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19 Taxes, Penalties, Fees, and Deduction Eliminations in Obamacare


Obamacare has 12 new or increased taxes and fees, and 7 lowered or eliminated tax benefits and credits.

The Patient Protection and Affordable Care Act (PPACA) contains 12 of those revenue generators, the Reconciliation Act contains four, and three are found in both.

We have listed all 19 taxes, penalties, fees, and deduction eliminations below along with a citation, brief description, and relevant passage from Obamacare.

19 taxes, penalties, fees, and deduction eliminations.

19 taxes, penalties, fees, and deduction eliminations.

$50,000 tax penalty on 501(r)(3) charitable hospitals for failure to meet five new requirements

Source:

Bill: PPACA
Sec. 9007. Additional Requirements for Charitable Hospitals
Sec. 10903. Modification of Limitation on Charges by Charitable Hospitals
Sec. 4959. Taxes on Failures by Hospital Organizations

Description:

Tax Penalty for Non-Compliance:

Amends the Internal Revenue Code of 1986 to add additional requirements for hospitals wishing to file as 501(r)(3) charities, and taxes those hospitals $50,000 if they fail to meet the requirements. The requirements include conducting a community health needs assessment and implementing a strategy to meet those needs; establishing a written financial assistance policy; establishing a policy to provide emergency care without discrimination; limiting charges for "emergency or other medically necessary care” for individuals eligible for financial assistance.

Quote from bill:

"If a hospital organization to which section 501(r) applies fails to meet the requirement of section 501(r)(3) for any taxable year, there is imposed on the organization a tax equal to $50,000."

Increased tax penalty (40%) for monetary transactions that "merely serve to lower one’s tax burden"

Source:

Bill: Reconciliation Act
Sec. 1409. Codification of Economic Substance Doctrine and Penalties

Description:

Codifying Existing Common Law Doctrine and Tax Penalty for Non-Compliance:

If a taxpayer performs a transaction that the IRS deems to lack "economic substance" or "a business purpose" (i.e. merely to lower one’s tax burden), that transaction is now penalized at a tax rate of 40% if undisclosed (an increase from the existing rate of 20%). The "economic substance doctrine" was a well-established common law doctrine that Obamacare codified in American tax law.

Quote from bill:

"(5) DEFINITIONS AND SPECIAL RULES.—For purposes of this subsection—

(A) ECONOMIC SUBSTANCE DOCTRINE.—The term ‘economic substance doctrine’ means the common law doctrine under which tax benefits under subtitle A with respect to a transaction are not allowable if the transaction does not have economic substance or lacks a business purpose.”

"(1) APPLICATION OF DOCTRINE.—In the case of any transaction

to which the economic substance doctrine is relevant, such transaction shall be treated as having economic substance only if—

(A) the transaction changes in a meaningful way (apart from Federal income tax effects) the taxpayer’s economic position, and

(B) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into such transaction.”

 

(i) INCREASE IN PENALTY IN CASE OF NONDISCLOSED NONECONOMIC

SUBSTANCE TRANSACTIONS.—

"In the case of any portion of an underpayment which is attributable to one or more non-disclosed noneconomic substance transactions, subsection (a) shall be applied with respect to such portion by substituting ‘40 percent’ for ‘20 percent’.”

Elimination of tax credits for cellulosic biofuel (black tar) producers

Source:

Bill: Reconciliation Act
Sec. 1408. Elimination of Unintended Application of Cellulosic Biofuel Producer Credit
Description:

Elimination of Tax Credit:

Removes tax breaks for "black liquor,” a byproduct of papermaking used by pulp mills as as an alternative energy source for plant operations.

Quote from bill:

"(a) IN GENERAL.—Section 40(b)(6)(E) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clause:

iii) EXCLUSION OF UNPROCESSED FUELS.—The term ‘cellulosic biofuel’ shall not include any fuel if—

(I) more than 4 percent of such fuel (determined by weight) is any combination of water and sediment, or

(II) the ash content of such fuel is more than 1 percent (determined by weight).”

