Category: INABILITY TO CARE FOR ONES SELF


NEW TAXES and PENALTIES.
Check out the new Affordable Care Act Tax (ACA) Features. Expect to answer questions about your health coverage when preparing your 2014 personal income tax returns before April 15th 2015 (soon).
 
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Update:

Each year the Health Insurance Marketplace has an open enrollment period.  The open enrollment period to purchase health care insurance for 2015 runs from Nov. 15, 2014, through Feb. 15, 2015. Contact the Marketplace at HealthCare.gov to enroll and to get information about financial assistance to purchase health care coverage for you and your family.

On Sept. 10, 2014, IRS Commissioner John A. Koskinen testified before the House Ways and Means Committee’s subcommittee on Health. The commissioner’s testimony focused on the IRS’s role in the implementation of the Affordable Care Act and what the IRS is doing to ensure that taxpayers know how provisions of the law may affect them.

Effect of Sequestration on Small Business Health Care Tax Credit – Tax-Exempt Employers Only
Due to sequestration, refund payments issued to certain small tax-exempt employers claiming the refundable portion of the Small Business Health Care Tax Credit under Internal Revenue Code section 45R, are subject to sequestration. This means that refund payments processed on or after Oct. 1, 2014, and on or before Sept. 30, 2015, issued to a tax-exempt taxpayer claiming the Small Business Health Care Tax Credit under section 45R will be reduced by the fiscal year 2015 sequestration rate of 7.3 percent (regardless of when the original or amended tax return was received by the IRS). The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise impacts the sequester, at which time the sequestration reduction rate is subject to change.  Sequestration only affects the refundable portion of the Small Business Health Care Tax Credit filed by tax-exempt employers.  Sequestration does not impact Small Business Health Care Tax Credit claims by non-tax-exempt employers, as the credit is not a refundable credit for non-tax-exempt employers.

Affected taxpayers will be notified through correspondence that a portion of their requested payment was subject to the sequester reduction and the amount.
IRC §7216, Disclosure or Use of Information by Tax Return Preparers
Final Treasury Regulations on rules and consent requirements relating to the disclosure or use of tax return information by tax return preparers became effective Dec. 28, 2012. For additional information about how these apply to services and education related to the Affordable Care Act, please see our questions and answers. 

Medical Loss Ratio (MLR)
Beginning in 2011, insurance companies are required to spend a specified percentage of premium dollars on medical care and quality improvement activities, meeting a medical loss ratio (MLR) standard. Insurance companies that are not meeting the MLR standard will be required to provide rebates to their consumers beginning in 2012. For information on the federal tax consequences to an insurance company that pays a MLR rebate and an individual policyholder who receives a MLR rebate, as well as information on the federal tax consequences to employees if a MLR rebate stems from a group health insurance policy, see our frequently asked questions.
Reporting Employer Provided Health Coverage in Form W-2
The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, Wage and Tax Statement, in Box 12, using Code DD. Many employers are eligible for transition relief for tax-year 2012 and beyond, until the IRS issues final guidance for this reporting requirement.
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The amount reported does not affect tax liability, as the value of the employer excludible contribution to health coverage continues to be excludible from an employee’s income, and it is not taxable. This reporting is for informational purposes only, to show employees the value of their health care benefits.

More information about the reporting can be found on Form W-2 Reporting of Employer-Sponsored Health Coverage.

