Senate Strips Tax Provision in Health Care Bill

More action in President Obama's health care reform legislation. Yesterday, in addition to voting against a full repeal, the Senate voted to get rid of the highly unpopular 1099 reporting provision. And business owners across the nation heave a simultaneous sigh of relief.

MSNBC reports:

In a bipartisan vote of 81-17, the Senate just voted to stripe the health care law of a controversial tax measure, the so-called 1099 provision.

It's a reporting requirement tucked into the law that mandates businesses submit IRS tax form 1099 for every vendor it pays more than $600.

It was designed to prevent vendors from underreporting income to the IRS while simultaneously offsetting the cost of the health care law. Instead, opponents say, it will create a paperwork nightmare for small businesses and the IRS.

Continue reading at MSNBC.com...

Will Obamacare Really Kill 1.6 Million Jobs?

Conservative leaders in the House of Representatives are hoping to vote to repeal the health care reform package, and their main point is that the legislation will kill 1.6 million jobs. There’s been a lot of rhetoric about the “job-killing heath care bill,” but is that really true? Not so much, says Factcheck.org.

Daily Finance reports:

The Republicans certainly feel that it will, and they've put a number to the claim: 1.6 million jobs lost. They've sponsored a bill they call the Repealing the Job-Killing Health Care Law Act, which is likely to come up for a vote early next week. The bill will probably pass the House, where the Republicans have a majority, but will likely fail in the Democrat-controlled Senate. Even if it passed the Senate, though, President Obama would certainly veto the proposal.

The Republicans have based their claim that the law will kill 1.6 million jobs on an August 2010 report by the Congressional Budget Office, which said the Affordable Care Act would reduce the amount of labor in the economy by about 0.5%, because more people would choose to retire earlier, thanks to the reduced cost of health insurance.

But as an analysis by FactCheck.org points out, having people leave the job market because it has become financially possible for them to retire is entirely different from killing jobs. The FactCheck report says, in part: "The House Republican leadership. . . badly misrepresents what the Congressional Budget Office has said about the law. In fact, CBO is among those saying the effect 'will probably be small.'"

An Impediment to Hiring

The GOP's political leaders aren't the only ones who have issues with Obamacare. Another criticism has been made by the U.S. Chamber of Commerce, a private business-lobbying group. The chamber maintains that one provision -- that small businesses with more than 50 full-time employees must provide adequate health care coverage for their workers or face a penalty of between $2,000 to $3,000 per worker -- is causing many small firms to stop hiring.

Read more here

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Permanent = no, temporary = yes

Acne Cream? Tax-Sheltered. Breast Pump? No.

As part of the new health reform bill, a handful of medical expenses will result in a break for American taxpayers. Dentures, acne cream, and even artificial turf for children with allergies are all viewed as medical expenses by the IRS. However, nursing mothers will not be allowed to use tax-sheltered health care accounts to pay for breast pumps, since the IRS has ruled that breastfeeding does not qualify as a form of medical care.

NY Times.com reports

With all the changes the health care overhaul will bring in the coming years, it nonetheless will leave those regulations intact when new rules for flexible spending accounts go into effect in January. Those allow millions of Americans to set aside part of their pretax earnings to pay for unreimbursed medical expenses.

While breast-feeding supplies weren’t allowed under the old regulations either, one major goal of the health care overhaul was to control medical costs by encouraging preventive procedures like immunizations and screenings.

Despite a growing body of research indicating that the antibodies passed from mother to child in breast milk could reduce disease among infants — including one recent study that found it could prevent the premature death of 900 babies a year — the I.R.S. has denied a request from the American Academy of Pediatrics to reclassify breast-feeding costs as a medical care expense.

In some respects, the biggest roadblock for mothers’ groups and advocates of breast-feeding is one of their central arguments: nursing a child is beneficial because it is natural.

I.R.S. officials say they consider breast milk a food that can promote good health, the same way that eating citrus fruit can prevent scurvy. But because the I.R.S. code considers nutrition a necessity rather than a medical condition, the agency’s analysts view the cost of breast pumps, bottles and pads as no more deserving of a tax break than an orange juicer.

Read more here

For Many, Health Care Relief Begins Today

A number of the provisions provided in the Patient Protection and Affordable Care Act will take effect today, offering relief to thousands of Americans. The act now prohibits insurance companies from excluding children because due to pre-existing health conditions, and insists they offer coverage to children under 26 on their parents insurance. Read more from the NYTimes.com story below.

