Tax Implications of the Health Refrom Act of 2010

1. DID YOU KNOW?

2. If you’re part of a hard-working (or retired) American family,

3. LIFE JUST GOT
HARDER

4. new taxes that
the 2010 health care law has
created include:

5. 2010
Starting July 1, 2010 indoor
tanning salons will charge a 10%
sales tax.

6. 2011
Pharmaceutical manufacturers
will collectively pay a new excise
tax, starting at $2.5 billion and
rising over time.

7. The drug makers will no doubt
pass this new cost onto
consumers.

8. 2011
Non-qualified distributions from
Health Savings Accounts will be
taxed at 20% instead of the current
rate of 10%.

9. That’s a 100% tax increase.

10. LIFE JUST GOT HARDER

11. 2012
Private insurance plans will be
forced to pay the government $1
or $2 each year for each participant.
If you have health insurance through
a private insurance plan,

12. you will likely be required to pay this charge

13. That’s an additional tax of
0.9%, or a 62% increase.

14. LIFE JUST GOT HARDER

15. 2013
Medicare payroll taxes will rise
62% for those earning more than
$200,000 a year ($250,000 if you
are married filing jointly).

16. The tax on wages in excess of $200,000 (or
$250,000) is rising from 1.45% to 2.35%.

17. 2013
There will also be a new 3.8% tax on gross
investment income for those
earning more than $200,000
($250,000 for married filing jointly).
•

18. Investment income” includes interest,
dividends, capital gains, rental
income, annuities and royalties.

19. 2013
In addition to this new tax, capital
gains taxes are set to rise in 2011
from 15% to 20%
— that’s a 33% increase.

20. — that’s a 33% increase.

21. 2013
Therefore, for people who
are making over $200,000 a year
($250,000 if you are married filing
jointly), the total tax on capital
gains is jumping from 15% to
23.8%.

22. the total tax on capital
gains is jumping from 15% to 23.8%.

23. That’s a 59% increase.

24. 2013
Medical device manufacturers
must collect a new national sales tax
of 2.9%. You will directly pay this tax,
but it will not apply to eyeglasses,
contact lenses or hearing aids.

25. 2013
Employers will no longer receive a
subsidy for providing retiree prescription
drug coverage. Companies
will pay more to provide such benefits
as a result.

26. (It has already been
announced that AT&T will incur a $1
billion charge, plus $62 million in new taxes
annually because of
this provision.

27. Similar announcements
have been made regarding
John Deere ($150 million), Caterpillar
($100 million), 3M Company ($90 million)
and AK Steele ($31 million), and
many more companies in the Fortune
500 are expected to make similar
announcements soon.)

28. It is widely
expected that Corporate America
will pass these costs onto consumers
in the form of higher prices for
their goods and services,and

29. reduction
in the benefits they provide to their
retired employees (who will in turn
be forced to pay higher health care
costs) or both.

30. LIFE JUST GOT HARDER

31. 2013
You will not be able to deduct medical expenses
on your tax return until you’ve spent 10%
of your Adjusted Gross Income.
Currently, you can begin deductions
after you spend 7.5% of your AGI.
Therefore, this is a 33% increase in
the threshold.

32. 2013
Contributions to Flexible Spending
Accounts will be capped at
$2,500 per year, and you will no
longer be able to use the money to
buy over-the-counter drugs. This
change will cause some taxpayers
to pay as much as several thousand
dollars more in health care expenses
and in annual income taxes.

33. 2013
If you’re an executive in the health
insurance industry and earn more
than half a million dollars a year,
taxes will effectively double for all
of your income above $500,000.

34. LIFE JUST GOT HARDER

35. 2014
Employers with more than 50 employees
that do not provide health
insurance to their employees will pay
a $2,000 penalty per employee per
year, starting with the 31st employee

36. 2014
If you do not have health insurance, you and each
member of your household will pay a new tax of 1%
of household income (at least $95 per person per year).
This tax will rise to 2.5% per year (at least $695
per person) by 2016.

37. 2018
Health insurance plans that cost more than $10,200 for
individuals ($27,500 per family) will pay a new
40% tax on any coverage that exceeds the limit.
Plan sponsors will no
doubt pass this cost along to you.

38. LIFE JUST GOT HARDER

39. Health insurance plans that cost
more than $10,200 for individuals
($27,500 per family) will pay a new
40% tax on any coverage that exceeds
the limit.

40. Plan sponsors will no
doubt pass this cost along to you.

41. In addition to these new taxes, the
new health care law cuts federal
funding of Medicare by $500 billion
over the next decade.

42. Medicare is not the only entitlement
program likely to see cuts.

43. Based on current projections, Social
Security will be broke by 2037 unless
changes are made.

44. That means taxes
will rise, and benefits will be delayed
or reduced, or all three.
Retirees are already feeling pressure.

45. NOW YOU KNOW

46. LIFE JUST GOT HARDER
Excerpted from
Health Care Reform
A Special Report
April 2010
By Ric Edelman
©2010 Edelman Financial Services RicEdelman.com 888-PLAN-RIC