Advantages in The New Federal Health Care Law

This year Congress passed Health Care legislation providing advantages for nearly every individual and small business. Not all of these changes take effect this year, so check through our list below and talk to your CPA about the provisions that effect your situation.

• Dependents under 27 years of age at the end of the year can now be covered on employer provided insurance and reimbursement plans. Self‐employed individuals can take a self‐employed health insurance deduction for premiums paid for coverage for dependents under 27 at the end of each tax year.
• Children who are 18 and under can no longer be denied coverage based on pre‐existing conditions for new, child‐only individual plans. Any child‐only plan existing before March 23, 2010 is exempt from this requirement.
• Insurance companies can no longer set lifetime limits on health insurance policies. They also will have to set annual limits of at least $750,000. This amount will increase each year until annual limits are banned altogether in 2014.
• Insurers can no longer cancel a policy retroactively due to an inadvertent error on an enrollment form.
• For 2010 and 2011, the adoption tax credit and employer provided adoption assistance exclusion have been increased by $1000.
• Starting in 2011, expenses for over‐the‐counter medications will be nonqualified medical expenses under all tax‐preferred health savings/reimbursement accounts (HRA, FSA, HSA or MSA). Any improper reimbursement from HSA and MSA accounts will be treated as a nonqualified distribution, will not be tax free, and will incur a 20% nonqualified distribution penalty.