1. 2010 American Institute of CPAs What Does Health Care Reform Mean for You? Updated as of November 2010

2. Today’s Presentation >New legislation and challenges >Importance of being prepared and informed >Overview of key provisions, rules and requirements, and what they mean to you >2010 to 2014 effective dates >Q&A 2 2010 American Institute of CPAs

3. 2010 Health Care Reform Legislation >Patient Protection and Affordable Care Act >Health Care and Education Reconciliation Act of 2010 >Legislation’s impact − substantial and long term 3 2010 American Institute of CPAs

4. Provisions >National high-risk pool >Lifetime limits and serious illness >Pre-existing condition exclusion >Dependent care coverage >Medicare taxes >Itemized deduction threshold for unreimbursed medical expenses >Mandatory insurance coverage >Premium assistance credit >Adoption credit >Adoption assistance program exclusion >Health FSAs, HSAs, HRAs and Archer MSAs >Indoor tanning services 4 2010 American Institute of CPAs

5. National High-Risk Pool >Temporary high-risk pool and subsidized coverage for adults with pre-existing conditions available through 2013 >Pre-existing conditions no longer excluded beginning 2014 >Pool dissolves in 2014 5 2010 American Institute of CPAs

6. Lifetime Limits and Serious Illness >No lifetime limits on coverage allowed >No policy cancellations for serious illness allowed >Effective: September 23, 2010 6 2010 American Institute of CPAs

7. Pre-Existing Condition Exclusion >Plans may not exclude children due to pre-existing conditions >Effective: September 23, 2010 7 2010 American Institute of CPAs

8. Dependent Care Coverage >Employer-provided accident or health plans >Reimbursements excluded from taxable income for dependents up to age 27 (effective March 30, 2010) >Continued coverage for adult child until age 26 (effective September 23, 2010) 8 2010 American Institute of CPAs

9. Medicare Taxes >0.9% increase depending on wages and filing status >2.35% Medicare tax rate >3.8% tax on investment income or modified adjusted gross income (MAGI) over the above limits depending on filing status >Effective: 2013 9 2010 American Institute of CPAs

10. Itemized Deduction Threshold for Unreimbursed Medical Expenses >Increased itemized deduction threshold – 10% of adjusted gross income (AGI) >Age-based exception – remains at 7.5% if individual/individual’s spouse has turned 65 before close of tax year (to expire after 2016) >Effective: 2013 10 2010 American Institute of CPAs

11. Mandatory Insurance Coverage >Individuals are required to have health insurance >Penalties for non-compliance based on fixed amount or percentage of income over filing thresholds >No criminal penalties, or IRS liens or seizures 11 2010 American Institute of CPAs

12. Mandatory Insurance Coverage Exceptions >Insurance cost exceeds 8% of income >Incarcerated individuals >Members of Native American Indian tribes >Individuals not legally present in US >Individuals claiming religious conscience exemption > Effective: 2014 12 2010 American Institute of CPAs

13. Premium Assistance Credit >Refundable tax credit >Treasury payment directly to insurer >Income-based eligibility >Inflation adjustment >Effective: Years ending after December 31, 2013 13

14. Adoption Credit >Maximum $13,170 credit per eligible child >Applies to both non-special-needs and special-needs adoptions >Refundable credit >Inflation adjustment for new dollar limit and credit phase-out >Effective: 2010 14 Caution: Credit reverts to $6,000 and available for special-needs children only after December 31, 2011 2010 American Institute of CPAs

15. Adoption Assistance Program Exclusion >Maximum $13,170 per eligible child exclusion for employer-provided adoption assistance programs >Inflation adjustment for new dollar limit and income limitations of exclusion >Effective: 2010 15 Caution: Income exclusion goes away after 2011. 2010 American Institute of CPAs

16. Health FSAs, HSAs, HRAs and Archer MSAs >Increased penalty for non-health withdrawals from HSAs (10% ti 20%) and Archer MSAs (15% to 20%) (effective 2011) >No over-the-counter drug purchases from health FSAs, HSAs, HRAs or Archer MSAs (effective 2011) >Health FSA contribution limit of $2,500 (effective 2013) 16 2010 American Institute of CPAs

17. Indoor Tanning Services >10% excise tax >Tax collection at time of payment >Effective: July 1, 2010 17 2010 American Institute of CPAs

18. The Road Ahead >A process not an event >New proposals, adjustments and other changes >Professional guidance >www.360financialliteracy.orgwww.360financialliteracy.org 18 2010 American Institute of CPAs