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A look at who's paying how much taxes

2,074 pages + $849 billion =
Senate health care bill

Do you have a flexible savings account? Are you planning on claiming medical expenses as an itemized deduction? What about your workplace insurance plan; is it relatively expensive coverage?

Then you'll face some costs in the Senate's humongous health care reform bill.

I'm not kidding about the size, both on the pure number of pages (almost 2,100) and the dollars ($849 billion).

I haven't yet read the text of H.R. 3590, otherwise known as the Patient Protection and Affordable Care Act.

But I have looked over the Joint Committee on Taxation's more manageable revenue estimates of the bill. This three-page document highlights the tax provisions and the money they will raise -- $371.9 billion -- over the next decade to help pay some of the health care reform costs.

Below are some of the changes and charges that are likely to affect a lot of us. Many of them have been covered before here on the ol' blog (see the Related Posts links at the end for those previous postings).

Again, note that the dollar amounts are the total estimated to be raised between 2010 and 2019.

Cadillac plan tax
This tax on more expensive, or Cadillac, health insurance plans -- a 40 percent excise tax on health coverage in excess of $8,500 for individuals, $23,000 for family coverage -- has been the subject of much Capitol Hill debate.

It isn't a direct tax on you, the covered individual. Rather, it will be assessed against the insurers. But if they're paying more, I'll give you three guesses as to what that might do your premiums and/or coverage options and the first two don't count.

Congressional bean counters say this tax will raise the most money: $149.1 billion.

More medical expenses needed to deduct
The bill would raise the current 7.5 percent adjusted gross income (AGI) floor on medical expenses to 10 percent. This means if your AGI is $50,000, you'd need $5,000 in medical expenses before you could write them off on Schedule A, and then it's only the amount in excess of $5,000 that's deductible.

The AGI floor for taxpayers age 65 or older would remain at 7.5 percent at least through 2016.

The increased deduction percentage would raise $15.2 billion.

Unified medical expenses definition
Those medical expenses deductible on Schedule A are often slightly different from the expenses that are reimbursable under medical flexible spending accounts (FSAs), health savings accounts (HSAs) and Archer medical savings accounts (MSAs). The Senate bill would make all those health options conform to to the itemized deduction definition of medical expenses.

Over-the-counter medicines that are prescribed by a physician would still be allowable under the plans, but still not as an itemized deduction.

This change would raise $5 billion.

Limit health FSA contributions
In addition to changes in what's payable from an FSA, the bill also would limit employee contributions to these plans to $2,500. Currently, there's no statutory limit on these savings vehicles, but companies often do cap them, typically at $5,000.

Capping FSA money would raise $14.6 billion.

HSA penalty hike
Another popular savings account for people with high-deductible medical coverage also faces a tax. The bill would Increase the penalty for nonqualified HSA distributions (withdrawals used to pay for something other than approved medical costs) from its current 10 percent to 20 percent. 

This increased penalty would bring in $1.3 billion.

Higher payroll tax for high earners
This is a new one. It wasn't in either the Senate Finance or health committee proposals, but Senate Majority Leader Harry Reid (D-Nev.) put it into H.R. 3509.

It would be an additional ½ percent tax on hospital insurance tax on wages for individuals who earn more than $200,000 ($250,000 for joint filers). This is the Medicare portion, currently 1.45 percent on wages, that is withheld from workers' paychecks.

This tax increase would raise $53.8 billion.

The tax price of beauty
Yep, the long-rumored plastic surgery tax is in there. The Senate bill would impose a 5 percent excise tax on purely cosmetic procedures. I guess if you're that vain, you'll just have to grin sans laugh lines and bear it.

The tax on cosmetic surgery would bring in $5.8 billion.

No surtax on the rich
What the Senate bill doesn't have, but is in the $1 trillion House health care bill, is a surtax on wealthy individuals, defined as folks making more than $500,000 a year, $1 million for couples who file joint returns.

This will be just one point of contention when the House and Senate measure have to be reconciled in conference committee.

Debate to begin ... when? So when will that House-Senate head butting begin? Well, first the just-released Senate measure has to make it through that body. Reid wants that to happen by year's end.

Good luck with that. The Majority Leader has to get some recalcitrant Democrats in tow before he can proceed.

Sens. Ben Nelson (D-Neb.), Blanche Lincoln (D-Ark.) and Mary Landrieu (D-La.) have made no secret about their concerns with the proposal. Reid believes the three will eventually back the move to send the bill to the Senate floor, but who really knows.

So get ready. This will be fun, especially if you're a wonky Capitol Hill masochist. And aren't we all in our heart of hearts?

Related posts:

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