Annual excise tax on drug manufacturers and importers for sales of non-generic branded pharmaceutical drugs (varies based on amount sold)

Source:

Bill: PPACA
Sec. 9008. Imposition of Annual Fee on Branded Prescription Pharmaceutical Manufacturers and Importers
Bill: Reconciliation Act
Sec. 1404. Brand Name Pharmaceuticals

Description:

New Excise Tax:

New annual excise tax on sales of non-generic branded pharmaceutical drugs by drug manufacturers and importers. The tax burden varies depending on the amount of drugs sold.

Quote from bill:

"(a) IMPOSITION OF FEE.—

(1) IN GENERAL.—Each covered entity engaged in the business of manufacturing or importing branded prescription drugs shall pay to the Secretary of the Treasury not later than the annual payment date of each calendar year beginning after 2010 a fee in an amount determined under subsection (b).

(2) ANNUAL PAYMENT DATE.—For purposes of this section, the term ‘annual payment date’ means with respect to any calendar year the date determined by the Secretary, but in no event later than September 30 of such calendar year.

(b) DETERMINATION OF FEE AMOUNT.—

(1) IN GENERAL.—With respect to each covered entity, the fee under this section for any calendar year shall be equal to an amount that bears the same ratio to the applicable amount —

(A) the covered entity’s branded prescription drug sales taken into account during the preceding calendar year, bear to

(B) the aggregate branded prescription drug sales of all covered entities taken into account during such preceding calendar year.

(2) SALES TAKEN INTO ACCOUNT.—For purposes of paragraph (1), the branded prescription drug sales taken into account during any calendar year with respect to any covered entity shall be determined in accordance with the following table:

 

With respect to a covered entity’s aggregate branded prescription drug sales during the calendar year that are:

The percentage of such sales taken into account is:

Not more than $5,000,000

0 percent

More than $5,000,000 but not more than $125,000,000

10 percent

More than $125,000,000 but not more than $225,000,000

40 percent

More than $225,000,000 but not more than $400,000,000.

75 percent

More than $400,000,000

100 percent

 

APPLICABLE AMOUNT.—For purposes of paragraph (1), the applicable amount shall be determined in accordance with the following table:

Calendar year Applicable amount

2011 ............................................................................... $2,500,000,000

2012 ............................................................................... $2,800,000,000

2013 ............................................................................... $2,800,000,000

2014 ............................................................................... $3,000,000,000

2015 ............................................................................... $3,000,000,000

2016 ............................................................................... $3,000,000,000

2017 ............................................................................... $4,000,000,000

2018 ............................................................................... $4,100,000,000

2019 and thereafter ...................................................... $2,800,000,000.’’;

(f) TAX TREATMENT OF FEES.—The fees imposed by this section—

(1) for purposes of subtitle F of the Internal Revenue Code of 1986, shall be treated as excise taxes with respect to which only civil actions for refund under procedures of such subtitle shall apply, and

(2) for purposes of section 275 of such Code, shall be considered to be a tax described in section 275(a)(6).”

 

 

 

 

 

 

Tax deduction elimination for health insurance companies that do not spend at least 85% of revenues on clinical services

Source:

Bill: PPACA
Sec. 9016. Modification of Section 833 Treatment of Certain Health Organizations

Description:

Elimination of Tax Deduction for Non-Compliance:

Health insurance companies that do not spend at least 85% of revenues on clinical services will not qualify for existing tax deductions.

Quote from bill:

"(a) IN GENERAL.—Subsection (c) of section 833 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(5) NONAPPLICATION OF SECTION IN CASE OF LOW MEDICAL LOSS RATIO.—Notwithstanding the preceding paragraphs, this section shall not apply to any organization unless such organization’s percentage of total premium revenue expended on reimbursement for clinical services provided to enrollees under its policies during such taxable year (as reported under section 2718 of the Public Health Service Act) is not less than 85 percent.”

