How the Supreme Court’s Health Care Ruling Will Impact You– June 29, 2012

The U.S. Supreme Court has upheld the requirement of the Patient Protection and Affordable Care Act (PPACA or Act) that mandates individuals to obtain health insurance by 2014 or pay a penalty. The Supreme Court’s “green light” of this core provision also sets in motion other significant tax and reporting provisions that will greatly impact employers and employees. Below is a brief summary of the most immediate requirements to consider:

  • Beginning with 2012 W-2 reporting forms issued in January 2013 -- Employers must report the cost of employer-provided health coverage. This requirement applies to most employers with more than 250 employees. Effective January 1, 2013 -- Individuals making more than $200,000 per year ($250,000 and up for married filing jointly) will incur an additional .9% Medicare surcharge. Employers will be responsible for withholding the amount from employees.

  • In addition to the Medicare surcharge on wages and self-employment income from partnerships, a 3.8% Medicare surcharge will apply to the unearned income of any individual making over $200,000 per year (family income of above $250,000). Unearned income includes rents, royalties, capital gains, interest and dividends. At this time, income from S Corporations will not be subject to the surcharge. Effective January 1, 2013 -- Medical device manufacturers will be subject to a 2.3 percent excise tax on the sales of their devices.

  • There are many additional, significant insurance issues included in the PPACA that employers must analyze and sort through before the Act takes full effect in 2014. Does becoming self-insured make sense? Are HSAs a viable option? What about state-based insurance exchanges? Cohen & Company’s Healthcare Consulting Group will provide additional guidance in the coming months to help employers navigate as efficiently as possible.

For more information on the tax implications of this ruling, contact Tracy Monroe at tmonroe@cohencpa.com or a member of your service team.

This communication is for information only, and any action should only be taken after a detailed review of the specific situation and appropriate consultation.

Notwithstanding that these materials do not constitute legal, accounting or other professional advice, as may be required by United States Treasury Regulations and IRS Circular 230, you should be advised that these materials are not intended or written to be used, and cannot be used by you or any other person, for the purpose of avoiding penalties that may be imposed under federal tax laws. No written statement contained in these materials may be used by any person to support the promotion or marketing of or to recommend any federal tax transaction(s) or matter(s) addressed in these materials, and any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor with respect to any such federal tax transaction matter.