House "Affordable Health Care for America Act"

[samclem]

Quote:

Originally Posted by FUEGO For moderate income folks, the premiums you pay may end up being capped at 9-11% of your income, which is an effective tax. Add that to a 15% federal tax and possibly 7-8% state tax for some, and you have a very hefty marginal tax burden even for rather low income individuals. We'll have to see how the health insurance debates are ultimately resolved, but this could also mean Roth IRA's and Roth 401ks become more favorable. As would muni bonds.

I think another group of retirees/ERs who might be affected are those with employer-sponsored/employer-assisted health care. The proposed House legislation (as I read the summary) allows employers to cut the health care benefits they provide retirees if they do the same to their current workers. Employers can cut benefits to current workers if they pay the "fine." Paying this fine (8% of payroll) looks like it will be cheaper than providing insurance, certainly it will be as health care costs escalate. Employees left without employer insurance will have to buy their own, but most will get the subsidy (from taxpayers). If employers need to increase compensation to keep their employees, they'll increase pay. So, the employee will be fine. Not so with retirees--the employer won't be paying them anything extra (since they aren't employees). They'll just be getting a big health care bill. Sorry!

Regarding Roth IRAs and Roth 401Ks--I think it's interesting that we are talking about lots of "changed promises" (means testing SS, changed tax rates, very large new taxes on everyone, including those earning much less than $250,000 ) and yet there's precious little discussion of a new income limit or asset limit on Roth tax exclusions. I think it's possible the "fat cats" (and we'll see who THAT is) will be paying taxes on Roth withdrawals, too. In the name of fairness.

[youbet]

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Originally Posted by samclem I think it's possible the "fat cats" (and we'll see who THAT is) will be paying taxes on Roth withdrawals, too. In the name of fairness.

I agree. It won't be an income tax but rather Roth withdrawals and possibly muni bond interest will count towards income for determining health care premium subsidies and that sort of thing.

[Martha]

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Originally Posted by youbet I agree. It won't be an income tax but rather Roth withdrawals and possibly muni bond interest will count towards income for determining health care premium subsidies and that sort of thing.

Nothing wrong with that. Should be the same with tax exempt interest.

[FUEGO]

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Originally Posted by Martha Nothing wrong with that. Should be the same with tax exempt interest.

What, are you trying to get back into practice?!?! This is proposing an alternative alternative minimum tax...

[haha]

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Originally Posted by Martha Nothing wrong with that. Should be the same with tax exempt interest.

It is already with respect to tax exempt interest and Medicare Part B premiums. Premiums are based on AGI as adjusted (adjusted adjusted AGI- that is, AGI with muni interest added back.)

Count me as one who does see something wrong with this. One way this new program could be cheaper for an individual is if the government put price controls on doctors, hospitals and drug companies, and no one is talking about that to my knowledge.

The only other way I can think of is to rob Peter to pay for Paul; and it always works out that I am Peter, even though I live in a 500 sq ft apartment in a building built in 1927.


Ha

[ERD50]

Quote:

Originally Posted by youbet It won't be an income tax but rather Roth withdrawals and possibly muni bond interest will count towards income for determining health care premium subsidies and that sort of thing.

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Originally Posted by Martha Nothing wrong with that. Should be the same with tax exempt interest.

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Originally Posted by haha Count me as one who does see something wrong with this.

I second that. I consider it wrong for the government to essentially change the rules of a ROTH after the fact. I'm no lawyer, but in the private sector I think that would be called "breach of contract". So while I guess we don't technically have a "contract" with the govt, it should be treated as such. Maybe even more so, since we have no real recourse.

And collecting HC premiums to provide HC is just as much a tax as collecting my money for any other purpose our govt chooses. So if a ROTH wd affects the amount of money I pay to the govt, it is being taxed. I didn't sign up for that when I contribute to a ROTH (though I am aware they can change the rules, but I do think it is wrong and would hope that they would grandfather past contributions).

If they want to change it going forward, well, I may not like it but at least it isn't screwing the person that tried to play by the rules.

