This legislation is complicated and not all of its effects are yet understood, I want to highlight some key elements that might affect you.

1. StanCorpJournal
StanCorp Investment Advisers
April 2010
Erin Eddins
How Will Health Care Reform CFP , ChFC
® ®
erin.eddins@standard.com
Affect Taxpayers and Investors? 425.212.5986
Perhaps you’re tired of hearing about health for essential benefits, and will be required to auto While consumers and individual taxpayers aren’t
care reform. You know it passed amid plenty of enroll new full-time employees in health care the only group shouldering the cost of health care
controversy, but do you understand what this coverage. Undoubtedly, these changes will mean reform, these changes highlight how important
reform means to investors or employees? While higher costs for employers, forcing companies financial and tax planning will become in the next
the legislation is complicated and not all of its to closely examine the size and compensation of few years. Working with a financial planner and
effects are yet understood, I want to highlight their workforce. CPA will be essential.
some key elements that might affect you.
Higher Taxes Expect Higher Insurance Premiums
Mandating Coverage in 2014 One way these policies will be funded is through This law does not contain aggressive policies to
The new law requires that every American buy new taxes and tax increases. Starting in 2013, reduce health care costs throughout the industry.
health insurance or pay an income tax penalty taxpayers with earned income above $200,000 It stands to reason that, if health insurers are
beginning in 2014. The interpretation is that (single return) or $250,000 (joint return) will required to expand and extend coverage without
enrolling in an employer group health plan will be subject to an additional 0.9% Medicare a decrease in health care costs, higher premiums
satisfy the individual mandate. Employers with at Hospital Insurance tax (i.e., rising from 1.45% to can be expected. Currently some people pay
least 50 full-time employees will also be required 2.35%) on wages in excess of those thresholds. lower premiums by choosing plans with a
to offer health insurance starting in 2014. Additionally, those same taxpayers will be subject high deductible, but the legislation will place
Employers not offering any coverage or offering to a new 3.8% Medicare surtax on the lesser of restrictions on high-deductible policies. Employers
coverage that is considered “unaffordable” to net investment income or income in excess of and individuals wanting to lower premiums by
the employee will face a $2,000 per employee the $200,000/$250,000 threshold. High-income selecting high-deductible plans might consider
penalty. To help meet these mandates, states will taxpayers will need to closely examine their tax doing so now, before they become unavailable.
be required to create Health Insurance Exchanges situation in the next few years leading up to the
where individuals and small employers can implementation of these higher taxes. If you’re interested in a more detailed analysis of
purchase health insurance. the legislation, including real-life examples, you
In addition to Medicare taxes, some other tax might want to read the Tax Briefing at CCH.com.
Big Changes for Employers provisions will change in 2013. Taxpayers This is a complicated issue and the implications
The law includes a number of new requirements claiming an itemized income tax deduction for are not yet fully understood.
for the health plans offered by employers. medical expenses will be able to deduct only the
Beginning with the 2011 plan year, employer portion of such expenses in excess of 10% of
health plans must offer coverage to adult children their adjusted gross income, up from the current
up to age 26, may not impose lifetime limits on level of 7.5%. This provision is deferred to 2017
the dollar value of benefits and may not impose for those age 65 and older. Additionally, the law
preexisting condition exclusions on children under will impose an excise tax of 2.3% on the sale of
19. By 2014, employer group health plans will be medical devices by manufacturers, with certain
prohibited from preexisting condition exclusions exceptions, starting in 2013.
for all enrollees and from imposing annual limits
®
Erin Eddins is a Chartered Financial Consultant , a member of
the Financial Planning Association (FPA) and is a CERTIFIED
®
FINANCIAL PLANNER professional. She has more than 20
years of experience working with individuals and families to
develop financial plans and implement investment portfolios
to help clients secure their financial futures. She can be
©
reached at erin.eddins@standard.com or 425.212.5986.
2010, StanCorp Investment Advisers. All rights reserved