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Affordable Care Act: Upcoming Changes for 2013

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Health CareNot too long ago, the Supreme Court ruled that the Patient Protection and Affordable Care Act (PPACA) was a tax, and therefore constitutional. One one part of the law was deemed unconstitutional and struck down. For consumers, that means that the changes already implemented since the 2010 act was passed will remain in place. Because the PPACA includes milestones, and different provisions take place at different times, new changes will be coming for 2013.

As you prepare for the coming year, and evaluate your health care coverage going forward, here are some things to think about:

Your Health Care

Many of the provisions of the new health care act have already been in place, some of them since 2010. Additionally, other provisions will be coming online in the next few years. For 2013, the changes to health care coverage include:

  • New preventative care coverage: New funding is coming to state Medicaid programs, meant to reduce the cost of preventative care to patients.
  • Medicaid payments to primary care doctors: The federal government is providing more money to states so that primary care doctors have the larger Medicare payment rates for primary care services.
  • Coordination of patient care and bundled payments: The law creates a pilot program that is meant to help doctors, hospitals, and other health care providers to bundle services and bundle payments. The idea is to coordinate care, and the patient/insurance company only has to worry about making one payment.
  • More funding for CHIP: The idea is to provide more funding to states in an effort to expand coverage for children who need health insurance.

These items follow such addressing overpayments to insurance companies, improving access to community care clinics, extending coverage for young adults, getting rid of lifetime caps on coverage, and getting rid of the ability to deny children coverage due to pre-existing conditions, among other provisions.

Taxes and the PPACA

Of course, these changes have to be paid for. There are some tax changes coming in the next few years. Here are the tax changes to expect in 2013 (the individual mandate doesn’t take effect until 2014):

  • Change in the health care deduction limit: Up through the end of this year, you can deduct health care expenses that exceed 7.5% of your adjusted gross income. However, starting in tax year 2013, that threshold rises to 10%. For some, that essentially results in a tax increase, since you have to spend more on health care before seeing the deductible. One way to get around this is to use a HSA so that all of your expenses are basically tax deductible.
  • Medicare wage surtax: Starting in 2013, if you make more than $200,000 as a single person, or $250,000 if married filing jointly, you will pay 0.9% of the income above that level.
  • Medicare unearned income surtax: Another tax will be applied to Modified AGI (in this case AGI + tax-free income) for those with income levels that are the same as above. There is an additional 3.8% surtax applied to the lesser of your net investment income, or the excess Modified AGI beyond the limits.
  • Excise tax on medical devices: There will also be an excise tax of 2.3% on medical devices such as prosthetics and wheelchairs, although items, like hearing aids and eyewear, that are sold in retail settings, aren’t subject to the tax.

There will also be penalties for companies of a certain size who don’t provide coverage to employees.

You need to figure out how you are likely to be affected, and plan accordingly.

(Photo: diekatrin)

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9 Responses to “Affordable Care Act: Upcoming Changes for 2013”

  1. Anonymous says:

    Its funny you mention using a health savings account… b/c when the 10% kicker starts… so does the limitation on how much you can put into your HSA.

    • Miranda says:

      There have always been limits on what you can put in your HSA, which operates very similarly to an IRA. I think you are thinking about Flexible Savings Accounts (FSAs), which are now getting limits they didn’t have before.

  2. Interesting stuff. I didn’t know the medical deduction was rising to 10%. HSA’s are no brainers now IMO, especially for people who have to pay for healthcare on their own.

    Most companies have made it benefical enough to choose the HSA option, just takes a little push to get going. After 3 years, I have $9,000 invested in TIPS(tax free in CA).

  3. zapeta says:

    It’d sure be nice if we got rid of all the red-tape and insurance companies and had single payer healthcare like every other civilized nation in the world.

    • NateUVM says:

      Whoa, whoa, whoa there… You seem to be asking for a lot.

      I mean, that’d be like trying to set up a system where one of the victim’s families in the Aurora, CO tragedy didn’t have to decide between paying for their daughter’s recovery from multiple gunshot wounds or paying for the mother’s cancer treatment… That’s seems like a real pie-in-the-sky scenario that the “greatest nation on earth” wouldn’t ever be able to pull off.

      Keep dreaming buddy. It’s a matter of national priorities. We’ve got to make sure that the 1% still have millions to shelter in the Caymans.

  4. Fabclimber says:

    No one in Gov’t wants to put a couple of million insurance workers on the unemployment line by eliminating the excess layers of non-value added work.

  5. James says:

    I believe the flex spending accounts will have a limit of $2500. Many employers offer a FSA with a higher limit so if you have been using that higher limit, guess what, you now pay more taxes.

  6. Mike says:

    Democratic politicians hate the health savings account. They think its just another way for the rich to park their cash tax free.


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