The Patient Protection And Affordable Care Act
Here are the key provisions of the Patient Protection and Affordable Care Act:
40-percent surtax on high-end employer-sponsored health plans
If your company has an insurance plan that pays premiums in excess of $10,200 for individual coverage and $27,500 for family coverage, then beginning in 2018 there will be imposed a 40% nonrefundable excise tax.
Increases the Medicare tax to 2.35 percent for couples with adjusted gross incomes (AGI) over $250,000 a year and individuals with AGI over $200,000
Instead of the current 1.45% Medicare tax on W-2 wages and net income from self-employment, this will rise to 2.35%. Double that because employers have to match that 2.35%, and if you are self-employed the total tab goes from 2.9% to 4.7% of self-employment net income. This is a 62% tax increase!
Imposes new fees on certain health-related industries
Tanning salons have to pay a 10% tax beginning July 1 of this year. And there are going to be “fees” levied on brand name pharmaceutical sales, which will be based on “market share”. This will begin in 2011.
Increases the threshold for the deduction of eligible unreimbursed medical expenses from 7.5% to 10% of AGI starting in 2013
Instead of the current 7.5% of adjusted gross income threshold (floor) that one must hurdle in order to begin deducting medical care and insurance costs, this will rise to 10%. In other words, ones ability to deduct out-of-pocket medical costs is lowered by a third.
And in summary, according to the experts, the above translates into $400 billion in additional taxes. And if you happen to make over $250K per year, then you will be severely punished. Read this summary here from the Cato Institute.
May 4th, 2010 at 12:32
[...] The credit under the new law offers an incentive to small businesses by essentially subsidizing employee coverage by way of the tax credit for purchasing health insurance. Read more on the Patient Protection and Affordable Care Act here at webtaxcpa. [...]