It’s no fun to be sick. Illness often requires spending time in a pharmacy, doctor’s office, or hospital, all of which can be very expensive. Congress intended the Patient Protection and Affordable Care Act to increase the rate of health insurance coverage and reduce health care costs, but it comes at a price.
One way the Act is designed to pay for itself is through a new 3.8 percent Medicare contribution tax (Health Care Tax), which is now effective for the 2013 tax year. This article will discuss who is subject to the tax, how it works, and planning concepts for minimizing its impact. Family business owners will want to consider the application of the tax to themselves and their families as individuals, as well as to trusts and estates that may, now or in the future, hold an interest in the family business.