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President Obama has signed into law sweeping
new health care reform! The legislation is in
two parts consisting of the "Patient Protection and Affordable Care Act
(H.R.
3590)", and the "Health Care and Education Reconciliation Act of
2010 (H.R.
4872)". These bills were signed into
law on March 23, 2010 and March 30, 2010 respectively.
While the
primary purpose of this reform is to mandate that all U.S. residents
obtain health insurance coverage, the law creates many tax credits and
penalties on employers and taxpayers for failure to do so. In addition,
there are several new rules that were created to raise the necessary
funds to pay for this reform. Many of these provisions do not become
effective until year 2011 or later. See the timeline below:
Tax Year 2009
Tax Year 2010
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Health
insurance coverage and reimbursements for
children under
age 27 excluded from gross income;
-
10% excise tax on certain
indoor tanning
services beginning July 1, 2010;
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Adoption credit increased to $13,170. It is now a refundable
credit. The credit has also been extended through 2011;
-
Small business health care tax
credit created;
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$250
one-time rebate is not taxable for people who reach the Medicare
prescription drug coverage gap in 2010 (Medicare Part D).
Tax Year 2011
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Employers are no longer allowed to deduct from their taxes the value
of benefits bought for retirees with government subsidies in order
to provide retiree prescription drug coverage under Medicare Part D;
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Businesses must begin reporting the value of health care benefits on
employees' W-2 statements (NOW OPTIONAL FOR
2011). These benefits are NOT taxable;
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Money in
flexible spending arrangements (FSA's), health savings accounts (HSA's),
Archer medical savings accounts (MSA's), and other health
reimbursement arrangements (HRA's) CANNOT be used for
over-the-counter medicines unless they are prescribed by a doctor.
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The
penalty for using health savings account (HSA) funds for
non-qualified medical expenses increases from 10% to 20%. The
penalty for using an Archer medical savings account (MSA) for
non-qualified medical expenses increased from 15% to 20%.
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Simple
Cafeteria Plans - Small employers that employed an average of 100 or
fewer employees during the previous two years can establish a simple
cafeteria plan. A simple cafeteria plan is deemed to meet the
stricter nondiscrimination requirements of traditional cafeteria
plans. Simple cafeteria plans must still meet certain contribution
and eligibility requirements.
Tax Year 2012
Tax Year 2013 and Beyond
This will be updated as we get closer to year 2013
View the Entire Acts (Bills)
Passed By U.S. Congress
Download
Patient Protection and Affordable Care Act
Download
Health Care and Education Reconciliation Act of 2010
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