CCH issues a Special Tax Briefing on the tax provisions of the health care bill

The House version of health care reform - the Affordable Health Care for America Act, which passed by a vote of 220-215 on Saturday, November 7, 2009 - mandates several significant changes to the tax code and differs in many ways from the tax provisions likely to appear in any Senate version, requiring extensive reconciliation to reach final agreement. CCH has issued a Special Tax Briefing on the tax provisions of the legislation, detailing differences between House and Senate versions. To read the Briefing, click here.

"Both House and Senate approaches to health care reform use the tax code in two basic ways - to broaden insurance coverage through tax incentives and penalties on the one hand, and on the other hand simply to raise revenue to pay part of the costs, even if the revenue raisers aren't directly related to coverage issues," said CCH Principal Federal Tax Analyst Mark Luscombe, JD, LLM, CPA.

For example, the House bill imposes a new 4.5 percent surtax on incomes above $500,000 for single filers, $1,000,000 for joint filers and surviving spouses, expected to raise more than $400 billion over 10 years to help pay for nearly universal coverage. Although a final version of the Senate bill is still being fine-tuned, it will not contain an income tax surcharge and is almost certain to contain a tax on "Cadillac" insurance plans, with more generous benefits and higher premiums than typical plans, a provision lacking in the House bill.

"There are dozens of differences between House and Senate tax provisions. Some are minor and easy to reconcile, but many differ in very fundamental ways. Assuming that health care reform passes in the Senate, a conference committee will have a lot of work just to iron out these tax issues on the way to a final bill," Luscombe said.