Tax changes persuant to health care bill?

The text of the bill is probably the best resource now, just because it's so complex. There are many links at

I'm not sure which one it is. From various and and other sources here are the following tax changes:

2010

• 0 rebate for certain medicare participants

• Tax credit for small businesses. Need to figure out how much it is.

• 10% tax on indoor tanning services

2011

• W-2 will report cost of employee health insurance

• Tax on pharmaceutical companies according to market share, but not sure if this tax or fee is deductible to the companies, and another source says the net tax is 2.5B but will rise annually

2012

2013

• Medical deduction in excess of 10% of AGI (as opposed to 7.5%). I don't know if it becomes 12.5% under AMT.

• Medicare payroll tax 2.35% for single filers earning more than 200k and married filers earning more than 250k. But I'm confused because I read elsewhere that the tax is 3.8%

• Medicare on investment income -- same limits as above

• 2.9% excise tax in imposed on the sale of medical devices

• Max you can put into a FSA is reduced to ,500.

2014

• Penalty is you fail to buy insurance. The penalty is about 2k, if I remember correctly. But a tax credit to help you buy insurance if you make up to 88k, and you will pay no more than 9.5% of your AGI if you make 4x the poverty level (currenlty 22k for a family of 4) for a total of 60, and 3% of your AGI if you make 133% of the federal poverty level.

• Penalty on employers who fail to provide coverage if they have >= 50 employees. I read somewhere that 2 part time employees are counted as

1 full time employee.

• Health insurance companies pay tax based on their market share, and tax is 8B but will rise each year.

2018

• Excise tax on high cost employer-provided plans. 40% on amounts over 10.2k or 27.5k. Since the medicare tax on investment income was a compromise to delay the excise tax till 2018, would the medicare tax on investment income vanish?

And in one of the bills I read about a 5% tax on elective cosmetic surgery.

It looks like the thresholds are higher for high-risk jobs.

at

and I'm not sure which one it is.  Fromvarious and and other sources here are the following tax changes:>

This one sounds good but would only work for small businesses with average payroll of under $20,000 (maybe mom-pop restaurants? It excludes highly-compensated employees. 50% of health coverage costs, with phaseout eliminating the credit above $40,000. But this goes into effect after 2012.

Here's a complete link:

How small is small? I am a one man operation and could use the credit.

The Kaiser Family Foundation has an excellent comparison (including tax changes) of the Bill passed on Sunday that becomes law when signed by the President and the Reconciliation Bill passed by the House today that goes to the Senate. There is also a third column for the original House bill that can be disregarded.

This links to a summary prepared by the George Washington University School of Public Health and Health Services. It's 121 pages.

I glanced at it as it came off printer but haven't read it though. Joe

The current tax, 1.45%, + the increase of 2.35% (as above) = 3.8%. Does that make it clear to you?

I think the idea is that these are uncommonly generous plans. If the employer is struggling, it can offer a more main stream plan and not be subjected to the tax, and also save money on premiums.

SNIPPED

Here's the abridged version of what I got this morning from my insurance guy - ENJOY!

The United States House of Representatives voted 219 to 212 to pass the Senate approved healthcare reform measure. This bill will likely go to President Obama on Tuesday of this week for his signature, which will make it the law of the land. Some aspects of the legislation will go into effect 90 days after enactment, but most provisions will be phased in between 2011 and 2018

After voting to approve the Senate bill, the House then voted on "key changes" to the bill, as part of a pre-arranged agreement to guarantee passage of the historic legislation. These changes, voted on as a "Reconciliation" bill, passed by a vote of 220 to 211. This "Reconciliation" bill now goes to the Senate for approval, where it only requires a simple majority vote to pass, as opposed to the normal 60 Senate votes needed to pass most legislation, because of the "Reconciliation" procedure being employed.

At this time, we are still gathering facts about the recently passed legislation. There are many unanswered questions and concerns; however, as we understand it, the legislation still allows for significant roles to be played by the brokers and administrators in use today.

Although we have been, and continue to be, concerned about the establishment of any type of government coordinated or run Health Insurance Exchange, where individuals and businesses would be required to go to buy health insurance, we are thankful that the establishment and utilization of such Health Insurance Exchanges will be a "state by state" decision and will not be implemented until 2014. So, only time will tell what the future holds as states explore Health Insurance Exchange options.

Most of the questions are "how is this going to affect me - the business owner, the individually insured, and the private citizen."

The specific answers are still coming to light. But so far, here is some of what we know:

Businesses -

The requirement of most businesses to cover their employees doesn't begin until 2014. Most of the legislation focused on companies with more than 50 employees. The fine will be $750 per year for each employee they do not cover. (However the "reconciliation" bill increases the penalty to $2,000 and reduces the number of employees threshold to 30).

