Tax And Healthcare Reform

Recent healthcare reform laws will give the national budget an influx of $143 billion - good news for seniors and other citizens

. These reforms will help provide better healthcare for those who've been affected by the gaps between their medical expenses and the little that Medicare could cover, although it will affect the amounts a person needs to pay as tax. What are the effects of healthcare reform on taxes, and on seniors who survive on limited income while having to keep their budgets under control?

Statistics can help people understand the implications of these recent healthcare laws. Three years ago, the average yearly income for a household in US was around $50,000. Income usually goes up as the head of the household ages, up to the age of 64 when the figure declines due to retirement. When heads of households are beyond the age of 75, the average income is only around $20,000. Overall, less than 2% of all American households exceeded yearly earnings of $250,000 - it can then be assumed that only a small percentage of those earning a quarter of a million annually are seniors.

If a couple earns more than a quarter-million per year, or an individual more than $200,000, the couple or individual will need to pay an additional 0.9% for Medicare payroll tax and 3.8% tax on investments and other unearned income. People with earnings below these figures won't change what they pay for taxes - only those with incomes in the higher brackets are required to pay extra. These changes begin in three years.

People with savings accounts specifically for healthcare will be affected by increased taxes due to the healthcare reforms. These accounts, which cover the insured person's approved healthcare costs with money from his or her initial deposit once the year starts, are meant for medical attention only. If funds are withdrawn for other uses, the amounts will be taxed by 20%, compared to the current 10% tax.

Unless what a senior earns is relatively high, he or she will experience little change in taxes. This means that many retirees and seniors will enjoy the benefits of better healthcare without having to stretch their already meager funds even further.

by: Carina Smith

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