Written by Scot Smith,
On June 28, 2012 the Supreme Court largely upheld the Affordable Care Act. Individuals should prepare for the following provisions that become effective in 2013:
(1) employer-provided health Flexible Spending Arrangements (FSAs) will be limited to $2,500 per year,
(2) the hospital insurance portion of the FICA tax will be increased from 1.45% to 2.35% for wages over $200,000 ($250,000 if MFJ; $125,000 if MFS),
(3) medical expenses will be deductible as itemized deductions only to the extent they exceed 10% of Adjusted Gross Income (the current 7.5% threshold will still apply to taxpayers who turn 65 before the end of the tax year),
(4) taxpayers with modified Adjusted Gross Income over $200,000 ($250,000 if MFJ; $125,000 if MFS) will be subject to a 3.8% surtax on net investment income (interest, dividends, rents, royalties, capital gains), and
(5) employers who provide qualified prescription drug coverage for Medicare Part D eligible retirees, which is subsidized by the Department of Health and Human Services, will have to reduce their deduction for the coverage by the amount of the excludable subsidy.