Health care reform contains tax increases hidden in plain sight

excerps from an article By MIKE DENNISON Missoulian State Bureau | Posted: Sunday, December 6, 2009 6:30 am

HELENA – To pay for health care reform, you’ll find billions of dollars in tax increases tucked inside the two major bills now before Congress – with each taking a vastly different approach to who ends up paying.

Here’s a quick look at the tax proposals in each of the major bills:

House bill: It would raise about $46 billion a year by levying an income tax surcharge on single people earning more than $500,000 a year and couples earning more than $1 million. Only 700 taxpaying households in Montana fall into those categories.

It also would tax medical devices and limit tax-free medical “flex” spending accounts to $2,500.

Senate bill: It has a controversial 40 percent tax on so-called “Cadillac” health plans; levies an annual fee on insurers, drug makers and medical device makers; and raises Medicare payroll taxes for singles earning more than $200,000 a year and couples earning more than $250,000.

It also limits flex spending accounts and medical-expense tax deductions.

The excise tax would be levied on the “aggregate value” of health care benefits that exceed $8,500 for single people and $23,000 for families, starting in 2013.

While no one is enthusiastic about paying higher taxes, two prominent supporters of the health reform bills – AARP and Montana Change That Works, a labor-funded organization – say they can live with the taxes in the Senate bill. read whole article

Comment: Flex Spending Account, a payroll deduction before payroll taxes to pay for medical and/or related expenses