How much will Medicare cuts affect you?
According to the Congressional Budget Office (CBO), this 4% cut amounts to $36 billion for Medicare providers, which could have a substantial impact on the delivery of care to our patient community. These Medicare cuts could increase by an additional potential 4% if Congress fails to waive PAYGO on any additional spending packages passed this year.
How did tax reform affect Medicare tax treatment?
While the recently passed Tax Cuts and Jobs Act (TCJA) did repeal the individual health coverage mandate under the Affordable Care Act, it left in place the 0.9% Additional Medicare tax on high-income individuals. The takeaway here is that there were no changes to the tax treatment of Medicare benefits or rules due to tax reform.
What does the tax cuts and Jobs Act mean for Medicare?
Editor’s Note: This article was originally published on April 09, 2018. While the recently passed Tax Cuts and Jobs Act (TCJA) did repeal the individual health coverage mandate under the Affordable Care Act, it left in place the 0.9% Additional Medicare tax on high-income individuals.
How much will the sequester cut Medicare spending?
The Congressional Budget Office has estimated that a Statutory PAYGO sequester in fiscal year 2022 resulting from passage of the American Rescue Plan Act of 2021 would cause a 4% reduction in Medicare spending – or cuts of approximately $36 billion. Failure to waive Statutory PAYGO would result in $9.4 billion in cuts to hospital providers.
How is Medicare financed?
1-800-557-6059 | TTY 711, 24/7. Medicare is financed through two trust fund accounts held by the United States Treasury: Hospital Insurance Trust Fund. Supplementary Insurance Trust Fund. The funds in these trusts can only be used for Medicare.
How much Medicare tax do self employed pay?
Medicare taxes for the self-employed. Even if you are self-employed, the 2.9% Medicare tax applies. Typically, people who are self-employed pay a self-employment tax of 15.3% total – which includes the 2.9% Medicare tax – on the first $142,800 of net income in 2021. 2. The self-employed tax consists of two parts:
What is the Medicare tax rate for 2021?
Together, these two income taxes are known as the Federal Insurance Contributions Act (FICA) tax. The 2021 Medicare tax rate is 2.9%. Typically, you’re responsible for paying half of this total Medicare tax amount (1.45%) and your employer is responsible for the other 1.45%.
What is Medicare Part A?
Medicare Part A premiums from people who are not eligible for premium-free Part A. The Hospital Insurance Trust Fund pays for Medicare Part A benefits and Medicare Program administration costs. It also pays for Medicare administration costs and fighting Medicare fraud and abuse.
When was the Affordable Care Act passed?
The Affordable Care Act (ACA) was passed in 2010 to help make health insurance available to more Americans. To aid in this effort, the ACA added an additional Medicare tax for high income earners.
How is the Hospital Insurance Trust funded?
The Hospital Insurance Trust is largely funded by Medicare taxes paid by employees and employers , but is also funded by: The Hospital Insurance Trust Fund pays for Medicare Part A benefits and Medicare Program administration costs. It also pays for Medicare administration costs and fighting Medicare fraud and abuse.
What the House Passed
The Medicare-related legislation, doesn't do everything APTA and other organizations have asked for, but it comes close. Here's what's in the bill.
The Senate Path
While the House passed the Medicare changes as standalone legislation, the journey the changes will take in the Senate is a little trickier— which could be a good thing. (This is where staying awake in civics class pays off.)
No Guarantees
As with all machinations on Capitol Hill, there's never a sure bet. That's why we need to be ready to advocate for S.610. Stay tuned to APTA — by way of our website, member emails, social media, and the APTA Advocacy Network — for calls to action in the coming days.
Medicare PAYGO Cuts
The American Rescue Plan Act of 2021, signed into law by President Biden in March, increased spending without offsets to other federal programs. Under statutory Pay-As-You-Go (PAYGO) rules, any increases to the federal deficit automatically triggers an additional series of acrossthe-board deductions to federal programs.
Medicare Sequester Delay Extension
At the onset of the COVID-19 pandemic, Congress delayed the automatic 2% Medicare sequestration cuts as providers were struggling to keep their doors open to their communities. Various delays were enacted during this public health emergency, with the last pause setting to expire on January 1, 2022.
Changes to the Medicare Conversion Factor
Last year, due to a temporary patch approved by Congress, the Centers for Medicare & Medicaid Services (CMS) increased all providers’ payments by 3.75% to offset a change in the Medicare conversion factor that CMS implemented as part of a change to Evaluation and Management (E/M) codes designed to increase support for primary care services.
The Problem
Entitlement spending is the fastest growing part of the federal budget, and this pattern will continue even if there is no expansion of so-called mandatory programs In just the past 40 years, entitlements have nearly doubled as a share of federal outlays, climbing from 32 percent of total outlays in 1962 to 60 percent of the federal budget in 2002.
The Enormous Cost of a New Prescription Drug Entitlement
In the absence of program reform, creating a new entitlement for prescription drugs is akin to pouring gasoline on a fire. And it will be very expensive gasoline.
Creating Obstacles to Permanent Tax Reduction
In a political environment of rising costs and demands for more benefits, the most likely scenario is action by Congress to repeal existing legislation that would reduce tax revenue while concomitantly dampening enthusiasm for future tax reduction and reform. The remaining Bush tax cuts would likely be the first target.
Goodbye to Future Tax Reform
The tax cuts enacted in 2001 and 2003 are already at risk, and adding a prescription drug entitlement would magnify that risk. Further tax relief and fundamental tax reform would also be jeopardized if entitlements continue to consume an ever-larger share of national economic output.
What Congress Should Do
Rather than enacting a huge new drug entitlement that will undermine sensible tax policies, lawmakers should pause to consider how best to address the shortcomings of Medicare in a responsible manner. A lack of drug insurance is not a widespread problem. Most seniors already have private coverage.
Conclusion
The House and Senate prescription drug bills will hurt America by making the health care system less responsive to market forces, but the damage will extend far beyond the health care system. The fiscal policy consequences of entitlement expansion are staggering.
Halting Statutory PAYGO Sequester for 2022
The bill would stop the 4% PAYGO sequester from taking effect early next year. Any cuts mandated by a sequester order for the 2022 “PAYGO scorecard” would be delayed and added to the “2023 scorecard.” This does mean Congress will need to take action in late 2022 to eliminate these cuts.
One-year Delay of Clinical Lab Cuts
The bill would delay for one year (until Jan. 1, 2023) payment cuts under the Clinical Laboratory Fee Schedule (CLFS).
Delay Implementing Radiation Oncology Model
The package would delay for one year (until Jan. 1, 2023) the implementation of the radiation oncology model. The AHA had urged CMS to delay the model start date to Jan. 1, 2023 to give the model and its participants the best chance to truly improve cancer care and patient outcomes.
