What are the taxes to pay for the new healthcare law? « Health Insurance Advisory

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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.

What are the taxes to pay for the new healthcare law?

Author: Administrator | Aug 28 2011 | Taxes - New Healthcare Law

Think you are not paying for the new healthcare law? Many new taxes are being phased in to cover the cost of the Patient Protection and Affordable Care Act and are in addition to $500 billion in Medicare cuts. These will likely impact most Americans.  Here are a few of the new taxes:

Personal income tax rates will rise when the Bush tax cuts expire in late 2012:

  • The 10% bracket rises to 15%
  • The 25% bracket rises to 28%
  • The 28% bracket rises to 31%
  • The 33% bracket rises to 36%
  • The 35% bracket rises to 39.6% (2/3 of small business are taxed at this rate)

Married couples and families will also pay higher taxes. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income.  The child tax credit will be cut in half from $1,000 to $500 per child, and 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

Tax penalties on individuals and families who don’t purchase a medical insurance plan – starting in 2014

Tax on Cadillac Health Plans – starting in 2018 an annual tax of 40% on medical insurance 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.

Death tax - this year, there is no death tax.  After the Bush tax cuts expire, there will be is a 55 percent top death tax rate on estates over $1 million.

Higher tax rates on savers and investorsthe 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.

Drug tax – if you have an Health Saving Account, Flexible Spending Account or Health Reimbursement Arrangement, 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%.

If you need low cost medical and dental insurance for you or you family, we can help. We offer free, low cost medical insurance quotes for individuals, families and the self employed. Our medical insurance research center will provide you with valuable information so you can learn your medical insurance options, including HIPAA Portability and COBRA Continuation. Even if you have pre existing health conditions, we can suggest alternatives, such as guaranteed health insurance and the new government Pre Existing Condition Insurance Plan. Get started today!

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