<p style="margin-bottom:7.5pt;line-height:normal">The health-care reform legislation signed into

law in 2010 contained a number of tax changes. Some of these changes took
effect immediately; others have only recently become effective. Here are some
of the changes worth noting:

Changes that went into effect prior to 2013

If you frequent tanning
salons, you're probably well aware that the health-care reform legislation
brought with it a 10 percent tax assessed on amounts paid for indoor tanning

The legislation also
extended the tax benefits associated with employer health plans (i.e., the
ability to exclude the value of the benefits from income) to any children who
have not reached age 27 by the end of the year.

In addition, the
legislation made changes to flexible spending arrangements (FSAs), health
reimbursement arrangements (HRAs), health savings accounts (HSAs), and Archer
MSAs: over-the-counter medications (except for insulin and medications that are
prescribed by a physician) are no longer considered qualified medical expenses
for purposes of reimbursement and tax-free distributions. And, the additional
tax that applies to HSA and Archer MSA distributions not made for qualifying
expenses increased to 20 percent.

Changes that went into effect in 2013

Do you typically itemize
your deductions on Schedule A? Starting in 2013, unreimbursed medical expenses
were deductible on Schedule A only to the extent that they exceeded 10 percent
of adjusted gross income (AGI), instead of the 7.5 percent threshold that
applied in prior years. Until 2016, however, if you or your spouse turned age
65 before the end of the taxable year, the 7.5 percent AGI threshold continued
to apply. Beginning in 2017, the 10 percent AGI threshold was to apply to
individuals who had reached age 65 as well. However, for 2017 and 2018, the
threshold has now been reduced to 7.5 percent for everyone; it increases to 10
percent in 2019.

Also starting in 2013,
high-income individuals were subject to two new Medicare-related taxes. Those
with wages over $200,000 (married couples filing jointly with wages over
$250,000) are subject to an additional 0.9 percent hospital insurance
(Medicare) payroll tax. A 3.8 percent Medicare contribution tax is also imposed
on the unearned income of individuals with modified adjusted gross income
(MAGI) over $200,000, or married couples filing jointly with MAGI over

Health FSAs that are
part of a cafeteria plan are capped at a $2,650 (in 2018, $2,600 in 2017)
reimbursement limit.

Changes effective in 2014

This is the year of the
carrot and the stick. A premium assistance tax credit is available to help
eligible individuals purchase health-care insurance through the Exchange
Marketplace. Who qualifies? Individuals with household income between 100
percent and 400 percent of the federal poverty level will qualify, with the
exact amount of the credit based on income level (for a family of four, that
means income from $24,300 to $97,200 in 2017, $24,250 to $97,000 in 2016).
Generally, individuals who are offered coverage through an employer health plan
don't qualify for the credit unless the employer health plan doesn't cover an
adequate share of benefits (60 percent), or it's considered
"unaffordable" (the employee portion of the premium is 9.5 percent or
more of the employee's household income).

And then there's the
stick. Beginning in 2014, if you're a U.S. citizen or legal resident, you'll
generally be required to have adequate health-care coverage. If you don't,
you'll face a penalty tax unless you qualify for an exemption. For 2014, the
tax was equal to the greater of 1 percent of the amount of your household
income that exceeds a specific amount (generally, the standard deduction plus
personal exemption amounts you're entitled to for the year) or $95 per
uninsured adult (half that for uninsured family members under age 18), with a
maximum household penalty of $285. In 2015, the percentage rate increased to 2
percent, the dollar amount per uninsured adult increased to $325, and the maximum
household penalty increased to $975. In 2016 and 2017, the percentage rate is
2.5 percent, the dollar amount per uninsured adult is $695, and the maximum
household penalty is $2,085. This health insurance individual mandate has been
eliminated for months beginning after December 31, 2018.

This material was prepared by Broadridge
Investor Communication Solutions, Inc., and does not necessarily represent the
views of The Retirement Group or FSC Financial Corp. This information should
not be construed as investment advice. Neither the named Representatives nor
Broker/Dealer gives tax or legal advice. All information is believed to be from
reliable sources; however, we make no representation as to its completeness or
accuracy. The publisher is not engaged in rendering legal, accounting or other
professional services. If other expert assistance is needed, the reader is
advised to engage the services of a competent professional. Please consult your
Financial Advisor for further information or call 800-900-5867.


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