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Accounting
The Affordable Care Act (a.ka. Obamacare) has created some interesting implications for financial reporting. The issues revolve around the determination of benefits, particularly when companies opt to put their employees through Obamacare insurance exchanges where they had previously been on a company plan. The Affordable Care Act was signed into law in 2010, and reshaped the health care insurance industry in particular. With the creation of health care insurance exchanges, competition in health insurance was increased and some of the information asymmetry in the health care market decreased -- though not nearly enough for the market to be considered competitive.
One of the implications for accountants of the Affordable Care Act is that many employers have taken the opportunity to move their employees off of employer-sponsored plans and onto the exchanges as a means of reducing the cost of their benefits programs. As the ACA implementation process accelerates, the accounting implications are becoming more apparent. This paper will discuss some of those. In particular, there are several new ways that liabilities can arise under the ACA, usually with respect to retiree benefit plans. This new liabilities will need to be recorded, but there is also the possibility that the FASB will need to become involved in emerging issues, since...
There may be litigation involved in some circumstances. For some workers, the insurance would be subsidized by the taxpayers, which improves the attractiveness of the idea for employers (Nussbaum, 2013). There had already been a decrease in retiree health care coverage as the result of FAS 106. FASB Statement No. 158 further strengthened the provisions regarding the reporting of underfunded or overfunded retirement benefits. Health care benefits are particularly unclear given the number of variables at work. For organizations with defined benefit plans, offloading their health care not only reduces a key element of complexity in their accounting, but a key long-term liability from their balance sheet as well. When the company needs to account for the decline in value of the plans, that could have an impact on that company's income statement, because of the clarity demanded of companies with respect to retirement benefits valuation under FASB Statement No. 158.
Companies that are keeping employees on in-house retiree health plans will also face changes to their accounting as the result of the Affordable Care Act. There are several implications noted. The first is that the changes to Medicare Advantage will affect the way that risk is pooled and calculated, resulting in actuarial changes that will be reflected on the balance sheet as expected future obligations change. There are also changes regarding accounting for reinsurance as well (Kastrup, 2013).
The FASB has also specifically addressed some other aspects of the ACA directly. Loss contingencies were addressed in 2010 with FASB ASC 450, wherein loss contingencies need to be reported, along with best estimations of their…
References
CalCPA. (2014). ACA mythbuster. California CPA Education Foundation. Retrieved May 2, 2014 from http://www.calcpa.org/content/27238.aspx
FASB (2010). Contingencies (Topic 450). Financial Accounting Standards Board. Retrieved May 2, 2014 from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175823559187&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=309726&blobheadervalue1=filename%3DProposed_ASU_Contingencies_Topic_450_Disclosure_of_Certain_Loss_Contingencies.pdf&blobcol=urldata&blobtable=MungoBlobs
FASB Summary of Statement No. 158. Financial Accounting Standards Board. Retrieved http://www.fasb.org/summary/stsum158.shtml
Kastrup, L. (2013). Financial reporting implications under the Affordable Care Act. American Academy of Actuaries. Retrieved May 2, 2014 from http://www.actuary.org/files/HPFRC_White_Paper_on_ACA_and_FR_final_062513.pdf
Nussbaum, A. (2013). GE, IBM ending retiree health plans in historic shift. Bloomberg. Retrieved May 2, 2014 from http://www.bloomberg.com/news/2013-09-09/ge-to-ibm-ending-retiree-health-plans-in-historic-shift.html
Whitehouse, T. (2014). Benefits trend raises accounting issues, PwC warns. Compliance Week. Retrieved May 2, 2014 from http://www.complianceweek.com/benefits-trend-raises-accounting-issues-pwc-warns/article/345238/
To make matters worse the stagnant economy means that more people are requiring assistance. In most cases, different demographics of consumers are unable to afford health care coverage. This is because of the abusive practices that are used by the insurance industry to maximize their profit margins (i.e. The denial of preexisting conditions). To make matters worse insurance premiums are increasing exponentially in order to keep up with rising
health care industry, in terms of the economics of that business, and how it is structured. The Affordable Care Act was introduced in 2010 in order to address some of the issues that are inherent in the health care industry, namely a high rate of uninsured and skyrocketing costs that were threatening the quality of care for everybody else. The reality is that the ACA has been highly successful.
Healthcare and Revenue Cycles When it comes to the revenue cycle and receivables management, a healthcare organization faces unique challenges. These challenges include the fact that many clients (patients) cannot afford the care they are there to receive because of the extremely high cost of healthcare. Thus, they are either covered completely by insurance, covered partially, covered by the state (Medicaid or Medicare), or are self-payers or indigent patients (cannot pay
Accounting for Postretirement Health Care and Life Insurance Benefits necessitates disclosures regarding an employer's accounting. These include a delineation of the provision of benefits and the groups of employees given coverage, a delineation of the employer's prevailing accounting and financing policies for such benefits and lastly the cost of such benefits acknowledged for the period. In particular, this is effective for the financial statements prepared by organizations for the financial
HITECH Act and Meaningful Use The American healthcare system is subject to undergo unprecedented reforms resulting from the Affordable Care Act (ACA). These changes have generated opportunities for firms across the healthcare landscape. Healthcare Information Technology (HITECH) is a crucial piece to various government reforms. As such, programs sponsored by the government have formulated enormous incentives to adopt information technology solutions. This has spurred much greater tailwinds in the healthcare industry.
097 United States 0.109 0.093808 0.036112 0.068 Utah 0.1071 0.1401 0.035696 0.073 Vermont 0.1326 0.0988 0.040851 0.114 Virgin Islands NA NA NA Virginia 0.1048 0.0829 0.080009 0.092 Washington 0.1229 0.0669 0.027831 0.068 West Virginia 0.1293 0.0774 0.036499 0.055 Wisconsin 0.0954 0.0357 0.032367 0.097 Wyoming 0.1251 0.1453 0.053867 0.075 Notes All spending includes state and federal expenditures. Growth figures reflect increases in benefit payments and disproportionate share hospital payments; growth figures do not include administrative costs, accounting adjustments, or costs for the U.S. Territories. Definitions Federal Fiscal Year: Unless otherwise noted, years preceded by "FY" on statehealthfacts.org refer to the Federal Fiscal Year, which runs from October 1 through September 30. for example, FY 2009 refers to the period