IRS to play a large role in broadening insurance coverage through tax incentives and penalties
CCH has issued a Special Tax Briefing to explain the final tax provisions of health care reform legislation. With the passage of the Patient Protection and Affordable Care Act and a companion Health Care and Education Reconciliation Act in the House, the stage is set for Senate concurrence through a simple majority vote and signing by the president to wind up the long legislative path to health care reform. To read the Briefing, click here.
“It is certain that the IRS will play a large role in broadening insurance coverage through tax incentives and penalties on the one hand, and on the other hand collecting new taxes to pay part of the costs,” said CCH Principal Federal Tax Analyst Mark Luscombe, JD, LLM, CPA.
The bill contains an excise tax on “Cadillac” insurance plans – those with more generous benefits and higher premiums than typical plans – an excise tax on medical devices, “industry fees” on various health-related industries and a Medicare surtax of .9 percent on wages and 3.8 percent on investment income for individuals with adjusted gross incomes over $200,000 for an individual, $250,000 for couples. Except for seniors, it raises the threshold for the itemized medical deduction from 7.5 percent of adjusted gross income to 10 percent. Beginning in 2013, it will limit contributions to tax-advantaged flexible spending accounts for health expenses.
“The bill aims to broaden coverage, with individual and employer mandates, and those mandates are backed up by using the IRS to assess payments on individuals who choose to remain uninsured and employers who choose not to offer group health plans,” Luscombe said.
Other revenue raisers include closing a loophole related to biofuel production, codification of the economic substance doctrine and an adjustment to corporate estimated tax payments in 2014.
CCH Tax Briefings
To read the CCH Special Tax Briefing on health care reform, click here. Timely, current analysis of other tax legislation can be found at CCH Tax Legislation Coverage.
CCH analysts are available to discuss the tax, employee benefits and Medicare/Medicaid aspects of health care reform. Please contact: Neil Allen (847-267-2179 or email@example.com); or Brenda Au (847-267-2046 or firstname.lastname@example.org).
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business ( CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading solutions are The ProSystem fx® Suite, CorpSystem®, CCH® IntelliConnect™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.
Wolters Kluwer is a market-leading global information services company. Professionals in the areas of legal, business, tax, accounting, finance, audit, risk, compliance, and healthcare rely on Wolters Kluwer’s leading, information-enabled tools and solutions to manage their business efficiently, deliver results to their clients, and succeed in an ever more dynamic world. Wolters Kluwer has 2009 annual revenues of €3.4 billion ($4.8 billion/£3.0 billion), employs approximately 19,300 people worldwide, and maintains operations in over 40 countries across Europe, North America, Asia Pacific, and Latin America. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.