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Monday night, news broke that one of the five largest insurers in the US, Aetna, wasleaving 70% of the counties in which it offers insurance through the Affordable Care Act's public healthcare exchanges.The move was seen as a huge blow to the future of the act, making Aetna the third large insurer, after United Healthcare and Humana, to significantly reduce its Obamacare business.Aetna cited the large losses that the company has incurred from the exchange business — $200 million in the second quarter alone — when explaining its decision to roll back its business.
These statements, however, appeared to be a dramatic turnaround from the company's first-quarter earnings call in April, when CEO Mark Bertolini said the firm planned to stay in the exchanges and that the company was "in a very good place to make this a sustainable program."
Now, however, it appears a large reason for the shift in tone was the Department of Justice's lawsuit to block Aetna's merger with rival Humana.
A July letter, acquired by Huffington Post reporters Jonathan Cohn and Jeffrey Young, outlined Aetna's thinking on the public exchanges if the deal with Humana were blocked. The letter from Bertolini to the DOJ outlined the effect of a possible merger on its Affordable Care Act business.
For one thing, Bertolini notes that the cost savings from the Humana deal would allow the companies to further expand coverage into parts of the US.As we add new territories, given the additional startup costs of each new territory, we will incur additional losses," the letter said. "Our ability to withstand these losses is dependent on our achieving anticipated synergies in the Humana acquisition."Additionally, the letter seemed to foretell the move on Monday. Here's the key passage(emphasis added):Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses. Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint.
"We currently plan, as part of our strategy following the acquisition, to expand from 15 states in 2016 to 20 states in 2017. However, if we are in the midst of litigation over the Humana transaction, given the risks described above, we will not be able to expand to the five additional states.
"In addition, we would also withdraw from at least five additional states where generating a market return would take too long for us to justify, given the costs associated with a potential breakup of the transaction. In other words, instead of expanding to 20 states next year, we would reduce our presence to no more than 10 states."In other words, the cost of fighting the DOJ would make Aetna unable to sustain the losses incurred from the public exchanges.According to a letter from the DOJ provided by Aetna, the DOJ asked the company what the effect would be on the firm's Affordable Care Act business if the merger were not completed. Thus, Aetna responded with its letter.A spokesperson for Aetna said the decision to roll back the coverage was not because of the DOJ's lawsuit, but rather realizing the full details of the losses. The statement from the spokesperson reads, in part:"In the time since we submitted our written response to DOJ and provided a courtesy copy to [the Department of Health and Human Services], we gained full visibility into our second quarter individual public exchange results, which — similar to other participants on the public exchanges — showed a significant deterioration. That deterioration, and not the DOJ challenge to our Humana transaction, is ultimately what drove us to announce the narrowing of our public exchange presence for the 2017 plan year.Read More
501c4 groups get guidance from IRS on a new reporting requirement. Those established after July 8, 2016, must notify the agency of their formation and intention to operaate a social welfare organizations with 60 days of formation. Groups in existence before July 9 that have not previously filed an exemption application or annual Form 990 return have until Sept 6 to comply with the reporting rules. Nonfilers face a $20 a day penalty unless the failure is due to reasonable cause. Organizations must electronically file Form 8976 and pay a $50 user fee. It asks for basic identifying information as well as the group's statement of purpose and the month its annual accounting period ends Dec 31 for calendar year groups. Within 60 days after submitting the form, the Service will send an acknowledgment that it received the notice. This receipt is not a determination that the organizations meets the rules to qualify for tax exempt status as a 501c4 social welfare group. Groups wanting more certainty can seek an IRS determination by filing Form 1024
Some politicians want to nic the prohibition on political activity by churches. Churches are currently barred from participating or intervening in political campaigns, either for or against a candidate running for office. Add Trump to the chorus of GOPers who support repeal of this law, which has been on the books for over six decades. They claim the ban restricts the freedom of speech rights of religious organizations.
