. The tax does not apply to eyeglasses, contact lenses, hearing aids and devices sold at retail stores for individual use. 

 

Video: Q1 2013 Global Economic Market Review     Kevin Barr, Executive Vice President, Investment Management Unit

Looking back at the first quarter, many of the world's major equity markets delivered a year's worth of gains in just three months. In a near mirror image of last year's fourth quarter, the ongoing financial crisis in Europe and political strife in the U.S. dominated the headlines and set a negative tone. Fortunately, the results from the financial markets were once again significantly better than the sentiment.

On their way to delivering solid results, global markets overcame a long list of challenges. The United States saw sequestration and tax hikes. The U.K. had a debt downgrade, and we saw election-related fears in Italy and a near meltdown in Cyprus. Slow but steady economic growth in the United States coupled with accommodative central bank policy in both Europe and the United States helped to power the gains.

 

View Kevin's full video presentation below:

 

 

Video: Q1 2013 Global Economic Market Review

 

Did You Know? 

As a fee based financial advisor we can:

  • Help you define your most important financial goals based upon your core values
  • Create a strategy to help you navigate the financial choices that will help you reach your goals
  • Provide ongoing review of your plan to assure that you stay on track
  • We can advise on the correct use of financial instruments such as no load mutual funds and ETF funds.

In addition to health insurance, our Benefits division can help your company with:

  • 401k plans
  • Employee paid payroll deduction benefits
  • Group Life, Disability, and Dental Plans
 We can advise you on, and find the best rates for:
  • Term Life Insurance
  • Long Term Care Insurance
  • Long Term Disability Insurance
 Through our network of Qualified Advisors affiliated with our ProNet Group, we can refer you to the best advisors in the following areas:
  • Estate Planning Attorney
  • Real Estate Attorney
  • Employment Law
  • Third Party Administrator 
  • Certified Business Evaluations Expert
  • Property Casualty Agent
  • Accountant
  • Banker
  • Mortgage Broker

Let us know if we can help! 

When conditions become volatile and confusing, there is no more important time to have a Trusted Financial Advisor to help guide you. Please remember that you have unrestricted access to us. Call, email, or text any time!
Do you have an idea for the next newsletter?  Is there an issue you'd like to hear more about?  Is there someone you'd like to add to the newsletter list?  Let us know!

Sincerely,
 
Tom Licciardello, CFP 
Crissy Licciardello 
Licciardello Financial Services
Compass Capital Corporation