During the past couple of years, I’ve written numerous insurance texts that are either devoted entirely to the Affordable Care Act or that contain chapters about it. Formally known as the Patient Protection and Affordable Care Act of 2010, the media refers to this recent federal legislation as Obamacare.
I won’t bore you with details about provisions you already know, like the individual mandate and employer requirements going into effect on January 1, 2014. I will provide you with lesser-known details that will either affect you directly or affect someone you know. This first blog post discusses some changes that will go into effect in 2013.
(By the way, I have the text of the PPACA on my computer in PDF format; although I haven’t read all 974 pages of it, I have read significant portions of it and have conducted extensive research about it.)
As a warm-up, here are some of the provisions of the PPACA that have already been put into place:
- Dependent coverage for adult children must now be provided on their parents’ health policies until age 26 (subject to requirements for being a “dependent”)
- Certain types of preventive care is no longer subject to deductibles and copayments, such as mammograms and colonoscopies
- Lifetime benefits have been eliminated
- Annual benefits limits have been restricted
- Pre-existing conditions limits may not be imposed upon children under age 19
Beginning in 2013, tax-deductibility of medical expenses will change. At present, taxpayers are permitted to itemize and deduct medical expenses if those expenses exceed 7.5% of the taxpayer’s adjusted gross income. This means if you earn $50,000 per year, you may itemize and deduct your medical expenses that exceed $3,750. In 2013, the threshold increases to 10%. So, if you earn $50,000 in 2013, you may only itemize and deduct your medical expenses that exceed $5,000.
If a person has a flexible spending account, the maximum contribution will be $2,500 beginning in 2013. Up until that time, there has been no limit to contributions to this tax-advantaged plan that allows employees to designate a portion of their annual earnings to pay for qualified medical expenses. (These funds are not taxed if used for qualified medical expenses.)
Also beginning in 2013, the Medicare tax rate for individuals who earn more than $200,000 per year will increase. The same holds true for married taxpayers filing jointly if their combined wages are in excess of $250,000. The increased tax rate applies to wages in excess of the thresholds. These same individuals will also pay a higher Medicare tax rate on their investment income.
So, did you know these facts? What are your thoughts?
Link to the text of the PPACA
Link to the Henry J. Kaiser Family Foundation site about the PPACA
Link to the U.S. Department of HHS about the PPACA
LifeHealthPro’s list of articles about the PPACA
Link to Healthcare Reform Article by the New York Times