Senior & Assisted Living Advisor Throughout Illinois

Latest News

Home  >   Latest News
American Taxpayer Relief Act of 2012

Congress passed late last night (January 1, 2013) the American Taxpayer Relief Act of 2012 following in analysis provided by LeadingAge in Washington and the impact it has on providers and employees in provider communities:
  • Permanently eliminating an increase in the tax rate for most Americans.
  • Temporarily avoiding steep cuts to domestic and defense spending scheduled to take effect on January 1 (known as sequestration).
  • Preventing a 27% cut in payments to Medicare physicians and implementation of caps on out-patient therapy.

In addition, the legislation repeals the Community Living Assistance Services and Support (CLASS) Act and creates a Long-Term Care Commission similar to one LeadingAge had supported to address the broad question of how to best provide long-term services and supports.

Here is a top-line review of major provisions in the bill that affects our members and the people we serve. We will be preparing a more in-depth analysis.

Impact on employees

  • Current tax rates for individuals earning under $400,000 and married couples earning under $450,000 are made permanent; rates for individuals and couples above those income limits raised to 39.6%.
  • Child Tax Credit and Earned Income Tax Credit expanded.
  • Alternative Minimum Tax (AMT) fixed to avoid applying to middle and lower-income workers.
  • Payroll tax cut not extended (this relates to payments into Social Security fund; no changes to Social Security program enacted).

Impact on Medicare beneficiaries:

  • No change in eligibility (eligibility age not raised to 67; no increase in premiums).
  • Doc fix: payments for doctors kept at 2012 rates through 2013, no 27% reduction under SGR formula which was scheduled for January 1, 2013.
  • Therapy cap exceptions process extended through 2013 for both non-hospital and hospital settings.

Impact on Provider communities

  • Medicare: Approximately 10% reduction in payment for multiple same-day Medicare Part B therapy procedures, but no additional cuts to skilled nursing facilities, home health or hospice providers. The bill focused on hospitals for payment reductions to pay for the “doc fix.” However, the bill’s pay-fors focus on areas that could in the future apply to long-term care providers, especially recoupment for up-coding. A 2% across-the-board spending reduction mandated by the Budget Control Act of 2011 was suspended for 2 months.
  • Medicaid: 1-year extension of Qualifying Individual (QI) program that allows Medicaid to pay Medicare Part B premiums for some low-income beneficiaries.
  • AOA programs: Funding outreach and assistance for Area Agencies on Aging (AAA) and Aging Disability Resource Centers (ADRC) extended for 1 year.
  • Tax exempt impact: Sliding scale reduction of itemized deductions and phase out of personal exemptions for couples with income over $300,000 and individuals with incomes over $250,000. Charitable deductions are not otherwise affected.
  • Housing and Older Americans Act programs: Current funding continued for 2 months, at which time Congress will have to address the funding cuts to domestic and defense programs included in “sequestration” along with the debt limit and other deficit reduction and budget issues.

CLASS Act repealed and Long-Term Care Commission established

The bill repealed the CLASS Act and replaced with the establishment of a commission to develop a plan for better financing and delivery of long-term care services. The creation of the commission is in line with our advocacy agenda around financing long-term services and supports.

We will work aggressively with Congress and the White House to support the commission’s work.

With the exception of the repeal of CLASS, this legislation avoids significant reductions in our programs, but leaves significant questions about reforming the tax code, entitlement “reform,” long-term care, and funding for housing for the rest of this year.

Contact Elderwerks

Finding assisted living or other types of aging care can be overwhelming. Let our dedicated team help you navigate your options.

Contact Us

For your complimentary, person-centered assistance or help touring a senior community, call an Elderwerks Advisor today at 855-462-0100.


Our newsletters provide up to date information on events, education, and other important updates of interest to older adults, families, and professionals.