-ERD50

[Martha]

Quote:

Originally Posted by ERD50 I second that. I consider it wrong for the government to essentially change the rules of a ROTH after the fact. I'm no lawyer, but in the private sector I think that would be called "breach of contract". So while I guess we don't technically have a "contract" with the govt, it should be treated as such. Maybe even more so, since we have no real recourse. And collecting HC premiums to provide HC is just as much a tax as collecting my money for any other purpose our govt chooses. So if a ROTH wd affects the amount of money I pay to the govt, it is being taxed. I didn't sign up for that when I contribute to a ROTH (though I am aware they can change the rules, but I do think it is wrong and would hope that they would grandfather past contributions). If they want to change it going forward, well, I may not like it but at least it isn't screwing the person that tried to play by the rules. -ERD50

Oh baloney.

People who have income from tax exempt interest or Roth IRAs should have that income counted when determining eligibility for a subsidy. No one ever said Roths would be sheltered from everything, it is only sheltered from income tax. That is all the law provides and that alone is huge. Roth income might be counted in determining eligibility for many benefits. It certainly is counted to see if you are impoverished enough to get medicaid to pay for your nursing home. It is not like breach of contract and is not a change of the rules. To call every benefit or subsidy a tax on everyone else is stretching things way out of proportion.

[teejayevans]

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Originally Posted by ERD50 I second that. I consider it wrong for the government to essentially change the rules of a ROTH after the fact. I'm no lawyer, but in the private sector I think that would be called "breach of contract". If they want to change it going forward, well, I may not like it but at least it isn't screwing the person that tried to play by the rules. -ERD50

Talk to the GM bond holders about that...
TJ

[Martha]

Quote:

Originally Posted by haha It is already with respect to tax exempt interest and Medicare Part B premiums. Premiums are based on AGI as adjusted (adjusted adjusted AGI- that is, AGI with muni interest added back.) Count me as one who does see something wrong with this. One way this new program could be cheaper for an individual is if the government put price controls on doctors, hospitals and drug companies, and no one is talking about that to my knowledge. The only other way I can think of is to rob Peter to pay for Paul; and it always works out that I am Peter, even though I live in a 500 sq ft apartment in a building built in 1927. Ha

My only point had to do with what could be counted as income. I too find fault with the proposals. I think that we need some price controls somewhere,but not everywhere. I keep thinking of the $100 MRI in Japan and Japan has no shortages of MRI machines.

On the other hand, I think that our primary care providers are underpaid so they end up having too many patients.

[samclem]

Quote:

Originally Posted by haha One way this new program could be cheaper for an individual is if the government put price controls on doctors, hospitals and drug companies, and no one is talking about that to my knowledge. The only other way I can think of is to rob Peter to pay for Paul; and it always works out that I am Peter, even though I live in a 500 sq ft apartment in a building built in 1927.

In addition to these two ways of reducing costs to an individual (price controls on services or cost shifting to other individuals) why not lower costs by taking steps to improve competition, thereby improving both the quality of services and the efficiency of their delivery? That's the force that works well in almost every other aspect of our economic lives. Health care is different in important respects, but I'm confident eliminating the structural impediments to competition is the best way to get a handle on costs. There are good ways to do this (and powerful vested interests opposed to it).

[samclem]

I'm with Ziggy. "Tax increase" and "subsidy reduction" feels a lot the same if you're one of the guys actually paying for the subsidy everyone is receiving.

Though I can see why this "subsidy" approach is attractive . . .

[ERD50]

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Originally Posted by samclem Though I can see why this "subsidy" approach is attractive . . .

It's attractive because you can say the word "subsidy" without saying the word "tax". Your lips don't even move the same. Some people might want to believe you kept your promise not to raise certain taxes.

But whether I end up paying more, or pay the same but get less of a subsidy, it is all the same amount of money out my pocket and into the govt pocket. If it looks like a duck, walks like a duck and quacks like a duck....

Quote:

Originally Posted by Martha Oh baloney.

Well, I guess we will have to agree to disagree. But this time, at least Merriam Webster and George Stephanopoulos are on my side.

Obama: Mandate is Not a Tax - George's Bottom Line

(and see the videos I posted a few back)

-ERD50