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Factbox:
Tax provisions in Obama’s healthcare law
By Kim
Dixon, Reuters
May 16,
2012
(Reuters) -
President Barack Obama’s healthcare overhaul law contains a slew of new
tax
provisions, and their fate is unclear as the U.S. Supreme Court weighs
the
law’s constitutionality.
Some have
been put into effect in the two years since Obama signed the law,
including a
tanning salon tax and tax credits for small businesses. Other
provisions will
be phased in over time.
A ruling on
the law is expected in late June. Here is a look at major tax
provisions in
Obama’s Patient Protection and Affordable Care Act.
IN EFFECT
Small
business tax credits. For businesses with fewer than 25 workers and
average
annual wages of less than $50,000 a person, the credit is meant to
offset the
costs of healthcare coverage provided by the businesses. Set now at up
to 35
percent of employer contribution for small employers and 25 percent for
tax-exempt employers, the credit will rise by 2014 to up to 50 percent.
Drugmaker
fees. An annual fee on drugmakers based on sales and market share, this
will
raise $2.8 billion in government revenue for 2012-2013, rising to $4.1
billion
in 2018. The fee then ticks back down to raise $2.8 billion in 2019 and
later.
Medical
device excise tax. An excise tax of 2.3 percent on sales of medical
devices is
levied on manufacturers, which are responsible for reporting and paying
the
tax.
Tanning
salon tax. A 10 percent excise tax on consumer payments to indoor
tanning
salons, it is collected by the salons at the time of service and passed
onto
the government.
BEGINNING
IN 2013
Medicare
insurance tax increase for wealthy. This is an increase in the Medicare
hospital insurance payroll tax rate for individuals with incomes
exceeding
$200,000, or married couples making more than $250,000. The rate will
rise to
2.35 percent of wages from its current level of 1.45 percent.
Unearned
income tax. This is a new tax on investment income such as capital
gains and
dividends of 3.8 percent, on top of the current 15 percent tax, also
for
higher-income groups.
BEGINNING
IN 2014
Individual
mandate penalty fee. Under the “individual mandate” portion of the
healthcare
law, Americans must have health insurance or pay a fee to the Internal
Revenue
Service. The fee will be $95, or 1 percent of taxable household income,
in
2014. By 2016, it will rise in phases to $695 per person, with a cap
that
equals the greater of $2,085 per family or 2.5 percent of household
income.
Employer
mandate fee. Under the healthcare law, companies with more than 50
workers must
pay the IRS $2,000 for each full-time employee they do not provide
health
coverage. The first 30 employees are excluded from the fee.
Healthcare
premium tax credit. This is a credit, based on a percentage of income,
for low
and middle income individuals to help them buy insurance in state-run
insurance
marketplaces.
Health
insurers fee. The government will collect revenue from health plans,
beginning
by raising $8 billion in 2014 and ramping up to raise $14.3 billion in
2018.
Subsequent years’ fees will be based on the rate of premium growth.
COMING
LATER
“Cadillac”
health plan tax. This is a tax of 40 percent above threshold amounts on
what
are considered expensive policies. The tax, imposed on the insurer, is
based on
the value of plans with coverage costing more than $10,200 in benefits
for
individuals and $27,500 for families. Effective in 2018.
Sources:
Internal Revenue Service, Kaiser Family Foundation.
(Reporting
by Kim Dixon; Editing by Kevin Drawbaugh and Vicki Allen)
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