Unfortunately, for the Construction Industry only, companies with 5 or more employees and an annual payroll of more than $250,000 are subject to the fines.

Employers must begin reporting the value of the health benefits on W-2 Forms beginning January 2011. The details of the gradual penalties are being examined.

For smaller employers, a subsidy program similar to the Maryland Partnership Subsidy would be available for companies with less than 25 employees and an average annual wage of less than $40,000.

Individuals -

Most penalties for not purchasing insurance do not kick in until 2014. Subsidies to help families earning up to 400% of the poverty level don't begin until 2014. A rebate of $250 to Medicare drug beneficiaries who reach the coverage gap called the "donut hole" should begin within a year.

Medicare Advantage Plans will be cut tremendously. The final result is still being examined. Reduces the maximum Flexible Spending Account contributions to $2500 and eliminates over the counter medications as an eligible expense for HSA's, FSA's and HRA's.

Private citizens -

The taxes to pay for this reform begin in 2013 in the form of additional "Medicare Payroll" taxes expanded to dividends, interest and other unearned income for single filers earning more than 200,000 and joint filers earning more than 250,000. The bill also raises the AGI floor for medical expenses deductions from 7.5% to 10%.

Fortunately for everyone in Maryland, we have lived under most of this legislation for quite some time.

Maryland already has a high risk pool for people with pre-existing conditions where you cannot be denied coverage.

Maryland already has mandates that an insured cannot kick you off of the insurance when you are sick.

Maryland small group reform already has unlimited lifetime benefit maximums, and children cannot be denied coverage if they are enrolled on their parents plan within 30 days of birth.

Marylanders cannot be subject to pre-existing conditions while changing jobs if you do not incur more than a 63 day gap in coverage.

Nearly all of the mandates required in the "essential benefits" to be established by the Secretary of DHHS are already mandated in Maryland.

Hope this helps,

Gene E. Utterback, EA, RFC, ABA

So the point of health care reform was to lower the quality of health care for those who can afford it? I understand punishing employers who don't provide insurance, but this strikes me as completely absurd. Our company now spends nearly 20%+ of gross salaries on health care, and the government's reward for that is to add another 40% onto that cost? Unbelievable....

Those of us who don't have health insurance through work don't get to have insurance that is fully deductible above the line. This provision just provides that those who are getting exceptionally good health insurance, presumably because they can afford to pay for it, should pay tax on a small portion of what is in effect their income - and probably a smaller portion than many others pay in taxes on their health insurance dollars.

Why then, did they raise the AGI floor from 7.5% to 10%? Seems that having a ceiling, a cap if you will, on medical expenses and/or just the health insurance premiums would allow everyone to deduct what they pay ~up to~ the cap amount tax free whether it's through an employer or purchased individually. They just widened the gap by eliminating medical expenses as an itemized deduction for millions of filers. Seems kind of backwards to me.

I agree with that. They should have lowered the AGI floor to zero, but put a cap on how much would be deductible.

So instead of fixing the problem by creating a single consistent deductibility rule for everyone, they are punishing those who currently can deduct the expense? What problem are they fixing here by doing that?

The problem has always been and still is the cost of healthcare. All this bill is doing is making healthcare even more expensive.

messagenews:Xns9D446D398854Fspamtraplexregiacom@130.133.4.11...

It's not clear that the net effect will be to raise the mean cost of healthcare per capita.

It is clear that this was only health INSURANCE reform, and everyone understands that health CARE reform is still urgently needed.

It would be interesting to see if they messed with the HSA deduction in the manner that I suggested (via my Congresscritter).

Letter excerpt:

'A slightly more complicated issue arises with the interaction between "high deductible" policies and Health Savings Accounts (26 U.S.C. 223). It makes no sense to forbid a taxpayer from participating in an HSA when his annual deductible exceeds a certain amount, and it also makes little sense to not permit healthy taxpayers to place an amount equal to their annual deductible into such accounts, yet the Internal Revenue Code as it currently exists, blocks both actions. Therefore, I would strike out Section 223(c)(2)(A)(ii) in its entirety with the preceding "and", and modify 223(b)(2) to read "...1/12 of the greater of--" the amount specified by (A) or (B), and add "and, (C) the annual deductible of the plan."'

- From my letter dated February 10, 2010 to Mr. Waxman (D - CA-30 [Los Angeles Westside]). (To date, his office has not replied. He usually does, eventually.)

I think it is quite clear. There is supposed to be savings, but they need to raise my taxes to pay for the savings.