Good Neighbor Insurance, Inc (www.gninsurance.com) is keeping up with the changes in our US health care system and will be, over the course of the next months and years, expanding this section with up-to-date information. Health care overhaul will bring change but it is going to happen slowly. There will be a lot of minor as well as major changes over the course of the next few years with a bulk of these changes happening in 2014 and the last parts being implemented by 2018. Keep in mind that there will probably be additional regulations coming in the next few years to expand on what has become law signed on March 22nd, 2010.
In this article you will find some key taxes and fees that may be applicable to you. Please realize this is not all the taxes and fees that have become law and we will be providing more updates shortly.
TAXES AND FEES ON INDIVIDUALS AND FAMILIES
1. Starting in 2014, tax on individuals without acceptable health care coverage. These dollar amounts are not adjusted for inflation. (A) A 2.5% income tax on individuals who do not have health care coverage, but the fine cannot be more than what the government states is the average annual premium for an individual insurance plan in a stated year. (B) High income tax payers making a joint (family) return over $250,000 and a standard (single)return of over $200,000 are required to pay an additional 0.5% of wages whether you are self-employed, on a 1099, or a W-2 employee. (C) A 1% tax increase for individuals making $350,000-$499,999 and couples making $500,000 – $999,999. (D) A 1.5% tax increase for individuals making $500,000 – $999,999 and couples/families making $1 million or more.
2. Starting in 2012, Medicare, www.gninsurance.com/medicare.asp, payroll tax on investment income will be expanded to include unearned income (unearned income could be such vehicles like 401k, IRA’s, ROTH IRAs, and other stocks and bonds).
3. Starting in 2012, there will be a 3.8% tax on investment income for individuals making more than $200,000 per year and for families making more than $250,000 per year.
4. Starting in 2011, there will be an increase in taxes on distribution from health savings accounts and Archer medical saving accounts not used for medical purposes. This means that the monies you have in these two types of accounts are to be used for qualified medical expenses. If not used for qualified medical expenses, the tax on non-medical products and services you used will be increasing from 10% to 20%.
5. Starting in 2018, a policyholder will be paying an excise tax on high cost, employer-sponsored health coverage of up to 40% on plans that are greater than predetermined levels (also called “Cadillac” high-end insurance plans). For example, if your company’s yearly premium (what you pay and what your employer pays together) is higher than $10,200 for self/individual plan than you will be taxed 40% anything over $10,200. The same goes for a family with premiums higher than $27,500 annually.
TAXES AND FEES ON SMALL BUSINESS
1. Starting in 2014, a small business (when talking about the new health insurance law the US government states that small businesses employ 2 to 49 employees) that already offers group insurance can pay a $3,000 per-year tax on each employee if that employee qualifies and accepts government health care premium subsidies or government-run health care. Thus, if the employee takes the government-run plan over the employer’s plan even for one month of the calendar year the employer will have to pay a $3,000 annual tax. This can happen even though the employer’s plan may have stronger benefits than the government-run plan. Government-run plans can be Medicare, Medicaid, CHIPS, Veteran, and other possible State government plans including exchanges. This also is applicable if your employee’s spouse takes any government-run plan you as an employer will be liable for this $3,000 tax. Thus, the employer of your employee’s spouse and you will be paying a total of $6,000 annual tax if one takes any government-run insurance plan.
2. Businesses electing not to have group coverage for their employees will be charged an 8% tax on payroll. This tax will be applied for each employee not meeting the government’s minimal coverage requirement.
3. A small business could incur two types of taxes for the same employee if the employer does not provide group insurance and if an employee receives premium subsidies from the government to help pay for health insurance.
Doug Gulleson loves to scuba dive overseas. He makes sure he always takes his credit card AND international travel insurance. Visit Good Neighbor Insurance at dev.gninsurance.com for a FREE Arizona quote or if you are needing trip cancellation coverage please go to www.gninsurance.com/tripcancellation/ .