The New Health Care Reform – Changes Starting in 2013

by Michele Postler, Monday, November 26, 2012

The new health care reform is fast approaching and the implementations are already starting in January 2013. This is before the final and mandatory implementation that all Americans must have health insurance in place before January 2014 or pay a tax penalty if you decide not to.

 

Changes starting in 2013

The following are important to be aware of in the next year, as they may apply to you.

 

  • Itemized deductions can be claimed at 10 percent of your adjusted gross income. This is up from7.5 percent currently. They will be claimed on your federal income tax return medical expense deductions not covered by insurance.
  • If you make an income of over $200,000 (or $250,000 for a family) per year you will be seeing an extra 0.9 percent of taxes taken from your pay check. Essentially, you will be helping to fund the Medicare program. As well, any unearned income will have a new tax at 3.8 percent. This is on income earned from investments, interest, dividends, annuities, rent, royalties and specified capital gains tax as well as inactive businesses.
  • The flexible spending account will have a higher cap starting in 2013, of a maximum $2,500. This cap will increase with inflation in the coming years.
  • Exchanges will be available starting October 2013. An exchange is a state based market place for health insurance. It is a new program to help people compare insurance, buy insurance, and to make sure the plan is tailored to their needs.
  1. You will be able to compare the same type of product side by side and get Medicare supplemental quotes.
  2. The exchange will either be built by your state or will partner with the federal government. They will have to decide this before the October 2013 start date.
  3. The process will be streamlined as you will only need to fill out one application to find out what and if you qualify for a premium discount or reduction.
  4. You will also be able to enroll in a health insurance plan after deciding what plan is best for you, including Medicare Advantage Plans.
  5. You will be able to make changes that may affect your insurance coverage, like a change in employment or marital status, as well as renew your plan using these exchanges.
  • Federally matched payments for preventative service for Medicaid will increase by 1 percent for states that offer Medicaid coverage.
  • Employers who receive a tax deduction for retiree subsidies for Medicare Part D will be eliminated.
  • Employers who do not withhold enough Medicare payroll taxes for employees will be seeing penalties starting in 2013.

The new changes are coming and they are big news, but if you’re not ready to buy into the new plan, don’t fear as the tax penalty could be less than the cost of being insured. It is estimated that about 4 million people will forego the new healthcare mandate. Mostly young adults without children who believe they are healthy enough to avoid paying for healthcare.

 
There will be a learning curve on collecting the penalties, as the IRS has been instructed not to make “aggressive efforts” to collect the penalties by the members of the Affordable Care Act (ACA). Everyone should be aware that the government plans to increase these penalty rates substantially for uninsured individual in the years following 2014 and 2015.