Net Investment Income Tax
A new Net Investment Income Tax went into effect on Jan. 1, 2013. The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have certain investment income above certain threshold amounts. On Nov. 26, 2013, the IRS and the Treasury Department issued final regulations, which provide guidance on the general application of the Net Investment Income Tax and the computation of Net Investment Income. In addition, on Nov. 26, 2013, the IRS and the Treasury Department issued proposed regulations on the computation of net investment income as it relates to certain specific types of property. Comments may be submitted electronically, by mail or hand delivered to the IRS. For additional information on the Net Investment Income Tax, see our questions and answers.
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Additional Medicare Tax
A new Additional Medicare Tax went into effect on Jan. 1, 2013. The 0.9 percent Additional Medicare Tax applies to an individual’s wages, Railroad Retirement Tax Act compensation and self-employment income that exceeds a threshold amount based on the individual’s filing status. The threshold amounts are $250,000 for married taxpayers who file jointly, $125,000 for married taxpayers who file separately and $200,000 for all other taxpayers. An employer is responsible for withholding the Additional Medicare Tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year. On Nov. 26, 2013, the IRS and the Department of the Treasury issued final regulations which provide guidance for employers and individuals relating to the implementation of Additional Medicare Tax, including the requirement to withhold Additional Medicare Tax on certain wages and compensation, the requirement to report Additional Medicare Tax, and the employer process for adjusting underpayments and overpayments of Additional Medicare Tax. In addition, the regulations provide guidance on the employer and individual processes for filing a claim for refund for an overpayment of Additional Medicare Tax.
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Minimum Value.
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On April 26, 2012, the Department of the Treasury and IRS issued Notice 2012-31, which provides information and requested public comment on an approach to determining whether an eligible employer-sponsored health plan provides minimum value. Additionally, on April 30, 2013, the Treasury Department and the IRS issued proposed regulations relating to minimum value of eligible employer-sponsored plans and other rules regarding the premium tax credit. Starting in 2014, whether such a plan provides minimum value will be relevant to eligibility for the premium tax credit and application of the employer shared responsibility payment. 
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On November 4, 2014, the Department of the Treasury and IRS issued Notice 2014-69, which provides additional guidance regarding whether an employer-sponsored plan provides minimum value coverage if the plan fails to substantially cover in-patient hospitalization services or physician services.
Information Reporting on Health Coverage by Employers.
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On March 5, 2014, the Department of the Treasury and IRS issued final regulations on employer health insurance coverage information reporting. The information reporting relates to health insurance coverage that is offered by certain employers, referred to as applicable large employers, and reporting is to be provided by each member of an applicable large employer. Additionally, on July 9, 2013, the Department of the Treasury and the IRS issued Notice 2013-45, announcing transition relief for 2014 from this annual information reporting. For additional information on the employer health insurance coverage information reporting see our questions and answers and this fact sheet issued by the U.S. Department of the Treasury. 
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On July 24, 2014, the IRS released draft forms that employers will use to report on health coverage that they offer to their employees. In accordance with the IRS’ normal process, these draft forms are being provided to help stakeholders, including employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them. On Aug. 28, 2014, draft instructions relating to the forms were posted to IRS.gov. Both the forms and instructions will be finalized later this year.
Information Reporting on Health Coverage by Insurers
On March 5, 2014, the Department of the Treasury and IRS issued final regulations on minimum essential coverage information reporting. The information reporting is to be provided by health insurance issuers, certain sponsors of self-insured plans, government agencies and certain other parties that provide health coverage. Additionally, on July 9, 2013, the Department of the Treasury and the IRS issued Notice 2013-45 announcing transition relief for 2014 from this annual information reporting.
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On July 24, 2014, the IRS released draft forms that insurers will use to report on health coverage that they provide for individuals that they cover. In accordance with the IRS’ normal process, these draft forms are being provided to help stakeholders, including insurers, employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them. On August 28, 2014, draft instructions relating to the forms were posted to IRS.gov. Both the forms and instructions will be finalized later this year.
Disclosure of Return Information.
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On Aug. 13, 2013, the Department of the Treasury and the IRS issued final regulations with rules for disclosure of return information to the Department of Health and Human Services that will be used to carry out eligibility determinations for advance payments of the premium tax credit, Medicaid and other health insurance affordability programs.
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Small Business Health Care Tax Credit:
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This credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. On June 26, 2014, the Department of Treasury and the IRS issued final regulations on the credit, which include information on the requirement to purchase health insurance coverage through the Small Business Health Options Program (SHOP) Marketplace. The final regulations are applicable for taxable years beginning in or after 2014. Additionally, IRS Notice 2014-06 provides transition relief for employers in certain counties in Washington and Wisconsin with no SHOP coverage available. For taxable years beginning in 2010 through 2013, taxpayers can rely on the guidance in the proposed regulations, Notice 2010-44 and Notice 2010-82. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers.
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Application of the Affordable Care Act to Health Reimbursement Arrangements, Health Flexible Spending Arrangements and Certain Other Employer Healthcare Arrangements
The Affordable Care Act’s market reforms apply to group health plans. On Sept. 13, 2013, the IRS issued Notice 2013-54, which explains how the Affordable Care Act’s market reforms apply to certain types of group health plans, including health reimbursement arrangements (HRAs), health flexible spending arrangements (health FSAs) and certain other employer healthcare arrangements, including arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy. The notice also provides guidance on employee assistance programs or EAPs and on section 125(f)(3), which prohibits the use of pre-tax employee contributions to cafeteria plans to purchase coverage on an Affordable Insurance Exchange (also known as a Health Insurance Marketplace). The notice applies for plan years beginning on and after Jan. 1, 2014, but taxpayers may apply the guidance provided in the notice for all prior periods.  
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DOL has issued a notice in substantially identical form to Notice 2013-54, DOL Technical Release 2013-03. On Jan. 24, 2013, DOL and HHS issued FAQs that address the application of the Affordable Care Act to HRAs. On Nov. 6, 2014, DOL issued additional FAQs that address the application of the Affordable Care Act to HRAs and other payment arrangements.
Additional information is also available regarding consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace).
On Jan. 9, 2014, DOL and HHS issued FAQs that addressed, among other things, future rules relating to excepted benefits.
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Health Flexible Spending Arrangements
Effective Jan. 1, 2011, the cost of an over-the-counter medicine or drug cannot be reimbursed from Flexible Spending Arrangements (FSAs) or health reimbursement arrangements unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. This standard applies only to purchases made on or after Jan. 1, 2011. A similar rule went into effect on Jan. 1, 2011, for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs). Employers and employees should take these changes into account as they make health benefit decisions. For more information, see news release IR-2010-95, Notice 2010-59, Revenue Ruling 2010-23 and our questions and answers. FSA and HRA participants can continue using debit cards to buy prescribed over-the-counter medicines, if requirements are met. For more information, see news release IR-2010-128 and Notice 2011-5. Additionally, Notice 2013-57 provides information about the definition of preventive care for purposes of high deductible health plans associated with HSAs. 
In addition, starting in 2013, there are new rules about the amount that can be contributed to an FSA. Notice 2012-40 provides information about these rules and flexibility for employers applying the new rules. On Oct. 31, 2013, the Department of the Treasury and IRS issued Notice 2013-71, which provides information on a new $500 carryover option for employer-sponsored healthcare flexible spending arrangements. Learn more by reading the news release issued by the U.S. Department of the Treasury.
Further, Notice 2013-54 provides guidance regarding the application of the Affordable Care Act’s market reforms to certain health FSAs.   
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Medical Device Excise Tax
On Dec. 5, 2012, the IRS and the Department of the Treasury issued final regulations on the new 2.3-percent medical device excise tax (IRC §4191) that manufacturers and importers will pay on their sales of certain medical devices starting in 2013. On Dec. 5, 2012, the IRS and the Department of the Treasury also issued Notice 2012-77, which provides interim guidance on certain issues related to the medical device excise tax. Additional information is available on the Medical Device Excise Tax page and Medical Device Excise Tax FAQs on IRS.gov.
Changes to Itemized Deduction for Medical Expenses
Beginning Jan. 1, 2013, you can claim deductions for medical expenses not covered by your health insurance when they reach 10 percent of your adjusted gross income. This change affects your 2013 tax return that you will file in 2014. There is a temporary exemption from Jan. 1, 2013, to Dec. 31, 2016, for individuals age 65 and older and their spouses. For additional information, see our questions and answers.
Health Insurance Premium Tax Credit.
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Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange (also known as a Health Insurance Marketplace). The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On May 18, 2012, the Department of the Treasury and the IRS issued final regulations, which provide guidance for individuals who enroll in qualified health plans through Marketplaces and claim the premium tax credit, and for Marketplaces that make qualified health plans available to individuals and employers. On Jan. 30, 2013, the Department of the Treasury and IRS released final regulations on the premium tax credit affordability test for related individuals. On April 30, 2013, the Department of the Treasury and the IRS issued proposed regulations relating to minimum value of eligible employer-sponsored plans and other rules regarding the premium tax credit. On November 4, 2014, the Department of the Treasury and IRS issued Notice 2014-69, which provides additional guidance regarding whether an employer-sponsored plan provides minimum value coverage if the plan fails to substantially cover in-patient hospitalization services or physician services. Notice 2013-41, issued on June 26, 2013, provides information for determining whether or when individuals are considered eligible for coverage under certain Medicaid, Medicare, CHIP, TRICARE, student health or state high-risk pool programs. This determination will affect whether the individual is eligible for the premium tax credit. On November 7, 2014, the Department of the Treasury and IRS issued Notice 2014-71, which advises that an individual enrolled in a qualified health plan who becomes eligible for Medicaid coverage for pregnancy-related services that is minimum essential coverage, or for CHIP coverage based on pregnancy, is treated as eligible for minimum essential coverage under the Medicaid or CHIP coverage for purposes of the premium tax credit only if the individual enrolls in the coverage. On May 2, 2014, the Department of the Treasury and the IRS issued final regulations on the reporting requirements for Marketplaces. On July 24, 2014, the Department of the Treasury and the IRS issued proposed, temporary and final regulations providing further guidance on the premium tax credit. In particular, the regulations provide relief for certain victims of domestic abuse or spousal abandonment from the requirement to file jointly in order to claim the premium tax credit. In addition, the regulations provide special allocation rules for reconciling advance credit payments, address the indexing in future years of certain amounts used to determine eligibility for the credit and compute the credit, and provide rules for the coordination between the credit and the deduction under section 162(l) for health insurance costs of self-employed individuals. Rev. Proc. 2014-41, also released on July 24, 2014, provides methods for determining the section 162(l) deduction and the premium tax credit for health insurance costs of self-employed individuals who claim the deduction under section 162(l).
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Individual Shared Responsibility Provision
Starting in 2014, the individual shared responsibility provision calls for each individual to either have minimum essential coverage for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return. On June 26, 2013, the IRS released Notice 2013-42, which provides transition relief for employees eligible to enroll in a non-calendar year employer-sponsored health plan that begins in 2013 and ends in 2014. On Aug. 27, 2013, the Department of the Treasury and the IRS issued final regulations on the individual shared responsibility provision. On Jan. 23, 2014, the Department of the Treasury and the IRS issued proposed regulations addressing several issues that were identified in the preamble to the final regulations. On July 24, 2014, the IRS issued Rev. Proc. 2014-46, which provides the 2014 monthly national average premium for qualified health plans that have a bronze level of coverage. This amount is used to determine the maximum individual shared responsibility payment that may be due. On November 21, 2014, the Department of the Treasury and the IRS issued regulations finalizing the January 2014 proposed regulations. The final regulations address the treatment of health reimbursement arrangements, cafeteria plans, and wellness program incentives for purposes of determining the unaffordability exemption for individuals with offers of employer sponsored coverage.  The regulations also provide that certain limited benefit Medicaid and TRICARE coverage is not minimum essential coverage (Notice 2014-10, issued on Jan. 23, 2014, provides transition relief from the shared responsibility payment for months in 2014 in which individuals have this limited benefit coverage).  On November 21, 2014, the IRS issued Notice 2014-76, which identifies the hardship exemptions from the individual shared responsibility payment that a taxpayer may claim on a Federal income tax return without obtaining an exemption certification from a Health Insurance Marketplace. For additional information on the individual shared responsibility provision, see our ISRP page and questions and answers. Additional information on exemptions and minimum essential coverage is available in final regulations issued by the U.S. Department of Health & Human Services. 
Health Coverage for Older Children
Health coverage for an employee’s children under 27 years of age is now generally tax-free to the employee. This expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. Learn more by reading our news release or this notice.
Excise Tax on Indoor Tanning Services
A 10-percent excise tax on indoor UV tanning services went into effect on July 1, 2010. Payments are made along with Form 720, Quarterly Federal Excise Tax Return. The tax doesn’t apply to phototherapy services performed by a licensed medical professional on his or her premises. There’s also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee. For more information on the tax and how it is administered, see the Indoor Tanning Services Tax Center.
Adoption Credit.

