As you may be aware of the PPACA ( afordable care act) while they say it is affordable, everything comes with a price. Here are 20 taxes that you need to be aware of. Some have already started, some will be starting in the future. Here we go…
Taxes that took effect in 2010
1) EXCISE TAX on CHARITABLE HOSPITALS– PPACA pages 1961-1971.- $50,000 per hospital if they fail to meet community health assessment needs as determined by the department of Health and Human Services ( HHS)
2) Codification of the “economic substance doctrine” (tax increase of $4.5 billion)- Reconciliation act pages 108-113.- This provision allows the IRS to disallow legal tax deductions and other tax minimizing plans because the IRS “deems the deduction lacks substance” and that it is merely intended to reduce taxes owed.
3) “Black Liquor” tax hike ($23.6 billion)- Reconciliation act page 105-This is a tax increase on a type of Bio-fuel.
4) Tax on Innovator Drug Companies (22.2 billion)- PPACA Pages 1971-1980. Annual tax on the industry imposed relative to share of sales made that year.
5) Blue Cross/Blue Shield Tax Hike–PPACA page 2004-The special tax deduction in current law for BC/BS companies would only be allowed if 85% or more of premium revenues are spent on clinical services
6) Tax on indoor tanning services ($2.7 billion) PPACA pages 2397-2399. New 10% excise tax on Americans using indoor tanning salons.
Taxes that took effect in 2011
7) Medicine Cabinet Tax –PPACA pages 1957-1959. Americans can no longer use health savings accounts or flexible spending accounts for over the counter medicines.
8) HSA Withdrawal Tax hike– PPACA page 1959– Increases tax on non-medical early withdrawals from an HSA account from 10% to 20%.
Tax that took effect in 2012
9) Employer Reporting of Insurance on W-2. PPACA page 1957– This is a Preamble to taxing health benefits on tax returns.
Taxes that take effect in 2013
10) Surtax on investment income– Reconciliation Act Pages 87-93. Creation of a new 3.8% surtax on investment income.
11) Hike in Medicare Payroll tax–PPACA pages 2000-2003, Reconciliation Act pages 87-93.
12) Tax on Medical Device manufacturers– PPACA 1980-1986-2.3% excise tax on Medical equipment retailing over $100.
13) High Medical Bills Tax ($15.2 billion) PPACA pages 1994-1995. Currently those facing high medical bills are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5% of Adjusted Gross Income (AGI). New provision is 10% AGI.
14) FSA cap-AKA “special needs kids tax”. PPACA pages 2388-2389. Imposes cap on FSA’s of $2500 ( currently unlimited) Indexed for inflation after 2013. There is one group of FSA owners whom this cap will be cruel to: parents of special needs children. There are thousands of families with Special needs children in the US. Many use their FSA’s for special needs education. These schools tuition can easily exceed $14,000 per year. Under tax rules FSA dollars CAN be used to pay for this type of special needs education.
15) Elimination of tax deduction for employer provided retirement RX drug coverage in co–ordination with Medicare Part D. PPACA page 1994
16) $500,000 Annual Executive Compensation Limit for Health Insurance Executives (PPACA pages 1995-2000)
Taxes that take effect in 2014
17) Individual Mandate Tax PPACA pages 317-337-Anyone not purchasing qualifying health insurance must pay an income surtax. In 2014 an individual will be 1% of AGI or $95. In 2015 2% or $325 and in 2016 2.5% of AGI or $695.
18) Employer Mandate Tax PPACA page 345-346-Applies to employers with 50 or more employees.
19) Tax on Health Insurers– PPACA pages 1986-1993– Annual tax imposed relative to premiums collected. Phases in gradually until 2018.
Taxes that take effect in 2018
20) Excise Tax on Comprehensive Health Insurance Plans. – PPACA pages 1941-1956 a 40% excise tax on “Cadillac” health insurance plans.
And these are things you should know. The source of this information is from Americans for Tax Reform. Thanks for reading!
Eric Wilson is President of I Sell Health, Inc. A Chicago area Health Insurance agency. He can be reached toll free at 888-448-5370