Congress Passes Groundbreaking Health Reform Law

Posted on 04.26.10

*Due to constantly changing regulations, please consult your tax and accounting professional for the most up to date information on this and any topic that you research online.

On March 30, 2010, The President signed the Health Care and Education Reconciliation Act of 2010 (Reconciliation Act). The Reconciliation Act modifies the legislation recently signed into law that contains the bulk of the health reform law, the Patient Protection and Affordable Care Act (Health Care Act). The Reconciliation Act also includes new provisions that were not part of the Health Care Act.

We have created a summary of certain key tax provisions in these new health reform Acts and their effective dates that may impact you and your business. The summary includes the following areas:

Health-Related Revenue Raisers

  • Additional Hospital Insurance tax for high wage workers
  • Surtax on unearned income
  • Excise tax on high-cost employer-sponsored health coverage
  • New limit on health FSA contributions
  • Restricted definition of medical expenses for employer provided coverage
  • Increased tax on nonqualifying HSA or Archer MSA distributions
  • Modified threshold for claiming medical expense deductions
  • Deduction for employer Medicare Part D is eliminated

Tax Changes Relating to Universal Health Coverage Mandate

  • Penalty for remaining uninsured
  • Low-income tax credits for participating in health exchanges
  • Employer responsibilities
  • “Free choice vouchers”
  • Tax credits for small employers offering health coverage
  • Dependent coverage in employer health plans