Skip to comments.Obamacare's Four Tax Hikes on Young Adults and Children
Posted on 03/21/2012 10:58:45 AM PDT by 92nina
The jobs-killing Obamacare law contains 20 new or higher taxes on American families and employers. Many of these tax increases fall on families making less than $250,000--a direct violation of candidate Obama's promise not to raise "any form" of taxes on these families. In less than a week, the second anniversary of Obamacare being signed into law will take place. The Supreme Court will be hearing oral arguments about the constitutionality of Obamacare next week.
Out of the 20 new or higher taxes in Obamacare, here are the four that most hurt young adults and children. Every single one of these taxes violates President Obama's promise not to raise taxes on families making less than $250,000:
Individual Mandate excise tax. Under Obamacare, all young adults must purchase "qualifying health insurance" (defined by unelected federal bureaucrats) or face an excise tax penalty of at least 2.5 percent of adjusted gross income. For many people in their late 20s or early 30s, health insurance may not fit into a budget which includes paying back student loans, starting a family, or finding a job. Others might want to obtain health insurance, but find their preferred plan is no longer "qualified" by President Obama's HHS bureaucrats. Raising taxes on young people is the wrong way to get them to buy health insurance.
Medicine Cabinet Tax. This tax increase on young people is already in effect. Since January of 2011, young people have not been able to purchase non-prescription, over-the-counter medicines from their flex-spending accounts (FSAs) or health savings accounts (HSAs). Since many young people require only light use of medical providers and can treat many illnesses over-the-counter, this tax increase falls on a large percentage of their actual out-of-pocket health expenditures.
For children, many of the products their parents buy them fall victim to this tax. Cough syrup, ear infection medicine, and children's pain relief products all must now be purchased on an after-tax basis. This raises the cost of providing health care to children.
New cap on flex-accounts (FSAs). Many young people and parents of children participate in flex accounts at work. Obamacare imposes a new cap of $2500 per year on these accounts, which currently face no limits from the tax code. This will, again, fall largely on parents with children. Consider braces, for example. A parent needing to buy a $4000 pair of braces might want to run that cost through their flex account to make it pre-tax. A $2500 cap makes that impossible for the whole cost.
Another example is tuition for special-needs education. These are allowed to be claimed as a flex-account reimbursement expense. Children with severe developmental disabilities often require special education that can run well in excess of $10,000 per year in tuition. The FSA cap hurts these families.
New limits on HSAs. Many young people are embracing health savings accounts. According to the Employee Benefits Research Institute, there are now more than 8.4 million accounts containing $12.4 billion in assets. Those numbers are up 55 and 70 percent in just one year, respectively.
There's a good reason why. AHIP, the health insurance trade association, reports that premiums for HSA-qualified plans are 20 to 40 percent lower than "gold plated" first-dollar plans. The average premium for an HSA-qualified health insurance plan is about $4200 for a single person, compared to over $7000 for a first-dollar plan--a savings of 40 percent. 52% of the 12 million Americans covered by an HSA are under age 40.
But Obamacare wants to kill off HSAs in several ways. First, Obamacare imposes a 20% surtax on non-health, pre-65 withdrawals from HSAs. This can result in a marginal tax rate on non-health distributions of over 60 percent. This "Fort Knox" treatment of HSAs discourages young people from opening them in the first place.
Secondly, HSAs can no longer be used to purchase non-prescription, over-the-counter medications.
Finally, HHS regulators are trying to strangle HSAs by imposing "medical loss ratio" (MLR) rules that make it almost impossible for HSA-qualified health insurance plans to operate properly.
Obamacare is a bad deal for everyone, even young adults and children.
Read more: http://www.atr.org/obamacares-four-tax-hikes-young-adults-a6786#ixzz1pm7No32v
Hasn’t Obama already slash the child deduction from $1000 to $500?
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