Tax Exempted Waiver Payments

Last week, The Arc reported on IRS Bulletin (2014-4) and an accompanying Q&A clarification document which, as of January 3, 2014, under IRS Code §131, allow payments to qualified Medicaid waiver providers to be excluded from gross income tax for reporting purposes. The clarification document states, in part, “… the IRS will treat ‘qualified Medicaid waiver payments’ as difficulty of care payments excludable from gross income under §131 of the Internal Revenue Code.  For purposes of the notice, qualified Medicaid waiver payments are payments by a state, a political subdivision of a state, or a certified Medicaid provider under a Medicaid waiver program to an individual care provider for nonmedical support services provided under a plan of care to an individual (whether related or unrelated) living in the individual care provider’s home.” The Arc sought clarification from the Internal Revenue Service and learned that individual providers can amend previous tax returns according to standard amendment practice. The IRS will release additional FAQs next month.

Tax Exempted Waiver Payments

Recently, The Arc became aware of an IRS Bulletin (2014-4) as well as an accompanying Q&A clarification document which, as of January 3, 2014 under IRS Code §131, allow payments to qualified Medicaid waiver providers to be excluded from gross income tax for reporting purposes. The clarification document states, in part, “… the IRS will treat ‘qualified Medicaid waiver payments’ as difficulty of care payments excludable from gross income under § 131 of the Internal Revenue Code.  For purposes of the notice, qualified Medicaid waiver payments are payments by a state, a political subdivision of a state, or a certified Medicaid provider under a Medicaid waiver program to an individual care provider for nonmedical support services provided under a plan of care to an individual (whether related or unrelated) living in the individual care provider’s home.” The Arc is seeking further clarification from the Internal Revenue Service and will share additional information accordingly.

Lame Duck Congress Begins

Today, the 112th Congress will begin a lame duck session to deal with budget and tax policy and potentially other items that were unfinished when Congress left for the election.   There is pressure on Congress to address the tax cuts that will expire, the cuts to Medicare providers that will occur, and the automatic across the board spending cuts that will happen at the end of the year unless Congress acts. The President and the leadership of the House and Senate are expected to begin negotiations on what will be the framework of an agreement to address these critical issues. The Arc will continue to urge Congress to protect critical programs such as Medicaid, Supplemental Security Income and Social Security, that provide a critical lifeline for people with I/DD.

Help Protect Disability Programs – Call to End Tax Cuts for the Top 2 Percent

Congress will vote this month on whether to renew the tax cuts enacted in 2001 and 2003 under the presidency of George W. Bush.  Please tell Congress to end these tax cuts for the top 2 percent.  As we fight to protect the Medicaid lifeline, it’s time to end tax cuts for those who need them the least.

The Arc has longstanding language in our legislative agenda supporting increased revenue if necessary.  A fair tax system will help ensure that revenue is raised to pay for critical disability services and supports.  This starts by allowing the tax breaks that were intended to be temporary to expire as scheduled for the top 2 percent.  Our nation must also make critical investments that create and sustain jobs while taking a balanced approach to addressing America’s fiscal challenges.

What disability advocates should know about the tax cuts:

  • Allowing the tax cuts to expire for the top 2 percent – those households making over $250,000 a year – would generate about $1 trillion.  But if these special tax breaks for the wealthiest Americans continue, it will be harder to protect important disability programs, like Medicaid, Social Security, housing, education, and employment from deep cuts and reduce the deficit.
  • A wealthy person who earns $1 million a year gets an average tax break of about $143,000, while a middle-class person making $50,000 gets an average tax break of only about $1,000, a low income individual earning $15,000 only gets an average tax break of $323.

Take Action

CALL YOUR 2 U.S. SENATORS AND REPRESENTATIVE NOW, toll free 888-744-9958

If you need to know who your Senators and Representative are, insert your zip code here.

