Individual Mandate:
- Applicable individuals must carry minimum essential health coverage for themselves and their dependents, or otherwise pay a "tax" for each month of noncompliance.
- Effective beginning in calendar year 2014.
- Individuals who are exempt:
- Those who are covered by Medicaid and Medicare
- Incarcerated individuals
- Individuals not lawfully present in the US
- Those with employer-provided health insurance, if it satisfies the minimum essential coverage and affordability requirements
- Those whose income is below the filing requirement
- The tax is the greater of a flat dollar amount, or percentage of household income
- 2014: flat dollar amount is $95 per individual or dependent without coverage, OR 1% of "household income" (aggregate incomes of all members of a household required to file a tax return)
- 2015: flat dollar amount is $325 per individual or dependent without coverage, OR 2% of "household income"
- 2016: flat dollar amount is $695 per individual or dependent without coverage, OR 2.5% of "household income"
- Post 2016 - the 2016 amounts indexed for inflation
Premium Assistance Tax Credit:
- Eligible lower-income individuals who obtain coverage under a qualified health plan through an insurance exchange may qualify for a premium assistance tax credit under Code Sec. 368 unless they are eligible for other minimum essential coverage, including employer-sponsored coverage that is affordable and provides minimum value.
- Begins in 2014.
- Credit is fully refundable.
- A large employer may be liable for an "assessment payment" if any full-time employee receives this tax credit.
Medical Deduction Threshold:
- Schedule A medical expenses must meet 10% of AGI threshold to be deductible.
- Begins in 2013.
- If age 65 and older before the close of the tax year, the 7.50% threshold continues to apply until 2016.
Additional Tax on HSA/MSA Distributions:
- Distributions from HSA's and Archer MSA's that are not used for qualified medical expenses are subject to an additional tax of 20%.
- Effective for distributions made after 12/31/10.
Additional Medicare Tax:
- Additional 0.9% Medicare tax imposed on wages and self-employment income of those with incomes above $200,000 (single), or $250,000 (MFJ).
- Begins in 2013.
- Employers must withhold on the higher rate if the employee receives wages in excess of $200,000.
Medicare Tax on Investment Income:
- Begins in 2013.
- A 3.8% Medicare contribution tax is imposed on the lesser of:
- An individual's net investment income for the year, or
- Modified AGI in excess of $200,000 (single), $250,000 (MFJ)
- Investment income includes interest, dividends, annuities, royalties, rents, income from passive activities, and capital gains.
Dependent Coverage Until Age 26:
- Group health plans and health insurance issuers providing dependent coverage for children must continue to make the coverage available for an adult child until turning age 26.
Medical Benefits for Children Under Age 27:
- Medical care reimbursements under an employer-provided health plan are excluded from gross income if they are for any employee's child who is not age 27 as of the end of the tax year.
- There is no requirement that a child qualify as a dependent, nor is there a requirement that an employer provide this coverage.
Employer Mandate:
- An “applicable large employer" may be subject to an assessment payment if any full-time employee is certified to receive an applicable premium tax credit or cost-sharing reduction payment.
- Applies beginning in 2014.
- “Applicable large employer" - on average employed 50 or more FTE's during the preceding calendar year.
- By 1/1/14, each state must establish an American Benefit Health Exchange and a Small Business Health Options program to provide qualified individuals and qualified small business employers, respectively, access to qualified health plans.
Small Employer Health Insurance Credit:
- For tax years 2010 through 2013, the maximum credit is 35% of the health insurance premiums paid by employers.
- For 2014 and 2015, the credit is scheduled to increase to 50%.
- In tax years that begin after 2013, an employer must participate in an insurance exchange to claim the credit.
Health FSA's Offered in Cafeteria Plans:
- Beginning in 2013, health flexible spending accounts offered through a cafeteria plan must limit annual reimbursements to $2,500. This does not limit other benefits available under a cafeteria plan such as dependent care reimbursements.