10% excise tax on indoor tanning services

Source:

Bill: PPACA
Sec. 10907. Excise Tax on Indoor Tanning Services in Lieu of Elective Cosmetic Medical Procedures

Description:

New Excise Tax:

New 10 percent excise tax on the use of indoor tanning salons.

Quote from bill:

"(b) EXCISE TAX ON INDOOR TANNING SERVICES.—

Subtitle D of the Internal Revenue Code of 1986, as amended by this Act, is amended by adding at the end the following new chapter:

CHAPTER 49—COSMETIC SERVICES

SEC. 5000B. IMPOSITION OF TAX ON INDOOR TANNING SERVICES.

(a) IN GENERAL.—There is hereby imposed on any indoor tanning service a tax equal to 10 percent of the amount paid for such service (determined without regard to this section), whether paid by insurance or otherwise.”

 

 

 

Removal of reimbursements for over-the-counter medicine (except insulin) from people with a health savings account (HSA), flexible spending account (FSA), or health reimbursement account (HRA)

Source:

Bill: PPACA
Sec. 9003. Distributions for Medicine Qualified Only if for Prescribed Drug or Insulin

Description:

Elimination of Reimbursements for Over-the-Counter Medicine:

Removes reimbursements for non-prescription, over-the-counter medicine (except insulin) from people with a health savings account (HSA), flexible spending account (FSA), or health reimbursement account (HRA).

Quote from bill:

"(f) REIMBURSEMENTS FOR MEDICINE RESTRICTED TO PRESCRIBEDDRUGS AND INSULIN.—For purposes of this section and section 105, reimbursement for expenses incurred for a medicine or a drug shall be treated as a reimbursement for medical expenses only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin."

Increased tax penalty (20%) for early withdrawal from health/medical savings accounts

Source:

Bill: PPACA
Sec. 9004. Increase in Additional Tax on Distributions from HSAs and Archer MSAs Not Used for Qualified Medical Expenses

Description:

Tax Penalty Increase for Early Withdrawal from Health/Medical Savings Accounts:

Increases tax penalties from 10 to 20 percent on non-medical early withdrawals from health/medical savings accounts.

Quote from bill:

"(a) HSAS.—Section 223(f)(4)(A) of the Internal Revenue Code of 1986 is amended by striking ‘10 percent’ and inserting ‘20 percent’.

(b) ARCHER MSAS.—Section 220(f)(4)(A) of the Internal Revenue

Code of 1986 is amended by striking ‘15 percent’ and inserting ‘20 percent’.”

3.8% tax on investment income earned in households earning over $250,000 per year

Source:

Bill: Reconciliation Act
Sec. 1402. Unearned Income Medicare Contribution
Sec. 1411. Imposition of Tax

Description:

New Tax
A new 3.8% tax on investment income earned in households earning over $250,000 per year ($200,000 single). This income includes gross income in interest, annuities, royalties, net rents, and passive income in partnerships and S corporations. It does not include municipal bond interest or life insurance proceeds, active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.

Quote from bill:

"(a) IN GENERAL.—Except as provided in subsection (e)—

(1) APPLICATION TO INDIVIDUALS.—In the case of an individual, there is hereby imposed (in addition to any other tax imposed by this subtitle) for each taxable year a tax equal to 3.8 percent of the lesser of—

(A) net investment income for such taxable year, or

(B) the excess (if any) of—

(i) the modified adjusted gross income for such taxable year, over

(ii) the threshold amount.

(2) APPLICATION TO ESTATES AND TRUSTS.—In the case of an estate or trust, there is hereby imposed (in addition to any other tax imposed by this subtitle) for each taxable year a tax of 3.8 percent of the lesser of—

(A) the undistributed net investment income for such taxable year, or

(B) the excess (if any) of—

(i) the adjusted gross income (as defined in section 67(e)) for such taxable year, over

(ii) the dollar amount at which the highest tax bracket in section 1(e) begins for such taxable year.

