New ACA Taxes
April 15 is right around the corner, and millions of Americans will find themselves paying more in taxes as a function of the Affordable Care Act.
The law is more than a fundamental change to the country's health insurance system. It also is a massive tax hike. As The Heritage Foundation's Federal Budget in Pictures shows, according to the most recent scores, the ACA will increase taxes by nearly $800 billion for the 10 year period of 2013-2022.

The ACA contains 18 separate tax increases. There is a tax on health insurance premiums, pharmaceutical companies, medical device manufacturers and a higher rate on the Hospital Insurance payroll tax for single filers with incomes above $200,000 ($250,000 for married filers) that also applies to investment income. Beginning in 2015, there are tax penalties on larger employers not offering mandated health insurance and beginning in 2014, penalties on individuals who do not purchase the mandated coverage. Also, many Americans are paying higher health insurance premiums, driven up, in part, by mandated benefits and new taxes on insurers.

Another indirect tax in the ACA comes from planned reductions in Medicare spending, which are politically unpopular and are unlikely to become reality. However, the likelihood of additional increases to what the affluent elderly pay for their Medicare insurance premiums is very likely.
New Spending
The two main coverage components of the ACA are a massive Medicaid expansion and new government subsidies to purchase coverage in the government-run state exchanges. The new spending on these provisions will cost taxpayers nearly $1.8 trillion from 2014 to 2023. There is also the additional costs of an expanded bureaucracy needed to manage the ACA Marketplace and police the tax collection.

Beginning in 2014, the ACA expands Medicaid eligibility to all individuals earning up to 138 percent of the federal poverty level (FPL) in any state that chooses to accept this expansion. This expansion is projected to add an additional 13 million Americans to Medicaid by 2023, mostly childless adults, costing federal taxpayers $709 billion from 2014 to 2023.

In addition, the ACA creates government subsidies for individuals and families earning between 100 percent and 400 percent of the FPL. In 2013, 400 percent of the FPL was almost $46,000 for an individual and $94,200 for a family of four. By 2023, it is estimated 19 million people will receive subsidies, costing taxpayers over $1 trillion from 2014 to 2023.
New Taxes and Penalties
The ACA's new spending is offset in part by the imposition of 18 new taxes and penalties. The CBO and the Joint Committee on Taxation project that the ACA taxes will raise $771 billion in new government revenue from 2013 to 2022. The taxes have been phased in since the law's passage, with a few still waiting to start. Many of these taxes will affect taxpayers indirectly through increased costs for goods, higher insurance premiums, or lost wages. 

Please feel free to contact us if you have any questions. 

Thank you, 
George Knox, CLU, ChFC
214.695.2904 (mobile) 214.443.1400 (office) |

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