For tax years 2010 and 2011, the Affordable Care Act raised the maximum adoption credit per child and the credit was refundable. For more information related to the adoption credit for tax years 2010 and 2011, see our news release, tax tip, questions and answers, flyer, Notice 2010-66, Revenue Procedure 2010-31, Revenue Procedure 2010-35 and Revenue Procedure 2011-52.
For tax year 2012, the credit has reverted to being nonrefundable, with a maximum amount (dollar limitation) of $12,650 per child. If you adopted a child in 2012, see Tax Topic 607 for more information. 
Transitional Reinsurance Program.
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The ACA requires all health insurance issuers and self-insured group health plans to make contributions under the transitional Reinsurance Program to support payments to individual market issuers that cover high-cost individuals. For information on the tax treatment of contributions made under the Reinsurance Program, see our frequently asked questions.
Medicare Shared Savings Program.
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The Affordable Care Act establishes a Medicare shared savings program (MSSP) which encourages Accountable Care Organizations (ACOs) to facilitate cooperation among providers to improve the quality of care provided to Medicare beneficiaries and reduce unnecessary costs. More information can be found in Notice 2011-20, which solicited written comments regarding what additional guidance, if any, is needed for tax-exempt organizations participating in the MSSP through an ACO. This guidance also addresses the participation of tax-exempt organizations in non-MSSP activities through ACOs. Additional information on the MSSP is available on the Department of Health and Human Services website.
The Centers for Medicare and Medicaid Services has released final regulations describing the rules for the Shared Savings Program and accountable care organizations. Fact Sheet 2011-11 confirms that Notice 2011-20 continues to reflect IRS expectations regarding the Shared Savings Program and ACOs, and provides additional information for charitable organizations that may wish to participate. 
On October 24, 2014, the Department of the Treasury and the IRS issued Notice 2014-67, which describes the conditions under which a hospital or other health care facility with tax-exempt bonding authority may participate in an ACO without jeopardizing the tax-exempt status of the bonds financing that facility.
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Qualified Therapeutic Discovery Project Program
This program was designed to provide tax credits and grants to small firms that show significant potential to produce new and cost-saving therapies, support U.S. jobs and increase U.S. competitiveness. Applicants were required to have their research projects certified as eligible for the credit or grant. IRS guidance describes the application process.
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Submission of certification applications began June 21, 2010, and applications had to be postmarked no later than July 21, 2010, to be considered for the program. Applications that were postmarked by July 21, 2010, were reviewed by both the Department of Health and Human Services (HHS) and the IRS. All applicants were notified by letter dated October 29, 2010, advising whether or not the application for certification was approved. For those applications that were approved, the letter also provided the amount of the grant to be awarded or the tax credit the applicant was eligible to take.
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The IRS published the names of the applicants whose projects were approved as required by law. Listings of results are available by state.
Learn more by reading the IRS news release, the news release issued by the U.S. Department of the Treasury, the page on the HHS website and our questions and answers.
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Group Health Plan Requirements.
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The Affordable Care Act establishes a number of new requirements for group health plans. Interim guidance on changes to the nondiscrimination requirements for group health plans can be found in Notice 2011-1, which provides that employers will not be subject to penalties until after additional guidance is issued. Additionally, TD 9575 and REG-140038-10, issued by DOL, HHS and IRS, provide information on the summary of benefits and coverage and the uniform glossary. Notice 2012-59 provides guidance to group health plans on the waiting periods they may apply before coverage starts. On June 20, 2014, HHS, DOL and IRS issued final regulations on the ninety-day waiting period limitation.. 
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More information on group health plan requirements is available on the websites of the Departments of Health and Human Services and Labor and in additional guidance.
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Further, Notice 2013-54 provides guidance regarding the application of the Affordable Care Act’s market reforms to certain types of group health plans, including health reimbursement arrangements (HRAs), health flexible spending arrangements (health FSAs) and certain other employer healthcare arrangements, including arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy. 
Annual Fee on Health Insurance Providers
The Affordable Care Act created an annual fee on certain health insurance providers beginning in 2014. On Nov. 26, 2013, the Treasury Department and IRS issued final regulations on this annual fee imposed on covered entities engaged in the business of providing health insurance for United States health risks. On Aug. 12, 2014, the Treasury Department and IRS issued Notice 2014-47 clarifying the scope of the term “covered entity” and the fact that reporting is not required in 2014 for an entity that would not qualify as a covered entity, even if it is a member of a controlled group that is a covered entity.
For additional information visit our Affordable Care Act Provision 9010 – Health Insurance Providers Fee page. 
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Tax-Exempt 501(c)(29) Qualified Nonprofit Health Insurance Issuers
The Affordable Care Act requires the Department of Health and Human Services (HHS) to establish the Consumer Operated and Oriented Plan program (CO-OP program). It also provides for tax exemption for recipients of CO-OP program grants and loans that meet additional requirements under section 501(c)(29). IRS Notice 2011-23 outlined the requirements for tax exemption under section 501(c)(29) and solicited written comments regarding these requirements as well as the application process. Revenue Procedure 2012-11, issued in conjunction with temporary regulations and a notice of proposed rulemaking, sets out the procedures for issuing determination letters and rulings on the exempt status of organizations applying for recognition of exemption under 501(c)(29).
An overview of the CO-OP program is available on the HHS website.
Medicare Part D Coverage Gap “donut hole” Rebate
The Affordable Care Act provides a one-time $250 rebate in 2010 to assist Medicare Part D recipients who have reached their Medicare drug plan’s coverage gap. This payment is not taxable. This payment is not made by the IRS. More information can be found at http://www.medicare.gov.
Additional Requirements for Tax-Exempt Hospitals
The Affordable Care Act added new requirements for charitable hospitals (see Notice 2010-39 and Notice 2011-52). On June 26, 2012, the IRS published proposed regulations that provide information on the requirements for charitable hospitals relating to financial assistance and emergency medical care policies, charges for emergency or medically necessary care provided to individuals eligible for financial assistance, and billing and collections. On April 5, 2013, the IRS published proposed regulations on the requirement that charitable hospitals conduct community health needs assessments (CHNAs) and adopt implementation strategies at least once every three years. These proposed regulations also discuss the related excise tax and reporting requirements for charitable hospitals and the consequences for failure to satisfy the section 501(r) requirements. On August 15, 2013, the IRS published temporary regulations and proposed regulations providing information on which form to use when making an excise tax payment for failure to meet the CHNA requirements and the due date for filing the form. Notice 2014-2 confirms that hospital organizations can rely on proposed regulations under section 501(r) of the Internal Revenue Code published on June 26, 2012 and April 5, 2013, pending the publication of final regulations or other applicable guidance. Notice 2014-3 contains a proposed revenue procedure that provides correction and disclosure procedures under which certain failures to meet the requirements of section 501(r) will be excused.
Annual Fee on Branded Prescription Pharmaceutical Manufacturers and Importers
The Affordable Care Act created an annual fee payable beginning in 2011 by certain manufacturers and importers of brand name pharmaceuticals. On July 24, 2014, the IRS issued final and temporary regulations on the branded prescription drug fee. The regulations describe the rules related to the fee, including how it is computed and how it is paid. Also on July 24, 2014, the IRS issued Notice 2014-42, which provides additional guidance on the branded prescription drug fee for the 2015 fee year and subsequent fee years. For information on the fee for the 2012, 2013 and 2014 fee years, see Notice 2011-92 , Notice 2012-74 and Notice 2013-51. 
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For additional information, visit our Affordable Care Act Provision 9008 Branded Prescription Drug Fee page.
Modification of Section 833 Treatment of Certain Health Organizations.
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The Affordable Care Act amended section 833 of the Code, which provides special rules for the taxation of Blue Cross and Blue Shield organizations and certain other organizations that provide health insurance. IRS Notice 2010-79 provides transitional relief and interim guidance on the computation of an organization’s taxpayer’s Medical Loss Ratio (MLR) for purposes of section 833, the consequences of nonapplication and changes in accounting method. Notice 2011-04 provides additional information and the procedures for qualifying organizations to obtain automatic consent to change its method of accounting for unearned premiums. Notice 2012-37 extends the transitional relief and interim guidance provided in Notice 2010-79 for another year to any taxable year beginning in 2012 and the first taxable year beginning after Dec. 31, 2012. 
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On January 6, 2014, the IRS issued final regulations that describe how the MLR for purposes of section 833 is computed.
Limitation on Deduction for Compensation Paid by Certain Health Insurance Providers (amended section 162(m)).
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The Affordable Care Act amended section 162(m) of the Code to limit the compensation deduction available to certain health insurance providers. The amendment goes into effect for taxable years beginning after Dec. 31, 2012, but may affect deferred compensation attributable to services performed in a taxable year beginning after Dec. 31, 2009. On Sept. 18, 2014, the Treasury Department and IRS issued final regulations on this provision. 
Employer Shared Responsibility Payment
The Affordable Care Act establishes that certain employers must offer health coverage to their full-time employees or a shared responsibility payment may apply. On Feb. 10, 2014, the Department of the Treasury and the IRS issued final regulations on the Employer Shared Responsibility provisions. For additional information on the Employer Shared Responsibility provisions and the proposed regulations, see our questions and answers. On July 9, 2013, the Department of the Treasury and the IRS announced transition relief from the Employer Shared Responsibility provisions for 2014. For more information, please see Notice 2013-45. For additional transition relief generally applicable to 2015, see the preamble to the final regulations. On Sept. 18, 2014, the Department of the Treasury and the IRS issued Notice 2014-49, which provides guidance on how to apply the look-back measurement method in situations in which the measurement period applicable to an employee changes. 
Patient-Centered Outcomes Research Institute Fee
The Affordable Care Act established the Patient-Centered Outcomes Research Institute. Funded by the Patient-Centered Outcomes Research Trust Fund, the institute will help patients, clinicians, purchasers and policy-makers make informed health decisions by advancing clinical effectiveness research. The trust fund will be funded in part by fees paid by issuers of certain health insurance policies and sponsors of certain self-insured health plans.

