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Timeline of Tax Provisions in the House Health Care Bill
by TF Staff
Fiscal Fact No. 218
In order to finance $940 billion in new health care spending over the next ten years, the health care bill that the House of Represenatives is likely to pass this (Sunday) evening contains many spending cuts to Medicare, along with many tax increases that are set to go into effect over the next decade. Courtesy of the Joint Committee on Taxation's scoring of each of the provisions in the bill and the CBO, this Tax Foundation Fiscal Fact contains a timeline of when each of the tax provisions in the bill is set to go into effect.
Some of the minor provisions are actually retroactive, whereas others such as the tax on high-cost health insurance plans (the so-called "Cadillac tax") don't go into effect until 2018. The increased Medicare tax that would for the first time expand part of payroll taxes to investment income, as well as incorporate filing status into a tax unit's liability, would go into effect in 2013.
All starting dates are January 1 of that year, unless otherwise noted. This list is fairly exhaustive, meaning it includes virtually every tax provision. The major provisions, as defined as those projected to raise or lose more than $10 billion within the ten year budget window, are denoted in red.
Retroactive provisions
-Exclusion for assistance provided to participants in State student loan repayment programs for certain health professionals (retroactive to January 1, 2009)
-Qualifying therapeutic discovery project credit (retroactive to January 1, 2009) – provision expires at end of 2010
-Modification of section 833 treatment of certain health organizations (retroactive to January 1, 2010)
-Make the adoption credit refundable; increase qualifying expenses threshold, and extend the adoption credit through 2011 (retroactive to January 1, 2010)
-Small Business Tax Credit for certain small businesses (those meeting certain criteria) providing health insurance to employees (retroactive to January 1, 2010). In 2013, restricted only to insurance purchased through an exchange and only available for two conseutive years
-Exclusion of unprocessed fuels from the cellulosic biofuel producer credit (retroactive to January 1, 2010)
Provisions going into effect on the date bill is signed into law
-Additional requirements for section 501(c)(3) hospitals
-Study and report of effect on veterans’ health care
-Provide income exclusion for specified Indian tribe health benefits
-Codify economic substance doctrine and impose penalties for underpayments
-Provision specifying that subsidies or tax credits received through health care reform will not affect individual's qualifications for other federal programs
-Tax Exemption for Certain Member-Run Health Insurance Issuers
-Tax Exemption for Entities Established Pursuant to Transitional Reinsurance Program for Individual Market in Each State
-Rules pertaining to how the IRS is involved in income-verification and individual status for the purposes of participation in the exchanges and subsidies received
Other provisions going into effect before the end of 2010
-July 1, 2010: Impose 10% excise tax on indoor tanning services
Provisions going into effect in 2011
-Employer W-2 reporting of value of health benefits
-Conform the definition of medical expenses for health savings accounts, Archer MSAs, health flexible spending arrangements, and health reimbursement arrangements to the definition of the itemized deduction for medical expenses (excluding over-the-counter medicines prescribed by a physician)
-Increase in additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses to 20%
-Impose annual fee on manufacturers and importers of branded drugs ($2.5 billion for 2011, $2.8 billion per year for 2012 and 2013, $3.0 billion per year for 2014 through 2016, $4.0 billion for 2017, $4.1 billion for 2018, and $2.8 billion for 2019 and thereafter)
Provisions going into effect in 2012
-Simple cafeteria plan nondiscrimination safe harbor for certain small employers
-Require information reporting on payments to corporations
Provisions going into effect in 2013
-$500,000 deduction limitation on taxable year remuneration to officers, employees, directors, and service providers of covered health insurance providers (goes into effect in 2013, but applies to compensation for services performed from January 1, 2010 forward)
-Limit health flexible spending arrangements in cafeteria plans to $2,500; indexed to CPI-U after 2013
-Impose 2.3% excise tax on manufacturers and importers of certain medical devices
-Eliminate deduction for expenses allocable to Medicare Part D subsidy
-Raise 7.5% AGI floor on medical expenses deduction to 10%; AGI floor for individuals age 65 and older (and their spouses) remains at 7.5% through 2016
-Broaden Medicare Hospital Insurance Tax Base for High-Income Taxpayers - additional HI tax of 0.9% on earned income in excess of $200,000/$250,000 (unindexed), and Unearned Income Medicare Contribution on 3.8% on investment income for taxpayers with AGI in excess of $200,000/$250,000 (unindexed)
-Impose Fee on Insured and Self-Insured Health Plans; Patient-Centered Outcomes Research Trust Fund (expires after 2019)
Provisions going into effect in 2014
-Increase by 15.75 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2014
-Impose annual fee on health insurance providers ($8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, $14.3 billion in 2018, and indexed to medical cost growth thereafter); based upon firm’s market share starting in 2013
-Excise Tax (i.e., penalty) on Individuals Without Essential Health Benefits Coverage
-Excise Tax (i.e., penalty) on Employers Not Providing Health Insurance Coverage to Employees (Shared Responsibility for Employers)
-Refundable Tax Credit Providing Premium Assistance for Coverage Under a Qualified Health Plan
-Requirement that employers report health insurance coverage
-Provisions specifying cafeteria treatment of employers who purchase insurance through exchange
Provisions going into effect in 2018
-40% excise tax on health coverage in excess of $10,200/$27,500 (subject to adjustment for unexpected increase in medical costs prior to effective date) and increased thresholds of $1,650/$3,450 for over age 55 retirees or certain high-risk professions, both indexed for inflation by CPI-U plus 1%; adjustment based on age and gender profile of employees; vision and dental excluded from excise tax; levied at insurer level; employer aggregates and issues information return for insurers indicating amount subject to the excise tax; nondeductible
by TF Staff
Fiscal Fact No. 218
In order to finance $940 billion in new health care spending over the next ten years, the health care bill that the House of Represenatives is likely to pass this (Sunday) evening contains many spending cuts to Medicare, along with many tax increases that are set to go into effect over the next decade. Courtesy of the Joint Committee on Taxation's scoring of each of the provisions in the bill and the CBO, this Tax Foundation Fiscal Fact contains a timeline of when each of the tax provisions in the bill is set to go into effect.
