Texas Health Insurance – It’s been more than three months since President Obama signed the Patient Protection and Affordable Care Act into law and, whether a person is “for” or “against” health care reform, no one can deny that the system is headed for some changes.
Keeping up with the 906-page bill is a job in itself and, as Gunnip & Company Partner James Selsor points out, the reform won’t only affect your Texas health insurance.
“It’s been pushed as a health care bill, but a lot of it is a tax bill,” Selsor said,
Here are four things Selsor recommends every taxpayer be aware of:
1. Few things will happen overnight. A host of different health care reforms are set to phase in between now and 2018, Selsor said. The controversial everyone-must-have-health-insurance part of the bill doesn’t begin taking effect for three more years, though taxpayers will start seeing boxes on their W-2s next year listing the costs of their health insurance, Selsor said. For now, the IRS will use that box for informational purposes only, he said, but it will eventually be used to tax so-called “Cadillac” health insurance plans that offer expensive benefits, he said.
2. Penalties for the uninsured. Starting in 2014, taxpayers who aren’t covered by a health care policy will be subject to a tax called the “shared responsibility penalty,” Selsor explained. That tax starts out at 1 percent of income, or $95, and slides up to 6.5 percent of income over the next several years. “The bill mandates health insurance for individuals, but it doesn’t mandate that employers provide the insurance,” he said, so taxpayers may need to purchase insurance themselves to avoid the penalty. Many states are staring health insurance exchanges in 2013 to give folks options when purchasing coverage.
3. Taxing the rich. Wealthy people will be hit with two different taxes in 2013 and the revenue from both will be used to fund health care reforms, Selsor said. Single taxpayers who earn more than $200,000 ($250,000 for married couples filing jointly) will pay a 3.8 percent tax on any unearned income exceeding that threshold. Also, individuals who earn more than $200,000 ($250,000 for married couples filing jointly) will pay an additional 0.9 percent in Medicare taxes.
4. Help for small businesses, penalties for larger businesses. Some businesses that have less than 25 employees with averages wages of less than $50,000 are eligible for a 35 percent credit on health insurance premiums if they offer insurance plans for employees, Selsor explained. But businesses with more than 50 employees will be subject to penalties starting in 2014 if they don’t provide adequate insurance coverage for their workforce, he said.