Here's an article I just published in the local newspapers. :)
Health Care Changes, part I in a series
By: Catarina Toumei
One of the major economic and financial discussions today is that President Obama recently signed into law a multi-trillion-dollar health care bill that was quickly pushed through legislation without the opportunity for reflection. What does this mean for you?
The rising costs of health care will affect your financial decision-making and portfolio, whether you are an individual or business owner. Buried within the contents of the more than 2,000-page bill - as well as the separate 383-page manager’s amendment, and a 276-page Indian Health Care reauthorization - are trillions of dollars in new government spending and many new taxes for individuals, business owners, and companies. This week’s column will focus on the changes in taxes for individuals.
The health care law is a prescription for higher taxes:
Ø No Hope in these Changes:
· All US citizens and legal residents must pay a fine to the IRS if they do not comply with the mandate to purchase government-run health insurance (except in cases of financial hardship, and religious objections ). The mandates will raise an estimated $15 billion from taxes over ten years, according to the Joint Committee on Taxation.
· All Business owners will be required to provide insurance and comply with the mandate for government health insurance or else pay steep fines. The mandates would raise $28 billion from taxes over ten years.
· A new tax on investment income for singles earning over $200,000 and families earning over $250,000 will be 3.8 percent. Active income from certain business ownership stakes and expenses, and distributions from retirement plans will be exempt.
· A 0.9 percent increase in the Medicare payroll tax on couples making more than $250,000 and individuals making more than $200,000. These taxes will raise $86.8 billion over ten years from taxes.
· Elimination of the deduction for the Medicare Part D (prescription) subsidy.
· Higher premiums and dropped coverage for more than 10 million seniors is expected due to cuts to Medicare Advantage plans.
· A new 40 percent excise tax on high-cost plans, the excess cost of employer-sponsored plans above threshold amounts. The provisions would raise $148.9 billion over ten years from taxes.
· A 40 percent tax on all government health plans regardless of the purchaser’s income.
· A new consumer sales tax of 2.3 percent on medical devices.
· Elimination of reimbursement for over-the-counter pharmaceuticals from Health Savings Accounts, Medical Savings Accounts, Flexible Spending Arrangements, and Health Reimbursement Arrangements to individuals. Also, an increase in the penalties for non-qualified HSA withdrawals from 10 percent to 20 percent. These provisions would raise taxes by $6.3 billion over ten years.
· Caps on FSA contributions; contributions can only total $2,500 per year, subject to annual adjustments linked to the growth in general (not medical) inflation. (At least 8 million individuals hold insurance policies eligible for HSAs, and millions more participate in FSAs. All these individuals would be subject to additional coverage restrictions - and tax increases - under this provision.)
· Raised threshold to itemize health expenses from 7.5 percent to 10 percent of adjusted gross income. This provision would raise taxes by $15.2 billion.
· Cap the deductibility of insurance industry executives’ salaries at $500,000, raising $600 million from new taxes.
The new health law will unfold over the next few years, with many of the highly controversial provisions not taking effect until after the 2012, and the real costs of the bill only becoming evident in 2014, although billions of dollars in new taxes and fees take effect sooner.
Join us next week as we will discuss the changes and taxes to companies, industries and the economy due to the new health law.
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