New Health Care Bill

Welcome to my very first blog post.  Hopefully, I will get better at writing the more I do these.

Somehow, this passed while we were all sleeping one night.  I have yet to speak to one person who thinks this bill is a good idea.  Truth be told, I don’t know much about it yet, but I have gathered 6 points of interest on it, and have posted them here for your convenience.

First the good news:

1. For 2010 through 2013, small businesses are eligible for a 35 percent tax credit for premiums paid for employee health coverage. A “small business” has no more than 25 employees and average annual wages less than $50,000. “To qualify, you can exclude company owners from the calculation,” Luscombe says.

Okay, so that’s it for the good news.  Now, for the “devil is in the details” news:

2. Starting in 2014, large companies (50 or more workers) will be liable for an additional tax if they do not provide minimum essential coverage. Even if they provide minimum essential coverage, they may be subject to a penalty if any employees received premium assistance or cost-sharing to purchase health insurance through an insurance exchange.

3. Starting in 2014, individuals may be subject to an individual responsibility penalty for failure to maintain minimum essential health coverage. Lower-income individuals may qualify for a refundable premium assistance tax credit.

An individual responsibility penalty. Can we impose this penalty on criminals, sex offenders and abusive parents, too?

4. Starting in 2013, Medicare tax will be assessed on investment income for high-income individuals or families. Investment income includes interest, dividends, capital gains, rental income, royalties and passive business income. “In effect, that’s an additional 3.8 percent tax on net investment income,” Luscombe says. “Many analysts expect the top marginal rate to move up from 35 percent to 39.6 percent in 2011, an additional 4.6 percent tax increase. Top capital gain rates may also increase from 15 percent to 20 percent.” Planning tip: The definition of “investment” does not include tax-exempt bonds.

Yippee!  We can look forward to going back to 40% tax rates.

5. In addition to taxing investment income, the Medicare tax rate itself on earned income has increased by a third, from 2.9 to 3.8 percent, for higher-income individuals and families.

And now for my personal favorite:
6. Starting in 2013, the legislation increases the adjusted gross income threshold for claiming an itemized deduction for medical expenses, from 7.5 to 10 percent. A temporary exemption is provided for senior citizens.

How did they sneak this one through?  That 7.5% floor for medical deductions has been difficult enough for many people to reach.  So, if you are a married couple filing jointly, and your AGI is $75,000.  This means that in 2013, you will have to spend $7,500 in medical expenses before you can deduct one dime.

Seriously, who thought this was a good idea?