Your paying for Health Insurance Reform

Effective 2010

Indoor tanning services are subjected to a 10 percent service tax.

Effective January 2011

n Pre-tax dollars from health savings accounts (HSA), flexible spending accounts (FSA) or health reimbursement accounts (HRA) can not be used to buy over-the-counter, non-prescription medicines. Easy To Insure ME

n Increase the tax from 10 percent to 20 percent for non-medical early withdrawals from a health savings account for those under age 65.

n Impose an annual cap of ,500 on contributions to flexible spending accounts, which are now unlimited; the cap is indexed for inflation.

n Premiums for Part D Medicare drug benefits for high-income senior citizens will increase in income tiers like the ones used for Part B benefits. An average Part D premium is about -40 per person per month, so this provision will add about a 1 percent marginal tax impact. Like Part B, the higher Part D premium will be determined based on a two-year look-back: 2011 premiums will be based on reported Modified Adjusted Gross Income in 2009.

n The threshold for the higher-income related Medicare Part B premiums is frozen until 2019, effectively making an increasing number of people each year subject to higher premiums. The current standard Medicare premium is 0.50 per month and increases to 4.70 per month when the threshold – ,000 for individuals and 0,000 for couples – is reached and continues to increase as income increases.

Effective Jan. 1, 2013

n A new 0.9 percent payroll tax on individuals earning more than 0,000, or 0,000 for joint filers. Currently the Medicare payroll tax is 2.9 percent of all earned wages – with workers and employers each paying 1.45 percent. As an example, an individual who makes 0,000 a year in wages and ,000 a year in investments would not have to pay the new tax.

n A new 3.8 percent tax on unearned income generated from interest, dividends, capital gains, annuities, royalties and rents for individuals who earn more than 0,000 or couples who make more than 0,000. The tax will be imposed on the lesser of either net investment income; or modified Adjusted Gross Income (plus any excluded foreign income) over a threshold amount. The threshold amounts are 0,000 for joint filers and 0,000 for single filers. “Net investment income” does not include distributions from qualified plans or IRAs. Also affected are individuals who make a profit of more than 0,000 on a real estate sale or couples who make a profit of 0,000 on a real estate sale.

n A tax per participant on insured and self-insured health plans for funding comparative effectiveness research to be paid by insurance companies. In 2014, the tax increases to per participant and can increase based on a specific formula.

n Increase from 7.5 percent to 10 percent the floor on itemized deductions for medical expenses, but taxpayers age 65 and over are exempt from the cutback through 2016.


n Pharmaceutical companies will face a new excise tax based on the market share of the company.

n Most medical devices become subject to a 2.3 percent excise tax collected at the time of purchase.

n Health insurance companies become subject to a new excise tax based on their market share; the rate gradually raises between 2014 and 2018 and thereafter increases at the rate of inflation.

n Annual penalty of or up to 1 percent of income (whichever is greater) is imposed on individuals who do not obtain health insurance; this will rise to 5, or 2.5 percent of income, by 2016. Families have a limit of ,085. Exemptions to the fine include cases of financial hardship (where health insurance would cost more than 9.5 percent of an individual’s income) or religious beliefs.

n Employers with more than 50 employees who don’t offer full-time employees health insurance face a ,000 per employee penalty. Businesses with fewer than 50 employees are exempt from the requirement.

Effective 2018

n A new 40 percent excise tax on high cost (“Cadillac”) insurance plans is introduced. The tax is on the cost of coverage in excess of ,500 (family coverage) and ,200 (individual coverage), and increases to ,950 (family) and ,850 (individual) for retirees and employees in high-risk professions. The dollar thresholds are indexed with inflation; employers with higher costs because of the age or gender demographics of their employees may value their coverage using the age and gender demographics of a national risk pool.

Congressman Rogers’ makes his opening statement on Health Care reform legislation that is under debate in Congress.

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