The Affordable Care Act has been the source of much debate and scrutiny since being signed into law in 2010, and it’s easy to see why. Considering it affects what many Americans identify as a top priority and value in their lives – health – there’s no question the importance such a reform has on the entire country. A plan that includes millions of people from various walks of life is bound to be a complicated one, which is why it is crucial to know how the act can cost you. Here are 7 ways you, your family or business may take a hit in the check book as a result of the reform:
Cost of Coverage
The cost of everyone’s insurance will increase due to the fact insurance companies must cover people who are sick, which wasn’t a previous requirement.
Insurers must also provide new preventative services and essential health benefits under the act, which could cause insurance premiums to increase as a result. Many insurance plans already cover some of these essential services – such as outpatient care – while other services – such as maternity and newborn care – are irrelevant to a portion of the population.
(Source: Obamacare Facts http://obamacarefacts.com/obamacare-pros-and-cons.php)
Business growth – an essential component in a healthy conomy st hours so fewer employees qualify as full time. id the tax, and 16 per cent pationhy economy – is hampered by the act’s employer mandate, according to the US Chamber of Commerce.
The mandate requires employers with the equivalent of 50 or more full time employees to provide affordable health care coverage in 2015. If they don’t – and at least one full-time employee receives a premium tax credit for purchasing individual coverage on the health insurance exchange – businesses will be assessed a penalty.
The chamber states the tax deters business growth by discouraging small businesses from hiring additional employees, as only those businesses with the equivalent of 50 or more full-time employees are penalized. Additionally, the law defines a full-time employee as someone who works 30 hours per week instead of 40 hours per week.
Sixteen per cent of organizations surveyed have adjusted or plan to adjust hours so fewer employees qualify as full time, according to The International Foundation of Employee Benefits Plans.
Workers may also see the quality of their coverage decrease as employers look to avoid a tax on high-end health plans, also known as the ‘Cadillac’ tax. Consumers will pay higher premiums on plans that exceed $10,200 for individuals and $27,500 for families, as a result of insurance companies being assessed a 40 per cent tax. That’s according to the U.S. Chamber of Commerce, which states businesses are beginning to restructure their coverage in anticipation of the tax taking effect in 2018. A survey by the International Foundation of Employee Benefits Plans shows that approximately 17 per cent of organizations have already started to redesign their plans to avoid the tax.
Prior to 2013, families could deduct medical expenses that exceeded 7.5 per cent of their adjusted gross income. Now, however, medical expenses must exceed 10 per cent before any deduction can be taken from them.
As outlined in the act’s individual mandate – which went into effect Jan. 1, 2014 – most Americans were to have obtained health insurance by 2014 or pay a tax penalty. The fee amounts to $95 per adult and $47.50 per child or one per cent of taxable income, whichever is greater. The charge increases two per cent ($325 per adult) in 2015, and 2.5 per cent ($695 per adult) in 2016. Fees will be paid on federal income tax returns.
Source: Centers for Medicare and Medicaid Services (https://www.healthcare.gov/what-if-i-dont-have-health-coverage/)
Millions of Americans were hit with new taxes last year, including a 0.9 per cent surtax on Medicare taxes for individuals who make more than $200,000 and families making more than $250,000. They also pay an additional 3.8 per cent surtax on investment income or modified adjusted gross income.
New taxes also affect health savings accounts (HSA) and Archer medical savings accounts (Archer MSA). Effective for distributions made after Dec. 31, 2010, the tax on HSAs will increase from 10 to 20 per cent, while MSAs will go from 15 to 20 per cent, of the amount included in gross income.
A 10 per cent tax must be paid by tanning services, while manufacturers and importers of medical equipment pay a 2.3 per cent excise tax.
An annual fee imposed on health insurance companies – that is expected to raise $100 billion over the next 10 years – could negatively impact some Americans. The Congressional Budget Office states that the health insurance tax will largely be passed on to small businesses and consumers buying individual policies in the form of higher premiums. Fees will increase premiums to $110 per person and $270 per family in 2014 in the individual market, according to a report by Oliver Wyman. Small group premiums will increase to $150 per employee and $360 per family, while premiums in the large group market will increase to $140 per employee and $380 per family. Self-insured companies are exempt.
Finding out not just where you can benefit, but also how you will be negatively impacted by the Affordable Care Act will help you to make better decisions concerning coverage. Learn how the changes and adjustments will affect your health – that priceless ingredient to a quality life.
Jon Gilchrist is the Sales and Marketing Manager for Cheques Now Inc. His professional life is dedicated to providing business owners, payroll managers and accountants with secure, low-cost cheques. Follow him on Google+.