Sometimes lost in the partisan clamor about the new health care law is the profound relief it is expected to bring to hundreds of thousands of Americans who have been stricken first by disease and then by a Darwinian insurance system.

On Thursday, the six-month anniversary of the signing of the Patient Protection and Affordable Care Act, a number of its most central consumer protections take effect, just in time for the midterm elections.

Starting now, insurance companies will no longer be permitted to exclude children because of pre-existing health conditions, which the White House said could enable 72,000 uninsured to gain coverage. Insurers also will be prohibited from imposing lifetime limits on benefits.

The law will now forbid insurers to drop sick and costly customers after discovering technical mistakes on applications. It requires that they offer coverage to children under 26 on their parents’ policies.

Continue reading at NYTimes.com…

Tax Credit Bonanza for Small Businesses

From CNNMoney.com:

Across the country, small businesses are talking to their accountants about a hefty tax credit that could make health insurance a little more affordable.

Six months after sweeping health care reform was enacted, the cost of health insurance remains one of the most pressing issues facing small businesses. Premiums typically run 18% higher for small businesses than for larger companies.

The health care law called for the expansion of state-run exchanges aimed at helping small businesses find affordable coverage. But not until 2014. To bridge the gap, the law also established a slew of significant tax credits to small firms starting this year.

The Internal Revenue Service has sent out millions of post cards to business owners and tax professionals alerting them to the tax credit. Business owners are still working to get their heads around the details, but it's a bit of bright news for those who'll qualify.

"That would be fantastic," said John Wilson, owner of Artistic Kitchens and Baths, a cabinetry and interior design business in Southern Pines, N.C. Wilson pays 80% of the cost of insurance for six of his twelve full-time employees. The other six employees opt for insurance through other avenues, such as their spouse's plan. "Health care costs are really, really high and that has been a big, big problem," said Wilson.

Read the original story here

Senate Fails to Cut Tax Provision in Health Law

According to the Associated Press, on Tuesday the Senate voted against repealing a new tax reporting provision in the new health care law. Even the White House backed the proposal by a Senator Bill Nelson to exempt companies with 25 or fewer workers and raise the reporting threshold for businesses with more than 25 employees.

It was an inconclusive ending to an early skirmish over repealing part of President Barack Obama's signature domestic policy achievement. But it signaled battles to come if Republicans gain control of Congress in the midterm elections this fall.

Tucked into the health law is a requirement that businesses file tax forms called 1099s with the Internal Revenue Service for every vendor that sells them more than $600 in goods. Business groups say it would create a paperwork nightmare for more than 40 million companies as they struggle to keep going in a weak economy.

But Nelson's amendment failed a 60-vote procedural test 56-42. That vote came shortly after the Senate also sidelined, by 46-52, an amendment by Sen. Mike Johanns, R-Neb., that would have repealed the reporting requirement.

"We're stuck on this issue of whether or not businesses are going to have to file these 1099s," Nelson said.

The votes were a sidelight in a debate over broader legislation to help small businesses, but nonetheless they underscored the difficulty of making any substantial changes to the health care law.

Continue reading at Google.com…

Health Law Likely to Add to Employer Costs

Employer health care costs will likely rise by 7-8% in 2011 due to the health care reform law enacted by Congress back in March. Employees may see a rise in deductibles and co-pays to offset this increase. According to Kiplinger.com, the anticipated savings will probably take five or more years to realize. That’s when insurance exchanges and other measures will start to take effect.

What’s making costs rise for employers? Covering kids until age 26 is a big contributing factor. The elimination of lifetime benefit caps and unforeseen bookkeeping problems also will not help. With older kids being covered now, companies might not be able to charge any surcharges by law, but more firms will get around that by charging more for say, a family of 6 than for a family of 4. Deductibles and co-pays may go up as well like I explained above, to help employers counterbalance the increased cost.

For the time being, many firms are considering these options as a way to save money:

• High quality medical providers—for example, employers sending heart patients to the Cleveland or Mayo clinic instead of unnecessary appointments.
• Setting up a “medical home” for each patient, especially the chronically ill. A physician’s office coordinates specialists, nursing homes and other providers and shares in any cost savings.
• Tiered co-pays of non drug treatments, based on cost effectiveness—acupuncture and exercise instead of back surgery for example.
• Clinics and telephone care. Firms too small for their own on-site clinic set up kiosks so workers can consult by phone or the Internet with staff doctors or other health providers.

