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What Does Health Care Reform Mean for You?

What Does Health Care Reform Mean for You?. Updated as of November 2010. Today’s Presentation. New legislation and challenges Importance of being prepared and informed Overview of key provisions, rules and requirements, and what they mean to you 2010 to 2014 effective dates Q&A.

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What Does Health Care Reform Mean for You?

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  1. What Does Health Care Reform Mean for You? Updated as of November 2010

  2. Today’s Presentation • New legislation and challenges • Importance of being prepared and informed • Overview of key provisions, rules and requirements, and what they mean to you • 2010 to 2014 effective dates • Q&A 2010 American Institute of CPAs

  3. 2010 Healthcare Reform Legislation • Patient Protection and Affordable Care Act • Health Care and Education Reconciliation Act of 2010 • Legislation’s impact − substantial and long term 2010 American Institute of CPAs

  4. Provisions • National high-risk pool • Lifetime limits and serious illness • Pre-existing condition exclusion • Dependent care coverage • Medicare taxes • Itemized deduction threshold for unreimbursed medical expenses • Mandatory insurance coverage • Premium assistance credit • Adoption credit • Adoption assistance program exclusion • Health FSAs, HSAs, HRAs and Archer MSAs • Indoor tanning services 2010 American Institute of CPAs

  5. National High-Risk Pool • Temporary high-risk pool and subsidized coverage for adults with pre-existing conditions available through 2013  • Pre-existing conditions no longer excluded beginning 2014 • Pool dissolves in 2014 2010 American Institute of CPAs

  6. Lifetime Limits and Serious Illness • No lifetime limits on coverage allowed • No policy cancellations for serious illness allowed • Effective: September 23, 2010 2010 American Institute of CPAs

  7. Pre-Existing Condition Exclusion • Plans may not exclude children due to pre-existing conditions • Effective: September 23, 2010 2010 American Institute of CPAs

  8. Dependent Care Coverage • Employer-provided accident or health plans • Reimbursements excluded from taxable income for dependents up to age 27 (effective March 30, 2010) • Continued coverage for adult child until age 26 (effective September 23, 2010) 2010 American Institute of CPAs

  9. Medicare Taxes • 0.9% increase depending on wages and filing status • 2.35% Medicare tax rate • 3.8% tax on investment income or modified adjusted gross income (MAGI) over the above limits depending on filing status • Effective: 2013 2010 American Institute of CPAs

  10. Itemized Deduction Threshold for Unreimbursed Medical Expenses • Increased itemized deduction threshold – 10% of adjusted gross income (AGI) • Age-based exception – remains at 7.5% if individual/individual’s spouse has turned 65 before close of tax year (to expire after 2016) • Effective: 2013 2010 American Institute of CPAs

  11. Mandatory Insurance Coverage • Individuals are required to have health insurance • Penalties for non-compliance based on fixed amount or percentage of income over filing thresholds • Nocriminal penalties, or IRS liens or seizures 2010 American Institute of CPAs

  12. Mandatory Insurance Coverage Exceptions • Insurance cost exceeds 8% of income • Incarcerated individuals • Members of Native American Indian tribes • Individuals not legally present in US • Individuals claiming religious conscience exemption • Effective: 2014 2010 American Institute of CPAs

  13. Premium Assistance Credit • Refundable tax credit • Treasury payment directly to insurer • Income-based eligibility • Inflation adjustment • Effective: Years ending after December 31, 2013

  14. Adoption Credit • Maximum $13,170 credit per eligible child • Applies to both non-special-needs and special-needs adoptions • Refundable credit • Inflation adjustment for new dollar limit and credit phase-out • Effective: 2010 Caution: Credit reverts to $6,000 and available for special-needs children only after December 31, 2011 2010 American Institute of CPAs

  15. Adoption Assistance Program Exclusion • Maximum $13,170 per eligible child exclusion for employer-provided adoption assistance programs • Inflation adjustment for new dollar limit and income limitations of exclusion • Effective: 2010 Caution: Income exclusion goes away after 2011. 2010 American Institute of CPAs

  16. Health FSAs, HSAs, HRAs and Archer MSAs • Increased penalty for non-health withdrawals from HSAs (10% ti 20%) and Archer MSAs(15% to 20%) (effective 2011) • No over-the-counter drug purchases from health FSAs, HSAs, HRAs or Archer MSAs(effective 2011) • Health FSA contribution limit of $2,500 (effective 2013) 2010 American Institute of CPAs

  17. Indoor Tanning Services • 10% excise tax • Tax collection at time of payment • Effective: July 1, 2010 2010 American Institute of CPAs

  18. The Road Ahead • A process not an event • New proposals, adjustments and other changes • Professional guidance • www.360financialliteracy.org 2010 American Institute of CPAs

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