Health Care Reform and Your Taxes

The following is general information on what you can expect when filling your tax return as it related to the.

The requirement for all U.S. citizens to own a health insurance plan, otherwise know as the "Individual and Corporate Mandates", is the focal point for The Patient Protection And Affordable Care Act (ACA). Starting in the year 2014, Americans (except for those granted specific exemptions) will be required to purchase an approved health insurance policy.

Those who fail to do this are subject to a fine/penalty. The penalty is 1% of total income or a mandatory minimum charge which increases annually by the rate of inflation. This penalty is assessed when the person attempts to file their annual tax return.

Part of this health care law enabled the setup of health care exchanges that assist consumers in finding insurance. The exchanges themselves first opened in October, 2013.

There are tax credits/subsidies which low income individuals and families can apply for. These are provided in order to minimize any out of pocket expenses for consumers. They are capped annually and when an individual's subsidy exceeds this amount (a reconciliation takes place on their tax return). The taxpayer is responsible for any difference.

The ACA is generally funded in a variety of ways. First, there is a 3.8% surcharge on investment income (normally taxed at 15%) for filers over $200,000 or $250,000 joint as well as a .9% surcharge on Medicare taxes for those filers. Second, there's revenue collected from penalties to citizens who do not obtain a qualified plan. There is also revenue collected through the fines employers face when they fail to pay for all or nearly all of their employees comprehensive health plan. Finally, there are a number of additional taxes and fees being levied on a variety of companies who produce things such as medical equipment, even some that provide services like tanning salons.

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