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How is the Patient Protection and Affordable Care Act Paid For?

The health care legislation signed into law in March 2010 is large in its scope - its coverage provisions will cost $800 billion over the next decade. This is paid for $500 billion in cuts elsewhere, as well as $400 billion in new taxes. This calculator shows how these new taxes affect you, and explains how they work.

Step 1/3

First, enter some basic information about yourself, and then click the "Continue" button. At the end, you'll have the option to go back and make changes to any information entered in any of the steps.

Marital Status:
Your Age:
Spouse's Age:
Number of Children:
Household Income: $
 

Step 2/3

For a more accurate estimate, you have the option of entering information about your income tax return - your dependents, deductions, types of income, and so forth. If you skip this step, we'll estimate these numbers using the information you've already given us.

Step 2/3

Go ahead make whatever changes you need in the box to the right (the numbers currently displayed are our estimates only). When you're done, click the button below.

Step 3/3

Now we need some information about your spending on health care.

Health Insurance Premiums
The default amount listed below is the average cost of an individual plan (if you are single and have no children) or a family plan (if you are married or have children.)
Monthly     Annual
Your annual contribution: $
Employer's annual contribution: $
Enter $0 for employer's contribution if you purchase your own insurance.
Out of Pocket Costs
Annual spending on:
• Over the Counter Medicine $
• Prescription Drugs $
• Other Medical Expenses $
• Indoor tanning services $
 
Medical Savings Account
I have a tax-preferenced medical savings account such as an HSA, FSA, or HRA
   No    Yes
Type:
HSA contributions
or HRA/FSA spending cap*:
$
*(see note)

Results

Below are our initial estimates for how the new taxes in the health care bill affect you. Click on any provision for more information on it and how the number was calculated, as well as to enter in additional options. You can also use the tabs to the right to return to the previous steps and change anything you've entered, to see how it affects the numbers here.

New Taxes in the Affordable Care Act
Cadillac Tax $
Changes to medical savings accounts $
Additional tax on HSA disbursements $
Annual fee on prescription drug manufacturers $
Annual fee on insurance companies $
Excise tax on certain medical devices $
Modification of deduction for medical expenses $
Tanning tax $
Additional Medicare Tax $
Total: $
Hey, what about the individual mandate?
Intro
Income Tax Info
Health Insurance
Tax Details
To get started, answer the questions to your left.
Using default estimates
Filing Status:
Your Age:
Spouse's Age:
Number of Children Under 17:
Number of Children 17+
Wages, Salaries, Tips, Head: $
Wages, Salaries, Tips, Spouse: $
Dividends: $
Short Term Capital Gains: $
Long Term Capital Gains: $
Social Security Benefits: $
Other Income: $
State/Local Tax Deduction: $
Real Estate Tax Deduction: $
Other non-medical itemized deductions: $
Current Income and Payroll Tax Liability: $
Please answer the questions to your left.
Insurance Plan Type:
Total Insurance Premiums: $
Out of Pocket Spending
     Prescription Drugs: $
     Over the Counter Medicine: $
     Other Medical Expenses: $
     Indoor Tanning Services: $
Tax Preferenced Medical Account:
     Account Type:
     Annual HSA Contribution /
      or HRA/FSA Cap:
$
Excise Tax On High-Cost Health Insurance Plans

Goes into Effect: January 1st, 2018

This is the excise tax your insurance company owes on your health plan. Much of this cost is likely to be passed onto you in the form of reduced benefits.

Additional Options

Check box if you are over 55 and receiving employer-sponsored retiree health coverage and not eligible for Medicare and/or are engaged in a "high-risk profession"

High risk professions are considered to be:

  • Police work
  • Firefighting
  • Emergency medical technicians, paramedics, or other first responders
  • Longshore work
  • Construction, Mining, Agriculture, Forestry, or Fishing

A retiree with at least 20 years of employment in a high risk profession is also qualifies.

Changes to Medical Savings Accounts

Goes into Effect: January 1st, 2011
(Already in effect)

Over the counter medicine can no longer be paid for with tax-preferenced medical savings accounts such as HRAs and FSAs, so your spending on such drugs is taxable.

Additional Options
For HSA, Covered Individuals Over 55:
Calculation Details
Increase in Adjusted Gross Income on Form 1040: $
Resultant Additional Income Tax Liability: $
Additional Tax on Disbursments from Health Savings Accounts Not Used for Qualified Medical Expenses

Goes into Effect: January 1st, 2011
(Already in effect)

Withdrawals from HSAs not used for medical expenses are subject to an additional tax, in addition to being includable in taxable income. This number is the maximum possible tax assuming you spend all the money in your HSA each year, and is based on on the difference between your given HSA contribution and your spending on HSA-reimbursable expenses, accounting for the change that over the counter drugs are no longer reimbursed. Note that this could be lower (or $0) if you adjust your HSA contribution accordingly.

Additional Options

For HSA, Covered Individuals Over 55:

Imposition of Annual Fee on Manufacturers of Branded Prescription Drugs

Goes into Effect: January 1st, 2011 (Currently In Effect)

The bill imposes an annual fee on manufacturers of prescription drugs based on their market share, some of which will be passed onto consumers directly in the form of higher prices, as well as secondarily passed onto them in the form of higher insurance premiums. This number reflects that price increase, assuming the cost is borne entirely by the consumer, based on both your out of pocket costs and your insurance premiums. Their higher cost is also likely to be reflected in other ways (such as higher insurance premiums).

Imposition of Annual Fee on Health Insurance Companies

Goes into Effect: January 1st, 2014

The bill imposes an annual fee on health insurance companies based on their market share, some of which will be passed onto consumers in the form of higher prices. This number reflects the price increase assuming consumers bear the entire burden of the tax, based on your insurance premiums.

Excise Tax on Medical Device Manufacturers

Goes into Effect: January 1st, 2013

The bill imposes a 2.3% excise tax on the sale of certain medical devices, which we assume is passed onto the purchasers of such devices. This has the ultimate effect of slightly increasing the cost of health care. Your share of this tax is based on your total health care spending.

Modification of Itemized Deduction for Medical Expenses

Goes into Effect: January 1st, 2013

The health care bill limits the deductibility of unremibursed medical expenses. Currently, such expenses are deductible only to the extent they exceed 7.5% of your adjusted gross income; this threshold will be raised to 10% in 2013.

Decrease in itemized deductions:$
Increase in taxable income:$
Additional income tax owed:$
Excise Tax on Indoor Tanning Services

Goes into Effect: July 1st, 2010 (already in effect)

The 10% excise tax on indoor tanning services will raise prices, causing you to pay this much extra.

Additional Medicare Payroll Taxes

Goes into Effect: January 1st, 2013

The health care bill imposes an additional 0.9% payroll tax on wages, and a 3.8% tax on investment income, over $200,000 (for single filers) and $250,000 (for married filers). This threshold is not adjusted for inflation, so this tax will affect more and more people as time goes on.

My income is below these thresholds but I'm still affected by this tax. What's going on?

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