Health Reform: More Gory Details

April 1, 2010

Now that we actually have something in writing on all of this health care “reform” jazz, consider a few more of the gory details–lowlights indeed:
1.     For tax years beginning in 2014, we and thee will have to maintain minimum essential coverage or pay a penalty. And by 2016, if you fail to maintain coverage, get ready to pay as much as $2,085 per household!
2.     Also starting in 2014, tax credits will be available for individuals and families with incomes up to 400% of the federal poverty level ($88,200 for a family of 4) who are not otherwise eligible for coverage through Medicaid, or their employer. These lucky folks will have to purchase their coverage from a newly established “insurance exchange” in their state, in order to obtain their tax credits.
3.     And employers of 50 or more who don’t offer insurance coverage to their employees, or who do offer coverage which Big Brother deems “unaffordable” will, of course, be subjected to a new penalty.
4.     And even if employers do offer minimum essential coverage to employees after 2013, and pay a portion of that coverage, they will have to provide qualified employees with a voucher whose value can be applied to purchase of a health plan through the insurance exchange if those employees don’t participate in the employer’s plan, and whose required contribution exceeds a certain amount, and whose total household income does not exceed 400% of poverty level.
5.     For tax years beginning in 2018, a 40% (nondeductible) excise tax will be assessed against insurance companies and plan administrators for any health plan to the extent the annual premium exceeds $10,200 for single persons and $27,500 for a family.
6.     We already mentioned (last week) the additional “hospital insurance tax” of 0.9% on “high income” workers–those making over $200,000 ($250,000 jointly), and the surtax on unearned income of 3.8% (the “unearned income Medicare contribution”) which starts in 2013.
7.     And here’s another “incentive” which will make insurance professionals run for the exits: a new deduction limit (of $500,000 annually) on executive compensation if at least 25% of an insurance company’s gross premium income is derived from health insurance plans.
8.     And if you’re a pharmaceutical company, get ready to pay an annual flat fee, starting in 2011, allocated to all companies proportionally, in the annual amount of $2.5 billion, increasing gradually to $4.1 billion in 2018. Just makes the industry want to run right out and keep spending other billions in the development of new, better pharma products, doesn’t it?
9.     And back to health insurance providers–that industry as well can look forward to an annual flat fee on the sector as a whole, starting in 2014 at a level of $8 billion and increasing annually to $14.3 billion by 2018. Will there be any such providers left by then?
10. And don’t forget the indoor tanning industry which, beginning July 1 of this year, will get clipped with a 10% excise tax on indoor tanning services provided.
So go get your indoor tan before the price goes up.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
            Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He is also a contributor to the recently published 13th edition of Tax Savvy for Small Business, published by Nolo. He can be reached at 831-7288, and welcomes comments below.

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