Pathologists and clinical laboratories can expect a new type of federal oversight

One consequence following passage of the massive health bill now being considered by Congress is a significant expansion in the role of the Internal Revenue Service for certain healthcare activities. So writes Phil Galewitz and Christopher Weaver of Kaiser Health News about developments that are not auspicious for pathology and clinical laboratory testing.

They note that the job of enforcing the legislative mandate that requires every citizen of the United States to have health insurance (or pay a penalty tax) will fall to the IRS. The federal agency would look for this information on income tax returns. Americans would have to show proof of coverage on their income tax returns starting in either 2013 (House bill) or 2014 (Senate bill).

Both the House and Senate health reform bills would greatly expand the role of the Internal Revenue Service in managing certain aspects of the healthcare system. (Photo by Beth Liu/KHN)

Both the House and Senate health reform bills would greatly expand the role of the Internal Revenue Service in managing certain aspects of the healthcare system. (Photo by Beth Liu/KHN)

In addition, the IRS would distribute upwards of $140 billion per year in health subsidies. This money would go to small employers and may as many as 19 million low-income individuals to help them purchase health insurance.

Galewitz and Weaver go on to note that, under this pending legislation, the IRS will take on a significant range of new responsibilities. They list the following activities that the IRS would oversee:

  • Subsidies for low-income people purchasing health insurance through newly created state exchanges.
  • Small-business tax credits to provide insurance to employees,
  • Enforcement of mandate that all U.S. citizens and legal residents have insurance.
  • Penalties on employers for not providing affordable coverage if any of their employees get subsidies under the new insurance exchanges.
  • A tax on insurers that provide high-cost “Cadillac” insurance benefits.
  • Penalties for improper distributions from Health Savings Accounts (HSA), which would increase under the legislation.
  • Contributions to Flexible Savings Accounts, which would be limited.
  • New requirements for non-profit hospitals to prove their charitable missions, such as doing a “community needs assessment” once every three years.
  • Taxes on pharmaceutical companies, medical device companies and health insurance providers. (This would include medical laboratories if Congress passed a final bill that included a tax on laboratory testing, calculated and assessed annually.)

Pathologists and laboratory managers may recall that an early version of the healthcare bill drafted by the Senate Finance Committee this summer proposed a $750 million tax on clinical laboratory testing. This tax was to be prorated among clinical laboratories annually. The Department of Treasury (which manages the IRS) was to calculate the amount of tax owed and assess individual laboratories with the amount of the tax due from them each year. That proposal to tax laboratory testing was dropped. But it could be restored in the final version of the bill. If that were to happen, clinical laboratories and pathology groups would find themselves dealing with the IRS regarding this tax on laboratory testing.

Related Information:

Health bills could expand IRS role

IRS Faces Tough New Duties under Health Overhaul

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