Read the full article here.

$250 Medicare checks begin to be issued

According to CNN Money, one of the first tangible effects of the health care reform law is the fact that the government has begun to mail out $250 checks this week to seniors who fall within Medicare’s gap for prescription drug coverage. Checks will continue to be mailed to seniors falling within this category throughout the year.

The gap or “donut hole” occurs when a senior citizen’s prescription drugs cost too much to be paid for through basic Medicare coverage, but aren’t expensive enough to qualify for other coverage. In addition to a $310 deductible, Medicare beneficiaries pay 25% of their drug costs until the total reaches $2,830 for the year. Then, they fall into a coverage gap. At that point, enrollees must pay all costs out of pocket until their annual expenses exceed $6,440. After that, seniors pay 5% of drug costs for the rest of the year.

What’s the plan for 2011? Seniors who fall into the ‘donut hole’ will receive a 50% discount on brand-name drugs. The discount for generic drugs will be 7%. Those figures will rise over the years, eventually reaching a total 75% discount that effectively will eliminate the gap in 2020.

So, what do you think about this aspect of the health care law…will it really help?

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U.S. Sets Application Window for Drug Tax Credit

From Reuters.com:

Small U.S. drugs and biomedical research firms will have a one-month window to apply for a new $1 billion tax credit for research into new therapies, according to guidance issued by the U.S. Treasury Department on Friday.

The two-year tax credit, created under this year's landmark health care legislation championed by President Barack Obama, aims to accelerate research into new therapies and projects that reduce medical costs.

Firms with less than 250 employees can apply for the credit, which covers up to 50 percent of qualifying research costs up to $5 million annually, from June 21 to July 21, the Treasury said. The credits can be applied to expenses incurred in 2009 and 2010.

Decisions on qualifying projects, which will be evaluated by the Department of Health and Human Services, will be issued by Oct. 29, the Treasury said.

"This new tax credit will help advance research to find life-saving treatments and help U.S. companies lead the way in innovative medical discoveries," Treasury Secretary Timothy Geithner said in a statement.

Nickel and dimed by Obama's microtaxes

According to a Fortune magazine survey almost half of taxpayers feel they aren’t getting what expect with their tax dollars. To add to this, some taxpayers will be soon paying a lot more in taxes. The taxing nuggets President Obama has included within the health care reform act are being referred to as a “nickel and diming” tactic because of the variety of new taxes sprinkled throughout the bill that target high earners.

I started to talk about these proposed taxes back in April on my blog here. The reform act includes a 3.8% tax on interest and dividends. There will also be a .09% increase in the Medicare payroll tax. Currently the Medicare payroll tax is 2.9% on all wages, with the worker and his employer each paying 1.45%. Under the new 2013 Medicare payroll tax increase a high income individual will be paying 2.35% of their wages.

Please read more CNNMoney.com here.

Health Care Reform’s Tax Change Creating Headaches

The media might be putting the news to the extreme in the article, Health care law's massive, hidden tax change from CNNMoney.com, but yes, it looks as though a provision of the health reform law is creating some extra paperwork for business owners.

Section 9006 of the health care bill states that beginning in 2012 all companies will have to issue a 1099 tax form to any individual or corporation from which they buy more than $600 in goods or services in a tax year.

IRS Form 1099s are currently used to document income for contract workers (meaning non-employees). The change in how 1099s will be used is twofold: it expands their scope by using them to track payments not only for services but also for tangible goods, and it requires that 1099s are issued to corporations, not just individuals. Yes, expanding the definition of person to include corporation means more reporting requirements, not to mention the enormous amount of paper and postage involved, and that can be fairly burdensome especially for small businesses.

People are also concerned, however, that this will mean any retail purchase a freelancer does at a major store or every routine purchase a business makes, they will need to send a 1099 to that supplier at the end of the year tallying up their purchases. However, Tax Girl, in her blog today feels like I do: when the IRS regulations come out routine purchases and large retailer corporations may be excluded.

The phrase in the new law that’s likely to ease the potential reporting chaos:

“The Secretary may prescribe such regulations and other guidance as may be appropriate or necessary to carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.”

The IRS will hold public hearings on any proposed regulations and give you, as a taxpayer, the right to put in your two cents. They usually accept public comment via US mail and email. Take advantage of the opportunity to make your voice heard if you feel the added paper work is too much or you are not happy with the regulations. Since the new law is effective January 1, 2012, you will likely see proposed regulations and public hearings in 2011.