(b) THRESHOLD AMOUNT.—For purposes of this chapter, the term ‘threshold amount’ means—

(1) in the case of a taxpayer making a joint return under section 6013 or a surviving spouse (as defined in section 2(a)), $250,000,

(2) in the case of a married taxpayer (as defined in section 7703) filing a separate return, 1?2 of the dollar amount determined under paragraph (1), and

(3) in any other case, $200,000.”

0.9% tax for hospital insurance on households earning over $250,000 per year

Source:

Bill: PPACA
Sec. 9015. Additional Hospital Insurance Tax on High-Income Taxpayers
Sec. 10906. Modifications to Additional Hospital Insurance Tax on High-Income Taxpayers

Description:

New Tax:

An additional tax for hospital insurance on individuals earning over $200,000 per year and households earning over $250,000 per year.

Quote from bill:

"(a) FICA.—

(1) IN GENERAL.—Section 3101(b) of the Internal Revenue Code of 1986 is amended—

(A) by striking ‘‘In addition’’ and inserting the following:

(1) IN GENERAL.—In addition’’,

(B) by striking ‘‘the following percentages of the’’ and inserting ‘‘1.45 percent of the’’,

(C) by striking ‘‘(as defined in section 3121(b))—’’ and all that follows and inserting ‘‘(as defined in section 3121(b)).’’, and

(D) by adding at the end the following new paragraph:

(2) ADDITIONAL TAX.—In addition to the tax imposed by paragraph (1) and the preceding subsection, there is hereby imposed on every taxpayer (other than a corporation, estate, or trust) a tax equal to 0.9 percent of wages which are received with respect to employment (as defined in section 3121(b)) during any taxable year beginning after December 31, 2012, and which are in excess of—

(A) in the case of a joint return, $250,000, and

(B) in any other case, $200,000.’’.

(2) COLLECTION OF TAX.—Section 3102 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(f) SPECIAL RULES FOR ADDITIONAL TAX.—

(1) IN GENERAL.—In the case of any tax imposed by section 3101(b)(2), subsection (a) shall only apply to the extent to which the taxpayer receives wages from the employer in excess of $200,000, and the employer may disregard the amount of wages received by such taxpayer’s spouse.

(2) COLLECTION OF AMOUNTS NOT WITHHELD.—To the extent that the amount of any tax imposed by section 3101(b)(2) is not collected by the employer, such tax shall be paid by the employee.

(3) TAX PAID BY RECIPIENT.—If an employer, in violation of this chapter, fails to deduct and withhold the tax imposed by section 3101(b)(2) and thereafter the tax is paid by the employee, the tax so required to be deducted and withheld shall not be collected from the employer, but this paragraph shall in no case relieve the employer from liability for any penalties or additions to tax otherwise applicable in respect of such failure to deduct and withhold.’’.

(b) SECA.—

(1) IN GENERAL.—Section 1401(b) of the Internal Revenue

Code of 1986 is amended—

(A) by striking ‘‘In addition’’ and inserting the following:

(1) IN GENERAL.—In addition’’, and

(B) by adding at the end the following new paragraph:

(2) ADDITIONAL TAX.—

(A) IN GENERAL.—In addition to the tax imposed by paragraph (1) and the preceding subsection, there is hereby imposed on every taxpayer (other than a corporation, estate, or trust) for each taxable year beginning after December 31, 2012, a tax equal to 0.9 percent of the self employment income for such taxable year which is in excess of— ‘‘(ii) in any other case, $200,000.

(B) COORDINATION WITH FICA.—The amounts under clauses (i) and (ii) of subparagraph (A) shall be reduced (but not below zero) by the amount of wages taken into account in determining the tax imposed under section 3121(b)(2) with respect to the taxpayer.’’.

