2013 Changes in Health Care Law and Taxes

Here is an overview of changes taking place in healthcare this year and how it may affect corporate or individual tax returns.

Medicare surtaxes
High- income taxpayers may be affected by two new Medicare surtaxes. 

  • For the lesser of “net investment income” or the excess above $200,000 of modified “adjusted gross income” for single filers and $250,000 for joint filers, a 3.8% surtax applies.

  • Taxpayers with an earned income above $200,000 for single filers and $250,000 for joint filers have a 0.9% surtax applied.

Medical deductions
For taxpayers 65 and older, the “floor” for deducting qualified medical expenses is not effected until 2016, but for those who are younger, it is raised from 7.5% of AGI to 10% in 2013.

Flexible spending accounts
There is now a cap on contributions to health care flexible spending accounts (FSA) of $2500.  

W-2 reporting
Benefits received from employer-sponsored health plans must be shown in the W-2s issued in 2013 for wages paid in 2012. For employers issuing less than 250 W-2s in 2012, reporting is optional.

Small business health care tax
If a small business pays at least 50% of their employee’s health care premium, they may qualify for a tax credit under the health care reform law. The business must employ less than 25 employees with average wages less than $50,000 to qualify. For tax years 2010 through 2013, the maximum credit is 35% of premiums paid. The credit increases to 50% for 2014.

You can file an amended tax return and claim the credit even if you didn’t take the credit in prior years.

For details and guidance, contact our office at 706-353-1711.