Congress takes next step toward health care reform
While many of us were wrapping Christmas gifts or planning holiday gatherings this past Christmas Eve, the Senate passed an $871 billion health care reform bill by a vote of 60 to 39. The “Patient Protection and Affordable Care Act of 2009” would expand health insurance coverage to 94% of Americans and pay for it with billions of dollars in new taxes and fees.
The House passed its version of health reform back in early November. Its bill, the “Affordable Health Care for America Act,” also extends coverage and pays for it with a different collection of taxes and fees from those in the Senate bill.
Both bills are massive and contain provisions that would affect individuals, businesses, and the medical and insurance industries. A conference of members from the House and Senate will be held in January to work out the differences between the two bills and fashion one piece of legislation. When that bill comes out of conference, it must be passed by the House of Representatives and the Senate before it can be sent to the President to be signed into law.
Among the tax provisions in the Senate bill:
* A 40% excise tax on employer-provided health insurance plans with annual premiums over $8,500 for individuals and $23,000 for families. Somewhat higher limit for retirees and those in high-risk professions.
* A penalty excise tax for individuals who fail to maintain health insurance coverage, starting at $95 in 2014 and increasing to $750 by 2016.
Among the tax provisions in the House bill:
* A 5.4% surtax on single taxpayers with incomes over $500,000 and joint filers with incomes over $1 million.
* An additional tax levied on those who fail to obtain health insurance coverage of either 2.5% of their adjusted income or the average cost of insurance premiums available on the new health care exchange. Exemptions provided for lower-income individuals.
Both the Senate and the House bills provide individuals and businesses with tax credits to help with the costs of insurance. It’s important to note that the provisions in the final bill may differ significantly from those in either of the current bills, so as you begin your tax planning for 2010, remember that health reform and the taxes connected with it are still a work in progress, not a final law.