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Individuals – The Effect of the Patient Protection and Affordable Care Act

With the Supreme Court recently upholding the Patient Protection and Affordable Care Act (PPACA) employers and individuals need to be prepared to comply with PPACA.  The following summarizes some of the key provisions and effective dates relating to individuals:

  • Beginning in 2014, individuals will be required, with some exceptions, to maintain minimum essential health insurance coverage, or pay a penalty for failing to do so.  The penalty is the greater of  a flat dollar amount ($95 for 2014, $325 for 2015 and $695 for 2016) or a percentage of the extent to which the taxpayer’s household income exceeds the income tax filing threshold (1% for 2014, 2% for 2015 and 2.5% for 2016.)
  • Beginning in 2014, eligible lower income individuals who obtain coverage through an insurance exchange may qualify for a premium assistance tax credit.
  • For tax years beginning after December 31, 2012, the threshold to claim an itemized deduction for unreimbursed medical expenses is increased from 7.5% to 10%, except for individuals and their spouses age 65 or older.
  • For tax years beginning after December 31, 2012, an additional 0.9% Medicare tax is imposed on wages and self-employment income of higher income individuals.  The thresholds are individuals with remuneration in excess of $200,000, married couples filing a joint return with income in excess of $250,000 and married couples filing separate returns with income in excess of $125,000.
  • For tax years beginning after December 31, 2012, a 3.8% Medicare contribution tax is imposed on unearned income.  The tax is imposed on the lesser of an individual’s net investment income or modified adjusted gross income in excess of $200,000 for individuals and $250,000 for married couples filing a joint return.

For information concerning the PPACA and its impact on employers and businesses, see a related post titled Employers and Businesses – Compliance with the Patient Protection and Affordable Care Act

For any questions concerning the PPACA, contact attorney Mark Samila, a member of the firm’s Tax and Employee Benefits team.