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Wednesday, August 22, 2012

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.

Employee Demand For Voluntary Benefits Exceeds Supply

 

At smaller businesses, economic conditions are making one-half of Gen Y and Gen X workers look more toward employee benefits as a solution to financial security – even if they have to fund 100% of the cost themselves, according to a MetLife survey.

“Younger workers have a different benefit perspective than older generations, particularly those in many smaller organizations that were hit very hard by the recession and are unsure about the future of Social Security,” said Anthony Nugent, executive vice president, Group, Voluntary & Worksite Sales, at MetLife.

Two-thirds of Gen Y and Gen X employees, who work for small businesses, are willing to pay more for their benefits rather than losing them. Fifty-four percent want a wider array of benefit options, even if it means paying all of the cost of voluntary benefits, such as life, dental, vision, disability, critical illness, or homeowner/auto insurance coverage, for example.

Fifty-seven percent of companies with 500 employees or more say that providing voluntary benefits is a key element of their benefit strategy compared to 43% who said so a year earlier. Smaller firms saw an increase to 31% from 26%. The survey also reveals the following:

• 44% of younger workers are interested in voluntary home/auto while 2% of small businesses offer this benefit.
• 41% of younger workers are interested in voluntary life while 20% of small businesses offer this benefit.
• 40% of younger workers are interested in voluntary disability while 8% of small businesses offer this benefit.
• 38% of younger workers are interested in voluntary dental while 11% of small businesses offer this benefit.
• 38% of younger workers are interested in voluntary vision while 9% of small businesses offer this benefit.
• 38% of younger workers are interested in voluntary critical illness while 10% of small businesses offer this benefit.

Almost three out of four small business employees would like their employer to offer financial education, but only 29% of employers offered these programs. Seventy-two percent of younger employees who are very satisfied with their benefit have a very strong loyalty to their employers compared to 46% of younger workers overall.

For more information, visit www.amsinsure.com or call 800-334-7875 to request more information.