The Health Care Bill currently being debated in the House has a large number of Tax provisions, some of them are just dumb-founding.

Sec. 501 revises the Internal Revenue Code to impose a tax on any individual without “Adequate” Health Coverage.  One of the major problems here is the fact that the Federal Government gets to decide what constitutes “adequate” coverage.  Anyone with an insurance plan that does not meet that definition has a tax of 2.5% imposed on them.

That means that many individuals will face the choice of paying for coverage they don’t need or paying an additional tax.  At least as long as non-qualifying insurance plans are available (not likely given this bill.)  No unmarried, childless male needs an insurance plan that covers maternity care or well baby coverage, but this bill imposes those requirements on Insurers.

This provision either forces people to pay more for additional coverage (which they may not need) or pay more in taxes.  Either way, many people will face higher out-of-pocket costs as a result.


Sec. 512 Imposes a new tax on Businesses that don’t offer their employees health coverage (and remember, any Employer offered coverage must meet the Government imposed requirements, giving employers ample reason not to offer coverage).  The tax is equal to 8% of the employee’s wages.

Read that carefully.  8% of the employee’s wages.  This is not an 8% tax rate.  That would be a tax on the employer’s profits.  This is instead, an increase in the cost of doing business, and could increase costs for some business enough to put them out of business.  This is especially true of those businesses that don’t make enough currently to offer their employee’s health insurance.

The costs associated with emplying workers is typically the highest expense for any business.  Increasing it by 8% is a cost many businesses just can’t afford to absorb.

Sec. 532 Decreases the amount of money that can be contributed to FSAs (Flexible Spending Arrangements).  This forces individuals with those plans to face higher taxes.

Sec. 533 Increases the penalty for “nonqualified” distributions from Health Savings Accounts from 10% to 20%.  Again, another tax hike.

Sec. 551 Imposes an additional tax on “High Income” Individuals.  The rate is 5.4% for individuals making $500,000 or $1,000,000 for joint filers.  FYI, many of these people are small business owners.  Taking money from them can result in less money for expanding a business, especially during a period of tight credit.  This is coupled with the phase-out of George Bush’s tax cuts, which lowered the top marginal rate.  The top rate will be 45% after this.

This is coupled with State income taxes.  This means many of these people will be facing income tax rates well over 50%.  How hard do you think people will work once the Government starts taking the majority of what is earned.  When people stop working to earn more than a particular amount, because it just isn’t worth the effort, there is no longer any income for the Government to tax.

BTW, this particular provision id not indexed for inflation.  Remember what occurred with the Alternative Minimum Tax (ATM)?

Sec. 552 Imposes a new 2.5% Excise/Sales Tax on the sale of Medical Devices.  This is going to increase the costs associated with the use of those devices.  If your Hospital buys a new MRI, they will now have an additional cost, one that they will have to pass on to the people using that Hospital.

If the idea is to lower medical costs, why impose a provision guaranteed to increase medical costs?

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