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New Health Care Law – 7 New Taxes

The new health care law will cost us dearly7 New Taxes or Fees To Cover New Health Care Law

Beginning in 2014, the expanded coverage for Obamacare under the new health care law will essentially kick in and approximately thirty million (30 million)  individuals who have no medical insurance will be brought into the fold. When this expanded coverage begins, insurance companies will have to accept all applicants, regardless of their medical condition. No one can be declined.

In addition to this, just about every American citizen will have to be covered by medical insurance. They will essentially have three choices – receive coverage through their employer – receive coverage from a government program – or purchase medical insurance on their own.

The new health care law won’t require most individuals to remit additional funds to the Internal Revenue Service; however, the approximately two percent of Americans who are considered wealthy, will get hit the hardest, starting in 2013.

About two thirds, or approximately twenty million (20 million) individuals, will start receiving various tax credits in 2014 that will provide them assistance in paying the insurance premiums. Let’s look now and try to determine how and who will pay for this expanded coverage. Taxes and fees will kick in and it’s estimated that this will provide approximately seven hundred billion (700 billion) over a ten year period.

  1. Beginning January 1, 2013, higher income households will see a .9 % increase in Medicare Tax plus a 3.8% direct tax on investment income. Higher income households is defined as individuals with a modified adjusted gross income (MAGI) of $200,000.00 or more and a married couple filing jointly with $250,000.00 or more.
  2. Beginning January 1, 2014, any company who employs fifty (50) or more individuals, and does not offer medical insurance coverage, will be penalized if one or more of those employees is covered by a government subsidized policy. The possible penalty is $2,000.00 for each employee, with the first thirty (30) employees exempt from penalty.
  3. The health care industry, primarily firms that manufacture certain medical equipment, are faced with a 2.3% new tax on gross sales, not net profit. Many over the counter items such as eyeglasses, contacts, hearing aids, and prosthetics are exempt. However, other items from tongue depressors to pacemakers, and other implants are not exempt. Both parties are trying to have this tax repealed.
  1. Approximately eight billion ($8 billion) will be collected from insurance companies in 2014 as an annual fee under the new health care law.
  1. In 2011, the first year for this fee, two and one half billion ($2.5 billion) was collected from pharmaceutical companies who were importing or manufacturing name brand drugs.
  1. Starting in 2014, it’s estimated that approximately six million (6 million) individuals simply will not apply for medical insurance. They will be subject to tax penalties that are graduated over three years, or on a percentage of income. These fines will be paid on the tax returns and will raise about six point nine billion ($6.9 billion) in 2016.
  1. Those individuals who frequent indoor tanning facilities began paying a 10% sales tax back in 2010. Over a ten (10) year period, expectations are to raise about one and one half billion ($1.5 billion). That’s assuming that these operations stay in business. More and more medical studies show that ultraviolet light exposure increases the risk of skin cancer.

There are approximately twenty-eight million (28 million) individuals who use indoor tanning facilities, and they are predominantly women under thirty (30) years of age. We believe that these numbers could drop significantly if stronger medical evidence develops. The new health care law will be quite expensive.

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About Gust Lenglet

An accountant and tax preparer by profession, Gust's true passion lies in his blog titled "How To Manage Your Money". Through this venue, he not only tries to teach individuals about budgeting and money management, but he writes the majority of the articles as well.

Comments

  1. Amanda Baynes says:

    I believe there has long been an opinion that tanning facilities really aren’t good for you. Im very interested to read that they are now clear that it can cause skin cancer. What a shame that vanity over rides the need to protect yourself from these possibilities. The 10% tax is needed to fund the medical care required as a result of this practice.

  2. Stephanie Vega says:

    Thanks for breaking it down like this. I’m a firm believer in health care reform. There is no reason the richest country in the world shouldn’t take care of all it’s citizens.

  3. We’ve definitely noticed our health insurance premium go up every month lately. In fact we had to double our deductible (up to $10K) in order to be able to afford the monthly payment. I had no idea there would be tax credits for those increases. Thanks for sharing that.

  4. Matt White says:

    I’ve found the whole notion of Obamacare extremely difficult to understand but this has helped me a lot to pick apart some of the information. I personally think that a lot of companies are going to be affected in more ways than one. I hope it works out, I really do, but I have my doubts on the health bill.

