Tax Reform And The Affordable Care Act (ACA)

Tax Reform And The Affordable Care Act (ACA)

Tax reform, the battle is on. The House Ways & Means Committee recently issued the first public draft of its framework for tax reform, and the Affordable Care Act is first up. 

One could not be faulted for forgetting that much of the ACA, outside of the coverage and affordability issues, involves a legion of tax provisions that was used to “encourage” and fund the program. As such, most of these tax provisions are identified for termination or replacement. In order to be fully informed on the different measures that are currently being debated we are providing the following list of proposed tax changes.

Proposed Health Coverage Tax Credit:

• Replace the insurance premium boosters (supplements) currently in place with a premium tax credit that is age-based. The credit would range from $2,000 per year, for under age 30, to $4,000 per year, for 60 and older, with a cap of $14,000. 
• Allows for advance payments of the health coverage credit  to a health savings account.

Other Key Provisions:

• Repeal of the 3.8% net investment income tax on high earners beginning in 2018.
• Repeal of the small business tax credit beginning in 2020.
• Repeal the penalty tax on individuals who don’t have health coverage effective for 2016 and thereafter.
• Repeal the penalty on large employers for not offering health coverage with minimum essential coverage.
• Delay of the 40% cadillac excise tax on high-cost health plans until 2025.
• Repeal of the 10% excise tax on indoor tanning services.
• · Terminate the annual fee on pharmaceutical manufacturers and importers beginning 2018.
• Reduce the amount of the penalty on distributions from HSAs that are not used for qualified medical expenses.
• Remove the lower limits on contributions to flexible spending arrangements after 2017.
• Repeal the medical device excise tax after 2017.
• Restore the itemizing medical expense deduction limit to 7.5% from its current 10%.
• Remove the 0.9% Medicaid surtax after 2017.
• Increase the HSA contribution limit to equal the amount of the deductible and out-of-pocket limitation.
• Married taxpayers would both be allowed to make catch-up contributions to the same HSA.

IRS Collections Outsourced To Collection Agencies:

We are all conditioned to not trust any outside contact involving IRS issues given their recent troubles with ID theft, data security, and scamming. 

That’s why its important to know that beginning this spring the IRS will begin using private collection of certain inactive overdue federal tax bills. These debt collections companies are: Conserve, Pioneer, Performant, and CBE Group. You will not want to ignore correspondence from these groups.