Thursday, March 25, 2010

Answers on Health Care Reform and Taxes

An article in USA TODAY answers questions posed by readers about the new health care law. Take a look at two of the questions and their answers:

Q: How will the new health care bill affect the amount I am taxed from each pay check?

A: It depends on how much you earn. In 2013, the Medicare payroll tax, which is now 1.45%, will increase to 2.35% for individuals who earn more than $200,000 and married couples filing jointly who earn more than $250,000. The additional tax is applied only to the amounts above those threshold levels. That means a single taxpayer with an annual income of $250,000 will pay an additional $450 per year in Medicare taxes, while someone earning $500,000 will pay $2,700 more a year.

Q: My wife and I are self-employed, own and operate a mom-and-pop retail/service business. (Our health care) premiums just went up $100 per month. We simply cannot afford this, but have no other choice. Most insurance companies only want group policies. Will this new bill do anything to help us?

A: Maybe, but not immediately. Beginning in 2014, small companies and individuals who don't have insurance through work will be able to purchase insurance through newly created marketplaces, known as insurance exchanges, created and regulated by the states.
Think of it as an Orbitz or Travelocity for health care insurance. The idea is to lower costs by applying the same market principles as the purchasing power of group plans.

The Congressional Budget Office (
CBO) estimates that about 26 million Americans will purchase their policies through the exchanges. The CBO also estimates, however, that four in 10 people who buy insurance independently of a large employer could wind up paying 10% to 13% more. Others would receive federal subsidies to significantly lower those costs, so it depends how much you and your wife earn. Those earning up to 400% of the poverty level, or up to $88,200 for a family of four, will get some assistance.

Also, small businesses with fewer than 25 employees will be eligible for tax credits to help pay for health care costs for employees, as explained in a question above.

See more Q&A’s in the full article.

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