Affordable Care Act, the Health exchange and the IRS

Until now, people are still going back and forth on the pros and cons of the new health care reform. You may still have questions or doubts about this, and so this article will help you weigh some of the pros, cons, and tax effects for you and your family’s (health care) benefit.

PROS AND CONS

PROS

CONS

Creates Health Insurance Marketplace, a comparison-shop for the affordable quality health coverage Benefits mostly the low- and middle-classTakes a toll on high-earner taxpayers
Requires insurance companies to provide coverage for people with pre-existing health conditions* 

Doesn’t discriminate against gender

Added coverage means an increase in everyone’s insurance premiums
Requires insurance companies and group health plans to provide you with an easy-to-understand, standardized Summary of the Benefits and Coverage (SBC) per plan
Protects you from unreasonable rate increases by requiring insurance companies to publicly justify any 10% (or more) increase before raising your premiums*
Implements the 80/20 rule which requires insurance companies to spend 80% of the premiums to improve your healthcare quality rather than on administrative, marketing, etc. costs 
Stops insurance companies from cancelling your health insurance due to your health condition or (honest) error you’ve made on your form 
Allows you to choose your doctor as permitted by your insurance plan and to use out-of-network emergency rooms without penalty* 
Covers young adults under 26 and lets them stay on parents plan until the age of 26  Tendency to have healthier bodies; May just be an extra/unnecessary expense 
Provides free preventive services* 
Protects your essential health benefits coverage by taking out their lifetime and yearly* dollar limits 
Guarantees your right to appeal via an internal appeal and an external review*
Expands Medicaid to over 15 million uninsured low-income earners Uses Federal and State funding; Not all states have Medicaid
Gives up to 50% tax credits to small businesses from their employees’ health insurance premium costs Businesses that have the equivalent of over 50 full-time employees by 2015 will have to cover their insurance. 

In effect, some have cut employee hours and/or won’t hire more employees.

Shortage of healthcare professionals (52,000 by 2025) according to a National Monitor study
Higher drug costs if pharmaceutical companies – pay extra $84.8 million in fees for the next decade to close the “donut hole” in Medicare – pass fees on to consumers
Some insurance companies are raising costs to capitalize now before 2014

* doesn’t apply to grandfathered plans

TAX CHANGES

The health care reform would affect the IRS collection process due to some changes**:

  • Requires everyone to have health insurance otherwise you must pay a tax fee (1% of your income in 2014; 2.5% in 2016)

○      may be waived due to qualified financial or religious reasons

  • 10% tanning bed tax
  • Tax on health insurers, medical device manufacturers (2.3%), brand name drugs

○      may result to an increase in goods and services you avail

  • 3.8% Medicare Tax on Investment Income for over $200k/$250k
  • 0.9% Medicare Part A Tax increase for over $200k/$250k
  • Insurers who fail to comply with the 80/20 rule will have to give rebates
  • Threshold to deduct medical expenses (itemized deduction) increased from 7.5% to 10%
  • Over-the-counter medicines no longer qualify as FSAs, HRAs, HSAs, and MSAs
  • Additional tax on HSA (from 10% to 20%) and MSA (from 15%-20%)
  • 50% reduction of contributions to FSAs
  • Obamacare levies an annual $63 fee on all plans (decreases yearly until 2017) to help pay for insurance companies covering high-risk pools

Basically, the new health care reform aims to provide quality affordable healthcare to all Americans by regulating insurance companies through fostering competition, thereby lowering costs. But since a lot of aspects of the law have yet to be realized, there is no guarantee as to the actual effects it will have on the American people. And you might even wonder if, amidst all this, health insurance is at all necessary.

————————————————————————————–

**not all tax changes were listed here

Related posts:

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge