Well, it’s official. Obamacare, or the Patient Protection Affordable Care Act is real and the deadline for full implementation is January 2014, with many more changes coming in the near future.
Since The United States Congress passed it without knowing fully what was in the 2,500 page bill, (Nancy Pelosi’s words not mine), it looks like much of it will happen “on the fly” as they say. And when you really sit down and think about it, doesn’t the word “scary” come to mind?
A New Tax…
I wanted to put this article together to clear up some misconceptions about the penalties involved or should we say “taxes” as the Supreme Court so eloquently put it. The bill itself called it a penalty, but to make it “constitutional” in the eyes of our Supreme Court, the justices changed the wording to say “tax”, not penalty.
Some people will fare much better than others, but one thing’s for sure. This new monstrosity of a new law will increase the deficit tremendously, while raising health insurance premiums by as much as 400% according to the Newsmax article entitled “Premium Surges Could Reach 400 Percent Under Obamacare”. The money to fund it is just not there and won’t be, but that’s an article for another day.
They Needed 100% Participation
President Obama and the Democrats knew early on that they would have a problem trying to get everyone to participate in this plan. So they needed to come up with a way to force people to participate. Hence, the individual mandate, (tax) was created.
Obamacare will require “full participation” by Americans or they will feel the wrath of the IRS, plain and simple. And with all the scandals brewing in that facet of the United States government, who in their right mind wants to hear from their henchmen?
Obamacare decrees that everyone regardless of health will have to contribute disregarding if they want to or not. This does not set well with most freedom loving Americans, especially younger, healthy folks and smaller businesses, as they will have to pay a larger portion of the bill.
So Who Really Pays the Tax In the End
Anyone that doesn’t acquire health insurance starting in 2014 will incur the tax. At first it’s not really that much at $95 or 1% of your adjusted gross income whichever is more. The maximum penalty would be $285 in this scenario which is exactly three times the flat rate amount.
These amounts change as we progress through the years with it capping out at $695 or 2 ½ % of your income in year 2016.
If you already have health insurance, are on Medicaid or are covered by a large group plan through your employer, then the new tax will not apply to you. The tax was really aimed at people that choose to be uninsured, especially younger adults who simply feel bullet proof.
Obamacare had to find a way to get this healthier group of people in the risk pool to help offset all of the chronically ill, obese, diabetic, unhealthy or pregnant people that are guaranteed coverage under Obamacare. This list is much more extensive because this is “universal coverage” without pre-existing conditions applied, so everyone is covered regardless.
Did President Obama Throw Us a Bone?
People can get a “government subsidy” if they qualify for one, but the limits exclude a huge section of Americans, mostly small business owners and self employed people. It’s based on the Federal Poverty Level and where their income level falls within that guideline, but is made available to folks making up to 400% of the Federal poverty Level.
For instance a family of four making an income of just $92,000 per year and an individual making just $46,000 would not get any subsidy whatsoever, they would fall just outside the limits for any help on their health insurance premiums and would therefore be responsible for everything on their own.
There are also things like out of pocket limits, online health insurance exchanges and tax credits for small businesses that play a part in this equation while affecting final costs for coverage.
One thing is for sure, the next few years will be very interesting for the healthcare industry so buckle up and hold on tight, I feel a very bumpy road ahead.