The Patient Protection and Affordable Care Act, which I’ll call Obama-care, is now law. It has lots of tax changes, and folks like me will be trying to make sense out of them for a long time. It won’t be easy. This law is as poorly written as you might expect given the unseemly process that brought it to life.
Anyway, here’s my take on some of the key tax changes buried in Obama-care that will affect individual taxpayers between now and the not-too-distant future. I can’t come close to covering all the changes in one article, so please stay tuned for more on this subject later on.
Starting This Year
Tax Breaks for Covering Adult Children
Effective for plan years beginning after Sept. 23, 2010, health plans that cover dependent children must continue to cover adult kids until they turn age 26. This little-noticed new requirement is a sure way to increase health insurance costs, which is exactly what Obama-care was supposed to prevent.
In conjunction with the new requirement, employer-provided health coverage for an employee’s adult child is now treated as a tax-free fringe benefit as long as the child has not reached age 27 by the end of the year.
If you’re self-employed and pay for your own coverage, the cost of covering an adult child after Sept. 30, 2010 is eligible for the self-employed health insurance premium write-off as long as the child has not reached age 27 by the end of the year. It doesn’t matter if the adult child is your dependent or not.
Starting in 2011
No More Tax-Free FSA, HRA or HSA Reimbursements for Non-Prescription Drugs
If you have an employer-sponsored health care flexible spending account (FSA) or health reimbursement arrangement (HRA) at work or your own health savings account (HSA), you can take tax-free withdrawals to cover non-prescription drugs like pain and allergy relief medications. Starting next year, however, this privilege will only be available for prescriptions drugs, insulin and doctor-prescribed non-prescription medications.
Similar Posts:
- Humana Health Insurance Plan
- Healthcare Reform: How it Impacts You
- Health Insurance Now Required To Provide Free Vaccinations
- Withdraw From Your IRA — Penalty-Free (The Tax Guy)
- What H1N1 Might Cost You and Your Family
