How Obamacare Changed Your Taxes: UnitedHealth Group Inc. (UNH), CIGNA Corporation (CI), Aetna Inc. (AET)

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UnitedHealth Group Inc. (NYSE:UNH)The Affordable Care Act, colloquially known as Obamacare, completely changed how people get health care. With a big expansion of health insurance through mandatory coverage requirements, tens of millions of uninsured Americans will find themselves needing to get enrolled.

Yet the impact of Obamacare goes beyond the health care industry. New tax provisions associated with the Affordable Care Act have gone into effect this year, and they could have a big impact on your taxes both in 2013 and in future years.

What Obamacare did to your taxes
To find out more about exactly what tax provisions lawmakers embedded into the broader Obamacare legislation, the first resource I turned to was the Fool’s Motley Fool ONE Tax Center. Once you get your copy, you’ll find on page five of our exclusive 2013 tax report that Obamacare made several new tax-related changes that will have an impact on taxpayers of all income levels.

Perhaps the biggest change in the law expanded the tax that workers currently pay for Medicare to cover both higher amounts and different types of income. Until this year, workers paid 1.45% of their wages in Medicare withholding taxes, with employers paying another 1.45% out of their own pockets. Self-employed individuals paid the combined 2.9% on their own. Although the amount of wages subject to Medicare tax used to be limited in the same way as Social Security withholding, that changed in 1991, and by 1994, the limits on wages subject to Medicare taxation were removed entirely.

Going forward, though, Obamacare imposes additional Medicare taxes on certain individuals. In particular, two groups will be affected:

Joint filers with wages or other work-related earnings greater than $250,000 and singles earning more than $200,000 will have to pay an additional 0.9 percentage points in Medicare tax, bringing their total to 2.35% for employees or 3.8% for self-employed workers. Employers are supposed to handle this requirement in their withholding, but for two-earner couples, that may prove impossible, as your employer will have no knowledge of what your spouse earns.

Those with total adjusted gross incomes of more than $250,000 for joint filers, or $200,000 for singles, will have Medicare taxes imposed on their investment income as well. On whatever amount of investments exceeds the $250,000 gross-income level, you’ll have to pay the full 3.8% surtax yourself.

The net effect on high-income earners will be to bring total top tax brackets to 43.4% — the 39.6% regular tax amount plus the 3.8% Medicare tax.

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