IRS has a handy guide for churches that will be helpful this elections year. Publication 1828 explains in plain language the tax rules that are applicable to them Among the topics it covers: Activities that can jeopardize a church's tax exemption Unrelated business income tax. Substantiation rules for deductible contributions. What churches are permitted to do without violating the ban on politicking.
For the most, the monthly Medicare Part B premium remains $104.90 in 2016. However, the basic premium increases to $121.80 for some people. The affected group that pays more includes individuals who first enroll for 2016 and folks who do not have premiums deducted from monthly Social Security benefits. Upper-income seniors also pay more for Parts B and D coverage in 2016 if heir modified adjusted gross incomes for 2014 exceeded $170,000 for joint filers or $85,000 for single people, Here, modified AGI is AGI plus any tax exempt interest. For part B they pay the higher o$121.80 basic monthly premium plus a surcharge. They also owe a surcharge on Part D preiums for prescription druug coverage, The combined surcharges on upper-incomers can be as large as $340.90 a month
TAX EXEMPT GROUPS
A new service by Uber Technologies Inc that allows riders to pay for their trips in cash has heightened tensions with traditional metered taxis in South Africa and some drivers for the popular car service app say they fear for their safety after a spate of violent attacks. Uber introduced the cash option in South Africa in late May, less than three years after launching its regular credit card based service in Johannesburg. The goal to lure riders who do not have credit cards or are reluctant to plug their bank details inot an app.
When you see the market potential that cash unlocks, it is very hard to ignore that. The Uber cash options is also available in Nigeria, Kenya and Tanzania and markets beyond Africa, including India and Signapore. More than a dozen Uber drivers interviewed by the Wall St Jjournal said the cash payments are making their business tougher by increasing intimidation and violence form traditional taxi drivers. They said the risk of carrying cash in a country with one of the world's highest crime rates does not make up for the limited increase in business. The tensions could spell a problem for Uber in the company's largest African market, where the number of drivers operating doubled to 4,000 in the past year alone.
" Uber cash is putting our lives at risk" said Collen who has been driving for Uber in Joannesburg for the past two years. Like most other drivers, During a recent drop off at a Johannesburg light rail station Collen said a group of taxi drivers smashed his windshield and stole his cell phone and walllet ,, including his drivers license. Tensions with South African taxi drivers first boiled over last summer but Collen said things had calmed down until the cash option was introduced
NBC FAILS TO SCORE WITH OLYMPICS
The opening ceremony of the 2016 Olympics in Rio de Janeiro drew 26.5 million viewers on Comcast Corp's NBC on Friday night, a 35% decline from the record setting audience for London's opener in 2012, which attracted 40.7 million viewers, according to Nielsen The performance was the lowest rated Summer Games kickoff since the 2004 opening ceremony in Athens. This year's event showcased a variety of Brazilian musical genres from samba and bossa nova to the regional folk styhles of the the North East , and a commentqry on climate chasnge that showe the coasts of several countries being eroded by rising seas. That trend continued on Saturday night with 20.7 million tuning into NBC to watch the games, down 28% frp, tje 28.7 million that watched the first night of the London 2012 games. Another 2.2 million viewers were watching NBC's Olympic coverage on its cabel channels Bravo and NBC sports network. Overall NBC said 80.5 million people have watched some Olympic coverage
NBC executives are counting on ratings to increase when viewing on digital video recorders and donline consumption are factored in. Comcast's NBCUniversal media unit has invested heavily to secure all US medial rights for the Olmplics through 2032, including $1.2 billion for the Rio games. The company said lat week it had sold more than $1.2 billion in national ads ahead of Rio Despite the fact tha the Olympics have been plagues by a litany of problems, from Brazil's economic conditions to the concerns ove the Zika virus, NBC hasa remained extremely optimistic about the games.
NEW CHALLENGE FOR UBER IN AFRICA
AUGUST NEWSLETTER 2
OBAMA CARE TAKES ANOHER HIT