Good Neighbor Insurance (www.gninsurance.com and www.gninsurance.com) is continuing to update our clients on the new health insurance laws that were signed into law in the spring of 2010. There are six major coverage options for those in the US and even though some of the rules and regulations are similar for all many differences are there and it all depends on how old you are and for whom you work. Many critical details of this new insurance law will be clarified in the months and years to come.
These six major coverage options are:
(1) Individual or family coverage (private health care plans)
(2) Employee/employer group option for small businesses (typically under 50 employees)
(3) Employee/employer group option for large businesses (typically larger than 50 employees)
(4) Exchange options through the state you are residing in (fully integrated 1-1-2014 and are quasi-government and private insurance coverage combined)
(5) Medicare (which include Parts A, B, C, and D) for those 65 years onwards
(6) Full government health plans like Medicaid, CHIP, TRICARE, VA and other coverage plans as may be designated by the Department of Health and Human Services based mostly on financial criteria and/or military service.
Below is a list of tax hikes that were signed into law on March 2010 under the new health care law President Obama signed into law.
Note: AGI means adjusted gross income
$500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 billion/Jan 2013)
“Black Liquor” Tax Hike (Tax hike of $23.6 billion). This is a tax increase on a type of bio-fuel.
Blue Cross/Blue Shield Tax Hike ($0.4 billion/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services
Charitable Hospitals Excise Tax (Min$/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS
Codification of the “economic substance doctrine” (Tax hike of $4.5 billion). This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed.
Comprehensive Health Insurance Plans Excise Tax ($32 billion/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). For early retirees and high-risk professions exists a higher threshold ($11,500 single/$29,450 family). CPI +1 percentage point indexed.
Corporate 1099-MISC Information Reporting ($17.1 billion/Jan 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers
Employer Mandate Tax (Jan 2014): If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. This provision applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).
Employer Reporting of Insurance on W-2(Min$/Jan 2011): Preamble to taxing health benefits on individual tax returns.
Flexible Spending Account Cap – aka “Special Needs Kids Tax” ($13 billion/Jan 2013): Imposes cap of $2500 (Indexed to inflation after 2013) on FSAs (now unlimited). . There is one group of FSA owners for whom this new cap will be for parents of special needs children. There are thousands of families with special needs children in the United States and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
Health Insurers Tax ($60.1 billion/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. The stipulation phases in gradually until 2018, and is fully-imposed on firms with $50 million in profits.
HSA Withdrawal Tax Hike ($1.4 billion/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Individual Mandate Excise Tax (Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay income surtax according to the higher of the following
|1 Adult||2 Adults||3+ Adults|
|2014||1% AGI/$95||1% AGI/$190||1% AGI/$285|
|2015||2% AGI/$325||2% AGI/$650||2% AGI/$975|
|2016 +||2.5% AGI/$695||2.5% AGI/$1390||2.5% AGI/$2085|
Indoor Tanning Services Tax ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons
Innovator Drug Companies Tax ($22.2 billion/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.
Investment Income Surtax ($123 billion/Jan. 2013): This increase involves the creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income
|2011-2012 (current law)||20%||39.6%||39.6%|
|2011-2012 (Obama budget)||20%||20%||39.6%|
|2013+ (current law)||23.8%||43.4%||43.4%|
|2013+ (Obama budget)||23.8%||23.8%||43.4%|
Medical Device Manufacturers Tax ($20 billion/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exemptions include items retailing for less than $100.
Medicare: Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D ($4.5 billion/Jan 2013)
Medicare Payroll Tax ($86.8 billion/Jan 2013): Current law and changes:
|All Remaining Wages
|Health Tax Hike||1.45%/1.45%
Medicine Cabinet Tax ($5 billion/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin)
Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI ($15.2 billion/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI; it is waived for 65+ taxpayers in 2013-2016 only.
Doug Gulleson loves to scuba dive overseas and makes sure he has his US health care and overseas health care, http://onlineglobalhealthinsurance.com/my-travel-guard.asp , information with him at all times when he travels Keep our blog close by you, www.gntravelinsurance.com, for continual updates on the changes with the US health care system.