Here are the health care laws that you need to know:
- 10% Excise Tax on Artificial Tanning - This will affect the 28 million people who visit tanning salons in the U.S. every year. (This took effect in 2010)
- Tax Credit for employers under the Affordable Care Act - As of 2011, employers with 10 or fewer full-time employees that have average wages of up to $25,000 are eligible for the maximum credit of 35% of the amount the company contributes toward its employees health insurance premium. The credit is applied to the employer’s tax liability for the year. The tax credit decreases as the number of employees approaches 25 and as average annual wages approach $50,000. To qualify for the credit, an employer must pay at least 1/2 the premium for each employee.
- FSA & HSA Contribution limit and increase withdrawal penalties - Right now anyone with a flexible spending or health savings account can contribute up to $5,000. Under the new health care laws, as of 2013, the contribution limit decreases to $2,500. Also, there currently is a 20% penalty for withdrawing money for non-medical purposes. That was increased in 2010 from 10%.
- Medical Itemized Deduction Increase - Beginning January 1, 2013, taxpayers that take an itemized deduction for non-reimbursed medical expenses will only be allowed a deduction which exceeds 10% of adjusted gross income, up from 7.5% now. Taxpayers 65 and older can still use the old 7.5% threshold until 2016.
- 0.9% Medicare Tax on Individuals that make $200,000 (or more) or $250,000 for couples - This will effect 2.5 million households in the U.S. In addition to the 0.9% Medicare tax, there will be a 3.8% investment tax on top of the existing 15% capital gains rate, which is set to rise to 20% next year. These taxes are in effect as of January 1, 2013.
- Starting in 2014, individuals will have to pay a penalty for not having insurance - The amount of the penalty increases annually from 2014 to 2016. Starting in 2014, the penalty will be 1% of the family income (no more than $285, whichever is greater). In 2015, it rises to 2% (no more than $975). By 2016, the penalty would be 2.5% of the family income (no more than $2,085).
- Starting in 2014, employers with more than 50 employees that do not offer insurance coverage will have to pay a penalty - The penalty is $2,000 annually, multiplied by the number of full-time employees, minus 30. The penalty is increased each year by the growth in insurance premiums.
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