This week’s blog from Equinox Associate Lauren Burgon
President Obama signed the Patient Protection and Affordable Care Act into law in March, 2010, but most of us know that many of the law’s provisions don’t go into effect until 2014. While many employers are concerned with how the law will affect their businesses and the benefits they offer, many Americans are unaware that there are a number of provisions of the law that go into effect on January 1, 2013 that affect all of us on an individual level. It’s worth taking a few minutes to look at the changes in store for 2013, and to explore whether some planning in 2012 may affect the impact of the new law on your personal finances.
We have all heard about the individual mandate, especially since the Supreme Court upheld its constitutionality last summer. The individual mandate provides that if you don’t have health insurance, starting in 2014 you will pay a tax. The amount varies with your individual situation, and will rise each year at least until 2016. Right now it’s scheduled to peak in 2016 at 2.5% of your income.
But many of us are unaware of the tax changes that start in only a few months on January 1, 2013. These changes include:
- an increase in the threshold for medical deductions from 7.5% to 10% of your income;
- two new taxes for those with income over $200,000;
- an extra payroll tax of .9%; and
- a new 3.8% tax on unearned income such as investments, annuities, rent and royalties.
It might be a good idea to meet with your financial professional now, (not in December!) to explore what effect these new taxes will have on your individual situation, and whether there are changes you can make now to lessen their impact.
Likewise, for employers planning sooner rather than later is key to minimizing the impacts of this new law on your business. How many employees does your business truly have when it comes to evaluating the new law’s applicability? Are you sure that your independent contractors are truly independent contractors, and are you confident that these relationships would survive scrutiny by Employment Security or the IRS?
Looking ahead, educating yourself, and planning for the changes ahead are key to minimizing the new law’s financial impact to you as an individual and to your business.
For more information, join us in October 30th for an informative event. For details, please visit our events page.