What to say:

  • Allow the tax cuts to expire for the top 2 percent—those making more than $250,000 a year.
  • Oppose any extension of tax cuts for the top 2 percent—even a temporary one.
  • It’s time for the wealthiest Americans to pay their fair share so that we can protect disability programs, like Medicaid, which is a lifeline to people with disabilities and their families.

House Committee Votes to End Certain Taxes in Health Care Reform Law

The House Ways and Means Committee voted to eliminate a 2.3 percent tax on medical devices, and to end a ban on the use of pretax flexible spending accounts to buy non-prescription medicines. These measures were included in the Affordable Care Act to help pay for the cost of expanding health insurance.  The House of Representatives will likely vote on the measures in the near future, though the provisions are not expected to advance in the Senate.

House Republicans Expected to Release 2013 Budget Tomorrow

House Budget Committee Chairman Paul Ryan (R-WI) is expected to release a Fiscal Year (FY) 2013 Budget Resolution tomorrow, which is a blueprint for spending and tax policy for the year.  This is the first Congressional step in what will likely be a lengthy battle over appropriations levels, tax policy, and deficit reduction.   It is doubtful that all these issues, including the automatic spending cuts scheduled to take effect in January 2013, will all be resolved before the November election.  If not, then Congress could reconvene in a post-election “lame duck” session to try and resolve the issues and any other outstanding matters.   The FY 2013 House Budget Resolution is expected to contain deep cuts in critical domestic spending and include fundamental changes to the Medicaid and Medicare programs.   The Senate is not likely to vote on a Budget Resolution this year, as the Budget Control Act already set spending caps for 2012 to 2021.

Congress approves full-year extension of payroll tax holiday, extended unemployment benefits, and extended Medicare physician payment rates

Congress approved legislation (H.R. 3630) to extend for the rest of 2012 the temporary payroll tax rate reduction for workers, current Medicare reimbursement rates for doctors, and some long-term unemployment insurance benefits. The legislation extends through December 31, 2012 the 2 percent reduction in the Social Security payroll tax rate for workers that was initiated as economic stimulus in 2011. It also extends current Medicare physician payment rates, avoiding a scheduled 27.4 percent cut in reimbursements. It extends certain unemployment insurance benefits for long-term jobless workers, but also reduces the maximum number of weeks of long-term benefits to 73 weeks from 99 weeks. Benefits in states with jobless rates below 9 percent would be capped at 63 weeks. The reduction would be phased in between May and September, 2012. Finally, the legislation extends Temporary Assistance for Needy Families (TANF) through September 30, 2012.

Hearing on payroll tax holiday and unemployment insurance benefit extension

The U.S. Congress Joint Economic Committee will hold a hearing on “Bolstering the Economy: Helping American Families by Reauthorizing the Payroll Tax Cut and UI Benefits.” The hearing on Tuesday, February 7, will focus on the importance of extending the two-percentage-point payroll tax cut and continuing emergency federal unemployment insurance (UI) benefits through the end of 2012. At this hearing, the JEC will examine the economic impact of extending these policies versus allowing them to lapse.

Congress to take up full-year extension of payroll tax holiday, extended unemployment benefits

On December 23rd Congress approved, and the President signed, a bill (H.R. 3765) to maintain the 4.2 percent Social Security payroll tax paid by employees — which was reduced from 6.2 percent last year — through the first two months of 2012. The bill also maintains, for two months, expanded unemployment benefits and current payment rates for doctors who see Medicare patients.  Without action by Congress, all three provisions would have expired on December 31, 2011. The House and Senate are expected to begin negotiations over a full-year extension of all three provisions when they return to Washington at the end of January.

Congress approves 2-month extension of payroll tax holiday

On December 23rd Congress approved, and the President signed, a bill (H.R. 3765) to maintain the 4.2 percent Social Security payroll tax paid by employees — which was reduced from 6.2 percent last year — through the first two months of 2012. The bill also maintains, for two months, expanded unemployment benefits and current payment rates for doctors who see Medicare patients.  Without action by Congress, all three provisions would have expired on December 31, 2011. In January, Congress is expected to begin negotiations on how to extend the provisions through the remainder of 2012.