Health Care Reform Becomes Law
Posted by Ross Tax & Accounting on Fri, May 21, 2010
A massive reform on our country's health care system has taken place with the passage of two bills. The first, the "Patient Protection and Affordable Care Act," was signed by President Obama on March 21, 2010. The companion bill, the "Health Care and Education Reconciliation Act of 2010," was signed into law on March 30, 2010 and made several changes to the "Patient Protection Act." Together, these two pieces of legislation will have a dramatic affect on taxes paid by businesses and individuals and, of course, on the health care industry.
Provisions in these laws will go into effect over the next several years, creating an estimated $438 billion in new taxes on employers and individuals. For the first time, employers will be subjected to taxes if they do not offer coverage to employees or if the coverage fails an affordability test.
To help you keep up with the latest developments, below are key tax provisions of the health care reform laws:
- 10% tax will be imposed on indoor tanning services starting July 1, 2010.
- Beginning in 2018, insurance companies will be assessed a 40% excise tax on health insurance plans with annual premiums exceeding $10,200 for individuals and $27,500 for families.
- Starting in 2014, employers with at least 50 employees would be assessed an annual penalty of $2,000 for each employee that they did not provide coverage to.
- Starting in 2011, the penalty for using health savings account funds (FSA) for nonqualified expenses will increase from 10% to 20% and over-the-counter medications cannot be purchased with FSA funds. Staring in 2013, contributions to FSA's for medical expenses will be limited to $2,500.
- If make more than $200,000 a year, starting in 2013 the 2.35% of your payroll wages will go to Medicare tax (currently it's 1.45% of wages)
Ross Tax & Accounting Co. will continue to keep you posted any provisions that will affect your personal or business tax situations. If you have any questions or opinions, please comment below - we'd love to hear how you feel about the health care reforms.