The Patient Protection and Affordable Care Act, signed today by President Obama, reforms the US health care system as we currently know it.  The law requires individuals to maintain a minimum essential coverage or be subject to a penalty (effective for tax years beginning in 2014.)  What you may not know is that it also includes over $400 billion in revenue raisers and new taxes on employers and individuals.  A few of the more salient provisions of the legislation are highlighted below. 

1. Imposes a 40-percent excise tax on high-end employer-sponsored health plans (Effective 2018)
2. Increases the Medicare tax to 2.35 percent for couples with adjusted gross incomes (AGI) over $250,000 a year and individuals with AGI over $200,000 (Effective 2013)
3. Increases the threshold for the deduction of eligible unreimbursed medical expenses from 7.5% to 10% of AGI (Effective 2013)
4. Provides small businesses with a 35% tax credit for the premium cost of health insurance coverage (Effective 2010)
5. Requires employer W-2 reporting of the value of health benefits (Effective 2011)
6. Imposes a 3.8% Unearned Income Medicare Contribution surtax on net investment income of individuals earning more than $200,000 and couples earning more than $250,000 (Effective 2013)
7. Limits health flexible spending arrangements in cafeteria plans to $2,500 (Effective 2013)
8. Raises the quarterly estimated tax payments for corporations with assets of at least $1,000,000 by 15.75% (Effective 2014)
9. Extends an employee's dependent coverage until age 26 (Effective 3/23/10)
10. And much, much more! 

We will be providing more extensive coverage on the new legislation in the coming weeks.

If you have any questions regarding the information in this article, or have any other issues you would like to discuss, please feel free to contact the DZH Phillips tax department at 415.781.2500 or email cpas@dzhphillips.com.