(2) NO DEDUCTION FOR ADDITIONAL TAX.—

(A) IN GENERAL.—Section 164(f) of such Code is amended by inserting (other than the taxes imposed by section 1401(b)(2)) after section 1401).

(B) DEDUCTION FOR NET EARNINGS FROM SELF-EMPLOYMENT.—

Subparagraph (B) of section 1402(a)(12) is amended by inserting ‘‘(determined without regard to the rate imposed under paragraph (2) of section 1401(b))’’ after ‘‘for such year’’.

(c) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to remuneration received, and taxable years beginning, after December 31, 2012.”

2.3% excise tax on medical device manufacturers

Source:

Bill: Reconciliation Act
Sec. 1405. Excise Tax on Medical Device Manufacturers
Sec. 4191. Medical Devices

Description:

New Excise Tax:

New tax on the sales of medical devices, excluding eyeglasses, contact lenses, hearing aids, and "any other medical device determined… to be of a type which is generally purchased by the general public at retail for individual use.”

Quote from bill:

"(a) IN GENERAL.—There is hereby imposed on the sale of any taxable medical device by the manufacturer, producer, or importer a tax equal to 2.3 percent of the price for which so sold.

(b) TAXABLE MEDICAL DEVICE.—For purposes of this section—

(1) IN GENERAL.—The term ‘taxable medical device’ means any device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) intended for humans.

(2) EXEMPTIONS.—Such term shall not include—

(A) eyeglasses,

(B) contact lenses,

(C) hearing aids, and

(D) any other medical device determined by the Secretary to be of a type which is generally purchased by the general public at retail for individual use.”

Increase in threshold (10%) for itemized tax deduction of medical expenses

Increase in threshold (10%) for itemized tax deduction of medical expenses

Bill: PPACA
Sec. 9013. Modification of Itemized Deduction for Medical Expenses

Description:

Increase in threshold for itemized deduction of medical expenses:

Medical expenses in excess of 10% of an individual’s adjusted gross income may be deducted from tax reporting, an increase from 7.5%. The section grants a temporary waiver of the increase from the years 2013-16 for persons over the age of 65.

Quote from bill:

"(a) IN GENERAL.—Subsection (a) of section 213 of the Internal Revenue Code of 1986 is amended by striking ‘7.5 percent’ and inserting ‘10 percent.’

(b) TEMPORARY WAIVER OF INCREASE FOR CERTAIN SENIORS.— Section 213 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(f) SPECIAL RULE FOR 2013, 2014, 2015, AND 2016.—In the case of any taxable year beginning after December 31, 2012, and ending before January 1, 2017, subsection (a) shall be applied with respect to a taxpayer by substituting ‘7.5 percent’ for ’10 percent’ if such taxpayer or such taxpayer’s spouse has attained age 65 before the close of such taxable year.

(c) CONFORMING AMENDMENT.—Section 56(b)(1)(B) of the Internal Revenue Code of 1986 is amended by striking ‘by substituting ‘10 percent’ for ‘7.5 percent’’ and inserting ‘without regard to subsection (f) of such section.’”

Cap on tax-free contributions ($2,500) to health flexible spending arrangements

Source:

Bill: PPACA
Sec. 9005. Limitation on Health Flexible Spending Arrangements Under Cafeteria Plans
Sec. 10902. Inflation Adjustment of Limitation on Health Flexible Spending Arrangements Under Cafeteria Plans

Description:

Cap on tax deductions for medical expenses:

Contributions to health flexible spending arrangements that allow people to set aside money tax free to pay for medical expenses is capped at $2,500 (the threshold used to be unlimited). The limit will be indexed to inflation and increased by an annual cost-of-living adjustment.

