NEW YORK – The Republican bill to repeal and replace Obamacare contains some goodies for the wealthy.
The legislation, unveiled on Monday, would eliminate two surcharges on the rich that are being levied to help pay for Obamacare subsidies and other provisions. The taxes would end after this year.
Under the Affordable Care Act, single taxpayers with incomes above $200,000 and couples making more than $250,000 annually have had to pay an additional 0.9% Medicare payroll tax on the amount they earn above these thresholds. These taxpayers may also be hit with a tax surcharge of 3.8% on investment income above those thresholds. These taxes have been in place since 2013.
Ending Obamacare would mean that nearly everyone in the Top 1% who earn more than $774,000 a year, would enjoy a hefty tax cut, averaging $33,000, according to a report published in December by the non-partisan Tax Policy Center. Those in the Top 0.1% would get an average tax cut of about $197,000.
The bill also contains other benefits for those with money.
It would allow folks to contribute more to Health Savings Accounts, which are primarily used by better-off Americans who can afford to sock money away for health care expenses. The bill would increase the limit to cover the deductible and out-of-pocket expenses allowed under high deductible plans. For individual coverage, this would be $6,550 for individuals and $13,100 for families beginning in 2018. The current limit is $3,400 for an individual and $6,750 for a family.
Also, the Republicans would enable people higher on the income scale to claim the tax credit to help pay their premiums. Under Obamacare, an enrollee who makes more than $47,500 is no longer eligible for a subsidy. The GOP plan would let a policyholder making up to $75,000 and families earning $150,000 claim the full tax credit. The benefit would phase out slowly until the enrollee hits $215,000 in income or a family hits $290,000.
By Tami Luhby, CNNMoney