health care legislation
The Patient Protection and Affordable Care Act and the Health care and Education Reconciliation Act of 2010 were both signed into law in March, 2010. The provisions will be phased in over several years. The summary below is not all-inclusive, but covers some of the key features.
2010:
- A tax credit of up to 35% is available for employers with no more than 25 full-time equivalent employees and with average annual wages not in excess of $50,000. There is some phase out of the credit beginning with 10 Full-Time employees and average annual wages over $25,000.
- Health care coverage is extended to dependent children under age 27.
- A High-Risk pool is established for people with pre-existing medical conditions.
- Group and individual plans are prohibited from placing lifetime dollar limits on coverage.
- Insurers are prohibited from rescinding coverage except in cases of fraud.
2011:
- The maximum tax credit discussed above increases to 50%.
- The cost of employer sponsored health coverage must be included on the W-2 (information only - this does not make it taxable).
- The cost of over-the-counter drugs cannot be reimbursed on a tax-free basis through an HSA or MSA nor reimbursed through an FSA or HRA.
- A Simple Cafeteria Plan became available for small businesses.
- Grants available to small employers who establish wellness programs.
- Higher Part D premiums begin for those with incomes over $85,000 ($170,000 for couples).
2012:
- NOTE: the following provision was revoked: Information reporting for corporations - the current exclusion for filing Form 1099 for corporate providers of property or services of more than $600 in a year was intended to disappear.
2013:
- The threshold for claiming medical deductions on Schedule A will be increased from 7.5% to 10% for those under age 65. In 2016, the 10% hurdle will be extended to those age 65 and older.
- The deduction for employer Part D will be eliminated.
- There will be a Hospital Tax of 0.9% on earnings over $200,000 ($250,000 for joint filers).
- A 3.8% surtax will be applied on net investment income on those taxpayers with Modified Adjusted Gross Income in excess of $200,000 ($250,000 for joint filers). Investment income includes interest, dividends, anuities, rents and royalties, but not tax-exempt income.
- A $2,500 limit will be applied to FSA's.
- NOTE: the provisions related to tax increases have been under attack, so we will need to watch for final resolution.
2014:
- A penalty will be imposed on those remaining uninsured. NOTE: this provision is also under litigation.
- Low-income tax credits will be available for those participating in health exchanges.
- Employers who had at least 50 full-time employees in the previous year must offer certain coverage or pay a penalty.
- There will be new employer reporting responsibilities.
2018:
- An excise tax will be imposed on high-cost employer-sponsored health plans.