In 2013, Healthcare Reform will continue moving forward with changes affecting individuals, employers, insurers and medical providers. Although most of the major changes in health reform are set to occur in 2014, in the year ahead we will still see various provisions and taxes being implemented. Below we provide a quick reference for what to expect in healthcare reform in 2013.
Medical Device Sales Tax
Starting January 1, 2013, there will be a 2.3% sales tax on medical devices. The healthcare industry is attempting to repeal the tax, fearing that it will lead to a loss of more jobs.
Medicare Tax on Earned Income
Married taxpayers with income over $250,000 who file jointly, married taxpayers with income over $125,000 who file separately and individual taxpayers with income over $200,000 will see a 0.9% increase in the Medicare tax deducted from their paycheck.
This 0.9% Medicare Tax increase will also be applied to Self-Employed taxpayers’ net earnings using the same limits, and small business owners/shareholders who file as pass-through entities may experience the increase as well.
Medicare Tax on Investment Income
In addition to the increased tax on earned income over $200,000, there will be a 3.8% Medicare tax on Investment Income. Investment income may include earnings from capital gains, interest, dividends, annuities, royalties and rent. This tax applies to individuals with income above the same thresholds listed previously. Some homeowners with profits from home sales may be exempt through the Home Sale Tax Exemption that covers individuals with up to $250,000 in gains on their home from taxation and married couples with up to $500,000.
Increased Threshold for Medical Expense Deduction
Taxpayers who itemize deductions for medical expenses not covered by insurance must reach the threshold of 10% of their Adjusted Gross Income, instead of the previous 7.5% in the prior year.
Contribution Cap on FSAs and HSAs
Beginning Jan. 1, 2013, there will be a federal cap of $2,500 on how much an individual can set aside in tax free dollars in FSA and HSA accounts. This cap is set to increase annually by the inflation rate.
Higher Spending Cap for Insurance
Annual limits on how much an insurance company will pay for care will increase to $2 million, from $1.25 million in 2012. This cap will be eliminated in 2014. Before the Healthcare Reform Law, insurance companies and health plans could set annual limits themselves. Consumers will definitely benefit from this change, however insurers can still limit what services that are not essential.
Standardized Summary of Benefits and Coverage
The Affordable Care Act requires insurance companies to provide their members a standardized summary of benefits and coverage in plain, easy to understand language. The summary should explain what is covered and not covered by your plan, deductible limits and must include examples of coverage in two common medical conditions.
Increased Medicaid Payments for Primary Care Doctors
As Medicaid programs and providers prepare to cover more patients in 2014, the Act requires states to pay primary care physicians no less than 100% of Medicare payment rates in 2013 and 2014 for primary care services. Effective on Jan. 1st 2013.
Health Exchanges will be Open
On Oct 1, 2013, Federal and State Health Exchanges will be open for business. Individuals and employers will be able to go online to compare and purchase health plans for coverage set to begin on Jan. 1, 2014.
Expanded Preventative Health Coverage
Effective on Jan. 1st, the PPACA provides new funding to state Medicaid programs that choose to cover preventative services for patients at little or no cost.