The Dec. 31 expiration of the 2 percent payroll tax cut, federal unemployment insurance programs and Medicare’s sustainable growth rate will affect nearly every American family within just days. The following lays out how that would unfold should Republicans continue to block the short-term extension that passed with an overwhelming 89 Senate votes. Full state-by-state breakdowns are available below for the payroll tax cut and federal unemployment insurance programs.
PAYROLL TAX CUT
* Starting Jan. 1, 160 million workers’ take-home pay will be reduced by 2 percent to reflect the increase in payroll withholding taxes from 4.2 percent to 6.2 percent.
FEDERAL UNEMPLOYMENT INSURANCE
* After Dec. 31, the Emergency Unemployment Compensation (EUC) program will no longer provide benefits to individuals exhausting regular, State-provided unemployment benefits. (State benefits last for 26 weeks in most States.) As of Nov. 26, there were 3.8 million Americans receiving state unemployment benefits, according to the Department of Labor.
* After Jan. 7, the EUC program will no longer allow recipients to transition into the next tier of the program. After this date, EUC recipients will only be allowed to finish their current tier of EUC benefits. EUC has four tiers lasting 20 weeks, 14 weeks, 13 weeks and 6 weeks. Through Nov. 26, there were 3 million Americans receiving unemployment insurance through the Emergency Unemployment Compensation program, according to the Department of Labor.
* The Extended Benefits (EB) Program, which provides a maximum of 20 weeks of benefits in States with higher levels of unemployment, is operational now in 34 States. Nearly all of these States are triggered on to this program because of two temporary provisions that are expiring at the end of the year. EB is now temporarily operating with 100 percent federal funding and with a 3-year (rather than 2-year) look back requirement, which requires that States have unemployment rates higher than in the past. When these two provisions expire, the EB program will shut down in nearly every State in the first few weeks of January (the exact date will be determined by State law). Through Nov. 26, there were 593,097 Americans receiving unemployment insurance through the Extended Benefits program, according to the Department of Labor.
* The Department of Labor projects that if Congress fails to extend these EUC and EB provisions nearly 700,000 people will lose their unemployment benefits by the second week of January and nearly 2.2 million will lose benefits by the middle of February.
MEDICARE SUSTAINABLE GROWTH RATE AND OTHER HEALTH EXTENDERS
While the Center for Medicare & Medicaid Services has announced plans to delay processing of physician claims in the hope a fix will soon be enacted, they can only do so until Jan. 17 when they will have to start paying at lower rates with a 27 percent cut. Jan. 17 is the very day the House convenes for the 2nd session of the 112th Congress, which means there will be no opportunity for Congress to pass a fix before the cut kicks in. If House Republicans continue to block a short term extension, the following will take place:
* 650,000 physician and practitioners would see payment delays and a 27 percent cut in payments when payments are made.
* Over 800 rural hospitals would lose eligibility for “hold harmless" payments that help cover the cost of outpatient hospitals services and roughly 90 hospitals would receive payments that do not reflect the competitive wage environment in which they operate.
* Physical therapists, occupational therapists and speech language pathologists would no longer be allowed to use an exceptions process that protects seriously injured patients from hitting an arbitrary dollar cap on therapy services and halting their access to needed care later in the year.
* Over half a million (520,000) low-income Medicare beneficiaries would no longer receive financial assistance with their Medicare premiums.