  5. Francine W. says:

    I have this funky relationship with health insurance companies, especially since this Obamacare stuff started. My insurance monthly cost has gone up and they still refuse services they are supposed to cover. While I think national healthcare is needed, I think some bugs need to be worked out as there are some areas they apparently have forgotten to cover.

  6. Samantha E. says:

    I have been a little confused what Obamacare was and how it applied to me so I really appreciate the information in an easy to understand way. We have a group health plan with my husbands work, however, I worry if he would ever be laid off or hurt how we’d be able to afford health care. When he switched jobs, we had to pay 3 months of COBRA at $1400 per month for a family. If someone is laid off and without work, how could they pay that or even private coverage? It will be interesting to see how this works out. Will it drive down costs at Drs. or hospitals as there will be less write offs for them with uninsured people?

  7. Wayne G. says:

    I personally don’t think that we should all have to pay for this health care reform. Our country is not capable of supporting such a bill, therefore, we should not have initiated it in the first place.

    • TS Kitter says:

      Our country is MORE than capable of paying for such a bill. And BTW, the “country” is not paying for it – we are all paying our fair share for medical care that benefits us as individuals, and society as a whole. This is not a free lunch – people will be paying for this care out of their pockets. It’s just that the insurance companies will no longer be able to make BILLIONS a year in profit while denying ordinary citizens access to fair and decent health coverage. I’m guessing that you are one of the lucky people who get their insurance through an employer. Well guess what: not everyone in that lucky. Millions of people are not offered health insurance through their employer. So we have to watch our children get sick and watch them suffer, unable to get affordable care — so the insurance companies can pay their executives million dollar bonuses??

  8. In the news and in the papers, I’ve been hearing a lot about tax increases and new tax laws for US citizens, but I have been so caught in in day to day life that I didn’t look much further into what the rules actually were and how they applied to me. I must say that I have mixed feelings about Obamacare. I truly believe that the US is long overdue for healthcare reform, we’re one of the only countries on our economic level that doesn’t provide healthcare universally. However, as a Massachussetts resident, I’ve seen what this kind of plan looks like in action thanks to Mitt Romney’s time in office. It’s not pretty – I wish that with all the combined brainpower on Capitol Hill they had managed to think of some better way!

    • In my opinion, those “alleged public servants” on Capitol Hill are more interested in seeing how much foreign aid they can give away, and what perks they can buy for themselves. This is what really rubs me the wrong way.

  9. In Canada- we have ‘Obama Care’ and the good thing is you don’t have to worry about losing your home if you get sick. The problem is, the healthcare administrators who know nothing about you and only care about the federal healthcare budget, they get to decide the course of treatment and the type care you get- consequently , much needed MRIs are not prescribed because ‘they cost too much’. Obama Care does not work – great in theory, bad in action. I now go to Buffalo to get my Cancer follow up care and I gladly pay for it.

    Instead of subsidizing health care, try bringing the cost of it down. At the moment the system and those working in it are profiteering from the sick. Shouldn’t cost two grand for an MRI of half a million for a heart. It’s rather exploitive.

    • You are so right, but try and convince the morons in the US congress and that egomaniac in the white house! There are many in the health care industry that say that ObamaCare will eventually bankrupt us, if it continues the way it is set up. Insurance carriers are already raising rates on those that can’t afford to pay, and in 2014, it will hit the fan. I have a friend that used to live in Toronto and when he needed surgery for a problem that he had, it was considered elective and he was placed on the bottom of a very long list. He came to Detroit, Michigan and had it done, but paid it himself.

  10. Bontnie says:

    Sometimes I think the US traveled back in a time warp as our government attempts to control and intervene in every aspect of our lives. ObamaCare is a prime example, but if it is allowed to stay then I really fear things to come. For instance, everyone would be required to report everything they eat, how much exercise they do, and this would complete our society as that of the Borg.

  11. Thanks for this article, I have learned some new information. Hopefully all these changes will bring in positive effects. Hopefully citizens of United States will receive the health care they deserve.

  12. This post was really helpful thanks a lot but i pray these changes will bring positive transformation so that United states health care services will be enjoy to the fullest by the citizen.

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