Quote from bill:

"(a) IN GENERAL.—Subsection (i) of section 125 of the Internal Revenue Code of 1986, as added by section 9005 of this Act, is amended to read as follows:

(i) LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS.—

(1) IN GENERAL.—For purposes of this section, if a benefit is provided under a cafeteria plan through employer contributions to a health flexible spending arrangement, such benefit shall not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to such arrangement.

(2) ADJUSTMENT FOR INFLATION.—In the case of any taxable year beginning after December 31, 2011, the dollar amount in paragraph (1) shall be increased by an amount equal to—

(A) such amount, multiplied by

(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins by substituting ‘calendar year 2010’ for ‘calendar year 1992’ in subparagraph (B) thereof.

If any increase determined under this paragraph is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.

(b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2010.”

Removes tax deductions for employer-provided retirement prescription drug insurance plans through Medicare Part D

Source:

Bill: PPACA
Sec. 9012. Elimination of Deduction for Expenses Allocable to Medicare Part D Subsidy

Description:

Elimination of Tax Deduction:

Removes tax deductions for employer-provided retirement prescription drug insurance plans.

Quote from bill:

"(a) IN GENERAL.—Section 139A of the Internal Revenue Code of 1986 is amended by striking the second sentence.

(b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2010.”

Removes executive salary tax deductions for health insurance companies that compensate executives over $500,000 per year

Source:

Bill: PPACA
Sec. 9014. Limitation on Excessive Remuneration Paid by Certain Health Insurance Providers

Description:

Elimination of Tax Deduction for Non-Compliance:

Removes tax deductions for health insurance executives that are compensated over $500,000 per year.

Quote from bill:

 

"(a) IN GENERAL.—Section 162(m) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(6) SPECIAL RULE FOR APPLICATION TO CERTAIN HEALTH INSURANCE PROVIDERS.—

(A) IN GENERAL.—No deduction shall be allowed under this chapter—

(i) in the case of applicable individual remuneration which is for any disqualified taxable year beginning after December 31, 2012, and which is attributable to services performed by an applicable individual during such taxable year, to the extent that the amount of such remuneration exceeds $500,000, or

(ii) in the case of deferred deduction remuneration for any taxable year beginning after December 31, 2012, which is attributable to services performed by an applicable individual during any disqualified taxable year beginning after December 31, 2009, to the extent that the amount of such remuneration exceeds $500,000 reduced (but not below zero) by the sum of—

(I) the applicable individual remuneration for such disqualified taxable year, plus

(II) the portion of the deferred deduction remuneration for such services which was taken into account under this clause in a preceding taxable year (or which would have been taken into account under this clause in a preceding taxable year if this clause were applied by substituting ‘December 31, 2009’ for ‘December 31, 2012’ in the matter preceding subclause (I)).”

Tax penalty for individuals who do not have health insurance (the mandate)

Source:

Bill: PPACA
Sec. 1501. Requirement to Maintain Minimum Essential Coverage

Description:

Penalty for Non-Compliance:

Taxes individuals as a proportion of their income if they choose not to purchase health insurance.

Quote from bill:

"(b)(1) Section 5000A(b)(1) of the Internal Revenue Code of 1986, as added by section 1501(b) of this Act, is amended to read as follows:

(1) IN GENERAL.—If a taxpayer who is an applicable individual, or an applicable individual for whom the taxpayer is liable under paragraph (3), fails to meet the requirement of subsection (a) for 1 or more months, then, except as provided in subsection (e), there is hereby imposed on the taxpayer a penalty with respect to such failures in the amount determined under subsection (c).

(2) Paragraphs (1) and (2) of section 5000A(c) of the Internal Revenue Code of 1986, as so added, are amended to read as follows:

(1) IN GENERAL.—The amount of the penalty imposed by this section on any taxpayer for any taxable year with respect to failures described in subsection (b)(1) shall be equal to the lesser of—

(A) the sum of the monthly penalty amounts determined under paragraph (2) for months in the taxable year during which 1 or more such failures occurred, or

(B) an amount equal to the national average premium for qualified health plans which have a bronze level of coverage, provide coverage for the applicable family size involved, and are offered through Exchanges for plan years beginning in the calendar year with or within which the taxable year ends.