The IRS and the Department of the Treasury have issued final regulations (PDF) on this fee. On Sept. 18, 2014, the IRS issued Notice 2014-56, which establishes the applicable dollar amount for policy and plan years ending after Sept. 30, 2014, and before Oct. 1, 2015. Additional information on the fee is available on the PCORI page and in our questions and answers and chart summary. Form 720, Quarterly Federal Excise Tax Return, was revised to provide for the reporting and payment of the PCORI fee. Although Form 720 is a quarterly return, for PCORI, Form 720 is filed annually only, by July 31. If for any reason you need to make corrections after filing your annual Form 720 for PCORI, write “Amended PCORI” at the top of the second filing.
Retiree Drug Subsidies
Under § 139A of the Internal Revenue Code, certain special subsidy payments for retiree drug coverage made under the Social Security Act  are not included in the gross income of plan sponsors. Plan sponsors receive these retiree drug subsidy payments based on the allowable retiree costs for certain qualified retiree prescription drug plans. For taxable years beginning on or after Jan. 1, 2013, new statutory rules affect the ability of plan sponsors to deduct costs that are reimbursed through these subsidies. See our questions and answers for more information.
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Page Last Reviewed or Updated: 10-Dec-2014.
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IT'S TAX TIME.  BETTER GET YOUR PAPERS AND FILES READY EARLY. IT’S TAX TIME. BETTER GET YOUR PAPERS AND FILES READY.
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This newsletter is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of this newsletter should not be acted upon without specific professional guidance. Please call us if you have questions.

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STATEMENT PURSUANT TO IRS CIRCULAR 230: The drafter of this document did not intend nor write this document for the purpose that this document would be used to avoid any penalty imposed by a taxing authority, for promoting, marketing or recommending this advice to another party. The recipient of this document may not use this document for that purpose. Rex Crandell Firm would be pleased to prepare or arrange to have prepared by legal counsel, as applicable, a document that would meet the specific requirements of IRS Circular 230 and could be used for those purposes. Please advise us if you desire such a document.

__________________________________

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DISCLAIMER: The sponsors and editors of this privately owned website are not goverment employees and do not represent nor speak for any governmental agency.
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How to Go to Sleep on Time: 10 Steps + on Tax News Online Report.
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http://m.wikihow.com/Go-to-Sleep-on-Time
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How to Go to Sleep on Time

Do you keep telling yourself that you need more sleep, but just can’t seem to get to bed on time? Sleep is very important, but sometimes life is too busy or distracting. Here are some tips to help make your bedtime a healthy habit.

