Relevant Policy Background:
The ACA is fully paid for by a variety of mechanisms split between tax increases, fees imposed on providers and cost-savings generated by reforms to the healthcare delivery system.
The single largest tax that funds the ACA is an expansion of the hospital insurance tax, used to fund Medicare which is part of the FICA that everyone pays on the first dollar of income. Before the ACA, the tax was a flat 1.45 percent on all earned income.
Obamacare changed that in two ways, both of which made the tax much more progressive.
First, the ACA added an additional bracket of 2.35 percent for all incomes over $200,000 ($250,000 for married couples).
Second, the law also extended the tax to unearned investment and interest income. So, for all incomes over $200,000 ($250,000 for married couples), non-wage income was subject to a 3.5 percent surcharge. This is the first time in U.S. history unearned income has been subjected to a payroll tax.