In last week’s post, we talked about how the Affordable Care Act (also known as ObamaCare) aims to increase access to healthcare. This week we’ll talk about additional costs, taxes, or tax credits you may see with the new law.
Changes to Medicare Part D to Save You Money
Donut Hole Disappears in 2020
Each year since 2010, the donut hole amount has been reduced by 10%. It will continue to go down 10% each year until it disappears in 2020. Then, you will only pay your normal 25% coinsurance after you reach your deductible. Coinsurance means Medicare pays 75%, you pay 25%.
Reduced Costs on Some Brand Name Drugs
Since it’s 2012, and you still have a donut hole, the government has negotiated with brand name drug manufacturers to offer 50% off some prescriptions. Check with your local pharmacy to see if the discount applies to your medications.
Fewer Tax Breaks for Certain People
Itemized Medical Expense Deduction Goes Up
Starting next year, if you want to deduct medical expenses on your taxes, you could only do so if they exceeded 10% of your adjusted gross income. In past years, that percentage was 7.5%.
That means, if you make $50,000 a year, you would have to have $5,000 in medical expenses in order to deduct them.
If you’re over 65, your threshold will continue to be 7.5% of your adjusted gross income until 2016.
FSA Contributions Capped at $2500
Gone are the days of putting several thousand dollars into an FSA and getting the benefits of that tax-free money. Starting in 2013, you can only put $2500 into an FSA (flexible spending account.) This amount will increase annually based on a cost of living adjustment.
Watch for These New Tax Increases
Medicare Part A Tax Goes Up for High Earners
High earners (individuals who make $200,000 or couples filing jointly who make $250,000) will see an increase in the Medicare Part A tax from 1.45% to 2.35%. For these same high earners there will be a 3.5% assessment on unearned income (such as dividends and interest income).
New Taxes on Medical Devices
Starting in January 2013, manufacturers will be charged a 2.3% tax on all sales of medical devices – things like latex gloves, pacemakers, prosthetics, stents, and defibrillators. There are worries that this new tax could cost thousands of American manufacturing jobs.
These are the top 5 changes that could impact you. Remember to follow us on Twitter for up-to-date alerts about healthcare reform.
For more information about healthcare reform, visit Healthcare.gov.