More On Legal & Compliancefrom The Advisor's Professional Library
- Where Are We Headed? The ultimate compliance goal is to help ensure that everyone associated with an advisory firm acts ethically at all times. Advisors and RIAs should do the right thing, even when regulators are not looking over their shoulders.
- Pay-to-Play Rule Violating the pay-to-play rule can result in serious consequences, and RIAs should adopt robust policies and procedures to prevent and detect contributions made to influence the selection of the firm by a government entity.
As Congress continues to forge ahead with healthcare reform, House Democrats as well as the Senate Health, Education, Labor, and Pension Committee (HELP) introduced in mid-July legislation putting forth their versions of how healthcare reform should take shape. Both the House and Senate legislation would likely raise taxes for many clients of advisors.
House Democrats joined Rep. Charles Rangel (D-New York), chairman of the House Ways and Means Committee, as they issued on July 14 a revised health reform bill, America's Affordable Health Choices Act of 2009. The revised version includes Medicare and Medicaid reforms; health insurance exchanges in a local service area, which includes a public plan option; provisions to promote preventative and wellness services; and measures to improve efforts to combat fraud, waste, and abuse in the healthcare system.
For advisors, a key concern would be a proposed 5.4% income tax surtax on individuals and families with annual gross incomes exceeding $1 million. Those with incomes between $500,000 and $1 million would be hit with a 1.5% surtax, and those making between $350,000 and $500,000 would be charged a 1% surtax.
The revised House bill also includes a tax on self-insured health plans to fund the proposed healthcare reform, according to Anne Hance, a partner in McDermott Will & Emery's Washington, D.C. office.
The Senate HELP Committee passed on July 15 The Affordable Health Choices Act, a bill that the Committee says is designed to reduce health costs, protect individuals' choice in doctors and plans, and assure quality and affordable healthcare for Americans. The Senate bill also includes a public plan option as well as measures to combat fraud and waste. In introducing the legislation, members of the committee also touted these aspects of the bill: no American can be denied health coverage because of a preexisting medical condition, or have that coverage fail to help them when they need it most; no American will ever again be subject to annual or lifetime limits on their coverage, or see it terminated arbitrarily to avoid paying claims. The Senate bill requires those businesses which do not provide coverage for their workers to contribute to the cost of providing publicly sponsored coverage for those workers. The bill includes an exception for small businesses. The bill states that small businesses with 50 or fewer full-time workers could receive tax credits for subsidizing insurance coverage. Reuters reports that all companies with more than 25 workers would be required to pay at least 60% of their workers' health insurance or face a $750 per full-time employee fee, with a reduced rate of $375 per part-time employee. The first 25 workers would be exempt, Reuters says.