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Tax Impacts of Health Care Reform


The full text of the Senate’s Better Care Reconciliation Act of 2017 was released on June 22nd. While the bill being discussed in the Senate is labeled as health care reform, detailed analysis of the bill shows that it also contains very significant and impactful tax reform provisions.

Chiefly, it would eliminate the 3.8% Net Investment Income Tax imposed on high-income taxpayers retroactive to the beginning of 2017. It also effectively removes the employer mandate to provide affordable health care to employees, as well as the individual mandate to maintain health care coverage by reducing the penalties for noncompliance to zero, retroactively effective back to the beginning of 2016.

Other highlights include:

  • Repeal of the health FSA limitation on contributions, effective 1/1/2018.
  • Repeal of the annual fee on pharmaceutical manufacturers and importers, effective 1/1/2018.
  • Repeal of the medical device excise tax, effective 1/1/2018.
  • Repeal of the 0.9% ACA surtax on earned income, effective 1/1/2023.
  • Repeal of the 10% indoor tanning excise tax, effective 10/1/2017.

This bill is subject to change as it continues its journey through Congress. We are watching it closely and will pass along any updates as they happen. If you have any questions, please contact your tax professional at Berntson Porter & Company, PLLC at 425-454-7990. We’re here to help!