ObamaCare Implementation Timeline
The law will be implemented over much of the next 10 years
From years 2010 to 2013, implementation will largely involve new taxes, fees and mandates on individuals and small business.
2010 Small business tax credit: A temporary small business tax credit is available for some specified businesses who provide qualified health coverage. However, a somewhat complicated series of tests for these businesses is required to determine the actual amount of the credit. Only firms with 10 employees or less will qualify. For firms with 11-25 employees, the credit is reduced per employee. Firms with more than 25 employees will not receive a credit. Only firms who pay their workers an average of $25,000 or less are eligible for the full credit. The credit is reduced as the average wage goes up, stopping when it reaches $50,000. Only firms covering 50% or more of insurance costs will be eligible. The credit is only available for a maximum of six years. There are additional provisions for start-up firms beginning business after the enactment of this law.
Age 26: Children may stay on their parents’ policies until age 26.
Tanning salon tax: A 10% excise tax on indoor tanning services begins July 1.
Economic substance doctrine: The bill alters long-standing judicial doctrine in ways that could reduce tax-planning options and increase litigation.
W-2 reporting: Employers will be required to report employees’ health benefits on W-2s.
Brand-name drug tax: Manufacturers and importers of brand-name drugs will pay a tax of $2.5 billion in 2011, $3.0 billion per year for 2012 through 2016, $3.5 billion for 2017, $4.2 billion for 2018, and $2.8 billion for 2019 and thereafter.
HSA & FSA limits: Consumers are prohibited from using HSA and FSA funds to purchase non-prescribed items, including over-the-counter medication (except insulin).
HSA penalty: The penalty for using HSAs for non-qualified purchases increases to 20%.
Federally subsidized long-term care: Employers may voluntarily participate in the CLASS long-term care program. Participating firms’ employees will be automatically enrolled and subject to payroll deductions unless they choose to opt out. This program will almost certainly cost the federal government far more than what the payroll deductions will cover. So this entitlement is yet another unfunded liability to add to federal deficits for decades to come.
Cafeteria plan safe harbor rules added: Employers will have to meet minimum contribution requirements to receive protection from nondiscrimination requirements under cafeteria plans.
2012 1099 reporting: Businesses will have to send Form 1099s for every business-to-business transaction of $600 or more – a tremendous new paperwork burden for small business.
2013 Medical device tax: Manufacturers and importers of certain medical devices will face a 2.3% excise tax.
Fewer deductible medical expenses: New limits are placed on the deductibility of medical expenses on individual income tax returns. This provision raises the 7.5% AGI floor on medical expenses deductions to 10%. The AGI floor for those 65 and older (and their spouses) remains at 7.5% through 2016.
“Medicare” payroll taxes: The Medicare payroll tax on wages and self-employment income in excess of $200,000 ($250,000 joint) will increase to 2.35% and is not indexed to inflation. This tax marks the first time that funds designated for Medicare will be diverted elsewhere – specifically to pay for the insurance policies of people under the Medicare age. This establishes a precedent for treating this payroll tax as a revenue raiser for other purposes.
“Medicare” investment tax: In addition to the payroll tax, there will be a 3.8% tax on investment incomes for higher-income taxpayers (“higher-income” is based on wage and self-employment income plus other factors). Like the payroll tax, these funds are officially designated for Medicare but will be spent elsewhere.
FSA limits: Cafeteria plan FSAs will be limited to a maximum of $2,500 (inflation-adjusted after 2013).
2014 Small business health insurance tax: An annual fee on health insurance providers will be passed on to consumers. This tax will fall on the vast majority of plans that small businesses purchase, but not on self-insured plans (such as most big business and labor union policies). The fee is $8 billion for 2014, $11.3 billion for 2015 and 2016, $13.9 billion for 2017, $14.3 billion in 2018. For years beginning 2019, the $14.3 billion figure will be adjusted upwards for the growth in medical costs.
Health insurance exchanges: Exchanges open to individuals and small businesses with up to 50 employees. (An individual state may opt to increase that number to 100.)
Premium credits: The federal government begins subsidizing individuals up to 400% of the federal poverty line – around $88,000 today for a family of four. These credits will subsidize individuals purchasing insurance in exchanges (but not those with traditional employer-sponsored plans).
Medicaid eligibility expands: The income level for Medicaid eligibility rises, bringing millions of new people into Medicaid. This Medicaid expansion will account for around half of the total increase in insurance coverage and will place considerable new financial pressure on states.
Medicare cost-cutting: An independent Payment Advisory Board is created to recommend legislation to reduce the growth rate of Medicare costs.
Benefits package: Federal officials must define an essential benefits package with which all insurance policies must comply. (This provision includes restrictions on cost-sharing.)
Information from following source:
National Federation of Independent Business 1201 F Street NW * Suite 200 * Washington, DC 20004 * 202-554-9000 * Fax 202-554-0496 * www.NFIB.com