Health Care Update

On June 28, 2012, the Supreme Court upheld the Affordable Care Act, ruling that is was constitutional. 

The following will go into effect in 2013:

1) Flexible Spending Accounts (FSA's) that are employer-provided will be limited to $2,500

2) If wages are over $200,000 ($250,000 for MFJ; $125,000 for MFS), the hospital portion of FICA tax will be increased from 1.45% to 2.35%.

3) Medical expenses will only be deductible as an itemized deduction in the amount that exceeds 10% of AGI (7.5% for those that are 65 by the end of the year).

4) Net invest income will be subject to a 3.8% surtax if modified AGI is over $200,000 ($250,000 for MFJ; $125,000 for MFS).

5) Medicare Part D Eligible retirees whose employers provide qualified prescription drug coverage, the deduction will be reduced by the amount of excludable subsidy.  

The following will go into effect in 2014:

An individual may be penalized for not having the required health care coverage.  The monthly penalty will be the greater of a percentage of household income or a flat fee.

For a more in depth look at this please read CCH's Tax Briefing on the subject.