Patient Protection and Affordable Care Act   On March 30, 2010 President Barak Obama signed the Patient Protection and Affordable Care Act.  Below is a time line summary of some of the provisions of the Health Care legislation.  This is a brief summary and doesn't include every provision included in the legislation package.   During 2010 Tax credits begin for small businesses that provided health insurance coverage to their employees.  Business must have fewer than 25 full time employees and have average annual wages of 50,000 or less.  This credit is for tax years 2010 - 2013.  6 months after enactment children are permitted to stay on their parents insurance policies until their 26th birthday. During 2011  Individuals are prohibited from using funds from flexible spending accounts, health reimbursement accounts, and health savings accounts for over the counter medications that are not prescribed by a physician. There will be an increase in the penalties from 10% to 20%, for health savings accounts for withdrawals before age 65 for non-qualified distributions.  For Archer medical savings accounts, for non-qualified withdrawals, the penalties will be increased from 15% to 20%. Employers will be required to report the value of health care benefits provided to employees on the 2011 form W-2 (issued in January 2012). This has been Repealed. During 2012  For payments made after 2011, all businesses (including corporations) will be required to file form 1099 for all payments of $600 to any payee.  This has been Repealed. During 2013  Contributions made to flexible spending accounts will be limited to $2,500 per year, and then indexed for inflation in future years.  This will be indexed to the Consumer Price Index The Medicare payroll tax will increase from 1.45% to 2.35%, or 0.9%, on wages in excess of $200,000 for single $250,000 for married filing joint, and 125,000 for married filing separate.  A new 3.8% tax on net investment income, which is; interest, dividends, royalties, rents, gross income from trades or businesses (K-1s), and gains from the dispositions of property and assets, for individuals with incomes over the limits (just listed) subject to the increased Medicare tax will also apply. There will be an increase in the floor for unreimbursed medical of 7.5% to 10%.  Taxpayers age 65 or older are exempt from the cutback till 2016. During 2014  All U.S. citizens and legal residents will be required to have acceptable health coverage or pay a penalty.  The exceptions to this are people that can't afford the health insurance or fall below the federal poverty line.  The penalty will be phased in from 2014 to 2016.  The penalties will be the greater of  the flat fee penalties of $95 for 2014, $325 for 2015, and $695 for 2016, or 1% in 2014, 2% in 2015, and 2.5% of the amount over the required filing threshold.  After 2016, the penalties are indexed to the Consumer Price Index.  A tax credit will be provided to low income individuals to assisting in getting coverage. Employers with 50 or more employees that don't have coverage will face penalties $2000 per employee.  Employers that have employees that get a tax credit will pay a fine up to $3000 per employee. Please call us to discuss these new tax laws.  The information contained is general in nature and should not be acted upon in your specific situation without further details and professional consultation.  Check our Website Disclaimer Policy if you have questions.