RSM McGladrey's Tax Digest addresses tax implications of new health care legislation
Charlotte, NC – RSM McGladrey, one of the nation’s leading accounting, tax and business consulting firms, recently released a special edition of “Tax Digest,” focused on tax implications of the recently passed health care legislation.
According to the special edition, the Patient Protection and Affordable Care Act (H.R. 3590), combined with the Health Care and Education Affordability Reconciliation Act (H.R. 4872), will raise taxes for many Americans. “These bills significantly increase taxes on individuals with higher incomes and those with more costly health insurance plans,” said RSM McGladrey Executive Vice President, Tax Services Mike Metz. “They will cost approximately $940 billion. To pay for these changes, the bills impose $438 billion in new taxes and fees on insurers, businesses and individuals. The remainder of the cost is paid for by cuts in Medicare funding. The bills are expected to reduce federal deficits by $143 billion over the next ten years. The bills are also expected to expand health insurance coverage to 32 million individuals.”
The bills significantly increase taxes on individuals with higher incomes and those with more costly health insurance plans. At the same time, the bills provide significant tax credits for some individuals and small businesses, including:
- a credit to qualifying small businesses to reimburse them for the cost of providing health insurance to their employees, and
- a credit for up to 50 percent of investments made in 2009 and 2010 for new therapies to prevent, diagnose and treat acute and chronic diseases.
In addition to those credits, however, RSM McGladrey’s Tax Digest says that the bills also impose penalties on individuals and employers for failing to obtain or provide coverage.
The bills include a number of new taxes and fees for businesses, including:
- a new ten percent excise tax on indoor tanning services starting on July 1, 2010,
- a new excise tax on otherwise taxable medical device sales equal to 2.3 percent of the price of the device,
- a new annual nondeductible fee on health insurance providers beginning in 2014,
- a new nondeductible annual fee on pharmaceutical manufacturers and importers of branded drugs beginning in 2011, and
- a new requirement that 501(c)(3) hospitals conduct periodic community health needs assessments and adopt written financial assistance policies.
The bills also include limitations on insurers’ compensation deductions for certain highly paid executives to the extent plans offered by the insurer do not meet minimum coverage requirements.
To learn more about tax implications the series of new taxes and fees on individuals and business, you can download the RSM McGladrey’s special edition Tax Digest or visit our Web site at mcgladrey.com.
About RSM McGladrey
RSM McGladrey is a leading professional services firm providing accounting, tax and business consulting. RSM McGladrey operates in an alternative practice structure with McGladrey & Pullen LLP, a partner-owned CPA firm that delivers audit and attest services. Through separate and independent legal entities, they work together to serve clients’ business needs. Together, the companies rank as the fifth largest U.S. provider of accounting, tax and business consulting services (source: Accounting Today), with 7,000 professionals and associates in nearly 90 offices. RSM McGladrey and McGladrey & Pullen LLP are member firms of RSM International, an affiliation of independent accounting and consulting firms. To learn more about RSM McGladrey visit our Web site at mcgladrey.com, follow us on Twitter at @McGladreyPRNews and become a fan on our Facebook fan page at McGladrey News.