Tag Archives: Tax

Justice Dept. Says Crucial Provisions of Obamacare Are Unconstitutional – The New York Times

The following article should alarm every decent American, especially those who wants to see every American have health care that does not eat into their life savings or cause them to go into debt.

Your humble author is one of them and may also be affected if this draconian decision is upheld by the courts and the Supreme Court. Thanks Bernie Bots and Steiners…thanks for giving us Justice Gorsuch by not voting or not voting for the Democratic candidate two years ago.

For what this will mean to Americans, here is Dr. Don McCanne’s take on it:

“Amongst the more important provisions of the Affordable Care Act were the requirements for guaranteed issue and community rating. For individuals with preexisting conditions, insurers could not deny them coverage nor could they charge them higher premiums than are charged for others in the same age group. This corrected two of the most serious defects in the individual insurance market that existed before enactment of ACA and made insurance available to many who otherwise could not purchase the plans.

Now Attorney General Jeff Sessions says that he will no longer defend these provisions. If the courts uphold his position, individuals with significant health care needs may find insurance with adequate benefits to be either unaffordable or not even available to them. Then concepts such as “universal” or “affordable” become moot.

How does this compare to our traditional Medicare program? The courts have already ruled that Part A of Medicare – the hospital benefit -is mandatory and must be accepted if the individual also accepts Social Security benefits. However, this does not apply to Part B – the physician benefits – nor to Part D – the drug benefits. Thus the courts have ruled that the government can require certain mandates in health care, but it also demonstrates that our current Medicare program needs to be improved, for this and for a great many other reasons. So a single payer, improved Medicare for all should be able to pass constitutional muster.

Once we have an improved Medicare that covers everyone, instead of thinking of it as some sort of unwanted government mandate, most of us would think of it as an automatic program ensuring health care financing for all of us – one that we have earned though our individual contributions based on ability to pay – guaranteed, affordable health care forever.”

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Tax Benefits of Medical Travel

An online newspaper, Medical Tourism Daily posted an article today from The CPA Journal examining the tax benefits medical travelers could receive if they sought medical care outside of the US.

This article is a further elaboration of an earlier article written by an ERISA lawyer and that I wrote about four years ago, Beware the IRS: What to Know Before Using Medical Tourism for Group Health Plans.

Today’s article was authored by three CPA’s and PhD’s from the University of North Florida, in Jacksonville.

The authors discussed the additional savings for taxpayers who seek medical care abroad, above the savings from the medical care itself.

The main takeaways from the article are as follows:

  1. Deductibility of Medical Expenses – generally, the deductibility of medical expenses is determined without regard to where the expenses are incurred. Taxpayers seeking medical care abroad are subject to the same rules and regulations as those who seek medical treatment in the US. There may be some differences in the types of expenses incurred. Example: medical travelers generally incur travel and lodging expenses not associated with domestic medical care. The type and quality of medical care vary from country to country; some treatments, therapies, or drugs administered in other countries may be seen as experimental in the US. Medical facilities may also be different, with services performed on both an in and outpatient basis. Lastly, some overseas providers may require a significant, upfront, lump-sum payment, which would make determining deductibility of expenses.
  2. Allowable Medical Expenses – in order to deduct the cost of medical travel, the expenses incurred must qualify as medical expenses rather than as personal or vacation expenses. To qualify as a medical expense, costs must be incurred for the diagnosis, treatment, cure, or prevention of a mental or physical illness or injury. The cost of equipment, supplies, medicines, and materials needed for the diagnosis, treatment, prevention, or cure of illnesses and abnormal conditions may include, but are not limited to some of the traditional medical expenses. Medical insurance premiums are also allowed to be deducted, as well as long-term care services and transportation costs related to treatment are also deductible. For medical travelers, transportation expenses and meals and lodging expenses are also deductible, under certain conditions (meals and lodging only).
  3. Potential Tax Benefit – in order for a medical traveler to derive any benefit from medical expenses, the taxpayer must have allowable medical expenses that exceed 10% of adjusted gross income (AGI) and must itemize. Choosing to itemize actual expenses implies that the taxpayer has expenses that exceed the standard deduction. They cannot deduct both the standard deduction and itemized expenses in the same tax year.
  4. Paying for Medical Care Abroad – paying for medical expenses while living or traveling abroad is different from paying for medical expenses domestically. Many providers out of the US do not bill insurance companies directly. US citizens living and working abroad may want to fund medical care through high-deductible medical plans in conjunction with health savings accounts (HSA’s). US citizens are taxed on all income worldwide; therefore establishing an HSA can provide significant tax benefits in addition to effectively fund out-o-pocket costs. They can also be used by US citizens traveling abroad for the sole purpose of medical care, as long as the services qualify for the treatment of medical expenses in the US.

The authors conclude their article by advising medical travelers planning to travel for the purpose of medical treatment to carefully consider all factors involved with the tax treatment of their expenses. Lastly, they should keep detailed records and documentation.

It is incumbent on the patient, and not the facilitator to thoroughly educate themselves about the benefits and liabilities they may face if they fail to properly account for all of there medical travel expenses. It would be a wise and customer-focused facilitator, well-versed in tax issues to advise all medical travelers so that they can realize even greater savings from the medical care they receive.

And Now For Something Completely Different

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I thought I might like to go off topic and write about something other than medical tourism and its implementation into workers’ compensation.

Many of you may have certain views and beliefs about the Affordable Care Act (ACA, or PPACA), and believe that government-run, tax supported health care is unconstitutional, despite what the Supreme Court ruled. However, you will be surprised to learn, as I did the other night, that some of the Founding Fathers, namely John Adams, Thomas Jefferson, Alexander Hamilton, and Jefferson’s Treasury Secretary, Albert Gallatin, supported the establishment of federal marine hospitals under an Act signed into law by John Adams in July 1798.

In an earlier life, I was a double major in Political Science and History, among other Social Science and Humanities courses, and hold a Masters’ degree in American History from New York University. Generally, when one studies American history and American politics, emphasis is usually placed on such acts as the Alien and Sedition Acts, or the very important first cases heard by the Supreme Court such as Marbury v Madison or McCulloch v Maryland. But the Act for the Relief of Sick and Disabled Seamen was never a part of my courses, even when I studied American social or labor history.

As reported in two separate articles in Forbes magazine in January 2011 by Rick Unger, a Forbes Contributor, Unger describes how the 5th Congress, presided over by Thomas Jefferson in the Senate, and Jonathan Dayton, the Speaker of the House, who was the youngest man to sign the Constitution, passed the first government run and mandated health insurance program.  

In the first article, “Congress Passes Socialized Medicine and Mandates Health Insurance – In 1798”, Unger explains that the Founders realized that foreign trade was essential to our young economy, and they relied on the nation’s private merchant ships and sailors to carry out that trade. What precipitated the enactment of this law was that the job of a merchant sailor was very dangerous and difficult, and the sailors were exposed to tropical diseases and hurting themselves. This caused a reduction in manpower, and often left a ship’s captain without enough men to get out of port, which was bad for business and for the economy.

Recognizing that a healthy maritime workforce was needed, the Congress and the President did something about it. When it passed, it authorized the creation of a government operated marine hospital service, and mandated that privately employed sailors be required to purchase health insurance.

The Marine Hospital Service was a series of hospitals built and operated by the federal government to treat injured and ailing, privately employed sailors. It was paid for by a mandatory tax on the sailors (a little more than 1% of their wages) that was withheld from their pay and turned over to the government by the ship’s owner. This was not optional, if you wanted the job, you had to pay.

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Ships were no longer permitted to sail in and out of our ports without the health care tax being paid. This was the first national payroll tax. A sick or injured sailor would be given a voucher (in those days they actually paid off) once his payments were confirmed to have been collected and paid to the government, then the voucher would allow them to be admitted to the hospitals.

A few of these hospitals were privately operated, but the majority of the sailors were treated at federal maritime hospitals. This was expanded to include the Mississippi and Ohio rivers. This program eventually became the Public Health Service, and still exists today.

The second article, “Thomas Jefferson Also Supported Government Run Health Care”, published in Forbes four days after the first article, confirms that other Founding Fathers supported the idea of mandated health coverage and a government run hospital system.

So what does this mean? It means that the Tea Party/Libertarian/GOP attempts to overturn the ACA (aka Obamacare) because it mandates that all individuals purchase health insurance, is not only Constitutional, but that the very men who started this nation, Adams and Jefferson, and those who signed the Constitution, believed that such a mandated health care system for merchant sailors was necessary. And since the Constitution is for all the people, not just a certain class of people, like merchant sailors in the 18th or 19th centuries, or today’s military personnel, their spouses and children, veterans, old people, the poor or rich, white Men and a few Women in Congress who get taxpayer supported health care, but the rest of us do not.

It also means that Grover Norquist must be a Monarchist or a traitor to the Republic because he stated that his goal was to take back the country before the Socialists took over. Before learning about this Act, I thought that meant Theodore Roosevelt, Woodrow Wilson, FDR, Kennedy, Johnson, Nixon, and Obama, but now it seems it means that John Adams, Thomas Jefferson, Alexander Hamilton (Really?… Alexander Hamilton, the guy on the ten dollar bill and the guy who assumed all of the debt the original thirteen states incurred during the Revolution and started our national economy), as well as a former Treasury Secretary and Speaker of the House were Socialists, according to Norquist and the Tea Party-types. Then I guess the British Crown really was a Capitalist enterprise. Who knew? The American Revolution was fought for Socialism, except Socialism did not exist for a few more decades, and Karl Marx was not even born when this Act was passed.

So whenever anyone tells you that health care isn’t a right, that it is an entitlement and that forcing people to pay for health care is un-American, or un-Constitutional, refer them to the Act for the Relief of Sick and Disabled Seamen.