Good Neighbor Insurance (www.gninsurance.com and www.gninsurance.com) is continuing to update our clients on the new health insurance laws.   There are six major coverage options for those in the US and even though some of the rules and regulations are similar for all many differences are there and it all depends on how old you are and for whom you work.  Many critical details of this new insurance law will be clarified in the months and years to come.

Note:  Updated 8-16-2010

These six major coverage options are:

(1) Individual or family coverage

(2) Employee/employer group option for small businesses (typically under 50 employees)

(3) Employee/employer group option for large businesses (typically larger than 50 employees)

(4) Exchange options through the state you are residing in (fully integrated 1-1-2014 and are quasi-government and private insurance coverage combined)

(5) Medicare (which include Parts A, B, C, and D) for those 65 years onwards

(6) Full government health plans like Medicaid, CHIP, TRICARE, VA and other coverage plans as may be designated by the Department of Health and Human Services based mostly on financial criteria and/or military service

Q:  The PPACA requires that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with those issued for calendar year 2011. How will this work and what will it mean, tax-wise, for employees?

A:  The law will require employers to include the value of applicable employer-sponsored coverage on each employee’s W-2 for taxable years after December 31, 2010. This means the reporting will appear on an employee’s W-2, beginning with the one that is issued in early 2012. However, this reporting will be more for informational purposes and will have no impact on the taxable income of an employee. Employees’ premiums will still be made on a pre-tax basis. The purpose of this reporting requirement is to allow each employee to understand the actual value of their employer-provided health care benefits.

Q: Does the new health care law require workers to pay income tax on the value of employer-provided health insurance?

A: No. The value will appear on employees’ W-2 form.

Q. I have heard that this new law will now require employers to include the value of health care benefits on our W-2s. Is this correct? If so, does this mean that we will now have the value of these health care benefits included in our taxable income?

A:  Yes.  The value of your health benefits will show up as a separate entry on your W-2, the notice of wages and income that your employer mails each January.  But that will not happen until January 2012, when your employer reports your wages for the 2011 tax year.

You won’t be taxed directly, but your insurer might be, or your employer could be if it is self-insured, and either one could pass along that cost to you. But before you get upset, consider one more caveat: The tax is only on high-premium plans, better known as “Cadillac health plans,” and it doesn’t kick in until 2018. The tax, at 40 percent, won’t be on the full value of your health plan. Instead, it will be on the “excess benefit” — that is, the amount above $10,200 for a worker with single coverage and $27,500 for an employee with a family policy. Thresholds would go up with inflation.  Most Americans’ plans don’t cost that much. The average employer-sponsored plan for a family costs $13,375, according to the Kaiser Family Foundation, with the employer picking up $9,860 of the cost.

Doug Gulleson totally adores scuba diving and travels overseas throughout the year with his underwater camera in one hand and a cup of coffee in the other.   Visit Good Neighbor Insurance at www.gninsurance.com  and www.gninsurance.com/tripcancellation for Arizona and international travel insurance coverage.