2011 Taxes to Fund New Healthcare Law « Health Insurance Advisory

Welcome to the New Healthcare Law Center and State News

new healthcare reform lawThe new healthcare law, called the Patient Protection and Affordable Care Act (PPACA), represents comprehensive healthcare reform legislation signed into law on March 23, 2010. It contains numerous provisions designed to protect consumers and promote low cost medical insurance, including many new taxes to pay for the cost.

In this section of the site, you can also obtain the following information specific to your state: available medical insurance options, efforts to regulate medical insurance premiums, healthcare, the individual medical insurance marketplace and the new healthcare law.

Our objective is to help Americans make sense of the new healthcare law by explaining key provisions in plain English and assisting individuals, families and the self-employed in using this information to find and secure affordable medical insurance.

2011 Taxes to Fund New Healthcare Law

Author: Pete S - Sr. Staff Writer | Nov 12 2010 | Taxes - New Healthcare Law

Effective 2011, many new taxes will be phased in to help fund the new healthcare law.  As of the time of this article, the following taxes will be implemented beginning next year to finance the Patient Protection and Affordable Care Act, in addition to $500 billion in Medicare cuts.

• Personal income tax rates:

- 10% bracket rises to 15%

- 25% bracket rises to 28%

- 28% bracket rises to 31%

- 33% bracket rises to 36%

- 35% bracket rises to 39.6% (2/3 of small business are taxed at this rate)

• Higher Taxes on Marriage and Family – The “marriage penalty” (narrower tax brackets for married couples) will start from the first dollar of income.  The child tax credit will be cut in half from $1,000 to $500 per child. The dependent care and adoption credit will be cut.

• Medicare Tax Increase – Individuals earning $200,000 or more and families earning $250,000 or more will pay an additional 0.9%.

• Tax on Home Sales -  3.8% tax on home sales and other real estate transactions.

• Fewer Allowable Deductions – New threshold for out-of-pocket medical expenses rises from 7% to 10% starting in 2013.

• Tax on Investment Income – 3.8% annual tax on investment income for individuals making $200,000 or more and families making $250,000 or more. This tax is not indexed to inflation, so more people will fall under it each year. The tax applies to long and short term capital gains, taxable interest, dividends, royalties, rental income and annuity income.

• Tax on Medical Devices – 2.9% tax on medical aid devices.

• Tax on Tanning – 10% tax on all tanning salons.

• Penalties on individuals and families who don’t purchase health insurance coverage – starting in 2014 Tax on Cadillac Health Plans – Starting in 2018 an annual tax of 40% on health care plans valued at $10,200 for individuals and $27,500 for families. Paid by the insurer, the costs will be passed on to the consumer through higher premiums and/or reduced benefits.

• The Return of the Death Tax – This year, there is no death tax.  For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.

• Higher Tax Rates on Savers and Investors – The capital gains tax will rise from 15 percent this year to 20 percent in 2011.  The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.  These rates will rise another 3.8 percent in 2013.

• The Drug Tax – If you have an HSA, FSA, or HRA, you will no longer be able to purchase non-prescription, over-the-counter medicines, unless prescribed by your Doctor.

• HSA Withdrawals – This provision increases the additional tax on non-medical, early withdrawals, from an HSA to 20% from the current 10%.

• Employer Tax – Firms with more than 50 employees, that do not offer health insurance will pay a penalty of $2,000 per full time employee, starting with the 31st employee.

For more clear and concise information regarding the new healthcare law and how it will impact your pocketbook, visit our health care information blog.

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