While many of us were wrapping Christmas gifts or planning holiday gatherings this past Christmas Eve,
the Senate passed an $871 billion health care reform bill by a vote of 60 to 39. The "Patient Protection and
Affordable Care Act of 2009" would expand health insurance coverage to 94% of Americans and pay for it
with billions of dollars in new taxes and fees.
The House passed its version of health reform back in early November. Its bill, the "Affordable Health Care
for America Act," also extends coverage and pays for it with a different collection of taxes and fees from
those in the Senate bill. Both bills are massive and contain provisions that would affect individuals, businesses, and the medical
and insurance industries. A conference of members from
the House and Senate will be held in January to work
out the differences between the two bills and fashion
one piece of legislation. When that bill comes out of
conference, it must be passed by the House of
Representatives and the Senate before it can be sent to
the President to be signed into law.
Among the tax provisions in the Senate bill:
* A 40% excise tax on employer-provided health
insurance plans with annual premiums over $8,500 for
individuals and $23,000 for families. Somewhat higher
limit for retirees and those in high-risk professions
* A penalty excise tax on individuals who fail to
maintain health insurance coverage, starting at $95
in 2014 and increasing to $750 by 2016.
Among the tax provisions in the House bill:
* A 5.4% surtax on single taxpayers with incomes over
$500,000 and joint filers with incomes over $1 million.
* An additional tax levied on those who fail to obtain
health insurance coverage of either 2.5% of their
adjusted income or the average cost of insurance
premiums available on the new health care exchange.
Exemptions provided for lower-income individuals.
Both the Senate and the House bills provide individuals
and businesses with tax credits to help with the costs
of insurance. It's important to note that the provisions
in the final bill may differ significantly from those
in either of the current bills, so as you begin your tax
planning for 2010, remember that health reform and the
taxes connected with it are still a work in progress,
not a final law.
If you have any questions about this or any tax or accounting concerns don't ever hesitate to call our offices.