1 Determine how much sleep you need. Everyone’s personal sleep requirements differ, and it’s important to know your own needs so you can set an appropriate bedtime and stick to it. This may not be evident to you if you’ve been pushing your sleep to fit the rest of your life but the main indicator is feeling refreshed on waking. Too many hours of sleep can make you feellethargic and sleepy while too little can leave you feeling irritable and exhausted.Start keeping an eye on the time you go to bed and equate that with how you feel when you wake up. Don’t check the time too often or it’ll get worse. Try different times to see which bedtime gives you the optimal feeling when you wake up.

2 Figure out what time you need to go to sleep, taking into account the optimal hours you need personally and the time you need to be up each day.Determine when you have to be up in the morning and count back the number of hours of sleep you need. This is your bedtime.Use the sleepyti.me bedtime calculator to help you work out your best bedtime. It is found at:http://sleepyti.me/Be aware that even with the best of wills, most adults aged 18-45 and older don’t function that well if they’re not in bed by midnight (shift-workers excepted) and that the optimal going to bed time seems to be between 9pm and midnight.[1] There is even a saying that one hour of sleep before midnight is worth two hours after![2]
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3 Don’t balk if the time you need to get up is earlier than you want it to be. A time on the clock is nothing more than a number. Staying up past midnight is not a mark of coolness, and going to bed before 8:00 does not make you one of the kids. Time is what you make of it and the idea is to make the most of it and stay energized each day.Aim to always get up at the same time every day, no matter how badly you may have slept or how late you got to bed. Your body needs to establish its own regular routine and once this happens, the rest of your life fits around your sleep schedule.

4 Remind yourself of the reasons to get a good night’s sleep. These include better cardiovascular health, decreased blood pressure and stress hormones, increased alertness and energy, better memory and clarity of thought, improved mood and less risk of depression, better appetite regulation, and more time for your body to heal itself from daily wear-and-tear.[3] If that’s not enough to convince you, think of the downside of not getting enough sleep: your irritability increases, creativity plummets, you feel less inspired and you can become more stubborn, while you may also experience headaches, stomach upsets and other bodily signs.[4]
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5 Plan ahead. Determine what needs doing during your waking hours, how much time the tasks require, and when you will be doing them. Schedule tasks into the time you have and don’t add in additional tasks for which you do not have time. Time-adding tasks will also add stress and make it more difficult to get things done and get to bed on time. And remind yourself that though you may feel as if you’re making the most of the day by doing more tasks, your ability to perform them efficiently wanes the longer you work at them and the tireder you become.
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6 Make a bedtime routine.Keep it short, but a good routine will help both your mind and body relax and prepare for sleep. Do similar things each night that signal bedtime, such as cleaning your teeth and having a shower, having a hot drink, checking the doors are locked and maybe some meditation.Read How to have a good bedtime routine and How to get off a bad sleep schedule for more ideas.
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7 Eliminate distractions.
Bedtime is not TV-watching time or internet-surfing time. If you like doing any of these activities later at nt, do them well before your appointed sleep time. However, it’s not advised to use electronics in the bedroom as they disturb the peace of the bedroom and any such use in the hour prior to bedtime will keep you too alert to sleep. Reading however is good, it is calming and often makes you go to sleep quicker.

8 Make bedtime an appointment with yourself and go to bed. 
Write into your diary if you must! Remind yourself of the benefits again, and just do it.

9 Look for the benefits. The better you get at going to bed on time and getting enough sleep, the more you will see these benefits in your life. You’ll notice greater energy, a more positive outlook, faster thinking ability, better reflexes and all the other positive things that come with being alert and refreshed. Look for these positive signs and use them as motivation to continue with your good bedtime habit.
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10 If nothing else works, use melatonin. It’s a fast, effective oil that does NOT make you wake up drowsy.

Sleep can be affected by the seasons, with some of us needing more sleep during winter and less during summer.[5]
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Before going to bed, turn on “do not disturb” mode on your iPhone or other tablet device. If you receive a text, email, or other alert, the phone will not make a noise, causing you no interruption throughout the night. Alarms will still sound.

Turn down the lights well before bedtime, including on your computer monitor, to ready your body for sleep.

Try to keep your waking and sleeping times consistent. Your body will become accustomed to sleeping at these times and it will be easier to actually go to bed when you get sleepy at the right time.
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Remove all electronics from reach an hour before bedtime.

If your bedtime works out to be at a time that is still light or noisy, look for ways to reduce the noise or light in your sleeping room.

Exercise. The move your exercise/workout, the sooner you sleep. Cardiovascular exercise improves quality of sleep too.
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Read a book. Read the income tax code.

Put an eye mask on if there is too much light in your room. This blocks the light out in all areas.

Meditate with twists of neck, holding each twist at least 4 breaths. This will immediately relax you and prepare for a good sleep.

Don’t let others distract you from your bedtime. If they do, gently remind them that you have an appointment with yourself. It might help to explain your reasons. They might make an effort to get to bed on time, too!

Taking melatonin with certain other medications (such as anti-depressants) can be very dangerous. If you take medications, ask your doctor before taking melatonin.
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Comfortable bed, right room temperature

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http://m.wikihow.com/Sleep-When-You-Are-Not-Tired
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How to Sleep When You Are Not Tired

You go to bed early, or for a nap, but for whatever reason, you’re not tired or sleepy. There are many tricks you can use to relax your mind and body to make yourself fall into sleep mode more easily. If trying to sleep when you’re not tired is a constant problem in your life, you can also change your routine to make it easier for you to fall asleep at night, even if you feel wide awake. See Step 1 below to get started.

Part One of Three

Relaxing Your Body

1 Adjust the temperature. The temperature in the room should be slightly cooler than what’s comfortable for you. A slight drop in temperature induces sleep. [1] But don’t let yourself get too cold, especially your feet; cold feet can be disruptive to sleep, so put on some socks. You may wake up and have to take off those socks in the middle of the night, but that’s better than letting those cold feet keep you awake.
It can take several hours for your body temperature to cool down after exercise or exposure to excessive heat, so make sure your body is at normal temperature when you get ready for sleep.

2 Adjust the lighting. If you prefer a completely dark room, cover all lights such as digital alarm clocks, or any other electronic device in your bedroom that has a light on it. If you prefer to sleep with dim lighting, wear an eye mask or lower your lights until you are comfortable enough to sleep. Do not sleep with your lights on, as this disrupts sleep and makes it hard to become tired and relaxed.[2]
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3 Adjust the sound level. Consider putting on some white noise (sound machine, fan blowing etc.), which has been shown to make people fall asleep more quickly. Also, people find the ticking of a watch or clock soothing. [3] If you prefer everything quiet, turn off anything that causes noise.
You can also consider wearing earplugs before you go to bed. It can take some time to get used to them, but they can help block out sounds you didn’t even know were keeping you from sleeping. They can also be particularly useful if you share a bed with a partner who can wake you up.

4 Adjust your sleeping position. Keep your back straight, and make sure that your neck isn’t resting too high or too low. Avoid sleeping on your stomach, as forcing your head to one side is hard on the spine and neck. If you sleep on your side, put a narrow pillow or rolled-up towel between your knees to keep your hips in a neutral position. Even turning from your right side to your left can help you fall asleep if you’re feeling wide awake in the same old position.

