Nine Key Tax Rules That Will Affect Advisor Clients Now That The Supreme Court Upheld The Affordable Health Care Act Hot

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1. Beginning in January 2013, an additional Medicare tax payroll tax of 0.9% will be applied to individuals with adjusted gross income (AGI) exceeding $200,000 and married couples filing jointly with more than $250,000 of AGI.


2. Beginning in January 2013, a 3.8% “surtax” will be levied on single taxpayers with AGI exceeding $200,000, and married couples filing jointly with AGI exceeding $250,000. The surtax applies to the lesser of net investment income or AGI exceeding $200,000 for individuals ($250,000 for married couples filing jointly).


3. The penalty on those who do not have health insurance is scheduled to take effect January 1, 2014. The annual penalty will be $95 or 1% of income, whichever is greater. It rises to $695 or 2.5% of income for individuals by 2016. Families face a maximum penalty of $2,085, but still will owe 2.5% of household income if that amount is greater.


4. In 2012, all W-2s will have to include the value of health care benefits provided to employees.


5. Effective in 2011, the penalty on non-qualified distributions from Health Savings Accounts is doubled to 20%.


6. In 2013, the itemized deduction floor for medical expenses increases to 10% of AGI.


7. Beginning in 2018, the “Cadillac Tax” will become effective — a 40% excise tax on the portion of high-cost health insurance plans that exceed $10,200 for individuals or $27,500 for families.


8. Beginning in 2014, a refundable tax credit will be available to help individuals with low income purchase health insurance coverage.


9. Beginning in 2014, a non-deductible fee of $2,000 per employee will be imposed on businesses that do not provide adequate coverage. The first 50 employees are not counted.


For a detailed discussion of the tax rules affecting clients in the Affordable Health Care Act, please join us for a free webinar on Friday, July 6 at 4 ET, when I will discuss:

  • Medicare payroll tax of 0.9% on joint filers with more than $250,000 of AGI
  • 3.8% surtax on joint filers with more than $250,000 of AGI
  • New reporting requirements on W-2s
  • Doubling of the penalty on non-qualified distributions from Health Savings Accounts 
  • 40% excise tax on high-cost health insurance plans

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