By Tony Wilson
Special to the Citizen
If you think John Grisham has cornered the market in writing page-turning thrillers, then you obviously haven't read, "Present Law and Background Relating to the Tax-Related Provisions in the Affordable Care Act" by the staff of the Joint Committee on Taxation.
I recently started reading "Present Law" and only put it down when I dozed off in my office chair after the first paragraph and the 96-page tome slipped out of my hands and fell on my toe.
The document, released in March, takes an extremely detailed look at the 20-plus new taxes and fees associated with the Patient Protection and Affordable Care Act, often referred to as health care reform.
Now, I know what you are thinking: -- "Wait, PPACA can't be a tax because the Obama administration, while pushing the legislation, told the American people it wasn't a tax. But the attorney arguing on behalf of the same administration before the Supreme Court last summer said it was a tax and couldn't be overturned. Only the federal government could keep a straight face while arguing it's not a tax before mounting a defense that, in fact, it is a tax.
I'm here today to declare it is not a tax -- it's a lot of taxes with some fees thrown in, too. In fact, estimates on the new taxes and fees are in the $700 billion range over the next 10 years.
I've touched on some of the tax implications of PPACA in prior columns, but starting today I wanted to take a more detailed look at the taxes and fees associated with PPACA. To cover this topic, today's offering will be the first of a two-part series focusing on the findings outlined in "Present Law."
With the sting of April 15th still on the minds of many Americans, I think this is an appropriate time to look at many of us having to pay more taxes in the name of "reform."
One tax that many Americans don't realize is on the way beginning in January is an annual $63 "temporary assessment" per person levied for three years that is designed to raise $25 billion. The purpose is to provide insurers with some cushion in having to take on individuals with pre-existing conditions and the unpredictable costs associated with those conditions.
While the fee is charged on major medical plan insurers, we all know costs get passed along to the consumer. In this case, the consumer is those employers and individuals who buy major medical coverage. A number of large companies have asked for exemptions, including Boeing, which estimated this "temporary assessment" would cost the company an additional $25 million. The request was denied.
How many new jobs -- or worse, current jobs -- is that going to cost? You and I both know that you and I stand at the end of the consumer line. This cost will get passed along. I just hope enough people are still employed at the end of that line once the costs are passed down. If not, we will see a mushroom cloud above this "reform."
Despite the implementation of this new tax, there is good news -- the $63 annual fee in 2014 is expected to decrease in 2015 and then again in 2016, when it is projected to be $40 per person that year and then phased out by 2017. In case that makes you feel a little better, keep in mind Congress can act to extend the "temporary assessment." Hold on to your pocketbook, Granny.
Those of you who visit the tanning bed getting ready for the beach each summer have been paying a 10 percent penalty on those services for a few years now. A theory behind this tax was that it might encourage people to think twice about using these facilities which, according to published reports, increase skin cancer.
CNN Money reported that when the tax was implemented in 2010, the Congressional Joint Committee on Taxation projected that it would raise $200 million in 2011 fiscal year and around $2.7 billion by 2019. However, the IRS only collected $36.6 million in the first half of the 2011 fiscal year, according to the Treasury's inspector general for tax administration.
What? The Feds financial projections were off? That must mean they will have to come up with another tax idea to collect the "shortfall." If they implement a 10 percent tax on Hershey Kisses, I may be in trouble.
Next week, we'll continue our review of the taxes under PPACA. I recommend a pack of Tums with your cup of coffee and newspaper for that one.
Questions or comments? Feel free to email me at email@example.com.
Tony L. Wilson is a principal with NUVISION Financial Corporation based in Conyers. NUVISION is a subsidiary of National Financial Partners Corp. (NFP), which provides benefits solutions for companies.