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5 Make your bed comfier. Swap your over or under-stuffed pillows for the ones you keep in the guest room. If your mattress is lumpy, flip it over or cover it with a foam pad or other blankets. The more conducive to sleep your bed is, the more likely you will be to feel ready for bed. We’ve all lied in a nice, cozy hammock in the sunlight and fallen asleep when we weren’t even feeling particularly tired, haven’t we? Well, a cozy bed can have the same effect.

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6 Get some exercise at least three hours before bed. Go for a run, hit up the gym, take a long walk, or do some stretches to help you get your heart rate going before you ease into bed. This will work out your body and will make you more tired; doing this at least three hours before bed will keep your adrenalin from pumping right before bedtime and keeping you awake. If you work out shortly before bed, then you will feel more awake than ever.[4]

7 Avoid alcohol or caffeine right before bed. Though a glass of wine may initially make you feel drowsy, if you consume alcohol right before bed, then it will disrupt your sleep cycle and make you fall into a less deep sleep. If you do like to have a nightcap, just have it 2-3 hours before bed so it doesn’t keep you up. As for caffeine, you should avoid caffeine after 2-3 pm, or ideally even after noon, because it can take up to eight hours for the caffeine to fully leave your system, which can definitely make you feel not so tired even when you want to fall asleep.[5]

8 Drink cherry juice. Or snack on a variety of other foods that are rich in melatonin, which are known to help you feel sleepier and to help you drift off faster. Though you should avoid eating right before bed or you may be up with indigestion or general discomfort, eating some of these foods a few hours before bed can help you drift off: [6] [7]
Barley
Tomatoes
Rice
Sweet corn
Oats
Oranges
Bananas

9 Curl your toes. When you get in bed, curl your toes upward for a few seconds, relax them, and then repeat the gesture. This can help you relax your mind and your body, so performing a series of ten of these if you are feeling way too alert for your own good can help you fall asleep when you’re not tired.[8]

10 Drink herbal tea. Herbal tea, whether it’s chamomile or peppermint, has been shown to calm your body and mind and to help you feel tired and relaxed. Have a cup an hour or two before bed — you don’t want to drink too much liquid right before bed or you’ll be more likely to have to get up to urinate. If you make drinking herbal tea part of your pre-bed routine, this will help you fall asleep even faster.

11 Eat a healthy, lighter dinner. Get a healthy dose of carbs, proteins, and fruits or veggies with your daily dinner. Avoid spicy or overly heavy meals that are rich in fat or sugars, or your body will be more alert and uncomfortable throughout the night. Just a healthy, balanced dinner will do the trick in making you feel more tired. Make sure to eat it at least three hours before bedtime so your body has time to digest the food. Here are some great dinner options that can help you feel tired while still feeling healthy:[9]
Lighter pasta with cheese
Tofu with couscous
A glass of warm milk with oatmeal
A kale salad, salmon, and rice noodles

Part Two of Three:

Calming Your Mind

1 Recreate boredom. This varies from person to person, but whatever that activity is, it should lull your brain, not engage it. Slow, calming music lends itself well to this. Reading something that is completely uninteresting to you is good as well. Try reading the income tax code. Some types of puzzles or games may work as well, such as Sudoku or Solitaire. Listen to a very dry podcast. Play tic-tac-toe with yourself. Organize that stack of paper on your desk. Do whatever you think is the most boring thing possible.

2 Perform breathing exercises. Try abdominal breathing, yogic pranayam, or a one-minute breathing exercise. Close your eyes and focus on the breath falling in and out of your body. As you do this, picture each part of your body relaxing, one at a time. Focusing on your body will keep you from thinking about anything else from the outside world.

3 Visualize something relaxing and repetitive. For example, think of small, warm waves washing over your body at regular intervals to coincide with your breathing. Meditate to calm yourself and clear your head. Don’t pick anything too exciting or thrilling, or you will start to work yourself up. Picture a calming beach, a gorgeous, lush forest, or a beautiful rose garden. Imagine yourself walking through it all.

Think of one of the most beautiful and calming places you have ever been to (a clear stream of running water in a field of wildflowers in the mountains to a peaceful lake). This should help you relax.

4 Read. Reading can help calm your mind and take your thoughts off of anything that might have been troubling you that day. Read something light and a not too gripping, such as the local news, a paperback, or a piece of historical non-fiction. If you read a gripping thriller or an emotionally disturbing news story, then that will keep you up even longer, and will make you feel even more awake if you just can’t stop reading.
Challenge yourself and read the most boring thing you can find, from your old chemistry textbooks to a dry report about the state of another country’s economy.

5Turn off all visual stimuli at least an hour before bed. Put away the iPad, phone, computer with Netflix all cued up, and turn off that television. Your eyes should begin to start to rest and to stop seeing all of the images that will make you feel more awake, jumpy, and less able to focus. Stop being the person who drifts off while watching television or with a cell phone in her hand and get rid of all of those high-sensory distractions, which are guaranteed to make your mind feel more alert when it’s time for bed.[10]

6 Stick to the fifteen-minute rule. This rule is simple: if you’ve been lying in bed for more than fifteen minutes and are unable to fall asleep because you’re not tired, then try something else. If you continue to lie there, your mind will continue churning, and you may even work yourself up and feel even more awake than you did when you first closed your eyes. Once fifteen minutes have passed and you’re no closer to catching those z’s, do something else that is not very taxing. Read a magazine. Pace around your room. Drink some herbal tea. Hum to yourself. Sit up and stare at your hands. Do something new and you will start to drift off.
Whatever you do, though, make sure to keep the lights dim — even reasonably dim if you’re reading.

7 Avoid intense conversations before bed. Five minutes before bed time is not the time to get into a big fight with your significant other or to call up your best friend and complain about all of the stress you’re facing at work in great detail. If you live with someone and have to talk right before bed, make sure you don’t bring up anything more intense than the type of herbal tea you’re going to buy at the store tomorrow. Otherwise, the conversation will make you feel even more alert and awake, and it will take you even longer to fall asleep.
If you live with someone who loves intense conversations right before bed, reschedule them for two to three hours before bed instead, if you can.
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8 Think about everything you did that day. Another way to calm your mind is to go through everything you did that day, up to the most boring little detail. Start with how many blackberries you placed in your morning oatmeal and end with which quadrant of your teeth you decided to brush last. Try to break it down hour by hour and see how specific you can get and how many things you can end up remembering. Unless you’re a superhero or an ER doctor for a living, chances are that this alone will be boring enough to put you to sleep.
If you’ve gone through your whole day and still feel wide awake, try going through your entire week. Surely that should be boring enough to make you drift off.

Part Three of Three:

Developing a Sleep-Friendly Routine

1 Find your sleepy time routine. If you want to feel tired when you want to go to bed, then you have to find a routine that helps you decompress and fall right into bed that starts at least half an hour before it’s time to get some shut eye. This can include some light reading, listening to classical music, reading the newspaper, or doing whatever light, low-intensity activities help you forget your problems and start to recognize that your body needs rest.[11]
Once you find this routine, stick to it, and if you know you have to get to bed a little earlier one night though you’re not tired, start the routine earlier and you can trick your mind into feeling tired a bit faster.

2 Go to bed around the same time every night. You may not be feeling tired because you’re trying to go to bed three hours earlier than you normally do — probably because you have to wake up earlier. If you want to make it easier for yourself to fall asleep, then you have to get used to falling asleep at around the same time every night and waking up around the same time every morning. That way, your body will get used to feeling more tired at the same time every night or more alert at the same time every morning.

