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Healthcarereform

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Tax Implications of the Health Refrom Act of 2010

Tax Implications of the Health Refrom Act of 2010

Published in: News & Politics

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  • 1. DID YOU KNOW?
  • 2. If you’re part of a hard-working (or retired) American family,
  • 3. LIFE JUST GOT HARDER
  • 4. new taxes that the 2010 health care law has created include:
  • 5. 2010 Starting July 1, 2010 indoor tanning salons will charge a 10% sales tax.
  • 6. 2011 Pharmaceutical manufacturers will collectively pay a new excise tax, starting at $2.5 billion and rising over time.
  • 7. The drug makers will no doubt pass this new cost onto consumers.
  • 8. 2011 Non-qualified distributions from Health Savings Accounts will be taxed at 20% instead of the current rate of 10%.
  • 9. That’s a 100% tax increase.
  • 10. LIFE JUST GOT HARDER
  • 11. 2012 Private insurance plans will be forced to pay the government $1 or $2 each year for each participant. If you have health insurance through a private insurance plan,
  • 12. you will likely be required to pay this charge
  • 13. That’s an additional tax of 0.9%, or a 62% increase.
  • 14. LIFE JUST GOT HARDER
  • 15. 2013 Medicare payroll taxes will rise 62% for those earning more than $200,000 a year ($250,000 if you are married filing jointly).
  • 16. The tax on wages in excess of $200,000 (or $250,000) is rising from 1.45% to 2.35%.
  • 17. 2013 There will also be a new 3.8% tax on gross investment income for those earning more than $200,000 ($250,000 for married filing jointly). •
  • 18. Investment income” includes interest, dividends, capital gains, rental income, annuities and royalties.
  • 19. 2013 In addition to this new tax, capital gains taxes are set to rise in 2011 from 15% to 20% — that’s a 33% increase.
  • 20. — that’s a 33% increase.
  • 21. 2013 Therefore, for people who are making over $200,000 a year ($250,000 if you are married filing jointly), the total tax on capital gains is jumping from 15% to 23.8%.
  • 22. the total tax on capital gains is jumping from 15% to 23.8%.
  • 23. That’s a 59% increase.
  • 24. 2013 Medical device manufacturers must collect a new national sales tax of 2.9%. You will directly pay this tax, but it will not apply to eyeglasses, contact lenses or hearing aids.
  • 25. 2013 Employers will no longer receive a subsidy for providing retiree prescription drug coverage. Companies will pay more to provide such benefits as a result.
  • 26. (It has already been announced that AT&T will incur a $1 billion charge, plus $62 million in new taxes annually because of this provision.
  • 27. Similar announcements have been made regarding John Deere ($150 million), Caterpillar ($100 million), 3M Company ($90 million) and AK Steele ($31 million), and many more companies in the Fortune 500 are expected to make similar announcements soon.)
  • 28. It is widely expected that Corporate America will pass these costs onto consumers in the form of higher prices for their goods and services,and
  • 29. reduction in the benefits they provide to their retired employees (who will in turn be forced to pay higher health care costs) or both.
  • 30. LIFE JUST GOT HARDER
  • 31. 2013 You will not be able to deduct medical expenses on your tax return until you’ve spent 10% of your Adjusted Gross Income. Currently, you can begin deductions after you spend 7.5% of your AGI. Therefore, this is a 33% increase in the threshold.
  • 32. 2013 Contributions to Flexible Spending Accounts will be capped at $2,500 per year, and you will no longer be able to use the money to buy over-the-counter drugs. This change will cause some taxpayers to pay as much as several thousand dollars more in health care expenses and in annual income taxes.
  • 33. 2013 If you’re an executive in the health insurance industry and earn more than half a million dollars a year, taxes will effectively double for all of your income above $500,000.
  • 34. LIFE JUST GOT HARDER
  • 35. 2014 Employers with more than 50 employees that do not provide health insurance to their employees will pay a $2,000 penalty per employee per year, starting with the 31st employee
  • 36. 2014 If you do not have health insurance, you and each member of your household will pay a new tax of 1% of household income (at least $95 per person per year). This tax will rise to 2.5% per year (at least $695 per person) by 2016.
  • 37. 2018 Health insurance plans that cost more than $10,200 for individuals ($27,500 per family) will pay a new 40% tax on any coverage that exceeds the limit. Plan sponsors will no doubt pass this cost along to you.
  • 38. LIFE JUST GOT HARDER
  • 39. Health insurance plans that cost more than $10,200 for individuals ($27,500 per family) will pay a new 40% tax on any coverage that exceeds the limit.
  • 40. Plan sponsors will no doubt pass this cost along to you.
  • 41. In addition to these new taxes, the new health care law cuts federal funding of Medicare by $500 billion over the next decade.
  • 42. Medicare is not the only entitlement program likely to see cuts.
  • 43. Based on current projections, Social Security will be broke by 2037 unless changes are made.
  • 44. That means taxes will rise, and benefits will be delayed or reduced, or all three. Retirees are already feeling pressure.
  • 45. NOW YOU KNOW
  • 46. LIFE JUST GOT HARDER Excerpted from Health Care Reform A Special Report April 2010 By Ric Edelman ©2010 Edelman Financial Services RicEdelman.com 888-PLAN-RIC

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