(2) MONTHLY PENALTY AMOUNTS.—For purposes of paragraph

(1)(A), the monthly penalty amount with respect to any taxpayer for any month during which any failure described in subsection (b)(1) occurred is an amount equal to 1?12 of the greater of the following amounts:

(A) FLAT DOLLAR AMOUNT.—An amount equal to the lesser of—

(i) the sum of the applicable dollar amounts for all individuals with respect to whom such failure occurred during such month, or

(ii) 300 percent of the applicable dollar amount (determined without regard to paragraph (3)(C)) for the calendar year with or within which the taxable year ends.

(B) PERCENTAGE OF INCOME.—An amount equal to the following percentage of the taxpayer’s household income for the taxable year:

(i) 0.5 percent for taxable years beginning in 2014.

(ii) 1.0 percent for taxable years beginning in 2015.

(iii) 2.0 percent for taxable years beginning after 2015.”

Annual $2,000 tax on companies with over 50 employees that do not offer health insurance

Source:

Bill: PPACA
Sec. 1513. Shared Responsibility for Employers
Sec. 4980H. Shared Responsibility for Employers Regarding Health Coverage

Description:

Penalty for Non-Compliance:

If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2,000 for all full-time employees (applies to all employers with 50 or more employees). If the employer requires a waiting period of 30-60 days to enroll in coverage, a $400 tax per employee applies ($600 if the period is 60 days or longer).

Quote from bill:

"(a) LARGE EMPLOYERS NOT OFFERING HEALTH COVERAGE.—

If—

(1) any applicable large employer fails to offer to its fulltime employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer sponsored plan (as defined in section 5000A(f)(2)) for any month, and

(2) at least one full-time employee of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee, then there is hereby imposed on the employer an assessable payment equal to the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.

(b) LARGE EMPLOYERS WITH WAITING PERIODS EXCEEDING 30

DAYS.—

(1) IN GENERAL.—In the case of any applicable large employer which requires an extended waiting period to enroll in any minimum essential coverage under an employer-sponsored plan (as defined in section 5000A(f)(2)), there is hereby imposed on the employer an assessable payment, in the amount specified in paragraph (2), for each full-time employee of the employer to whom the extended waiting period applies.

(2) AMOUNT.—For purposes of paragraph (1), the amount specified in this paragraph for a full-time employee is—

(A) in the case of an extended waiting period which exceeds 30 days but does not exceed 60 days, $400, and

(B) in the case of an extended waiting period which exceeds 60 days, $600.

(3) EXTENDED WAITING PERIOD.—The term ‘extended waiting period’ means any waiting period (as defined in section 2701(b)(4) of the Public Health Service Act) which exceeds 30 days.

(c) LARGE EMPLOYERS OFFERING COVERAGE WITH EMPLOYEES WHO QUALIFY FOR PREMIUM TAX CREDITS OR COST-SHARING REDUCTIONS.—

(1) IN GENERAL.—If—

(A) an applicable large employer offers to its fulltime employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and

(B) 1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee, then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and 400 percent of the applicable payment amount.

(2) OVERALL LIMITATION.—The aggregate amount of tax determined under paragraph (1) with respect to all employees of an applicable large employer for any month shall not exceed the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.”

 

 

 

 

 

 

Annual fee on all health insurance companies (varies based on amount collected in premiums)

Source:

Bill: PPACA
Sec. 9010. Imposition of Annual Fee on Health Insurance Providers
Sec. 10905. Modification of Annual Fee on Health Insurance Providers
Bill: Reconciliation Act
Sec. 1406. Health Insurance Providers

Description:

New Fee
Annual fee on health insurance companies relative to the amount collected in premiums during the calendar year. Includes an additional "third party administration agreement” fee.

