Plan Now for the 2013 Provisions of the Health Care Law
The Supreme Court largely upheld the Affordable Care Act last week, so taxpayers should continue preparing for the following provisions that become effective in 2013:
1. Employer-provided health Flexible Spending Arrangements (FSAs) will be limited to $2,500 per year,
2. The hospital insurance portion of the FICA tax will be increased from 1.45% to 2.35% for wages over $200,000. This number rises to $250,000 for those who are married filing jointly and $125,000 if married filing separately.
3. Medical expenses will be deductible as itemized deductions only to the extent they exceed 10% of AGI. The 7.5% threshold will still apply to taxpayers who turn 65 before the end of the tax year.
4. Taxpayers with modified adjusted gross income (AGI) over $200,000 ($250,000 if married filing jointly and $125,000 if married filing separately) will be subject to 3.8% surtax on net investment income.
5. Employers who provide qualified prescription drug coverage for Medicare Part D eligible retirees, which is subsidized by the Department of Health and Human Services, will have to reduce their deduction for the coverage by the amount of the excludable subsidy.