The Affordable Care Act will bring some tax increases on high-income earners in 2013. Starting on January 1st, workers will have to pay an additional Medicare tax of 0.9% on any wages over $200,000, and married couples filing jointly will have to do the same for wages over $250,000. Additionally, a new Medicare tax of 3.8% will apply to the net investment income of taxpayers who have modified adjusted gross incomes above $200,000 for individuals or $250,000 for couples filing jointly.
There will also be less tax breaks available in 2013 for unreimbursed medical expenses. Currently, taxpayers may use an itemized deduction for medical expenses that exceed 7.5% of their adjusted gross income. The threshold will increase to 10% next year, although the change is delayed to 2017 for people 65 years of age and older.
Workers who utilize flexible spending accounts (“FSAs”) to pay for medical expenses will also face changes. Workers can still contribute money to FSAs free of tax, but there will be a limit of $2,500 per year starting in 2013.
David Dirr is an attorney at the Northern Kentucky office of Dressman Benzinger LaVelle and is a member of the firm’s healthcare and litigation groups. David is licensed to practice in Ohio, Kentucky, and Indiana. He concentrates his practice on the areas of Medicare and Medicaid reimbursement, anti-kickback law, the Stark law, and HIPAA.
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