Consumers Need to Be Aware of Tax Issues that Come With the ACA

As the Affordable Health Care Act rolls out, there are tax implications, potential penalties, and other considerations that may affect consumers, says John Beyer, CLU , president of AMS Benefit Consultants. To pay for the benefits associated with the healthcare mandate, Congress has imposed new taxes and penalties on the wealthy, the healthcare sector, and on those who refuse to purchase health insurance (an estimated 32 million Americans).

Those who don’t buy insurance are subject to the following penalties, which grow more severe in time:

• 2014 – $285 per family or 1% of the family’s income, whichever is greater.
• 2015 – $975 per family or 2% of income, whichever is greater.
• 2016 and beyond – $2,085 per family or 2.5% of income, whichever is greater.

Next year, the individual payroll tax for Medicare will increase from 1.45% to 2.35% for every dollar earned over $200,000 ($250,000/year for married couples). A 3.8% tax may be imposed on unearned income generated by dividends, interest income, capital gains and other forms of passive income, depending on your modified adjusted gross income.