Changing health care requirements
We are facing a number of challenging issues with the changing health care requirements. Measures passed two and a half years ago as part of Obamacare are starting to take effect. States are deciding whether to start their own health care exchanges or let the federal government run them. So far, only 15 states have decided to run their own. They are concerned with the high operating costs associated with them. People who enroll in the coverage starting in October would be covered Jan. 1, 2014.
Younger Americans will see their premiums go up dramatically. Some estimates show 40 percent increases. There will be a penalty for not buying coverage. Lower-income people will buy coverage from online exchanges with federally subsidized rates. The remainder would be covered by expanded Medicaid for adults earning up to 133 percent of the federal poverty level. This is about $15,000 for individuals and $30,600 for a family of four.
To help build the federal system, the Department of Health and Human Services hired a Canadian firm. There is a major difference in how national health care is run in Canada and England. In Canada, you can not use your own money to go outside of the national system. In England you can pay for additional health care out of your own pocket.
Major companies are exploring plans to open their own exchanges. These will give you a certain amount of corporate subsidy and you get the choice of what level of coverage you want. If you pick a plan that is more expensive than the subsidy, you pay the rest. If it is cheaper, you get to keep the difference. This is much like 401k savings plans work. Companies are constantly exploring ways to reduce their health care costs. Look for higher deductibles and co-pays. Companies are also looking at using more part-time workers. Employees may also be rewarded for living healthier health styles and will be encouraged to stop smoking, lose weight or perhaps join a gym.
Employees should expect to receive a lot of communications on health care changes during the next year. It will take additional evaluation to make informed decisions on the employee's part. All of these initiatives cost a lot of money. One way the law collects this is by charging a 2.3 percent excise tax on medical device makers. These costs will only add to the already bloated medical costs in this country. The law took no meaningful steps to reduce everyone's cost. It just shifts the burden to others whether is because they have good health or earn a higher income.
We are already hearing from Washington that we need more revenue and not just spending cuts. Higher wage earners saw their marginal tax rates just increase. In addition, there is a surcharge tax in Obamacare for anyone earning more than $200,000 per year. There is a 3.8 percent tax on investment income. This is on top of regular taxes. Although this is supposed to be for health care costs, it is deposited into the general fund. Also, people earning more than $200,000 have to pay additional Medicare taxes of 0.9 percent. Many people do not realize that people earning above $85,000 have to pay extra for their Medicare Part B & D premiums.
Next week, we will look at health care cost considerations for our seniors. There are some things that you may be able to do to reduce your health care costs.
Gary Boatman is a certified financial planner and local businessman who serves as president of the Monessen Chamber of Commerce.