3 Only use your bed for sleeping and sex. If you want to regularly be able to fall asleep, even if you’re not tired, then you can’t watch TV in bed, do your homework in bed, talk to friends on the phone in bed, or do anything in your bed other than have sex or try to fall asleep. If your mind and body associate your bed only with sleep and sex, then it’ll be easier for you to drift off when you close your eyes, instead of getting all worked up about the weird phone call you just got from your best friend or about all of the homework you still have to do.
Find a space in your home or room that is designated for “work only.” This will help you save the relaxing stuff for your bed.

4 Get out in the sunlight as soon as you wake up. Once you roll out of bed, head for the window or the balcony as soon as you can. The bright light from the sun will tell your body’s biological clock that it’s wakey-wakey time, and this same clock will help you get to bed in about 14-16 hours, helping you stabilize your waking up and going to bed routine.[12]

5 Set aside a “worry time” for earlier in the day. If one of the reasons you don’t feel tired when you go to bed is because you stay up for two hours worrying about your relationship, your health, your status at work, etc, then you need to work on setting aside a “worry time” earlier in the day so that there’s nothing on your mind by the time you’re ready to hit the hay. It may sound silly, but if you say, “I’m going to worry from 5-5:30 PM every day” and do nothing but worry, write down your worries, or say them aloud during that time, then you’ll get them off your chest.
If you wait until bed time to slow down and really think about your troubles, then yeah, you’re bound to feel wide awake for a long time.

6 Avoid hot baths before bed. Though many people think that nothing will help them fall asleep faster than taking a hot, relaxing bath right before bed, the truth is that taking that late hot bath will actually keep you awake for longer. Taking a hot bath will, not surprisingly, turn up your body temperature, which can take up to 6 hours to return to normal. And the higher your body temperature is, the harder it will be for you to fall asleep, so avoid those hot baths before bedtime because they will have the opposite of their intended effect.[13]

7 Kick fluffy (or Spot ) out of the room. Another way to develop a healthy routine that keeps you from staying awake for longer than necessary is to stop letting your dog or cat share the bed with you. Though you may love nothing more than the feeling of this furry, cuddly creature sleeping beside you, studies show that people who sleep with their pets have a hard time falling asleep and staying asleep because those cuddly creatures can wake you up in the middle of the night.[14]
You may think that having your dear pet next to you will help you fall asleep when you’re not feeling tired, but it will actually make you even more awake

Tips ^^

Sleep with a large pillow or stuffed animal, because no one likes to sleep alone.

Cuddle up to your favorite stuffed animal, close your eyes, and think of anything that makes you happy.

Clear your mind of all thoughts, try to think of positive memories and visualise calming scenes.

Daydream. It will get your mind off of anything stressful or worrisome and just let you drift off into whatever world you create.

Use the bathroom to make yourself more comfortable and prevent having to get back up any time soon.

Lay still and relax. Close your eyes, and try to clear your mind.

Surround yourself with calm, peaceful things that may help you slow down.

Fluff your pillow if it’s hard, so you can go to sleep.
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If you wash your hair, make sure that the wet hair isn’t pressing against your neck or you can dry it. Wet hair can be cold and prevent you from sleeping.

Have a warm beverage about an hour before you go to bed. Avoid coffee or anything with caffeine. Warm milk is usually a good choice.
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Don’t stress out about falling asleep, thinking “I have to sleep now or else…” This creates anxiety that prevents sleep. Instead, be laid back about it: “It’d be great to sleep right now, but if I don’t, no big deal. At least I’ll get some rest, and have a chance to relax.”
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USA ~ EAGLE & FLAG Mov Gif 04FEB14

A MESSAGE FROM REX CRANDELL’S TAX OFFICE:

Our firm provides income tax preparation and planning services for individuals, families, C Corporations, S Corporations, LLC Limited Liability Companies, Partnerships, domestic partners, for income and deductions generated in California, the United States, and assist taxpayers internationally comply with the USA income tax reporting requirements. Rex Crandell, Esq. also provides services in the area of Estate Planning, Estate Administration, Probate Procedures, Advance Healthcare Directives, Durable Powers of Attorney for Financial Management, and Advance Health Care Directives.

You can contact Rex Crandell’s offices in Walnut Creek and San Francisco, California
by calling; 1 (800) 464-6595;
or (925) 934 6320, Walnut Creek, California;  or  (415) 982-1110, San Francisco, California

or by e-mail at:    rexcrandell@astound.net

http://www.rexcrandell.com/

http://www.taxrexcrandell.com/

We would be happy to hear from you.

…FROM REX CRANDELL’s OFFICE…

Please contact our office if you have any questions.

Very truly yours,
/s/ Rex L. Crandell
Rex L. Crandell. CPA, Esq.

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FROM:

Rex L. Crandell Firm

Walnut Creek Office (For UPS/FedEx/OR if Signature Req’d Documents)
3000 Citrus Circle
Suite 207 – West Wing [ Click For MAP TO OUR OFFICE]
(925) 934-6320
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E-Mail: mailto:rexcrandell@astound.net
Internet: http://www.rexcrandell.com
Internet 2nd Web http://taxrexcrandell.com
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Skype Address rex.crandell
Fax: (925) 934-6325
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All U.S. Mail items [Except if Signature is required]:
P.O. Box 30305-Dept.  Tax News Blog Update
Walnut Creek, California 94598-9305 United States of America
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IT'S TAX TIME.  BETTER GET YOUR PAPERS AND FILES READY EARLY. IT’S TAX TIME. BETTER GET YOUR PAPERS AND FILES READY.
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This newsletter is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of this newsletter should not be acted upon without specific professional guidance. Please call us if you have questions.

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STATEMENT PURSUANT TO IRS CIRCULAR 230: The drafter of this document did not intend nor write this document for the purpose that this document would be used to avoid any penalty imposed by a taxing authority, for promoting, marketing or recommending this advice to another party. The recipient of this document may not use this document for that purpose. Rex Crandell Firm would be pleased to prepare or arrange to have prepared by legal counsel, as applicable, a document that would meet the specific requirements of IRS Circular 230 and could be used for those purposes. Please advise us if you desire such a document.

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DISCLAIMER: The sponsors and editors of this privately owned website are not goverment employees and do not represent nor speak for any governmental agency.
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WHAT HAPPENS WHEN A PERSON IS NO LONGER ABLE TO COMPETENTLY MANAGE THEIR FINANCES OR NOT ABLE TO TAKE CARE OF THEMSELVES?

