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Supreme Court Upholds the Individual Mandate

Posted 2:09 PM by

The individual mandate is a tax, not a penalty. That was, in effect, the synopsis of the majority opinion written by Chief Justice John Roberts regarding the landmark health care ruling on June 28, 2012.

In a close and controversial decision, the individual mandate, which requires Americans to buy health insurance was deemed constitutional by a slim 5-4 margin. The only part of the Patient Protection and Affordable Care Act (PPACA) that was struck down was a provision that penalizes states for refusing to participate in the proposed Medicaid expansion.

The Supreme Court’s ruling has cleared the way for full implementation of the PPACA which will bring many changes to the healthcare industry along with some major tax implications. The following are just a few of the new tax provisions: 

  • Small Business Tax Credit for up to 35% of insurance premiums paid by companies with less than 50 employees
  • 0.9% increase in Medicare tax for individuals earning over $200,000 ($250,000 married filing joint)
  • Higher threshold for itemized medical expenses deduction (from 7.5% of AGI to 10% of AGI)
  • 3.8% increase on “net investment income” for individuals earning over $200,000 ($250,000 married filing joint)
  • $2,500 cap on Healthcare FSA Contributions

Barring anything extraordinary, the Supreme Court’s decision has made it certain that these changes will take effect. That said, it is important to begin planning now to take advantage of the credits provided by the PPACA and to avoid any nasty tax season surprises that new laws can bring.

For a complete summary of the law, click here.

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Katz, Sapper & Miller’s Healthcare Resources Group serves healthcare providers, including physicians, hospitals and health systems, surgery centers, and long-term care facilities. Our team of healthcare professionals has the scope and depth to meet client needs. Learn more.

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