2010 American Institute of CPAs
What Does Health Care Reform Mean for You?
Updated as of November 2010
Today’s Presentation
> New legislation and challenges
> Importance of being prepared and informed
> Overview of key provisions, rules and requirements, and what they mean to you
> 2010 to 2014 effective dates
> Q&A
2
2010 American Institute of CPAs
2010 Health Care Reform Legislation
> Patient Protection and Affordable Care Act
> Health Care and Education Reconciliation Act of 2010
> Legislation’s impact − substantial and long term
3
2010 American Institute of CPAs
Provisions
> National high-risk pool
> Lifetime limits and serious illness
> Pre-existing condition exclusion
> Dependent care coverage
> Medicare taxes
> Itemized deduction threshold for unreimbursed medical expenses
> Mandatory insurance coverage
> Premium assistance credit
> Adoption credit
> Adoption assistance program exclusion
> Health FSAs, HSAs, HRAs and Archer MSAs
> Indoor tanning services
4
2010 American Institute of CPAs
National High-Risk Pool
> Temporary high-risk pool and subsidized coverage for adults with pre-existing conditions available through 2013
> Pre-existing conditions no longer excluded beginning 2014
> Pool dissolves in 2014
5
2010 American Institute of CPAs
Lifetime Limits and Serious Illness
> No lifetime limits on coverage allowed
> No policy cancellations for serious illness allowed
> Effective: September 23, 2010
6
2010 American Institute of CPAs
Pre-Existing Condition Exclusion
> Plans may not exclude children due to pre-existing conditions
> Effective: September 23, 2010
7
2010 American Institute of CPAs
Dependent Care Coverage
> Employer-provided accident or health plans
> Reimbursements excluded from taxable income for dependents up to age 27 (effective March 30, 2010)
> Continued coverage for adult child until age 26 (effective September 23, 2010)
8
2010 American Institute of CPAs
Medicare Taxes
> 0.9% increase depending on wages and filing status
> 2.35% Medicare tax rate
> 3.8% tax on investment income or modified adjusted gross income (MAGI) over the above limits depending on filing status
> Effective: 2013
9
2010 American Institute of CPAs
Itemized Deduction Threshold for Unreimbursed Medical Expenses
> Increased itemized deduction threshold – 10% of adjusted gross income (AGI)
> Age-based exception – remains at 7.5% if individual/individual’s spouse has turned 65 before close of tax year (to expire after 2016)
> Effective: 2013
10
2010 American Institute of CPAs
Mandatory Insurance Coverage
> Individuals are required to have health insurance
> Penalties for non-compliance based on fixed amount or percentage of income over filing thresholds
> No criminal penalties, or IRS liens or seizures
11
2010 American Institute of CPAs
Mandatory Insurance Coverage
Exceptions
> Insurance cost exceeds 8% of income
> Incarcerated individuals
> Members of Native American Indian tribes
> Individuals not legally present in US
> Individuals claiming religious conscience exemption
> Effective: 2014
12
2010 American Institute of CPAs
Premium Assistance Credit
> Refundable tax credit
> Treasury payment directly to insurer
> Income-based eligibility
> Inflation adjustment
> Effective: Years ending after December 31, 2013
13
Adoption Credit
> Maximum $13,170 credit per eligible child
> Applies to both non-special-needs and special-needs adoptions
> Refundable credit
> Inflation adjustment for new dollar limit and credit phase-out
> Effective: 2010
14
Caution: Credit reverts to $6,000 and available for special-needs children only after December 31, 2011
2010 American Institute of CPAs
Adoption Assistance Program Exclusion
> Maximum $13,170 per eligible child exclusion for employer-provided adoption assistance programs
> Inflation adjustment for new dollar limit and income limitations of exclusion
> Effective: 2010
15
Caution: Income exclusion goes away after 2011.
2010 American Institute of CPAs
Health FSAs, HSAs, HRAs and Archer MSAs
> Increased penalty for non-health withdrawals from HSAs (10% ti 20%) and Archer MSAs (15% to 20%) (effective 2011)
> No over-the-counter drug purchases from health FSAs, HSAs, HRAs or Archer MSAs (effective 2011)
> Health FSA contribution limit of $2,500 (effective 2013)
16
2010 American Institute of CPAs
Indoor Tanning Services
> 10% excise tax
> Tax collection at time of payment
> Effective: July 1, 2010
17
2010 American Institute of CPAs
The Road Ahead
> A process not an event
> New proposals, adjustments and other changes
> Professional guidance
> www.360financialliteracy.org
18
2010 American Institute of CPAs
2010 American Institute of CPAs
Top Related