Change is a constant in life, and with the Affordable Care Act (also known as ACA) marching forward, change is definitely coming on the healthcare front. The largest health care reform changes from the implementation of the Affordable Care Act will hit in 2014, but 2013 has some big changes you should be aware of. Let’s take a look at the big health care reform changes we will see this year – and how they will affect you:
Health Care Reform Changes in 2013
Here is a summary of the coming healthcare changes this year.
Health Insurance Exchange Programs
Millions of Americans are without health insurance. This lack of insurance is a huge gamble; all it takes is one serious trip to the hospital to set you back tens of thousands of dollars in medical debt. The ACA allows (and encourages) states to create health insurance exchanges that are designed to make health insurance more competitive – and more affordable. The exchanges are designed to provide more affordable coverage for individuals looking to buy insurance and to small businesses with up to 100 employees. (States have the ability to change who can participate in the exchanges, but this is the general idea.)
FSA and HSA Changes
There are some significant changes coming to Flexible Spending Accounts and Health Savings Accounts. Both FSAs and HSAs allow you to set aside money on a pre-tax basis. That money is never subject to income tax as long as the funds are used for qualified healthcare expenses. FSA limits will be capped at $2,500 per year. Your FSA account will also remain a “use it or lose it” account; any funds left in your account at the end of the year will automatically be forfeited.
Health Savings Accounts are similar to FSAs in that you can contribute pre-tax funds for medical expenses. However, the upside to an HSA is you don’t lose unused funds at the end of the year. You can keep your HSA for decades to come. However, HSA limits have changed: individuals may contribute $3,250 per year (up $150 over 2012) while families may contribute $6,450 (up $200 over 2012).
Higher Health Care Taxes for High Wage Earners
High income earners will face two new sets of taxes in 2013 that are related to healthcare laws:
- A 0.9% Medicaid income tax on wages above $200,000 for individuals and above $250,000 for couples
- A 3.8% investment income tax that applies to individuals making more than $200,000 per year and couples making more than $250,000 per year
Itemized Medical Deduction Threshold Raised
If you have a lot of medical expense in a year you may be able to deduct the expenses. In prior years the threshold you had to meet before you could deduct was 7.5% of your adjusted gross income. In 2013 that threshold increases to 10% of your AGI.
More Preventative Care
The ACA provides new funding for more preventative care provided by state Medicaid programs.
Increased Medicaid Payments for Primary Care Doctors
The ACA also provides funding for state Medicaid programs to pay Primary Care Doctors the 100% required by Medicaid. The difference between what states were paying and the 100% allowed is covered by federal funding.
Two More Years of Funding for Children’s Health Insurance Program (CHIP)
The CHIP program provides health insurance to children whose families cannot afford coverage for them. The ACA provides funding for two more years of CHIP.