Photo: IRS Form 1040

Health contributions will be based on filings

By John M. Gonzales
CHCF Center for Health Reporting
Posted: 04/13/2013 03:33:16 PM PDT
Updated: 04/13/2013 04:13:57 PM PDT

Related story: Obamacare has Southern California health care officials scrambling

If you’re among millions of uninsured Californians eligible for government-subsidized insurance, the ripples of health reform start with Monday’s tax deadline.

The government will use your return as its first yardstick for how much of a tax break it contributes to your health coverage. And if you don’t have government-mandated health insurance a year from now, a penalty will be added to your federal tax obligations.

These are among ways the federal tax code will increasingly be at the forefront of health reform’s implementation. Other provisions are also kicking in as the countdown continues toward full operation of the Affordable Care Act on Jan. 1.

Employers already have started withholding a higher Medicare tax on high-income earners, for example. And 2013 marks the debut of a 3.8 percent tax on net investment income of high earners.

The provision that will provide the biggest boost to taxpayers is the one that offers subsidies for uninsured people who obtain coverage through new insurance exchanges.

“It’s a tremendous deal for the people who are currently uninsured,” said Larry Levitt, senior vice president for special initiatives at the California-headquartered Kaiser Family Foundation.

“That’s not to tell you that the coverage will be free. The coverage will come with deductibles and co-pays,” said Levitt. “It will start with your current tax return, and ask everyone (to give notice) if their circumstances have changed. ”

The subsidies could also create a good deal of confusion for participants in the exchanges, and in some cases come back to haunt. If your income goes up substantially during the year, for example, you could have to give back all, or some, of the tax break.

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