The new Health Care Act is a direct assault on seniors. Barack Obama stated that “The chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health- care bill out here.”

The problem is his perception of “those toward the end of their lives”. It seems that seniors and “baby boomers” are included in his “end of their lives” targets. One is reminded of the movie “Logan’s Run” in which those reaching age 30 were deemed to be at “the end of their lives”.

A recent report by economic experts at the Health and Human Services Department concluded that the new Health Care Act will raise overall health costs. The report also notes that Medicare cuts impacting seniors in the new law may be “unrealistic and unsustainable” The report projected that Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red, “possibly jeopardizing access” to care for seniors. The report also warned about increased costs to seniors as a result of limitations on Medicare Advantage Plans. The report also warns that a new voluntary long-term care insurance program for seniors created under the law faces “a very serious risk” of insolvency. On the tax side of the equation, many ”baby boomers” and seniors will be subject to new and increased taxes and penalties under the new Health Care Act technically known as The Patient Protection and Affordable Care Act of 2010.

Here is a summary of the proposed direct and indirect taxes included in the new Health Care Act that may impact seniors and baby boomers :

• There is a new “Medicare Contribution Tax” of 3.8%” on investment income. Starting in 2013, senior and baby boomers may be subject to an additional tax on their investment income including interest income, dividend income, rental income, royalty income and annuity income. This is just the kind of income a senior it likely have in their “golden” years. This tax is in addition to the likely top income tax rates of 39.6% for Federal income tax and 10.55% for California income tax. This adds up to government taking more than 50% of your investment income in some cases. The good news is that this new additional 3.8% tax does not kick in until your modified adjusted gross income exceeds $250,000 for joint filers. The bad news is that the $250,000 threshold is not inflation indexed and thus will capture more taxpayers in the future as inflation increases much like the alternative minimum tax.

• Individual Requirement or “Mandate” to Buy Health Insurance: The act requires individuals to have at least a minimum amount of health insurance beginning in 2014. Failure to comply will result in a penalty equal to the greater of $695 or 2.5% of income per adult in the household.

• Employer Requirement or “Mandate” Regarding Health Insurance: An employer of more than 50 employees that does not provide health insurance would be assessed a nondeductible penalty of $2,000 per full-time employee.

• Excise Tax on High Cost Insurance: This proposal would assess a 40% nondeductible excise tax on employer provided health care with an aggregate value of $10,200 for individuals and $27,500 for families beginning in 2013 The health care benefits to be aggregated include group health insurance, health reimbursement arrangements (HRA), flexible spending accounts (FSA) and Health Savings Accounts (HSA).

• Medicare Tax Increase for “High Income” Individuals: There is an increase of .9% from 1.45% to 2.35% on employees but not employers. The increase would apply to income in excess of $200,000 for individuals and $250,000 for married couples. These thresholds would not be indexed for inflation. The higher rate would apply to wages and self-employment income beginning in 2013. The self-employed would also be subject to a .9% increase and would not be able to deduct any of the increased tax. Is this the beginning of a “slippery slope” of higher Medicare taxes for all taxpayers?

• New Fees on Health Care: New fees are applied to various health care items that will ultimately be paid by the American taxpayer including seniors via higher costs for those health care items. New fees are included for medical devices, pharmaceuticals, and health insurance.

• Limit on Itemized Deductions for Medical Expenses: The limit on deductible medical expenses for regular tax purposes would be increased from 7.5% of adjusted gross income (AGI) to 10% of AGI beginning in 2013. The 7.5% rate would not change to 10% for seniors until 2017.

• Limit on FSA Contributions: A limit of $2,500 would be place on flexible spending contribution beginning in 2011. The limit would not apply to HRAs. The limit would be indexed for inflation. New FSA rules also limits the purchase of other the counter drugs as a qualified expenditure unless specifically prescribed.

• Definition of Qualified Medical Expenses: Qualified medical expenses for HRA, HSA and FSA and Archer Medical Savings plans would be the same as medical expenses for itemized deductions.

• Higher Penalties for Non Qualified HSA Withdrawals: The penalty for non qualified withdrawals from an HSA before 65 would be doubled from 10% to 20% beginning in 2011.

• Targeted Tax Credits: The bill includes a modicum of tax relief in the form of tax credits for small businesses, low-income individuals, chronic disease therapy and Indian tribes. There is also an increase in the adoption credit.