Major aspects of the Affordable Healthcare Act are now in effect and many more will be effective in the near future.
Below are some of the most important aspects that business owners should be aware of.
- Additional Medicare Tax: There will be an increase of 0.9% on the employee portion of the hospital insurance tax portion of FICA for wage earners who earn above a threshold amount for tax years beginning after 12/31/2012. The threshold for joint returns or surviving spouse is $250,000. For a married individual filing separately, it is $125,000, and for any other filer, the threshold is $200,000.
- Medicare Tax on Unearned Income: Individuals making $200,000 or joint filers making $250,000 will pay an additional 3.8% Medicare payroll tax in unearned income. Excluded from the increased tax is Interest on tax-free bonds veteran benefits, and gain from the sale of a principal residence that are excluded from gross income are not considered net investment income for purposes of the additional tax, nor are qualified retirement plan and IRA contributions.
- Flexible Spending Account Contribution Limits: The contributions to Flexible Spending Accounts cannot exceed $2,500 per year. After December 31, 2013, the amount will increase.
- Employer Retiree Subsidy: In 2013, Employers will no longer be able to receive a subsidy to and also claim tax deduction for providing prescription coverage to retirees. Instead the amount the Employer is able to deduct will be reduced by the amount of the federal subsidy received.
- State Based Insurance Exchange: State health exchanges will be set up to facilitate the purchase of qualified health plans and provide for a Small Business Health Options Program to assist small employers in enrolling their employees in qualified plans. Beginning in 2017, states may allow employers of any size to offer coverage through an exchange.
- Notice of Exchange: By March 1, 2013, employers will be required to provide all new hires and current employees written notice about the state health benefit exchanges and the consequences if an employee decides to purchase a qualified health plan through one in lieu of employer-sponsored coverage.
- W-2 reporting: Tax form W-2s issued in 2013 for wages paid in 2012 must for the first time include a line showing the benefit employees receive from their employer-sponsored health care. The provision is an attempt to make health-care benefits and spending more transparent.
For more information and guidance see www.healthcare.gov/law. There you can read the full text of the law, view a timeline and find other helpful resources.