No legal news item last week was bigger than the U.S. Supreme Court's
decision to uphold virtually the entirety of the Affordable Care Act. In a move that surprised many observers, in a 5-4 decision the
Court deemed the controversial "individual mandate" portion of the measure
constitutional on grounds that it constituted a tax. While the court held that
the Congress could not pass the law pursuant to its power to regulate interstate
commerce, it did find it a permissible use of the legislature's taxing power.
Now that the matter is reasonably settled, local residents may be wondering
how the law affects their estate planning, if at all. A recent Smart Money story talked about some of these issues, explaining how
certain tax matters will indeed change in the upcoming year as a result of the
decision. A few select rates will change next year. For example, an extra .9% Medicare
tax increase will start for various individuals making over $200,000 or
$250,000. In addition, some investment income (long-term capital gains and
dividends) may face a 3.8% "Medicare contribution tax." This is in addition to
the rising rates if the "Bush tax cuts" expire without renewal.
Starting in 2013, a cap will be added on contributions to a healthcare
"flexible spending account" (FSA) plan. Right now there is no cap, so an
unlimited amount of money can be contributed to the plan which is then
subtracted from taxable income. The money can be used to reimburse qualified
medical expenses. Starting next year, contributions to those plans will be
capped at $2,500. Similarly, itemized deductions for medical expenses will now
apply only to expenses that exceed 10% of annual gross income (up from the
current 7.5%).
However, it is important to keep these tax issues in perspective, because
they represent just a part of the bill. The overall goal is to
provide comprehensive health insurance for more Americans so that overall
expenditures go down while quality of care goes up, but the long-term effect of these
sweeping changes will not be fully fleshed out for years to come. While the high-profile and controversial nature of the law may suggest that
many things will change for all residents once it is fully in effect, the truth
may be a bit less dramatic for many local families.
No comments:
Post a Comment