Health Care Reform: Tax Hikes on the Way - Kiplinger Take a look at what’s coming down the road, starting with provisions that take effect first: •A new 10% excise tax on indoor tanning services that takes effect for services provided after June 30, 2010. •Giving small firms tax credits as incentives to provide coverage, starting this year. Employers with 10 or fewer workers and average annual wages of less than $25,000 can receive a credit of up to 35% of their health premium costs each year through 2013. The credit is phased out for firms larger than that and disappears completely if a company has more than 25 employees or average annual wages of $50,000 or more. Beginning in 2014, small firms that sign up with one of the health exchanges to be created can receive a credit of up to 50% of their costs. •A requirement that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with W-2s for 2011. •Elimination, after this year, of a deduction employers now take for providing Medicare Part D prescription drug coverage to their retirees to the extent that the federal government subsidizes the coverage. This will not take effect until 2013. •Doubling the penalty for nonqualified distributions from health savings accounts, to 20%, beginning in 2011. •A limit on the amount that employees can contribute to health care flexible spending accounts to $2,500 a year. Under the House package of changes, the cap won’t take effect until 2013. •A ban on using funds from flexible spending accounts, health reimbursement arrangements or health savings accounts for the cost of over-the-counter medications, starting in 2011. •Imposing a 0.9% Medicare surtax on wages of single taxpayers earning more than $200,000 a year and couples earning over $250,000, starting in 2013. In addition, the House’s package of modifications would levy a special 3.8% Medicare tax on the unearned income of those taxpayers. The House defines unearned income as interest, dividends, capital gains, annuities, royalties and rents. Tax-exempt interest would not be included, nor would income from retirement accounts. •A hike in the 7.5% floor on itemized deductions for medical expenses to 10%, beginning in 2013. But taxpayers age 65 and over are exempt from the cutback through 2016. •A new 40% excise tax, beginning in 2013, on high-cost health plans, defined as those providing coverage in excess of $8,500 for individuals and $23,000 for families. The House’s package of modifications includes higher threshold amounts and an initial effective date of 2018. •A new tax on individuals who don’t obtain adequate health coverage by 2014. The tax is be phased in over three years, starting at the greater of $95, or 0.5% of income, in 2014, and rising to the greater of $750, or 2% of income, in 2016. The House passed companion measure would modify this provision so that a person without coverage in 2014 would pay the greater of $95, or 1% of income, and in 2016 would pay the greater of $695, or 2.5% of income. •Providing a refundable tax credit, once the individual mandate takes effect in 2014, to help low-income folks purchase coverage. To be eligible, a person’s household income must be between 100% and 400% of the federal poverty level, generally around $11,000 to $44,000 for singles and $22,000 to $88,000 for families. •A nondeductible fee charged to businesses with 50 or more employees if the firms fail to offer adequate coverage. The fee will equal $750 times the number of workers in the firm, and is slated to go into effect in 2014. The House’s package of modifications would increase that fee to $2,000 times the number of employees, though it would not count the first 30 workers in that calculation.
So much for the argument that the fine would be as much as insurance! It seems to me people could pay the $95 and not have insurance until it is needed. That should drive some insurance companies out of business.
To pay a $95 fine, you would have to be making $9500 or less. Someone making $80,000 would pay a fine of $2,000. Germany has mandatory insurance and they have over 200 thriving health insurance companies. The health insurance industry backed the health law, once the public option was dropped, because it will provide more business. The drug industry will get more business as well. I sold Wal-Mart and John Deere this week to buy Lilly and Cigna and I moved some small-cap funds into health-care funds. Capitalism thrives!
Even at that rate when you compute what we make, it is still less than what we are paying for insurance.
Kiss your money good bye. I wonder if Germany requires insurers to cover pre existing conditions with no adjustment in premiums. It's not possible to make money that way. You have to have the revenue to offset the huge exposures. Single payer (public health insurance) is inevitable under this plan.
Or the government could just further regulate the existing insurers, basically taking them over, and set the rates and prices themselves. Like Germany, it wouldn't matter how many providers there were, they would all essentially be controlled by the government, which would be no different than single payer.
I thought of another health care change according to Obama. He said basically that the insurance companies would pay us in order to cover us, 3000%, did he not?
The pharmaceuticals are going to have a guaranteed increase in business. Their lobby got in a lot of language that benefits them. Private industry is going to be the major player in this business. Ambitious and innovative companies are going to profit by it. And investors, too. It's a law, now. And public health insurance simply isn't in it.
