The Affordable Care Act is a far-reaching topic, changing the way healthcare is accessed and delivered in the US. While many aspects of the Affordable Care Act do not roll out until 2014, the tax component has gone into effect, and taxpayers need to be prepared for the tax bill that accompanies the act.
Medicare Payroll Tax - Thosewho make more than $200,000 annually or any married couple who makes more than $250,000 annually will pay a 2.35% Medicare payroll tax, up from 1.45%. This tax will largely affect taxpayers in high-income households.
Unearned Income Tax -. A surtax of 3.8% will be imposed on unearned income, such as taxable capital gains, dividends, rents, royalties and interest for single taxpayers who make more than $200,000 and married couples who make more than $250,000.
More Limitations on Flexible Spending Accounts - Flexible spending accounts are used to put money away on a pretax basis for eligible medical expenses. In 2013, there is a $2,500 limit to the amount of money you can put in a flexible spending account. The limit for dependent care remains at $5,000.
Cadillac Health Insurance Plan Tax – Asteep 40% penalty for being enrolled in a health insurance policy that costs $10,200 or more for a single member or $27,500 or more for a family will be imposed in 2018. This tax is causing many health insurance carriers to lower costs and many citizens to find a lower-cost health insurance policy.
On the other hand, some Medicare benefits are being cut, and some illnesses or surgeries previously considered appropriate for an overnight hospital stay are now considered outpatient, resulting in increased billings. If you typically claim unreimbursed medical expenses on your tax return: You may not get to do so now — they must be 10 percent of your income, up from 7.5 percent in the past.
The Affordable Care Act is long reaching and affects everyone regardless of what tax bracket you fall into. This legislation is all set to bring in sweeping changes to the US healthcare system, providing better care for patients and ensuring the long-term viability of the industry by embracing the reforms.