Health Care Reforms New Tax Laws

My CPA friends forwarded me a thumbnail sketch of the new tax law.

The health care reform is made up of 2 new laws: The Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010.

Here are a few of the highlights:

• Individuals who earn more than $200,000 for the year ($250,000 married couples) will be paying an additional 0.9% in Medicare tax beginning in 2013.
• Individuals whose adjusted gross income for the year exceeds $200,000 ($250,000 for joint files), whether from wages or otherwise, will also be paying an additional 3.8% Medicare tax on net investment income, starting in 2013.
• Most individuals will be required to obtain health insurance or be subject to a penalty tax starting in 2014.
• Tax credits to subsidize the cost of health insurance premiums will be available to individuals earning up to 400% of the poverty level starting in 2014.
• A 40% excise tax will be imposed on high-cost ‘Cadillac’ employer-sponsored health coverage, starting in 2018.

A high cost Cadillac plan is considered to be those plans that the premium cost is $8500 per individual and $23000 per family with low deductibles. Many union and government employees have Cadillac plans.

• Limits on tax-subsidized medical expenses will be imposed by raising the itemized medical expense deduction floor for regular tax purposes from 7.5% to 10% starting in 2013.

As you know I do not practice accounting or law and cannot give you advice on this specific area. I suggest you see your tax advisor or lawyer for additional guidance on how this law impacts you and your family.

If you have questions call Paul at 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.