Accounting Issues: Accounting for Annual Health Insurance Fees
Accounting Issues: Accounting for Annual Health Insurance Fees On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act (PPACA) and on March 30, 2010 the Health Care and Education Reconciliation Act provided provisions to the PPACA. The laws focus on reform of the private health insurance market, provide better coverage for those with pre-existing conditions, improve prescription drug coverage in Medicare and extend the life of the Medicare Trust fund by at least 12 years (Washington). There are a number of provisions in the PPACA Act that will impact the accounting for many companies. Among those provisions are the following (US): * A new annual fee on pharmaceutical manufacturers * A new excise tax in medical device manufacturers * Changes to the Retiree Drug Subsidy (RDS) * Revenue and channel considerations: * Changes to the Medicaid rebate rate * Expansion of the 340(b) Public Health Service (PHS) program * Changes for Medicare and Medicaid recipients who are over 65 and indigent * Medicare coverage gap (‘doughnut hole’)
The accounting aspect for the annual fee paid by pharmaceutical manufacturers is subject to review by the Emerging Issues Task Force (EITF). The same accounting issue goes for a provision of the new Health Care Act that calls for annual fees to health insurers are to be paid to the federal government. This leads to an issue at hand for the proper treatment of recording the annual fees and what period they should be recorded in. FASB, Financial Accounting Standards Board, is a private organization that establishes GAAP, generally accepted accounting principles, for public companies in the United States. It was created in 1973 by the Security and Exchange Commission (SEC) to replace the Committee on Accounting Procedure (CAP) and the Accounting Principles Board (APB). To help deal with the issue of how to record the annual fee, FASB has issued a
The accounting aspect for the annual fee paid by pharmaceutical manufacturers is subject to review by the Emerging Issues Task Force (EITF). The same accounting issue goes for a provision of the new Health Care Act that calls for annual fees to health insurers are to be paid to the federal government. This leads to an issue at hand for the proper treatment of recording the annual fees and what period they should be recorded in. FASB, Financial Accounting Standards Board, is a private organization that establishes GAAP, generally accepted accounting principles, for public companies in the United States. It was created in 1973 by the Security and Exchange Commission (SEC) to replace the Committee on Accounting Procedure (CAP) and the Accounting Principles Board (APB). To help deal with the issue of how to record the annual fee, FASB has issued a
Cited: "Agenda Report." Emerging Issues Task Force, 7 May 2010. Web. 2 Apr. 2011. <http://www.fasb.org/cs/ContentServer?c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176156892216>. Bielstein, Mark. "Accounting for Certain Fees Associated with Recently Enacted Health Care Legislation." FASB: Financial Accounting Standards. FASB Emerging Issues Task Force, 14 June 2010. Web. 2 Apr. 2011. <http://www.fasb.org/cs/ContentServer?c=Document_C&pagename=FASB%2FDDocument_C %2FDocumentPage&cid=1176157088066>. "Fees Paid to the Federal Government by Pharmaceutical Manufacturers." FASB: Financial Accounting Standards. FASB Emerging Issues Task Force, 29 July 2010. Web. 1 Apr. 2011.<http://www.fasb.org/cs/ContentServer?site=FASB&c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176157893083>. "Health Insurers — FASB Proposes Health Insurers Fee Expense Guidance." ParenteBeard – Audit, Accounting, Tax and Business Advisory Services. 23 Dec. 2010. Web. 2 Apr. 2011. <http://www.parentebeard.com/email/e-newsletters/a>. McGladrey & Pullen. "Proposed Accounting for Fees Paid to the Federal Government by Health Insurers." McGladrey - Assurance, Tax and Consulting. Web. 04 Apr. 2011. <http://mcgladrey.com/Insights/Proposed-Accounting-for-Fees-Paid-to-the-Federal-Government-by-Health-Insurers>. "Other Expenses Topic (720)." Proposed Accounting Standards Update. FASB Emerging Issues Task Force, 17 Dec. 2010. Web. 1 Apr. 2011 .<http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175821918986&blobheader=application%2Fpdf>. Thornton, Grant. "New Developments Summary." Grantthorton.com. 7 Jan. 2011. Web. 1 Apr. 2011.<http://www.grantthornton.com/staticfiles/GTCom/Audit/Assurancepublications/New%20Development%20Summaries/NDS%202010/NDS%202011-01.pdf>. "US Healtcare Reform: Accounting Issues." Pricewaterhouse Coopers. Web. 2 Apr. 2011. <http://www.pwc.com/gx/en/pharma-life-sciences/pdf/us-health-reform-alertv6.pdf>. Washington Post, The. "Health Care and Education Reconciliation Act of 2010." Washingtonpost.com. Wikipedia, the Free Encyclopedia, 30 Mar. 2010. Web. 2 Apr. 2011.<http://en.wikipedia.org/wiki/Health_Care_and_Education_Reconciliation_Act_of_2010>.