Farmers attending the Kansas Farm Bureau's annual convention in Manhattan in early December had the opportunity to learn some details about how the Affordable Care Act might affect their operations from James Gordon, a Certified Public Accountant with Sink, Gordon & Associates in Manhattan.
"First of all, you need to know a few things that have already changed with parts of the law already implemented," Gordon said. "For example, the amount of pre-tax money you can put in a flexible spending account has been reduced to $2,500 from $5,000 and a tax has been added on earnings of more than $250,000 of earned income, which would be wages earned. You are now being taxed 0.9% of income above that level to help support Medicare."
Gordon went on to say that the tax is higher on investment income. Investment earnings above $250,000 are now taxed at 3.8% for Medicare.
Another tax impact is that you can now deduct medical expenses above 10% of gross income on Schedule A of Form 1040, where the exclusion used to be 7.5% of income. For those taxpayers over 65 years old, that change is delayed until 2017.
Gordon had advice for farmers looking to buy policies to avoid paying a penalty for not having coverage.
"If you know that you don't qualify for federal subsidies to help you pay for a policy, don't waste your time on Healthcare.gov," he said. "The only reason you need to go there is if you qualify to get help paying for your premiums."
If you know that you do not qualify for subsidies, simply call one of the two companies that offer individual policies in Kansas: Blue Cross and Blue Shield or Coventry. Blue Cross is the only company offering small business group policies.
"If you just make a couple of phone calls to each of those companies, they can tell you what they are offering and can help you get signed up for a policy," he said.
Read more about the Affordable Care Act and its impact on farmers in the January Kansas Farmer.