The Tax Questions Blog

Archive for September, 2009

Question: My company loaned me $5,000 to pay medical expenses. Now my loan is being taxed... please help???

My company was going to give me $2,000 as part of their profit sharing plan. I told them to keep it and apply it towards my loan to them. However, they taxed my on the $2,000... is this right? They consider the profit sharing money as a free gift to employees, but now my loan is all of the sudden considered an advancement of salary and handled as income. Something doesn't make sense here! Can the IRS legally make money from the repayment of my personal loan? I thought personal loans weren't taxable? Isn't the repayment of the loan my liability alone? I feel like I'm paying interest to the IRS for this loan and it seems wishy washy to me.

Answer: Just because your employer calls it "free money", we all know that the government doesn't consider profit sharing a freebie. The money is considered income if it came from your employer.

Labour and Employment

Many of our clients were able to join us at our Expatriate Employment Arrangements forums held across Australia in May.

State regulators say Pennsylvania has one of the least competitive health insurance markets in the nation and they want to find out why.

The state Insurance Department has launched a formal examination of the four nonprofit Blue Cross insurers in Pennsylvania - Blue Cross of Northeastern Pennsylvania, Capital Blue Cross, Highmark Inc. and Independence Blue Cross - to determine if they engage in anti-competitive or unfair trade practices that violate state law.

The examination will focus on whether Pennsylvania consumers could reap the benefits of lower costs and greater choices from having a market that is more competitive, department officials said.
Pennsylvania's market is less competitive than in nine other populous states because of a key indicator, state Insurance Commissioner Joel Ario said in an interview Monday.

That indicator is the market share of the Blues compared to major national commercial carriers.
The combined Blue market share is almost 60 percent in Pennsylvania, compared to Blue market shares ranging from 18 percent to 48 percent in other states. Texas has a Blue market share of 18 percent, New York 33 percent and California 24 percent, according to a department document.
That means national commercial carriers such as Aetna, UnitedHealth and Health America have a smaller market foothold in Pennsylvania than in those other nine states, Ario said.

The examination will explore whether the Blues' territorial licensing agreements in Pennsylvania, under which each Blue does business only in its own region, are anti-competitive in nature.
If the Blues compete with each other instead of dividing up territory, then the national insurers and state-based insurers such as Geisinger Health Plan will have more of an opportunity to compete for customers, too, added Ario.

Other issues are whether the Blues use their market power to unfair advantage to force prices on providers and whether they have agreements among themselves that hinder competition.
Blue Cross of Northeastern Pennsylvania and Pittsburgh-based Highmark Inc. have a business relationship dating back to April 2005, when Highmark invested $34 million to buy a 40 percent stake and several board seats of two of the local Blue Cross' subsidiaries. Highmark-appointed directors were given control over any major corporate changes.

They strengthened their business ties in 2007, as the Wilkes-Barre-based Blue Cross moved several popular insurance plans into one of the subsidiaries co-owned by Highmark. The shift meant more than half of Blue Cross of Northeastern Pennsylvania's 585,000 customers at the time were subscribed to health plans partly owned and fundamentally influenced by Highmark.

"We welcome state regulators' periodic reviews of market conditions," said Anthony Matrisciano, spokesman for Blue Cross of Northeastern Pennsylvania, in a statement.

He said Blue Cross of NEPA has special obligations that affect its market share.

"As a Blue plan, we do have a unique position in the market in that we are the only insurers required to serve those considered uninsurable or high risk by other carriers," added Matrisciano. "We are also the only carriers in the state statutorily mandated to serve as the 'insurers of last resort.'"

The examination will start months after the collapse of a proposed merger between Highmark and Independence Blue Cross in January. The two companies withdrew their application several days before Ario had planned to deny the merger.

The commissioner said the merger didn't satisfy the competition test, and a consolidated company would have had a 51 percent market share - an unprecedented level in a single state.

An examination is similar to a fact-finding process where the results will be made public. The department can enter into agreements with the Blues as a result or offer proposals for lawmakers to consider.

The department hired the law firm of Hangley Aronchick & Segal to serve as examiner.

The four Blues pay the cost for their own examination, Ario said. Therefore, he doesn't think the undertaking will have a great impact on the department's budget.

Casino operator predicts 'jobs, jobs, jobs'

The gaming operator chosen to manage a proposed Cumberland Township resort casino discussed traffic, jobs, water and crime impacts Monday night, before 50 community leaders at the Eisenhower Inn & Conference Center.