Read more here.

Tax Bills Won’t Rise for Parents Who Keep Older Kids on Health Insurance

After millions of taxpayers expressed anger over concerns they might be hit with additional taxes for children under the age of 27 still receiving health benefits, both the IRS and Obama administration have spoken up regarding the issue. According to LA Times.com, the Federal government announced that tax bills will NOT increase for these families.

The president and his congressional allies have billed the new benefit for older children as one of the most immediate advantages of health legislation that in other respects remains highly controversial.

And last week, after prodding from Health and Human Services Secretary Kathleen Sebelius, several leading national insurance companies said they would offer the extended coverage immediately to parents who buy plans on their own.

But the healthcare bill did not make clear if employees would have to pay taxes on the additional benefit if they receive health insurance through work, as most Americans do.

Tuesday, the IRS issued a 12-page notice explaining that the added insurance for children under 27 would be tax-free, like other employer-provided health benefits, and that employers with some kinds of plans could begin offering the benefit immediately.

Continue reading at LA Times.com…

The Pros and Cons of Soda Taxes

With the recent passage of Obama’s health care reform bill, two topics have been in the news frequently: tax increases and the health of American citizens. One such tax increase is the so called “soda tax” which have been mentioned in Congress multiple times over the past few years; however, they have been unsuccessful in beening passed into law on a national level. With so many myths, and opinions about soda taxes being published online I decided to put together this blog entry explaining both the pros and cons so that my readers could make their own decisions about the possibility of a tax on carbonated beverages.

Pro: Fight Obesity

One of the most prominent arguments for instituting a national soda tax is to provide incentive for Americans to eat and drink healthier products and thus decrease obesity. There are numerous medical associations that have publicly announced their support of taxes on sugary beverages and some have even conducted studies to examine the potential health benefits of such a tax. A study conducted between the years 1985 and 2006, involving over 5,000 patients, showed a direct correlation between higher soda prices and the average daily caloric intake of Americans. Their study found that when the cost of a can of soda increased by 10%, the average patient consumed 7.12% fewer calories per day.

Con: Little Affect on Obesity

For every expert standing behind a soda tax, there is another who opposes it. Although some studies link soda prices with caloric intake, other health experts claim that problems with moderate eating, and lack of physical activity are more to blame for the countries obesity problem than sodas. When discussing the issue Dr Pepper Snapple Group Inc (DPS.N) Chief Executive Larry Young even said "let's put warning labels on sofas, because that's where kids are sitting instead of (being) outside playing.”

Pro: Additional Federal Revenue

There is no denying the fact that the federal government is looking for ways to increase revenue. Currently, there are about a dozen local government agencies – including Kansas, Colorado, and the city of Philadelphia – that have or are likely to begin enforcing soda taxes. The soft drink industry takes in about $110 billion per year in American sales, and whether or not a soda tax will help improve the health of the country, it could generate additional federal revenue. With so much spending going on in Washington, Congress is considering almost anything to generate more revenue.

Con: Recycling Fees

A large reason that many government agencies are hesitant to institute soda taxes is the fear that it might have an effect on the tax levied on the cans, bottles, and glass containers that carbonated beverages are sold in. These taxes are used to promote recycling, not public health, and are not generally that controversial. However, some experts are worried that adding a soda tax, on top of a recycling fee, could cause consumers to question these taxes on recyclable containers.

Pro: Incentives for Soda Company

Even before soda taxes became a popular topic of conversation, PepsiCo and Coca-Cola have both been working on tactics to improve their appeal to the ever growing group of health conscious Americans. However, with soda taxes becoming a reality in dozens of places across the country, the pressure is on for soft drink makers to produce healthier products.

Recently, PepsiCo responded to this new demand by creating a Gatorade beverage with all natural coloring and flavoring to be featured in health stores later this year. The company has also announced long term plans to make all of their products healthier over the next decade. They will reportedly cut the average amount of sugar per serving by 25% and the saturated fat by 15% in all products.

Con: Consumer Rights

Like other “sin” taxes, many Americans are most upset by the idea of using a tax to promote public health. Consumers of carbonated beverages feel like it is their right to indulge in sugary beverages, and the lack of moderation exhibited by some does not mean the government should enforce a tax increase on every American. Additionally, in today’s tough economic times many families are struggling to put food on the table, and any taxes on these family’s grocery bill would surely be unwelcome.