Quote from bill:

"(a) IMPOSITION OF FEE.—

(1) IN GENERAL.—Each covered entity engaged in the business of providing health insurance shall pay to the Secretary not later than the annual payment date of each calendar year beginning after 2013 a fee in an amount determined under subsection (b).

(2) ANNUAL PAYMENT DATE.—For purposes of this section, the term ‘annual payment date’ means with respect to any calendar year the date determined by the Secretary, but in no event later than September 30 of such calendar year.

(b) DETERMINATION OF FEE AMOUNT.—

(1) IN GENERAL.—With respect to each covered entity, the fee under this section for any calendar year shall be equal to an amount that bears the same ratio to $6,700,000,000 as—

(A) the sum of—

(i) the covered entity’s net premiums written with respect to health insurance for any United States health risk that are taken into account during the preceding calendar year, plus

(ii) 200 percent of the covered entity’s third party administration agreement fees that are taken into account during the preceding calendar year, bears to

(B) the sum of—

(i) the aggregate net premiums written with respect to such health insurance of all covered entities that are taken into account during such preceding calendar year, plus

(ii) 200 percent of the aggregate third party administration agreement fees of all covered entities that are taken into account during such preceding calendar year.

(2) AMOUNTS TAKEN INTO ACCOUNT.—For purposes of paragraph (1)—

(A) NET PREMIUMS WRITTEN.—The net premiums written with respect to health insurance for any United States health risk that are taken into account during any calendar year with respect to any covered entity shall be determined in accordance with the following table:

With respect to a covered entity’s net premiums written during the calendar year that are: The percentage of net premiums written that are taken into account is:

Not more than $25,000,000 ..................... 0 percent

More than $25,000,000 but not more than $50,000,000……………… 50 percent

More than $50,000,000 ............................. 100 percent.

 

(B) THIRD PARTY ADMINISTRATION AGREEMENT FEES.—

The third party administration agreement fees that are taken into account during any calendar year with respect to any covered entity shall be determined in accordance with the following table:

With respect to a covered entity’s third party administration agreement fees during the calendar year that are: The percentage of third party administration agreement fees that are taken into account is:

Not more than $5,000,000 ....................... 0 percent

More than $5,000,000 but not more than $10,000,000………….. 50 percent

More than $10,000,000 ............................. 100 percent”

40% excise tax on "Cadillac" health insurance plans

Source:

Bill: PPACA
Sec. 9001. Excise Tax on High Cost Employer-Sponsored Health Coverage
Sec. 10901. Modifications to Excise Tax on High Cost Employer-Sponsored Health Coverage
Bill: Reconciliation Act
Sec. 1401. High-Cost Plan Excise Tax

Description:

New Excise Tax
Beginning in 2018, "Cadillac” health insurance plans will be subject to a 40% excise tax above a certain threshold. The threshold will be higher for early retirees and high-risk professions.

Quote from bill:

"(a) IMPOSITION OF TAX.—If—

(1) an employee is covered under any applicable employer sponsored coverage of an employer at any time during a taxable period, and

(2) there is any excess benefit with respect to the coverage, there is hereby imposed a tax equal to 40 percent of the excess benefit.

(b) EXCESS BENEFIT.—For purposes of this section—

(1) IN GENERAL.—The term ‘excess benefit’ means, with respect to any applicable employer-sponsored coverage made available by an employer to an employee during any taxable period, the sum of the excess amounts determined under paragraph (2) for months during the taxable period.

(2) MONTHLY EXCESS AMOUNT.—The excess amount determined under this paragraph for any month is the excess (if any) of—

(A) the aggregate cost of the applicable employer sponsored coverage of the employee for the month, over

(B) an amount equal to 1?12 of the annual limitation under paragraph (3) for the calendar year in which the month occurs.