• Giving small firms tax credits as incentives to provide coverage, starting this year. Employers with 10 or fewer workers and average annual wages of less than $25,000 can receive a credit of up to 35 percent of their health premium costs each year through 2013. The credit is phased out for firms larger than that and disappears completely if a company has more than 25 employees or average annual wages of $50,000 or more. Beginning in 2014, small firms that sign up with one of the health exchanges to be created can receive a credit of up to 50 percent of their costs.
• A requirement that businesses include the value of the health care benefits they provide to employees on W-2s, beginning with W-2s for 2011.
• Elimination, after this year, of a deduction employers now take for providing Medicare Part D prescription drug coverage to their retirees to the extent that the federal government subsidizes the coverage. This will not take effect until 2013.
• Doubling the penalty for nonqualified distributions from health savings accounts, to 20 percent, beginning in 2011.
• A limit on the amount that employees can contribute to health care flexible spending accounts to $2,500 a year. Under the House package of changes, the cap won’t take effect until 2013.
• A ban on using funds from flexible spending accounts, health reimbursement arrangements or health savings accounts for the cost of over-the-counter medications, starting in 2011.
• Imposing a 0.9 percent Medicare surtax on wages of single taxpayers earning more than $200,000 a year and couples earning over $250,000, starting in 2013. In addition, the House’s package of modifications would levy a special 3.8 percent Medicare tax on the unearned income of those taxpayers. The House defines unearned income as interest, dividends, capital gains, annuities, royalties and rents. Tax-exempt interest would not be included, nor would income from retirement accounts.
• A hike in the 7.5 percent floor on itemized deductions for medical expenses to 10 percent, beginning in 2013. But taxpayers age 65 and over are exempt from the cutback through 2016.
• A new 40 percent excise tax, beginning in 2013, on high-cost health plans, defined as those providing coverage in excess of $8,500 for individuals and $23,000 for families. The House’s package of modifications includes higher threshold amounts and an initial effective date of 2018.
• A new tax on individuals who don’t obtain adequate health coverage by 2014. The tax is be phased in over three years, starting at the greater of $95, or 0.5 percent of income, in 2014, and rising to the greater of $750, or 2 percent of income, in 2016. The House passed companion measure would modify this provision so that a person without coverage in 2014 would pay the greater of $95, or 1 percent of income, and in 2016 would pay the greater of $695, or 2.5 percent of income.
• Providing a refundable tax credit, once the individual mandate takes effect in 2014, to help low-income folks purchase coverage. To be eligible, a person’s household income must be between 100 percent and 400 percent of the federal poverty level, generally around $11,000 to $44,000 for singles and $22,000 to $88,000 for families.
• A nondeductible fee charged to businesses with 50 or more employees if the firms fail to offer adequate coverage. The fee will equal $750 times the number of workers in the firm, and is slated to go into effect in 2014. The House’s package of modifications would increase that fee to $2,000 times the number of employees, though it would not count the first 30 workers in that calculation.
300
200
100
