Health Care Reform and You

BY MARY E. VANDENACK

Congress has now passed a comprehensive health care law earlier this year. Many of changes are phased in. The following are some key changes that are effective for 2010.

1. Small business tax credit: Small businesses (generally 25 or less employees) are provided tax credits to help offset the cost of employer-provided health insurance coverage. The qualified small employer much contribute at least one half of the cost of health insurance premiums for coverage of its participating employers.
2. Dependent coverage increases to age 26: Health insurance plans must provided for coverage of dependent children up to the age of 26. The employer-provided health coverage gross income exclusion is extended to coverage for such adult children. Self-employed individuals are allowed a deduction for the premiums paid on such coverage.
3. No lifetime limits on coverage: health plans are banned from placing lifetime limits on coverage.
4. No discrimination against children with pre-existing conditions: The new law prohibits all employer plans and new plans in the individual market from denying coverage to children with pre-existing conditions.
5. Temporary re-insurance program for early retirees: The new law creates a temporary re-insurance program for employer-sponsored early retiree coverage. Payments made und erhte program will be excludible from gross income.
6. Rebate for Medicare beneficiaries: A $250 rebate is provided to Medicare beneficiaries who hit the donut hole in 2010.
7. Indoor Tanning Tax: A 10 percent excise tax is imposed on qualified indoor tanning services for services provided on or after July 1st, 2010.
8. Temporary pool for high risk individuals: Immediate access to insurance is provided for those who are uninsured due to a pre-existing condition.

Some of the other key, tax-related provisions that phase in over the next several years are as follow:

• A refundable premium assistance tax credit to help make coverage more affordable, starting in 2014;
• A national voluntary long term care insurance program;
• A nondeductible penalty on large employers tha fail to offer the opportunity to employees to enroll in minimum essential coverage;
• A penalty tax on individual who fail to maintain minimum essential coverage;
• Additional Medicare payroll tax on earned income in excess of $200,000 for individuals and $250,000 for married taxpayers;
• Medicare tax on certain income fo trusts and estates;
• Medicate tax on unearned income;
• Tax on high cost insurance;
• Modified definitions of qualified medical expenses for health FAS’s, HSA’s and HRA’s;
• Increase in tax on non-qualified distributions from HSA’s;
• Increased threshold for the itemized medical expense deduction;
• New therapies credit to encourage investments in new therapies;
• Elimination of subsidy for employers that maintain prescription drug coverage for retirees who are eligible for Medicare Part D.

metroMAGAZINE, May 2010