Can You Afford Not To Understand?

As you may recall, the Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010. With most major provisions set to be phased in by January 2014, it’s important that you understand how the various provisions will affect you. Here are some new features to keep in mind.

  • Flexible spending accounts. The annual pretax employee contribution to a Section 125 cafeteria plan flexible spending account (FSA) is reduced to $2,500, subject to annual increases for cost-of-living adjustments. The reduction does not apply to certain employer non-elective contributions (e.g., flex credits).
  • Itemized deductions. The threshold for the itemized deduction for medical expenses increases from 7.5% to 10% of adjusted gross income, beginning in 2013. However, this increase is waived for taxpayers age 65 and older through 2016.
  • Hospital insurance. The hospital insurance (HI) portion of the payroll tax, commonly referred to as the Medicare portion, increases by 0.9% for individuals with wages exceeding $200,000 ($250,000 for married couples filing a joint federal income tax return, and $125,000 for married individuals filing separately).
  • Contribution tax. 2013 marks the imposition of a new 3.8% Medicare contribution tax on the unearned income of high-income individuals. This 3.8% contribution tax generally applies to the net investment income of individuals with modified adjusted gross income that exceeds $200,000 ($250,000 for married couples filing a joint federal income tax return, and $125,000 for married individuals filing separately).

Looking ahead, 2014 brings the implementation of health insurance exchanges, premium and cost-sharing subsidies and the requirement that most individuals have health insurance. There are many resources available to help you understand the conditions of the law and the other upcoming implementations. Contact your local financial professional, like a CPA, if you have questions about how the law impacts you.

This blog came from Feed the Pig, brought to you by AICPA

Visit www.feedthepig.org for more money-saving tips. 
Want to share this tip with your friends? Find out how.

Take the Pledge

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Take the America Saves Pledge

Tip of the Day

  • Written by Tammy G. Bruzon | January 16, 2017

    Your #taxrefund will continue to grow if you put it into savings or retirement http://bit.ly/2hZ6s8A @AmericaSaves

Saver Stories View all »

Coping with a Lost Job

Written by Katie Bryan | October 28, 2013

Aimee Shaffer worked as a Public Service News Director for radio for years until one day her employer downsized the company, resulting in hundreds of lost jobs, including Aimee’s.

Read more...

Taking Steps Toward Financial Fitness

Written by Tammy G. Bruzon | November 7, 2014

Nicky Vasquez learned about Virginia Saves when she attended her first class with Bank On Virginia Beach. The instructor shared how important it was to have a written savings goal, and the entire class joined Virginia Saves as the first step toward financial fitness.

Read more...

Starting and Continuing a Personal Finance Journey

Written by Sara Cooper | December 23, 2013

When Kiara Hardin, now a junior at Western Illinois University, became an intern with the Chicago Summer Business Institute during her sophomore year of high school, she began her personal finance journey. The program required participants to open a savings account.

Read more...

Receive Updates

Sign up for Texts

Written by Tammy G. Bruzon | July 15, 2014

Sign Up

Sign up for Emails

Written by Super User | September 16, 2013

Get Emails

Take the Pledge

Written by Super User | September 16, 2013

Start Saving