The Benefits and Costs of Obama Care

The key benefit of Obamacare, National Health Care, or Patient Protection and Affordable Care Act is providing care to those who are unable to purchase health insurance because it costs too much, or are uninsurable. Lack of adequate health coverage sometimes forces or keeps people in poverty, or causes the uninsured pain, suffering and death who go without needed treatment.

How much is this going to cost is a big unknown. A wide range of benefits are going to be offered, many of which are not clear yet. No one knows how many people are going to use the coverage and to what extent.

To pay for this in part is going to be through new taxes. The Supreme Court basically said that it is constitutional to mandate premiums because they are a tax, the same could be said for Social Security, Medicare, Medicaid, and Unemployment Taxes, so this shouldn’t really be a surprise, the precedent has been set in the growth of these programs for decades.

Here is a partial list of the new taxes:

The following will negatively affect the personal finances of upper income earners and retirees:

  • Addition of 0.9% to the 2.9% Medicare tax to 3.8% for singles who earn more than $200,000 and couples making more than $250,000, starting in 2013.
  • Medicare’s 3.8% payroll tax rate now applies to investment income, including dividends, interest income and capital gains.
The following will negatively affect the personal finances of everyone, since the costs will be passed on to the consumer:
  • 2.3% excise tax on medical device manufacturers and importers starting in 2013.
  • New annual fee on “branded” drug makers and importers, started this year.
  • Raising the floor on allowable medical deductions to 10% of adjusted gross income from 7.5%. This means that if you have medical expenses not covered by insurance, you will only be able to deduct only the amount that exceeds 10% of income.
  • New annual fee on health insurance providers starting in 2014.

Perhaps the biggest unknowns of this are the long-term effects to our economy, national debt and business growth.

4 thoughts on “The Benefits and Costs of Obama Care

  1. When will the the raising the floor on allowable medical deductions take place? This year? If so, it figures as I’ve been diligently saving receipts, documenting, etc. because I was sure we’d be over the 7.5%. Ugh.

    1. Kent says:

      I understand in 2013, so for tax year 2012 you should be okay assuming the lower amount, but consult your tax planner 😀

      1. Thanks for the reply. You inspired me to start running the numbers and I found I’ll need more itemized deductions to benefit anyway. At least I know where I stand. I wonder how many others out there are figuring their 2012 taxes in July. Ha ha 😉

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