FactCheck.org: IRS Will Not Need to Hire 16,500 New Agents to Enforce ObamaCare

From FactCheck.org via Tax Prof:

Q: Will the IRS hire 16,500 new agents to enforce the health care law?

A: No. The law requires the IRS mostly to hand out tax credits, not collect penalties. The claim of 16,500 new agents stems from a partisan analysis based on guesswork and false assumptions, and compounded by outright misrepresentation. ...

The IRS’ first task is to inform many small-business owners of a new tax credit that the new law grants them — starting this year — which will pay up to 35 percent of the employer’s contribution toward their workers’ health insurance. And in 2014, the IRS will also be administering additional subsidies — in the form of refundable tax credits — to help millions of low- and middle-income individuals buy health insurance.

The law does make individuals subject to a tax, starting in 2014, if they fail to obtain health insurance coverage. But IRS Commissioner Douglas Shulman testified before a hearing of the House Ways and Means Committee March 25 that the IRS won’t be auditing individuals to certify that they have obtained health insurance. He said insurance companies will issue forms certifying that individuals have coverage that meets the federal mandate, similar to a form that lenders use to verify the amount of interest someone has paid on their home mortgage. "We expect to get a simple form, that we won’t look behind, that says this person has acceptable health coverage," Shulman said. "So there’s not going to be any discussions about health coverage with an IRS employee." In any case, the bill signed into law (on page 131) specifically prohibits the IRS from using the liens and levies commonly used to collect money owed by delinquent taxpayers, and rules out any criminal penalties for individuals who refuse to pay the tax or those who don’t obtain coverage. That doesn’t leave a lot for IRS enforcers to do.

Honestly, this is a lot speculation surrounding the new health care bill, there are many questions that are simply unable to be answered until some of the provisions of the new law actually begin to play out. It is great to check out the source of the information before you buy 100 percent in to the information. The bottom line is: although, they did not ask for this job, the IRS will act as enforcer of this bill so if you are not able to report to them that you are in compliance with the specifics of this law, you will face tax penalties.

AT&T Plans $1 Billion Charge For Health Care

According to the Huffington Post, AT&T inc. plans to take a $1 billion non-cash accounting charge during the first quarter due to the new health care reform package. The company has also warned it may cut benefits currently being offered to employees and retired workers.

The charge is the largest disclosed so far. Earlier this week, AK Steel Corp., Caterpillar Inc., Deere & Co. and Valero Energy announced similar accounting charges, saying the health care law that President Barack Obama signed on Tuesday will raise their expenses. On Friday, 3M Co. said it will also take a charge of $85 million to $90 million.

All five are smaller than AT&T, and their combined charges are less than half of the $1 billion that AT&T is planning. The $1 billion is a third of AT&T's most recent quarterly earnings. In the fourth quarter of 2009, the company earned $3 billion on revenue of $30.9 billion.

AT&T said Friday that the charge reflects changes to how Medicare subsidies are taxed. Companies say the health care overhaul will require them to start paying taxes next year on a subsidy they receive for retiree drug coverage.

White House spokesman Robert Gibbs said Thursday that the tax law closed a loophole.

Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits – including the subsidies – from their taxable income.

The new law allows companies to only deduct the 72 percent they spent.

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.

Student-Loan Reform

From Time.com:

Government takeover!" So yelled the many critics of President Barack Obama's health care reform bill. But in their focus on the main event, Republicans seem to have all but ignored another part of the legislation that more precisely fits their rhetoric. In addition to securing the President a victory on health care, the House bill took him one step closer to delivering on a promise to reform the college-student-loan system. If a final piece of legislation before the Senate is approved, millions of students will get their federal loans directly from the Department of Education. In other words, the federal government would sweep aside private competitors in the biggest change to the federal student-loan program since its creation in 1965. It's a legitimate government takeover.

So where's all that outrage now? The thing is, the government already runs much of the student-loan industry. For decades under the Federal Family Education Loan (FFEL) program, the government has handed out subsidies to large banks and companies like Sallie Mae that lend money to student borrowers and collect it from them. In addition, the federal government has been obligated to cover up to 97% of any defaulted loan, effectively eliminating risk for lenders. Figuring that money could be saved by cutting out the middleman, Congress created the Direct Loan program--in which money goes from the Education Department to students--in 1993. The programs have been in competition with each other since then.

