There are many ways that have been structured into the Affordable Health Care Act (Obamacare) to fund the legislation. One of those methods is the investment income tax (unearned income). Wealthy individuals will pay a 3.8 percent surcharge on capital gains and dividends.

The tax went into effect in 2013 for many, but some may have avoided the initial financial pain due to the economic climate and losses.

Who Is Subject to the Tax?

The tax represents a 3.8 percent increase on the already existing tax and affects individuals with an adjusted gross income of $200,000 or more and $250,000 for couples filing jointly.

The tax increase affects a comprehensive range of stocks, bonds, commodities, trusts, annuities and specialized derivatives.

The increase also affects royalties, rentals, self-employment income, and home sales for people who have owned the property for more than five years.

Accounting firms have been hard at work searching for ways their clients can avoid a major jump in their taxes.

Many taxpayers haven’t seen an appreciable difference yet due to an array of economic factors and personal considerations, but will through a combination of the investment tax and mandatory insurance requirements.

The Internal Revenue Service can begin withholding funds through the Individual Mandate Tax on those who have failed to purchase healthcare insurance.

A charge of $95, or 1 percent, whichever is greater, will be levied on anyone without healthcare insurance and the tax increases depending upon how many uninsured individuals are in the household.

The tax increases through 2016 to top out at 2.5 percent or $695. The IRS can withhold the amount from any refund taxpayers might have coming, but can’t garnish wages or present taxpayers with a bill for the amount.

The Changes That Will Affect Taxes

Understanding the tax or seeking the assistance of an account is particularly important for those who fall near, but below the $200,000-$250,000 and suddenly come into a substantial amount of money.

Selling a second home, an increase in come or a bonus could quickly land individuals in the position of paying additional taxes.

Changes in family size can also affect their portion of taxes. 

Those who qualify for a federal subsidy to purchase insurance and experience an increase in income would have to pay back the subsidy.

The good news is that virtually everyone can now deduct up to 10 percent of their medical expenses People can still utilize a flexible spending account (FSA) to save on medical costs, Social Security, Medicare and income taxes, though they’re limited to a $2,500 personal contribution.

The investment income tax increases the rate from 15 percent to 18.8 percent on unearned income and is expected to affect only the wealthiest 2 percent of Americans. Money raised through the tax will be placed in federal coffers to help fund Obamacare.

The bottom line is that taxpayers who earn more than $200,000-$250,000, have unearned income or spend a significant amount on healthcare will see their taxes increase.

Known as Obamacare, the Affordable Health Care Act places a tax on a variety of services, items and businesses. The Medical Device Tax has come under fire from a variety of companies and individuals who claim it will accomplish everything from the loss of jobs to the stagnation of innovation, and take away medical devices from the elderly and infirm.

The truth is somewhere in the middle.

Obamacare does place a tax on medical devices, but the tax is levied against companies that make them, not against the people that use them.

The 2.3 percent excise tax is on the sale of the devices, not profits, and was actually cut in half from an original figure of 4.6. The tax went into effect on Jan. 1, 2013.

Who Pays the Tax And Why?

The tax affects devices that include defibrillators, dialysis machines, heart monitors and pacemakers. Fearing outsourcing of production and a loss of potential revenue, the Act covers all device manufacturers, regardless of where the equipment is actually made.

The law is only supposed to apply to devices that require the approval of, or referral by, a physician.

Those include many high-dollar tests conducted with MRIs, lasers and similar equipment.

Selling Devices Over-The-Counter

The Act says devices sold over-the-counter directly to consumers are exempt. Those devices include common items like contact lenses, eyeglasses and hearing aids.

Even though some devices can be sold directly to consumers, such as blood pressure and glucose monitors, many insurance companies won’t cover the cost unless it’s accompanied by a doctor’s prescription.  

Patients would have to pay for the equipment out of their own pocket and the cost wouldn’t count toward the individual’s deductible.

Obamacare’s device tax may not be applied when patients purchase any of the devices, but individuals will most likely experience overall increases on retail prices.

In medical facilities, patients will be billed more to use the machines.

Insurance companies may or may not pay the increased costs, but will most likely pass it on to patients in the form of deductibles.

Efforts to Repeal The Tax

Many in the House have voiced their intent to repeal the tax.

They cited the law as economically harmful, with the potential for a loss of life if device manufacturers reduced production or if medical facilities refused to purchase devices due to cost increases.

House officials claim the tax would stifle research and development, and would adversely affect start-up companies that might not be able to afford another tax as the cost of doing business.

Confusion surrounds many of the Obamacare taxes and many individuals were highly concerned that they would be denied medical devices they count on through the inability to afford another tax.

Only the makers of medical equipment will be forced to pay taxes on their products, but patients will likely experience the tax through higher retail prices, increased costs to use the equipment in medical facilities, and fewer referrals to obtain tests using high-dollar equipment.

The primary objectives of Obamacare are to reduce expenses while making more money. The law does that through penalties, fines and taxes in the form of the Individual Mandate Tax, fines for not having healthcare insurance and reducing Medicare reimbursements.

To survive in the Obamacare economy, clinicians must become more efficient with the people and systems in their practice.

The Human Element

Practitioners will have to be more efficient in identifying, hiring and motivating the people in their practice.

Identifying the right people is critical.

Clinicians can’t afford to have people who just do the minimum for a paycheck.

Practitioners should be looking for people who go above and beyond.

If a staff member has extra time between patients, the desirable person is one who will use that time to conduct some marketing, work on a piece for the practice’s newsletter or some other task to benefit the practice.

When practitioners identify staff members who won’t expend extra effort to benefit the practice or are unwilling to change to meet the clinic’s demands, they may have to be dismissed.

Hiring new people is time consuming, but clinicians must do what’s best for their practice. One negative influence will spread. Don’t accept substandard attitudes.

Patients are paying more out-of-pocket expenses and they’re going to become even more aware of where they go for healthcare instead of simply going where their insurance company sends them.

The quality of the people in the practice will define it and make it stand out above competitors. Customer service and marketing has never been more important than in the Obamacare economy.

Automate The Systems

There are numerous systems that will increase a practice’s efficiency, increase referrals, provide marketing tools and expedite billing.

The key concept for these systems is automatic.

The patent-pending In Touch EMR provides practitioners with an automated insurance verification system, patient workflow, and a streamlined documentation system.

In Touch Biller Pro offers integrated scheduling, documentation, billing and marketing in a single product to increase productivity and revenues.

The automated software system can be integrated with the In Touch EMR and is Medicare compliant.

It can be used with PCs, Macs and Android systems, along with iPads. It offers claims scrubbing, batching and denial management for top efficiency.

Clinicians can also take advantage of automatic newsletter generators, done-for-you referral services, coaching and marketing solutions.

Available systems run the gamut, from Therapy Newsletter to Clinical Contact, all of which are specially designed to automate processes, increase efficiency and market practices effectively.

Good people with bad systems are a recipe for disaster. Good systems in the hands of the wrong people are potentially worse.

Clinicians may find that certain staff members have turned into prima donnas who don’t or won’t learn new things or are unwilling to change.

It’s critical to have the right people in the right positions, no matter what steps must be taken to accomplish that.

Clinicians must be strong leaders who inspire and motivate staff, while employing systems that streamline office and patient processes to survive in the Obamacare economy.