Written by John S. Kampfe, Staff Accountant
Recently, the Supreme Court ruled to uphold some parts and reverse other parts of the Patient Protection and Affordable Care Act of 2010. Two main issues were decided as a result of a landmark court case which challenged the act’s constitutionality. First, the Supreme Court upheld the individual mandate, which requires almost all Americans to obtain health insurance by 2014, or be forced to pay a tax. Second, the Supreme Court ruled that the Federal Government cannot constitutionally require individual states to expand their Medicaid programs.
What does this mean for you now?
- Many children up to age 26 will be able to stay on their parents’ health insurance plan until they are 26.
- Adults with pre-existing conditions will be able to buy insurance from temporary high-risk pools until 2014, at which time coverage can no longer be denied for pre-existing conditions.
- Children can no longer be denied insurance because of pre-existing conditions.
What does this mean for you down the road?
- Beginning in 2013, the Medicare tax rate increases by 0.9% on wages over $200,000 ($250,000 for married couples). A new 3.8% tax will also be assessed on a portion of investment income for the same high income taxpayers.
- Beginning in 2014, employers with 50 or more full-time equivalent employees will be required to provide health insurance as a benefit to their employees. Employers with 50 or more full-time equivalent employees who do not do so will be required to pay a penalty. The penalty for not providing health insurance will be $2,000 per full time employee.
- Most Americans will be required to purchase Health Insurance by 2014, or pay a tax of up to 2.5% of their household income for deciding not to do so.
There are many more tax implications that will affect both businesses as well as individuals in the coming years as a result of the Affordable Care Act. Click here for a more inclusive list of the current and upcoming changes, organized by the year when they are effective.
Now is the time to start planning ahead for the coming tax changes. For more assistance, or to discuss any questions you may have related to these issues, please contact any one of HBE’s trusted advisors at 402.423.4343.