The Patient Protection and Affordable Care Act (P.L. 111 148), signed by the President on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111 152) and signed by the President on March 30, 2010, will implement fundamental health care reforms and require most of the 32 million uninsured individuals to obtain health care coverage or pay penalties. PPACA contains over $400 billion in revenue raisers and new taxes on employers and individuals.
National tax instructor (and CPE Link speaker) Vern Hoven answers some common questions regarding the Act:
Question: PPACA REQUIRES insurers that provide group health ins to cover children under 27 effective March 30, 2010 but have until Sept to issue the means of doing this? Does marital status of child have any effect? This is REQUIRED, correct? Answer: The marital status is irrelevant. The examples in IR-2010-53 and Notice 2010-38 contains an example of the married under 27-year-old. But be careful, because the benefit for covering the child’s spouse becomes a taxable fringe benefit.
Question: Does an employee need to provide proof that he has coverage if he declines employercoverage? Answer: Only to the IRS and to State Exchange if the employee purchases coverage from them.
Question: Can you briefly touch on the affect the health care reform law will have on medical reimbursement plans? Answer: I think all reimbursement plans will need to be redesigned, especially §125 Cafeteria Plans. I think that FSA’s will need to be limited to $2,500. And I would think that HSA deductible amounts and the maximum out-of-pocket amounts will need to be reduced.
Question: Can you clarify withholding by employer on medicare tax? I do not understand who is responsible for the withholding and what amount is to be paid with the 1040. On employer in excess of limit?? Husband and wife where combined in excess of limit. What is to bewithheld and paid by employer and how much paid on 1040? Answer: The employer is required to withhold an extra .9% medicare tax on wage paid to employee in excess of $200,000 (whether he is married or single). Any over withholding or under withholding is refunded or paid on the Form 1040. As an example Sharon makes $250,000 of wages from her employer. Employer must withhold on the $50,000 excess over $200,000 (even though she is married). If she and husband have less than $250,000 of wage, they will get a refund of the withholding on their Form 1040.