I admit I did not get myself emotionally attached to the health care reform one way or the other when it was being debated in Congress. I keep myself loosely informed from reading my friend Austin Frakt’s blog The Incidental Economist. Now that the final legislation is passed, everybody inevitably asks "What’s in it for me?" So do I.
I read the excellent timeline summary from Austin and the tax summary from CCH Group. I’m not too surprised to see that the vast majority of the items have absolutely no direct benefit to me. I have health insurance from an employer, which is not a small business. I do not cover an adult child as a dependent. HIPAA has covered pre-existing conditions for nearly 15 years. I’m not on Medicare, nor its Part D.
Of the few items in the health care reform that do affect me, unfortunately all are negative. If you happen to be in a married two-earner household working in a high cost-of-living area, you have been selected as a potential revenue source for the new law. The $250,000 married-filing-jointly tax threshold is not indexed to inflation. If you haven’t crossed it yet, eventually you will, just like the AMT thresholds.
|What||When||What to do?|
|0.9% increase in Medicare tax on earned income||2013||Max out all pre-tax savings plans|
|3.8% tax on unearned income (interest, dividends, capital gains)||2013||Move taxable investments to muni bonds|
|Reduce cap on Flexible Spending Account to $2,500 a year. No coverage for OTC drugs except with a prescription.||2013||Schedule elective procedures in January and February.|
|Tax on high value health care plans provided by employer||2018||I’m not sure if my plan counts as a high-value plan. If it does, the employer will likely cheapen the plan to make it not so.|
I’m not saying it’s a bad law because it doesn’t benefit me or because I have to pay more tax for it. If it does great things, I’d be glad to pay more tax and make those great things happen. Whether it will turn out great remains to be seen.