 By Rex L. Crandell

  1.  What are you going to do when you find out that a loved one or someone you is still alive but not competent to think properly or they are not able to take care of their basic necessities of life, for example;  cooking, getting dressed, bathing, using the bathroom, or they can no longer communicate to others what they want or need?    These issues should be considered any time when their competency becomes doubtful.  This might be in the form of not being ability to understand when people speak to them, manage their home or financial affairs, when they cannot keep up with, supervise, and make competent decisions that are in their own best interest at this time. 
  2. It is much better if these issues are addressed before the person looses their ability to continue to manage her own affairs. 
  3. If a person is not able to keep up with what is going on in their life.  Or they are unable to recognize the various people familiar with the people that they normally have contact with, then it is suggested that one or two family members schedule a doctor’s appoint for the person.  You should consider bringing them to a licensed medical physician and have a written competency evaluation report prepared.  It might be a good idea to ask in advance if this particular doctor’s office customarily provides competency evaluations and issues written letters if it is determined that the person is no longer able to take care of themselves or they are diagnosed as being incompetent.  
  4.  When a person is unable to comprehend and make the necessary decisions in their lives, the California Probate Code uses the term that the person “lacks competence”.  When a licensed medical physician makes a written competency report indicating that the individual is not competent, in the doctor’s written opinion, then many things need to change regarding the care and supervision of the person.
  5. If the person has a Revocable Living Trust and most of their assets are labeled in the name of the trust, then you should read the trust instrument to find out what it says about a competency determination.  A creator of a revocable trust that names themselves as the initial trustee cannot continue to act in the capacity of a trustee when they have been declared not competent.  In addition, the person would not have the right or legal ability to sign or enter into any type of contract or agreement if they are incapacitated. 
  6. You should re-read the trust instrument to see what it says about the process and who will step into the office of successor trustee when a determination of non-competency has been issued by a medical doctor or by other specific terms spelled out in the trust.  This section should be read before contacting a medical doctor to examine the person for competency issues.  The specified successor(s) trustee will take over the office of trustee for the trust (as written in the trust document) assuming that the successor(s) trustee is ready, willing and able to assume the trustee’s duties and responsibilities.
  7. For assets that are not labeled in the name of a trust there will need to be some procedure to manage those assets if a non-competency determination is properly issued.  These assets frequently could include pension plans, annuities or IRA accounts that are governed by a beneficiary statement with the asset holding entity.  Other assets that are labeled in the person’s individual name and do not show the trust as the owner will also fall into this category of asset, like bank accounts or real estate held in the person’s name alone and not in the name of the trust. 
  8. If the person does not have a Durable Power of Attorney for Financial Management, then a court supervised conservator will need to be nominated, appointed and confirmed by the local probate court.  Then the appointed conservator will need to make regular reports to the court because the entire process is done under court supervision to protect the rights, assets and health for the incapacitated person. 
  9. There is much more paper work involved when the person does not have a revocable trust and a Durable Power of Attorney for Financial Management because that creates the need for a Conservatorship which is supervised closely by the courts.  You would be well advised to attempt to avoid the costs, regulation and time involved in the court supervised Conservatorship path when there is any way to avoid it. When the person becomes incompetent and they had previously created a revocable trust and labeled most of their assets in the name of the trust, then a court supervised conservatorship can be avoided for management of all assets in the trust. 
  10. If the person had previously prepared and signed a Durable Power of Attorney for Financial Management and a determination of incompetency has been medically issued in writing, then the person specified in the Durable Power of Attorney for Financial Management document will then step in and begin managing the assets that are not held in the name of a trust.  When the person becomes incompetent and they had previously signed a Durable Power of Attorney for Financial Management form, then all assets that are not in a trust will be managed by the named financial manager without court intervention.  Again, if one exists, then the provisions should be read, evaluated and understood, especially by the person named in the document to take over the financial management duties.  Normally, the provisions are written in a way that is understandable to most people. 
  11. In other words, do not be put off that it might be written in that ancient, (never spoken publicly form of Old Roman Latin) language commonly referred to as “legalese”.  Just read the document, determine what it says and discuss it between all family members.  If you do not clearly understand what the document means, then hire a professional to assist you in your understanding.  
  12. You should also hire an attorney to be your legal advisor to help the family keep within the proper legal bounds when dealing with these types of situations.  Now days, when well-meaning but mistaken family members do not follow the legal rules law enforcement officials may try to prove criminal elder financial or physical abuse took place.  A well meaning but not informed about the laws in this area can create personal liability for the care giver for not following proper procedure.  Caring is not enough; it also has to be the proper thing to do for the incapacitated person to keep the care giver out of the frying pan, so to speak.
  13. If the possibility of incompetency exists, then the reality of the situation should be dealt with directly and promptly.  It is becoming an increasingly more common situation in our modern society, that most of us will eventually become incompetent and not able to manage our own affairs at some point in our life. 

DISCLAIMER AND WARNING AGAINST SELF-HELP

This information is general in nature and not intended to be legal, tax, accounting, or other professional advice, nor does it create any form of professional relationship.  If you need professional or technical advice, then you should contact a competent person to evaluate your factual situation because the situation discussed above is not the type of situation where people should attempt to go it on their own without competent advisors to direct and advice on your particular situation.  Each situation is different so no canned approach would usable or advisable.  If any of this information applies to you are someone you know you should immediately seek the services of a competent professional.  Rex Crandell & Firm is not affiliated with any governmental agency and does not claim to be a government employee nor have any special insider affiliations with any governmental agency.  This is because the information is designed exclusively for advisory purposes only to provide a general background of the area discussed.

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A MESSAGE FROM REX CRANDELL’S TAX OFFICE:
Our firm provides income tax preparation and planning services for individuals, families, C Corporations, S Corporations, LLC Limited Liability Companies, Partnerships, domestic partners, for income and deductions generated in California, the United States, and assist taxpayers internationally comply with the USA income tax reporting requirements.  Rex Crandell, Esq. also provides services in the area of Estate Planning, Estate Administration, Probate Procedures, Advance Healthcare Directives, Durable Powers of Attorney for Financial Management, and Advance Health Care Directives.

You can contact Rex Crandell’s offices in Walnut Creek and San Francisco, California by calling; 1 (800) 464-6595; or (925) 934 6320; and you can contact our office by e-mail at rexcrandell@astound.net

http://www.rexcrandell.com

http://www.taxrexcrandell.com

We would be happy to hear from you.

…FROM REX CRANDELL’s  OFFICE…

Please contact our office if you have any questions. 

Very truly yours,
/s/ Rex L. Crandell
Rex L. Crandell. CPA, Esq.

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FROM:

Rex L. Crandell Firm

Walnut Creek Office (For UPS/FedEx/OR if Signature Req’d Documents)
3000 Citrus Circle
Suite 207 – West Wing         [ Click For MAP TO OUR OFFICE]
(925) 934-6320
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San Francisco Office
425 Market Street
22nd Floor                               [  Click For MAP TO OUR OFFICE]
(800) 464-6595
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E-Mail:            mailto:rexcrandell@astound.net
Internet:           http://www.rexcrandell.com
Internet 2nd Web  http://taxrexcrandell.com
Internet 3rd Web http://estateplanningreport.wordpress.com
Skype Address     rex.crandell    
Fax:                (925) 934-6325
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All U.S. Mail items [Except if Signature is required]:
P.O. Box 30305-Dept. Web New
Walnut Creek, California 94598-9305 United States of America

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          STATEMENT PURSUANT TO IRS CIRCULAR 230: The drafter of this document did not intend nor write this document for the purpose that this document would be used to avoid any penalty imposed by a taxing authority, for promoting, marketing or recommending this advice to another party. The recipient of this document may not use this document for that purpose. Rex Crandell Firm would be pleased to prepare or arrange to have prepared by legal counsel, as applicable, a document that would meet the specific requirements of IRS Circular 230 and could be used for those purposes. Please advise us if you desire such a document.

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