Some of the minor provisions are actually retroactive, whereas others such as the tax on high-cost health insurance plans (the so-called "Cadillac tax") don't go into effect until 2018. The increased Medicare tax that would for the first time expand part of payroll taxes to investment income, as well as incorporate filing status into a tax unit's liability, would go into effect in 2013.
All starting dates are January 1 of that year, unless otherwise noted. This list is fairly exhaustive, meaning it includes virtually every tax provision. The major provisions, as defined as those projected to raise or lose more than $10 billion within the ten year budget window, are denoted in red.
Retroactive provisions
-Exclusion for assistance provided to participants in State student loan repayment programs for certain health professionals (retroactive to January 1, 2009)
-Qualifying therapeutic discovery project credit (retroactive to January 1, 2009) – provision expires at end of 2010
-Modification of section 833 treatment of certain health organizations (retroactive to January 1, 2010)
-Make the adoption credit refundable; increase qualifying expenses threshold, and extend the adoption credit through 2011 (retroactive to January 1, 2010)
-Small Business Tax Credit for certain small businesses (those meeting certain criteria) providing health insurance to employees (retroactive to January 1, 2010). In 2013, restricted only to insurance purchased through an exchange and only available for two conseutive years
-Exclusion of unprocessed fuels from the cellulosic biofuel producer credit (retroactive to January 1, 2010)
Provisions going into effect on the date bill is signed into law
-Additional requirements for section 501(c)(3) hospitals
-Study and report of effect on veterans’ health care
-Provide income exclusion for specified Indian tribe health benefits
-Codify economic substance doctrine and impose penalties for underpayments
-Provision specifying that subsidies or tax credits received through health care reform will not affect individual's qualifications for other federal programs
-Tax Exemption for Certain Member-Run Health Insurance Issuers
-Tax Exemption for Entities Established Pursuant to Transitional Reinsurance Program for Individual Market in Each State
-Rules pertaining to how the IRS is involved in income-verification and individual status for the purposes of participation in the exchanges and subsidies received
Other provisions going into effect before the end of 2010
-July 1, 2010: Impose 10% excise tax on indoor tanning services
Provisions going into effect in 2011
-Employer W-2 reporting of value of health benefits
-Conform the definition of medical expenses for health savings accounts, Archer MSAs, health flexible spending arrangements, and health reimbursement arrangements to the definition of the itemized deduction for medical expenses (excluding over-the-counter medicines prescribed by a physician)
-Increase in additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses to 20%
-Impose annual fee on manufacturers and importers of branded drugs ($2.5 billion for 2011, $2.8 billion per year for 2012 and 2013, $3.0 billion per year for 2014 through 2016, $4.0 billion for 2017, $4.1 billion for 2018, and $2.8 billion for 2019 and thereafter)
Provisions going into effect in 2012
-Simple cafeteria plan nondiscrimination safe harbor for certain small employers
-Require information reporting on payments to corporations
Provisions going into effect in 2013
-$500,000 deduction limitation on taxable year remuneration to officers, employees, directors, and service providers of covered health insurance providers (goes into effect in 2013, but applies to compensation for services performed from January 1, 2010 forward)
-Limit health flexible spending arrangements in cafeteria plans to $2,500; indexed to CPI-U after 2013
-Impose 2.3% excise tax on manufacturers and importers of certain medical devices
-Eliminate deduction for expenses allocable to Medicare Part D subsidy
-Raise 7.5% AGI floor on medical expenses deduction to 10%; AGI floor for individuals age 65 and older (and their spouses) remains at 7.5% through 2016
-Broaden Medicare Hospital Insurance Tax Base for High-Income Taxpayers - additional HI tax of 0.9% on earned income in excess of $200,000/$250,000 (unindexed), and Unearned Income Medicare Contribution on 3.8% on investment income for taxpayers with AGI in excess of $200,000/$250,000 (unindexed)
-Impose Fee on Insured and Self-Insured Health Plans; Patient-Centered Outcomes Research Trust Fund (expires after 2019)
Provisions going into effect in 2014
-Increase by 15.75 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2014
-Impose annual fee on health insurance providers ($8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, $14.3 billion in 2018, and indexed to medical cost growth thereafter); based upon firm’s market share starting in 2013
-Excise Tax (i.e., penalty) on Individuals Without Essential Health Benefits Coverage
-Excise Tax (i.e., penalty) on Employers Not Providing Health Insurance Coverage to Employees (Shared Responsibility for Employers)
-Refundable Tax Credit Providing Premium Assistance for Coverage Under a Qualified Health Plan
-Requirement that employers report health insurance coverage
-Provisions specifying cafeteria treatment of employers who purchase insurance through exchange
Provisions going into effect in 2018
-40% excise tax on health coverage in excess of $10,200/$27,500 (subject to adjustment for unexpected increase in medical costs prior to effective date) and increased thresholds of $1,650/$3,450 for over age 55 retirees or certain high-risk professions, both indexed for inflation by CPI-U plus 1%; adjustment based on age and gender profile of employees; vision and dental excluded from excise tax; levied at insurer level; employer aggregates and issues information return for insurers indicating amount subject to the excise tax; nondeductible
