List of Revenue Provisions in Revised Senate Health Care Bill

December 19, 2009

Gerald Prante

Gerald Prante

The Joint Committee on Taxation (JCT) has released its scores of each of the revenue provisions in Senator Harry Reid’s revised health care bill.

It appears that all the buying off of individual senators is over and that this will be the bill that is voted on in the Senate this Thursday (Christmas Eve). But as with everything in this health care debate, it’s hard to predict what will happen two hours from now, let alone four days from now.

Among the highlights of this revised Reid health care bill are a new tax on tanning bed services and an even higher payroll tax increase on high-wage earners. Here’s the full list copied directly from JCT:

40% excise tax on health coverage in excess of $8,500/$23,000 indexed for inflation by CPI-U plus 1% and increased thresholds for over age 55 retirees or certain high-risk professions; levied at insurer level; employer aggregates and issues information return for insurers indicating amount subject to the excise tax; nondeductible; high 17 state transition relief

Employer W-2 reporting of value of health benefits

Conform the definition of medical expenses for health savings accounts, Archer MSAs, health flexible spending arrangements, and health reimbursement arrangements to the definition of the itemized deduction for medical expenses (excluding over-the-counter medicines prescribed by a physician)

Increase the penalty for nonqualified health savings account distributions to 20%

Limit health flexible spending arrangements in cafeteria plans to $2,500, indexed to CPI-U after 2011

Require information reporting on payments to corporations

Additional requirements for section 501(c)(3) hospitals

Impose $2.3 billion annual fee on manufacturers and importers of branded drugs

Impose annual fee on manufacturers and importers of certain medical devices

Impose annual fee on health insurance providers

Study and report of effect on veterans health care

Eliminate deduction for expenses allocable to Medicare Part D subsidy

Raise 7.5% AGI floor on medical expenses deduction to 10%; AGI floor for individuals age 65 and older (and their spouses) remains at 7.5% through 2016

$500,000 deduction limitation on taxable year remuneration to officers, employees, directors, and service providers of covered health insurance providers

Raise the hospital insurance tax on wages and self-employment income in excess of $200,000 ($250,000 joint) by 0.9 percentage points, unindexed

Modification of section 833 treatment of certain health organizations

Impose 10% excise tax on indoor tanning services

Provide income exclusion for specified Indian tribe health benefits

Simple cafeteria plan nondiscrimination safe harbor for certain small employers

Qualifying therapeutic discovery project credit (sunset 12/31/10)

Exclusion for assistance provided to participants in state student loan repayment programs for certain health professionals

Make the adoption credit refundable; increase qualifying expenses threshold, and extend the adoption credit through 2011

Topics

Tags

Related Articles

Design Matters When Raising Taxes to Reduce the Deficit and Stabilize the Debt

Inflation Reduction Act’s Price Controls Are Deterring New Drug Development

Insights into the Tax Systems of Scandinavian Countries

Deteriorating Federal Budget to Run $1.4 Trillion Deficit in 2023, CBO Projects

3 Observations on the CBO Long-Term Budget Outlook

California Considers Doubling its Taxes

The Joint Committee on Taxation (JCT) is a nonpartisan congressional committee in the United States that assists both the House and Senate with tax legislation. The JCT is chaired, on a rotation, by the Chair of the Senate Finance Committee and the Chairman of the House Ways and Means Committee.

A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

Inflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power.

Itemized deductions allow individuals to subtract designated expenses from their taxable income and can be claimed in lieu of the standard deduction. Itemized deductions include those for state and local taxes, charitable contributions, and mortgage interest. An estimated 13.7 percent of filers itemized in 2019, most being high-income taxpayers. 

A payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 24.8 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue.

An excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections.