Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

   
Resources - Tax Center - Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York
     
 

Affordable Care Act – Summary of Changes in 2013

 
 

Have you been looking for additional information on the Patient Protection and Affordable Care Act (the Act) and changes effective for 2013? Do you know how you will be impacted by these new regulations? Boris Benic & Associates wants to help educate you about the changes you can expect to see this year. Whether you are a business owner or individual taxpayer there are several changes effective this year that impact how you offer, report or receive/claim medical benefits. Outlined below are the major changes in healthcare that will impact both businesses and individuals over the next 12 months and beyond.

  • W-2 Reporting of Employer Sponsored Health Coverage – Beginning with tax year 2012 (with actual reporting starting in 2013) employers are required to report the cost of coverage under the employer-sponsored group health plan. Companies that provide “applicable employer-sponsored coverage” under a group health plan are required to comply with this reporting requirement. Note that the requirement applies to both businesses and tax exempt entities. Coverage value should be reported in Box 12 of Form W-2, using the code DD to identify the amount.

  • Repeal of Deduction for Qualified Retiree Drug Programs – In prior years, companies were entitled to a tax free subsidy of 28% of costs (as part of the Medicare Modernization Act) to provide a prescription drug coverage program to retired employees. Starting in 2013, companies that receive a subsidy for providing retiree drug coverage are still eligible to receive the subsidy, but will no longer be able to take a deduction for the subsidy on their federal tax return.

  • Higher Threshold for Medical Expense Deductions – Starting in 2013 taxpayers will be allowed to claim itemized deductions for medical expenses for the taxpayer, spouse and dependents once they have exceed 10% of the adjusted gross income (AGI). This is a 2.5% change in the threshold amount over 2012 (previously the amount was 7.5% of AGI). The increase does not apply to taxpayer (or their spouses) 65 years or older as the new threshold does not take effect for this group until 2017.

  • Additional Medicare Tax – New in 2013 is an additional .9% Medicare tax for high income earners. The tax applies to an individual’s wages, Railroad Retirement Tax Act compensation, and self-employment income that exceeds a set threshold based on the taxpayer’s filing status. The threshold amounts are $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately, and $200,000 for all other taxpayers. (These thresholds are not scheduled to be adjusted for inflation).  It’s essential to note that it is the employer’s responsibility to withhold the additional Medicare tax from wages or compensation paid to an employee in excess of $200,000.

  • 3.8% Medicare Surtax – Starting in 2013, certain high income taxpayers will be subject to a new tax based on investment income – 3.8% Medicare surtax. The new tax applies to individuals, estates and trusts that have specific investment income where total yearly income exceeds IRS thresholds. The threshold amounts are $250,000 for married couples filing jointly, $125,000 for married couples filing separately, $200,000 for single or head of household taxpayers and $250,000 for qualifying widow(er) with a dependent child. The IRS has defined investment income as interest, dividends, capital gains, rental income, royalty income, non-qualified annuities and income from businesses involved in trading financial instruments or commodities.

  • Flexible Spending Account (FSA) Limits - New for 2013 is a $2,500 cap on the amount of salary deferred contribution a participant makes to an FSA plan. Previously, the IRS did not impose a cap although most FSA plans did set their own maximum contribution limits. It’s important to note that the limits will be indexed for inflation beginning in 2014 and every year following.

Contact Us

The impact of the Act on business is comprehensive with new changes coming each year. If you have any questions about how the changes outlined in this article will impact your business, please contact Boris Benic, CPA, at 516-248-7361, or click here to email Boris. He would be happy to address any concerns you may be facing with respect to the new affordable care act regulations.

 

Source: IRS.gov

 
 

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

 

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York