Until now. Gone will be the subsidies, and gone will be the FFEL program. As of July 1, all new student loans will go through the Direct Loan program. The savings--an estimated $61 billion over 10 years--will be used to shore up and increase the need-based Pell Grant program by $36 billion and invest in community colleges. While the Administration has reason enough to crow about the proposed measures, it has had to scale back some of its bigger plans. An earlier version of the bill would have invested an additional $20 billion and offered even more substantial financial-aid increases. As it stands, $13.5 billion will be used to stem Pell Grant shortfalls resulting from the increased number of students forced back to college by the ailing economy. And a plan to raise the maximum Pell amount to almost $7,000 per year by 2020 has been replaced with one that maxes out at about $6,000.

With his first major piece of education legislation out of the way, Obama will likely move on to K-12 matters later this year as he attempts to rework the unpopular No Child Left Behind law. But before then, members of Congress (and America's students) are going on spring break.

10 Things you Should Know About the Tax Implications of Health Care Reform

Yesterday morning President Barack Obama signed the historic health care reform bill into law. Many experts are citing the legislation as the largest social package to pass through Congress in over forty years, and it will obviously have a significant impact on all American taxpayers. There have been dozens of stories published regarding health care reform, and it can be hard to comprehend everything. Therefore, I have gathered a list of the 10 most important things you should know about the tax implications of the legislation.

1. Mandatory Coverage Penalties in 2014

As you have probably already heard, beginning in 2014 you will be required to have health insurance. If you do not, then you will be forced to pay a $95 per person (or 1% of your income) fee. In 2016 this amount will increase to $695 or 2.5% of your income.

2. IRS Enforcement / Additional Costs

Unfortunately, the IRS is slated to take care of handling the mandatory coverage penalties that take effect in 2014. However, as Professor James Maule explains in this blog entry the thought of the IRS reviewing and approving every single American’s health insurance plan, when they can barely handle processing tax returns will be interesting to see. Additionally, the Congressional Budget Office has estimated they would need at least $10 billion dollars in additional funding to meet this new responsibility.

3. Low Income Subsidies

To help offset the cost of purchasing health insurance for your family, the federal government will provide taxpayers who cannot afford coverage with significant subsidies. It has been estimated that all families making under about $88,000 per year will qualify for some type of tax incentive.

4. Fees on Employers

You probably already know that under the package large businesses will be required to provide coverage for employees or pay a per worker fine. However, under the compromise package this fee was raised from $750 to a staggering $2,000. Employers will be able to qualify for a temporary tax credit of up to 35% of their contributions towards health insurance premiums.

5. Medicare Tax Changes

One of the largest tax increases in the new health care reform legislation is the additional Medicare tax on high-income taxpayers. Single workers making over $200,000 and married couples filing a joint return that make over $250,000 will be required to pay an additional 0.9% Medicare payroll tax. However, this is not the only Medicare related tax increase. A new 3.8% Medicare tax will be imposed on net investment income.

6. Doughnut Hole Rebates

In order to fill the hole in prescription drug coverage, all senior taxpayers in the country will receive a $250 “doughnut” hole rebate this year.

7. Medical Expense Deduction Increase

Another component of the new law increases the minimum for qualifying for the medical expense deduction. Currently, in order to claim the deduction your medical expenses need to total 7.5% of your adjusted gross income, but in 2013 it will be raised to 10%. However, seniors will be exempt from this increase until 2017.

8. Cadillac Taxes

Another tax implication of health care reform that I have discussed many times over the past few months, are the “Cadillac taxes” that will be imposed on high-cost employer provided health care plans. This tax will be 40%. However, the qualifying amounts were raised in the compromise package to $10,200 for single taxpayers or $27,500 per family.

9. The Tanning Tax

Starting July 1, 2010 a 10% tax will be levied on all payments made for indoor tanning services. This new “vanity tax” could raise up to $2.7 billion over the next decade, but it has been estimated that the tax could result in a lost of nearly 9,000 jobs in the tanning industry.

10. Adoption Tax Incentives

On a seemingly unrelated note, the health care reform bill also extends and expands the tax credits for adopting a child. The refundable credit has been extended through 2011, and the value was increased by $1,000.

IRS Health Care Oversight

I made an appearance on Fox Business news this morning to discuss the IRS’ new health care related responsibilities including individual mandates and enforcing penalties for businesses that do not provide coverage. Checkout the embedded video below, and be sure to tune into The Today Show next Friday when I will be making an appearance in the 10 AM EST hour.