Business both small and large are faced with the daunting task of complying with the requirements of the health care over-haul law (Patient Protection and Affordable Care Act of 2010) which was signed into law on March 23, 2010. Payroll processing and reporting will need to be adjusted to account for many of the changes made to benefit plans. Following are the effective dates for major tax provisions:
2010
Adoption tax credit is made refundable, retoractive to January 1, the thresholds for qualifying expenses are increased to $13,170 per child and the adoption credit is extended through 2011.
2011
- Employers must begin reporting the value of health care benefits on employees' W-2 statements
- Money in flexible speding arrangements, health savings accounts and other health reimbursement arrangements cannot be used fo over-the-counter medicines unless they are prescribed by a doctor.
- The penalty for using health savings account funds for nonqualified uses will rise to 20 percent from 10 percent.
- Employers would no longer be allow4ed to deduct from taxes the value of benefits bought for retirees with govenment subsidies for providing retiree prescription drug coverage under Medicare Part D.
2012
New information reporting is required for businesses making payment in excess of $600 in a calendar year to corporations.
2013
- Contributions to health care flexible spending arrangements will be limited to $2,500 as of January 1, 2013. The cap will be indexed to consumer price inflation beginning in 2014.
- A new 0.9 percent surtax will be added to the 1.45 percent Hospital Insurance (HI) payroll tax paid by individuals earning more than $200,000 a year or joint filers earning more than $250,000 per year. The index levels were not indexed for inflation.
- A 3.8% tax will be imposed on unearned income of individuals earning more that $200,000 per year or joint filiers earning more than $250,000 per year.
- The threshold for claiming medical expense deductions rises to 10 percent of adjusted gross income from 7.5%. The threshold will remain at 7.5 percent of income for individuals 65 or older until 2016.
2018
A 40 percent excise tax on high-cost nsurance plans goes into effect. The tax, paid by insurers or self-insured firms, is on the amount in excess of $10,200 for individuals and $27,500 for families.