Many of the provisions of the new Act are phased in over the next few years.  However, there are provisions that go into effect during 2010 and 2011 that will impact both individuals and businesses. A few of them are mentioned below:

Individual Tax Provisions starting in 2010 and 2011

Medical Benefits for children under 27 years of age

•o   Health insurance premiums of child under 27 years old are deductible

•o   Insurers must permit continued coverage for child under 27 years of age

•o   Effective March 23, 2010

10% Excise Tax of indoor tanning services

•o   This amount will be collected from the customer and remitted by the salon

•o   Effective July 1, 2010

Health FSA changes

•o   Over the counter items no longer qualify for reimbursement

•o   Effective for disbursements after December 31, 2010

Penalties for non-qualified disbursements of HSAs

•o   Increase from 10% to 20%

•o   Effective for disbursements after December 31, 2010

Business Tax Provisions starting in 2010 and 2011

Small Business credit available for health insurance

•o   Must have less than 25 full time employee equivalents

•o   Phase-out starts with more than 10 full time employee equivalents and average annual salary exceeding $25,000

•o   Average annual wages not more than $50,000

•o   Business must pay more than 50% of premiums

•o   Maximum credit is 35% percent of (the lesser of)

                   Total premiums made by employer 
                   Total small group Exchange premiums

•o   Effective in 2010

Simple Cafeteria Plans

•o   Section 125 nondiscrimination rules waived

•o   Under 100 employees

•o   Certain requirements need to be met (eligibility, participation, and contributions)

•o   Effective in 2011

Non Tax Provisions

Restrictions on group health plans

•o   Extension of dependent coverage

•o   Mandatory coverage of preventive health services

•o   Prohibition of lifetime/annual limits

•o   Effective in 2010

W-2 reporting requirements

•o   W-2s must have the cost of employer provided health coverage - even if employer does not pay it

•o   Effective in 2011

There are other provisions that take effect after 2011 that could impact both you and your business. As we get closer to the effective date for those provisions we will be sending further emails to keep you informed.

Should you have any questions, or would like additional information, please contact either Sarah Hancock (Director of Tax Services) or Leisha Gardner (Tax Services Manager) at 972-644-7112.