Healthcare Reform Bill Tax Implications


Healthcare Reform Bill Tax Implications

As tax season 2013 looms on the verge for all americans, I will be the first person to admit I am not a tax person. As I analyze various portions of the  affordable care act aka obamacare here is my take on the top 10 tax implications.  Its still unknown the massive impact it will have on the United States tax system, and how the IRS will follow-up with individuals regarding fines. On June 29th But most individuals want to know what are the Health Care Reform Bill Tax Implications?

The Affordable Care Act, was upheld through the US Supreme court. The Courts decision was based on the individual mandate being a tax penalty, which allowed the federal government to administer the mandate, even though Medicaid Expansion was left to the states. The most contentious part of the The Healthcare Reform Bill  was upheld By a vote of 5-4, The court specifically stated the requirement to buy health insurance can not be mandated by the federal government, and the government does not have the right to force citizens to purchase a product, especially across state lines. However the federal government does have the right to levy taxes, and as such chief Justice Roberts made the deciding vote, crossing party lines to uphold the Affordable Care Act, Obamacare as the law of the land, and for the time being limiting future federal court actions by the states. The remain justices vote 4-4 between upholding and striking down the Affordable Care Act


Healthcare Reform Bill Tax Implications

The Affordable care act goals of insuring an additional 25 million Americans will be accomplished through mainly two avenues. 1) Medicaid Expansion which was deemed to be a states choice by the Supremes, and the Individual mandate, which requires everyone to either have health insurance through an employer, private exchange or pay a Health Insurance Tax The penalty will be phased through 2016. Eventhough the Affordable Care Act invites individuals to purchase health insurance if they do not, a fee will be assessed, by the IRS

I logged onto the IRS website to see what they’re take is on these provisions, and the latest update regarding tax fines for the Affordable Care Act, here is what I have so far. This is a truncated list,  Please free to log on to the IRS site yourself for a full explanation on these key provisions, maybe you can give me some further details on what they mean. Below are 10 Tax provisions, that will ultimate effect you financially.

10 Obamacare Tax Provisions

Medicare Part D  $250 Rebate

The Affordable Care Act will  allow a one time $250 rebate in 2010 to assist Medicare Part D recipients whose medicare drug coverage gap has been met. This Rebate payment will not be taxable, thus allowing you to full benefit from the $250. This payment will be recieved from the Internal Revenue Service. Please visit for more information.

Obamacare Flexible Spending Accounts (FSA)

Most of us have probably experience this if we have an FSA account. Starting in 2011 the cost of an over-the-counter medicine or drug cannot be reimbursed from Flexible Spending Arrangements (FSAs) or health reimbursement arrangements unless a prescription is obtained. Simple things such as Tylenols, and cold medicine are no longer reimbursable through an FSA account.This does not affect insulin, even if purchased without a prescription.  The changes excludes other expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.  This standard went into effect for all purchases made after Jan. 1, 2011. The same rules went into effect on Jan. 1, 2011, for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs)

Starting in January 2013, The amount that can be contributed towards FSA will be decreased. Notice 2012-40 provides information about these rules and flexibility for employers applying the new rules.

Obamacare Excise Tax on Tanning

Moving forward a 10% tax will be placed on all indoor tanning services. This Affordable Care Act tax, was one of the first things that went into service, due to the size of the tanning population not much fuss was made. The tax will be charged on quarterly basis. Through Quarterly Federal Excise Tax Return. There is an exception for gyms that may offer tanning services as part of a membership package.

Obamacare Adoption Credit

The Affordable Care Act, promotes adoption by raising the maximum adoption credit amount to $13,360 this is up from $12,150 from 2009.  The tax credit will be refundable from the previous year, i.e. if you’re a eligible taxpayer, you can get it as a cash refund even if you owe no tax. The credit is focused on helping with all the fees and expenses associated with adoptions such as court, attorney, travel and other expenses associated with completing a legal adoption. It is recommend for all qualifying taxpayers to include legal adoption documents to help facilitate receiving the the refund.

Obamacare Dependent Children Coverage Age expanded

The Affordable Care Act, makes it possible for parents to keep their children on their health Insurance policies until they are 27. However the The Affordable Care Act now make it tax free for parents to pay for that additional premium, before parents would have to pay taxes on the additional cost ensuring a dependent child pass the age requirement. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return.


Obamacare Medical Device Excise Tax

A 2.3% percent tax will now be charged on all medical device. This will be known as as the medical device excise tax. This tax will be levied on all manufactures and importers of medical devices. These individual companies will pay the sales tax starting in January 2013.

Obamacare Small Business Health Care Tax Credit

Due to the Affordable Care Acts requirement for all small businesses to provide insurance for their employees based on the number of employees on the books. There will now be a small business tax credit, this is aimed at helping and encouraging small employers to offer insurance coverage for their employees. the credit is available to small employers that pay at least half the cost of single coverage for their employees.There will also be a Health Insurance Tax for companies that do not provide health insurance benefits

Obamacare Reporting Employer Provided Health Coverage in Form W-2

In order to provide greater transparency to the cost of Health Coverage in America, The Affordable Care Act now requires employers to report the cost of health coverage under an employer plan within the employees W-2 form, box 12 using code DD. This is the form you get every year that aids you in filing your tax return.  Note: This amount does not have any impact on your tax liability or taxes, this is for employees information purpose, and help keep consumers more informed.

Obamacare Medicare Shared Savings Program

In order to help reduce overall healthcare cost, The Affordable Care Act establishes a Medicare shared savings program (MSSP) encouraging Accountable Care Organizations (ACOs) to facilitate better, and more cooperation among providers in effort to improve the quality of care provided to reduce unnecessary costs.  Please read Notice 2011-20 for more details.


Obamacare Health Insurance Premium Tax Credit

Starting in 2014, individuals and families will be eligible for various tax subsidies  Please use this Health Insurance Tax Calculator to calculate if you qaulify. Individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. The Medicaid requirements in various states that will be part of the Medicaid Expansion program will now be available. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. On May 18, 2012, the final regulations were issued by the IRS , this regulation, provides  guidance for individuals who enroll in qualified health plans through Exchanges and claim the premium tax credit, and for Exchanges that make qualified health plans available to individuals and employers.

All exchange laws and requirements will not be effective until 2014



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