Braces for the Kids Just Got More Expensive: Obamacare Tax Hike Case Study


Posted by Ryan Ellis on Wednesday, March 21st, 2012, 12:59 PM PERMALINK

The Obamacare law raises or imposes twenty new or higher taxes on American families and small employers.  Often, these tax increases can conspire together against normal, everyday decisions.  Below are all the taxes that will be imposed on a child’s dental braces starting in 2013 under Obamacare:

Excise Tax on Medical Devices.  Obamacare imposes a new tax of 2.3% on medical devices, including braces. While these will be paid by the braces manufacturer, the tax will be passed along as a higher cost of the product, ultimately to be paid by the parent buying the braces for their child.  With the cost of braces being as high as $7,625 this new tax could raise the cost of these braces by $175.

Cap on Flex Spending Account Contributions.  There will be a new cap of $2500 for “use it or lose it” flex spending accounts at work.  These pre-tax accounts currently face no contribution limitation in the law.  A parent looking to sock away extra money to pay for braces would find themselves quickly hitting this new cap.  Needless to say, this will impact hardest on families making less than $250,000.

“Haircut” on Medical Itemized Deductions.  Faced with higher prices for braces and a reduced ability to pay for them with their FSA, parents might decide to deduct the braces’ cost on their tax returns.  Unfortunately, Obamacare makes this harder, too.  Before, medical deductions needed to be reduced by 7.5 percent of income.  In 2013, they will have to be reduced by 10 percent of income.  For families making more than $55,000 per year, the braces deduction won’t help them at all unless they have other medical bills on top of it.

This is just a small example of how a simple, everyday, kitchen table decision has been fundamentally-altered by the tax hikes in Obamacare.  It does not even take into account the indirect effects of the rest of the tax hikes in the law, which will reduce family income and kill jobs. 

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