| What are the main features of the Affordable Care Act Provisions?
The Affordable Care Act was enacted on March 23, 2010 and contains some tax provisions that take effect this year and other provisions that will impact taxpayers during the next several years. The following is a list of provisions that are currently in effect for the tax year 2010.
1. Medicare Part D Coverage Gap “donut hole” Rebate.
The Affordable Care Act provides a one-time $250 rebate in 2010 to assist Medicare Part D recipients who have reached their Medicare drug plan’s coverage gap. This payment is not taxable. This payment is not made by the IRS.
2. Therapeutic Discovery Project Program
This program is designed to provide tax credits and grants to small firms that show significant potential to produce new and cost-saving therapies, support jobs and increase U.S. competitiveness.
The IRS guidance describes the process by which firms can apply to have their research projects certified as eligible for the credit or grant. Companies may submit applications for certification beginning June 21, 2010. Applications must be postmarked no later than July 21, 2010.
3. Small Business Health Care Tax Credit
According to the IRS, "this new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees."
4. Health Coverage for Older Children
Health coverage for an employee's children under 27 years of age is now generally tax-free to the employee. The IRS has stated that "this expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit."
Furthermore, "this also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return."
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