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Health Care Law Changes for 2013

Posted by Mike C Posted on July 05 2012

With the Supreme Court (6/28/12) largely upholding the Affordable Care Act, taxpayers should continue preparing 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 AGI (7.5% threshold will still apply to taxpayers who turn 65 before the end of the tax year),

(4) taxpayers with modified AGI over $200,000 ($250,000 if MFJ; $125,000 if MFS) will be subject to a 3.8% surtax on net investment income, 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.

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