Healthcare Reform and Your Taxes
Note to all tax filers: Obamacare begins impacting your federal tax filing in the year 2015 when you are filing your 2014 tax return.
The following is general information on what you can expect when filling your 2014 return. For specific answers to questions you may have, you can try visiting the TurboTax website (here) as they recently launched a new health care question and answer exchange tool.
The requirement for all U.S. citizens to own a health insurance plan, otherwise know as the "Individual and Corporate Mandates", is the focal point for The Patient Protection And Affordable Care Act (AKA Obamacare). Starting in the year 2014, Americans (except for those granted specific exemptions) will be required to purchase an approved health insurance policy.
Those who fail to do this are subject to a fine/penalty. In 2014, the penalty starts at $95 per person ($47.5 per child) or 1% of total income. Every year, after 2014 the penalty will increase first by predetermined amounts and later by the rate of inflation. This penalty will be assessed when the person attempts to file their annual tax return.
Part of this health care law requires exchanges to be setup to assist consumers in finding insurance. The exchanges themselves first opened in October, 2013. Consumers have until March, 2014 to obtain a health care policy if they do not currently have one either through an exchange, their employer, or other means.
Those who do not have coverage by March, 2014 or have a qualified life event (such as a new marriage, etc), will be subject to the penalty on their 2014 tax return.
There are planned subsidies/credits which low income individuals and families can apply for. These are provided in order to minimize any out of pocket expenses for consumers. These subsidies are capped annually and when an individual's subsidy exceeds this amount (a reconciliation takes place on their tax return) they will be responsible for the difference.
The subsidies, as well as the administrative costs of such an undertaking, beg the question "Who pays for this"? Well, Obamacare is being funded from a variety of places.
First off, there is a 3.8% surcharge on investment income (normally taxed at 15%) for filers over $200,000 or $250,000 joint as well as a .9% increase on Medicare taxes for those filers.
There is, of course, the penalty revenue from those who do not obtain a qualified plan.
The government is also going to collect from employers who pay for all or nearly all of an employees comprehensive helth plan.
Finally, there are a number of additional taxes and fees being levied on a variety of companies who produce things such as medical equipment, even some that provide services like tanning salons.
So to answer the questions of "who is flipping the bill?" It looks like companies, employers, wealthy taxpayers and those that don't obtain an insurance plan will all be facing increased taxes.